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Tax breaks for wealthy need cut, Ryan says

House Budget Committee Chairman Paul D. Ryan said tax breaks for the wealthy should be reduced as part of an overhaul of the nation's tax code.

"We should ask: Who should get them?" the Wisconsin Republican said Tuesday in an interview with Bloomberg View in New York. "We should circumscribe these tax benefits to middle-income and low-income people, and not to higher-income people."

Ryan declined to identify which benefits ought to be cut to finance his proposed tax overhaul.

Last month, the House approved his budget that calls for consolidating the current six individual tax brackets into two, with rates set at 25 percent and 10 percent. The top rate now is 35 percent. His plan would make cuts in food stamps, Medicaid, Pell college tuition grants and other programs for the poor.

Ryan's plan calls for financing the lower tax rates by cutting individual tax preferences, without identifying which ones. Ryan has said the House's tax-writing Ways and Means Committee will sort that out later. It would need to come up with about $4.6 trillion in revenue over the next decade to pay for the lower tax rates, according to the nonpartisan Tax Policy Center in Washington.

Ryan also said he has a "hard time" believing that lawmakers will reach a so-called grand bargain to cut the deficit in a post-election session of Congress.

The November election winners will probably believe they would have a stronger hand in negotiations when the new Congress takes office in January, he said. Lawmakers shouldn't try to address those issues after the election anyway, Ryan said, because it would mean passing major legislation with relatively little scrutiny.

"I'm not a big believer in trying to cut backroom deals and then bringing them down from on high and showing them to the country," he said. Lawmakers should be "having hearings, having debates, in open, in public -- passing legislation through the front door versus cutting a deal in the back."

Congress will probably pass short-term legislation allowing lawmakers to postpone decisions until 2013 on issues such as whether to continue expiring Bush-era tax breaks, he said.

Ryan said lawmakers will examine which tax breaks are worth keeping and who should benefit from them.

He also predicted that a June recall election targeting Wisconsin Republican Gov. Scott K. Walker will provide a major political boost to the party that wins.

"It's the second-most important election this year, next to the presidential election," Ryan said. "It's a momentum-maker for either side -- it's high risk, high reward for either side."

Many observers agree that if unions and their Democratic allies prevail in the recall -- just over a year after Walker signed legislation to curb collective-bargaining rights for most public workers -- it would send a powerful warning to other politicians who might try to limit union rights. However, a Walker victory would be a stunning setback for organized labor.