BIDEN: The middle class will pay less and people making $1 million or more will begin to contribute slightly more. Let me give you one concrete example. The continuation of the Bush tax cuts -- we are arguing that the Bush tax cuts for the wealthy should be allowed to expire. Of the Bush tax cuts for the wealthy, $800 million -- billion of that goes to people making a minimum of $1 million.

We see no justification in these economic times for those, and they're patriotic Americans. They're not asking for this continued tax cut. They're not suggesting it, but my friends are insisting on it; 120,000 families by continuing that tax cut will get an additional $500 billion in tax relief in the next 10 years and their income is an average of $8 million.

We want to extend permanently the middle-class tax cut for -- permanently, from the Bush middle-class tax cut. These guys won't allow us to. You know what they're saying? We say "let's have a vote -- let's have a vote on the middle-class tax cut and let's have a vote on the upper (ph) tax cut; let's go ahead and vote on it."

They're saying no. They're holding hostage the middle class tax cut to the super wealthy. And on top of that, they've got another tax cut coming that's $5 trillion that all of the studies point out will in fact give another $250 million -- yeah, $250,000 a year to those 120,000 families and raise taxes for people who are middle income with a child by $2,000 a year.

This is unconscionable. There is no need for this. The middle class got knocked on their heels. The great recession crushed them. They need some help now. The last people who need help are 120,000 families for another -- another $500 billion tax cut over the next 10 years.

RADDATZ: Congressman?

RYAN: Our entire premise of these tax reform plans is to grow the economy and create jobs. It's a plan that's estimated to create 7 million jobs. Now, we think that government taking 28 percent of a family and business's income is enough. President Obama thinks that the government ought to be able to take as much as 44.8 percent of a small business's income.

RYAN: Look, if you taxed every person and successful business making over $250,000 at 100 percent, it would only run the government for 98 days. If everybody who paid income taxes last year, including successful small businesses, doubled their income taxes this year, we'd still have a $300 billion deficit. You see? There aren't enough rich people and small businesses to tax to pay for all their spending.

And so the next time you hear them say, "Don't worry about it, we'll get a few wealthy people to pay their fair share," watch out, middle class, the tax bill's coming to you.

That's why we're saying we need fundamental tax reform. Let's take a look at it this way. Eight out of 10 businesses, they file their taxes as individuals, not as corporations. And where I come from, overseas, which is Lake Superior, the Canadians, they dropped their tax rates to 15 percent. The average tax rate on businesses in the industrialized world is 25 percent, and the president wants the top effective tax rate on successful small businesses to go above 40 percent.

Two-thirds of our jobs come from small businesses. This one tax would actually tax about 53 percent of small-business income. It's expected to cost us 710,000 jobs. And you know what? It doesn't even pay for 10 percent of their proposed deficit spending increases.

What we are saying is, lower tax rates across the board and close loopholes, primarily to the higher-income people. We have three bottom lines: Don't raise the deficit, don't raise taxes on the middle class, and don't lower the share of income that is borne by the high-income earners.

He'll keep saying this $5 trillion plan, I suppose. It's been discredited by six other studies. And even their own deputy campaign manager acknowledged that it wasn't correct.

RADDATZ: Well, let's talk about this 20 percent. You have refused -- and, again -- to offer specifics on how you pay for that 20 percent across-the-board tax cut. Do you actually have the specifics? Or are you still working on it, and that's why you won't tell voters?

RYAN: Different than this administration, we actually want to have big bipartisan agreements. You see, I understand the...

RADDATZ: Do you have the specifics? Do you have the...

(CROSSTALK) BIDEN: That would -- that would be a first for the Republican Congress.

RADDATZ: Do you know exactly what you're doing?

RYAN: Look -- look at what Mitt Romney -- look at what Ronald Reagan and Tip O'Neill did. They worked together out of a framework to lower tax rates and broaden the base, and they worked together to fix that.

What we're saying is, here's our framework. Lower tax rates 20 percent. We raised about $1.2 trillion through income taxes. We forego about $1.1 trillion in loopholes and deductions. And so what we're saying is, deny those loopholes and deductions to higher-income taxpayers so that more of their income is taxed, which has a broader base of taxation...

BIDEN: Can I translate?

RYAN: ... so we can lower tax rates across the board. Now, here's why I'm saying this. What we're saying is, here's the framework...

BIDEN: I hope I'm going to get time to respond to this.

RADDATZ: You'll get time.

RYAN: We want to work with Congress -- we want to work with the Congress on how best to achieve this. That means successful. Look...

RADDATZ: No specifics, again.

RYAN: Mitt -- what we're saying is, lower tax rates 20 percent, start with the wealthy, work with Congress to do it...

RADDATZ: And you guarantee this math will add up?

RYAN: Absolutely. Six studies have guaranteed -- six studies have verified that this math adds up. But here's...

RADDATZ: Vice President Biden...

(CROSSTALK)

BIDEN: Look...

(CROSSTALK)

BIDEN: .. let me translate. Let me have a chance to translate.

RYAN: I'll come back in a second, then, right?

BIDEN: First of all, I was there when Ronald Reagan tax breaks -- he gave specifics of what he was going to cut, number one, in terms of tax expenditures. Number two, 97 percent of the small businesses in America pay less -- make less than $250,000. Let me tell you who some of those other small businesses are: hedge funds that make $600 million, $800 million a year. That's -- that's what they count as small businesses, because they're pass- through.

Let's look at how sincere they are. Ronald -- I mean, excuse me, Governor Romney on "60 Minutes" -- I guess it was about 10 days ago -- was asked, "Governor, you pay 14 percent on $20 million. Someone making $50,000 pays more than that. Do you think that's fair?" He said, "Oh, yes, that's fair. That's fair."

