President Obama to Bob Woodward: 'Mistake' to Dress Down Paul Ryan to His Face in Budget Speech

Sept. 10, 2012— -- President Obama told author Bob Woodward that he didn't know Rep. Paul Ryan was going to attend at a major speech he delivered last year on spending and debt, and says in retrospect that it was "a mistake" to dress down Ryan and his budget plans to his face in that setting.

In the interview conducted July 11 -- about a month before Ryan was tapped as Mitt Romney's running mate – the president also misstated the first name of the man who is now on the opposing presidential ticket.

"I'll go ahead and say it – I think that I was not aware when I gave that speech that Jack Ryan was going to be sitting right there," the president told Woodward according to audio transcripts of their conversations, provided to ABC News.

"And so I did feel, in retrospect, had I known – we literally didn't know he was going to be there until – or I didn't know, until I arrived. I might have modified some of it so that we would leave more negotiations open, because I do think that they felt like we were trying to embarrass him," Obama continued. "We made a mistake."

(Jack Ryan is the name of a famous Tom Clancy character, and also the name of the Republican who was slated to run against Obama in his 2004 Senate campaign before he withdrew in the wake of a sex scandal.)

The April 2011 speech set the stage for tense summer of negotiations that ultimately fell apart without a major agreement on spending and debt being reached. That's the major focus of Woodward's new book, "The Price of Politics."

Tune in to "World News with Diane Sawyer" and "Nightline" on Monday September 10, 2012 to see Diane Sawyer's exclusive interview with Bob Woodward

It also was an early volley in the broader debate now playing out on the presidential stage over taxes, entitlement programs, and the nation's fiscal course.

Last April, shortly after Paul Ryan released his budget proposal, "The Path to Prosperity," Obama chose to get more specific about his budget goals in a speech at George Washington University in Washington.

According to Woodward, as plans came together for the speech, a junior staffer in the White House congressional relations office noticed that while the co-chairmen of the president's fiscal commission, Erskine Bowles and Alan Simpson, were invited to attend, the other members were not.

Someone in that office thought it would be "polite" to extend invitations to others, even those who voted against the commission's recommendations. When Ryan got his invite, Woodward reports, he thought it was an effort by Obama to extend an olive branch to leaders of the new Republican House majority and "triangulate" a deficit solution, Bill Clinton-style.

But as Ryan and two GOP House colleagues settled into their seats, barely 25 feet from the president, they were in for a shock. The president lit into the Ryan budget plan, saying it was "less about reducing the deficit than it is about changing the basic social compact in America."

Bob Woodward's 17th book, "The Price of Politics," documents how President Barack Obama and congressional leaders responded to the economic crisis. The book is on sale Sept. 11, 2012.

Ryan thought it was a planned attack, and he was incensed. Ryan rushed out of the room even as Gene Sperling, a top Obama economic aide, tried to stop him to explain that the speech "wasn't a setup," Woodward writes.

"I can't believe you poisoned the well like that," Ryan told him.

Back at the Capitol, Ryan denounced the speech as "excessively partisan, dramatically inaccurate, and hopelessly inadequate to address our fiscal crisis." He said he was "very disappointed in the president," adding that he thought his invitation was an "olive branch."

"What we heard today was not fiscal leadership from our commander-in-chief; we heard a political broadside from our campaigner-in-chief," he said in a statement.

Ryan was an offstage player in much of the brinksmanship around the debt ceiling last summer. He wasn't in the direct negotiations handled for House Republicans primarily by House Speaker John Boehner and House Majority Leader Eric Cantor.

But Boehner, Cantor and others in the room were very aware of Ryan's viewpoints as potential compromises were floated and rejected. At one point, after The New York Times reported a possible "grand bargain" that included $1 trillion in new revenues, Rep. Chris Van Hollen, the top Democrat on Ryan's Budget Committee, appealed to Ryan to go along, according to Woodward.

"The window is already shut," Ryan replied. "It just isn't going to fly."

Last month, shortly after Ryan was named to Mitt Romney's ticket, White House aides have told reporters that Cantor cited Ryan's political concerns in explaining to the president why a "grand bargain" wouldn't be feasible. Cantor said Ryan was concerned that the deal would "guarantee the president's reelection," a senior administration official told ABC's Jake Tapper.

Woodward's book includes no such details, though Obama did tell Woodward that prominent Republicans did express concern to him about a deal helping him politically. He did not name those individuals.

Woodward told ABC News anchor Diane Sawyer that it's not accurate to suggest that Ryan scuttled a "grand bargain." Cantor's opposition – driven by the large tea party contingent in his caucus – was more critical, he said.

"I think Cantor is the center of this resistance to the deal," Woodward told Sawyer.

Ryan wound up voting for the eleventh hour deal to avoid a debt default, along with 173 of his House GOP colleagues. That pact called for automatic defense cuts, among other steps, to take place at the end of this year if other cuts aren't agreed to before then, though he has attacked the concept of those cuts on the campaign trail in recent weeks.

Despite his vote for the final bill, Ryan over the weekend attacked the president for insisting on Defense cuts to be enacted without a congressional agreement framed by the so-called "supercommittee." Woodward's book reveals that the Defense piece was inserted into negotiations by the White House.

"The devastating defense cuts that are now coming due were insisted upon by the Obama administration so they would not have to face another debt ceiling increase before the election," Ryan said on CBS yesterday. "If you go back and read Bob Woodward's book, the reason the defense cuts are in the sequester as they are was at the insistence of the Obama administration."

Click here to purchase an advance copy of Bob Woodward's new book "The Price of Politics" on sale Sept. 11, 2012