This is -- and they're going to talk -- you think these guys are going to go out there and cut those loopholes? The loophole -- the biggest loophole they take advantage of is the carried interest loophole and -- and capital gains loophole. They exempt that.

BIDEN: Now, there's not enough -- the reason why the AEI study, the American Enterprise Institute study, the Tax Policy Center study, the reason they all say it's going -- taxes go up on the middle class, the only way you can find $5 trillion in loopholes is cut the mortgage deduction for middle-class people, cut the health care deduction, middle-class people, take away their ability to get a tax break to send their kids to college. That's why they arrive at it.

RADDATZ: Is he wrong about that?

RYAN: He is wrong about that. They're...

BIDEN: How's that?

RYAN: You can -- you can cut tax rates by 20 percent and still preserve these important preferences for middle-class taxpayers...

BIDEN: Not mathematically possible.

RYAN: It is mathematically possible. It's been done before. It's precisely what we're proposing.

BIDEN: It has never been done before.

RYAN: It's been done a couple of times, actually.

BIDEN: It has never been done before.

RYAN: Jack Kennedy lowered tax rates, increased growth. Ronald Reagan...

BIDEN: Oh, now you're Jack Kennedy?

(LAUGHTER)

RYAN: Ronald Reagan -- Republicans and Democrats...

BIDEN: This is amazing.

RYAN: Republican and Democrats have worked together on this.

BIDEN: That's right.

RYAN: You know, I understand you guys aren't used to doing bipartisan deals...

BIDEN: But we told each other what we're going to do.

RYAN: Republicans and Democrats...

BIDEN: When we did it Reagan, we said, here -- here are the things we're going to cut.

(CROSSTALK)

BIDEN: That's what we said.

RYAN: We said here's the framework, let's work together to fill in the details. That's exactly...

BIDEN: Fill in the detail.

RYAN: That's how you get things done. You work with Congress -- look, let me say it this way.

(CROSSTALK)

BIDEN: That's coming from a Republican Congress working bipartisanly, 7 percent rating? Come on.

RYAN: Mitt Romney was governor of Massachusetts, where 87 percent of the legislators he served, which were Democrats. He didn't demonize them. He didn't demagogue them. He met with those party leaders every week. He reached across the aisle. He didn't compromise principles.

BIDEN: And you saw what happened.

RYAN: He found common ground -- and he balanced the budget...

BIDEN: You saw -- if he did such a great job...

RADDATZ: Mr. Vice President...

(CROSSTALK)

RYAN: ... four times without raising taxes...

BIDEN: Why isn't he even contesting Massachusetts?

(CROSSTALK)

RADDATZ: Mr. Vice President, what would you suggest -- what would you suggest beyond raising taxes on the wealthy, that would substantially reduce the long-term deficit?

BIDEN: Just let the taxes expire like they're supposed to on those millionaires. We don't -- we can't afford $800 billion going to people making a minimum of $1 million. They do not need it, Martha. Those 120,000 families make $8 million a year. Middle-class people need the help. Why does my friend cut out the tuition tax credit for them? Why does he go after the childcare...

RADDATZ: Can you declare anything off-limits?

BIDEN: Why do they do that?

RADDATZ: Can you declare anything off-limits?

RYAN: Yeah, we're saying close loopholes...

RADDATZ: Home mortgage deduction?

RYAN: ... on high-interest people.

RADDATZ: Home mortgage deduction?

RYAN: For higher-income people. Here...

BIDEN: Can you guarantee that no one making less than $100,000 will have a mortgage -- their mortgage deduction impacted? Guarantee?

RYAN: This taxes a million small businesses. He keeps trying to make you think that it's just some movie star or hedge fund guy or an actor...

BIDEN: Ninety-seven percent of the small businesses make less than $250,000 a year, would not be affected.

RYAN: Joe, you know it hits a million -- this taxes a million people, a million small businesses.

BIDEN: Does it tax 97 percent of the American businesses?

RYAN: It taxes a million small businesses...

BIDEN: Small businesses?

RYAN: ... who are our greatest job creators.

BIDEN: I wish I'd get -- the "greatest job creators" are the hedge fund guys.

RADDATZ: And you're -- and you're going to increase the defense budget.

RYAN: Think about it this way.

RADDATZ: And you're going to increase the defense budget.

RYAN: No, we're not just going to cut the defense budget like they're -- they're proposing...

BIDEN: They're going to increase it $2 billion.

RYAN: That's not...

(CROSSTALK)

RYAN: We're talking about... RADDATZ: So no massive defense increases?

RYAN: No, we're saying don't -- OK, you want to get into defense now?

RADDATZ: Yes, I do. I do, because that's another math question.

RYAN: So -- right, OK.

RADDATZ: How do you do that?

RYAN: So they proposed a $478 billion cut to defense to begin with. Now we have another $500 billion cut to defense that's lurking on the horizon. They insisted upon that cut being involved in the debt negotiations, and so we have a $1 trillion cut...

RADDATZ: Let's put the automatic defense cuts aside, OK?

RYAN: Right, OK.

RADDATZ: Let's put those aside. No one wants that.

BIDEN: I'd like to go back to that.

RADDATZ: But I want to know how you do the math and have this increase in defense spending?

BIDEN: Two trillion dollars.

RYAN: You don't cut defense by a trillion dollars. That's what we're talking about.

RADDATZ: And what -- what national security issues justify an increase?

BIDEN: Who's cutting it by $1 trillion?

RYAN: We're going to cut 80,000 soldiers, 20,000 Marines, 120 cargo planes. We're going to push the Joint Strike Fighter out...

RADDATZ: Drawing down in one war and one war...