GOP, Dem lawmakers see room for compromise ahead of fiscal talks

As they return to Washington this week, lawmakers from both parties are talking compromise to avoid the impending “fiscal cliff,” showing a willingness to put once inviolable positions on the negotiating table.

More senior Republicans distanced themselves from conservative activist Grover Norquist’s anti-tax pledge this weekend in an apparent effort to signal their willingness to broker a deficit-reduction plan and move past the expiring tax rates and automatic spending cuts set to take effect next year.

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Sen. Lindsey Graham (R-S.C.), who has indicated in the past that he and Norquist might not see eye to eye on new revenues, became the latest GOP lawmaker to loudly break from the pledge.

Graham said on Sunday that he is willing to “violate” the pledge to secure a deficit deal “for the good of the country.”

"I am willing to generate revenue," Graham said Sunday on ABC's "This Week."  But the South Carolina senator cautioned: "I will not raise tax rates to do it; I will cap deductions."

Cutting deductions without a dollar-for-dollar match in lower tax rates goes against the strict pledge, because it would raise the effective tax paid by some groups.

Efforts to reach a deficit deal during 2011’s debate over raising the debt-ceiling limit were blocked after senior Republicans balked at measures to raise new revenues, demanding spending cuts and entitlement reform instead.

But since the election, some Republicans, particularly in the Senate, have said they are willing to consider new revenue measures without raising tax rates.

Graham’s statement was praised by Sen. Dick Durbin (D-Ill.), who suggested his party would meet the GOP by putting some of the spending programs it is most inclined to protect on the table in the upcoming negotiations.

"Let me salute Lindsey Graham," said Durbin, the No. 2-ranking Democrat in the Senate, also on ABC. “What he just said about revenue and taxes needed to be said on his side of the aisle.”

Durbin said Democrats would need to head to negotiations with the same level of openness. “We need to be honest on our side of the aisle, and as we did under Bowles-Simpson, put everything on the table," said the Illinois senator.

The year-end deadline, when the George W. Bush-era tax rates expire and automatic cuts to mandatory spending take effect, is only the latest in a series of economic deadlines that sparked deficit negotiations in Congress.

Democrats, though, believe Republicans have less leverage now that the election is over and the GOP failed to capture the White House and Senate. President Obama and congressional Democrats have insisted that any deficit deal include higher taxes on the wealthy, by allowing the Bush-era rates to expire for those families making over $250,000 a year.

Many Republicans, though, say that new revenues can come from patching loopholes and eliminating deductions, without the need to raise any tax rates. Speaker John Boehner (R-Ohio) has said he is willing to "accept new revenue, under the right conditions," meaning matching cuts and fewer loopholes but no higher tax rates.

Over the weekend, though, more lawmakers from both parties signaled optimism that an agreement could be reached and conceded that it was more necessary than ever to put sacred cows on the table in order to reach a deal.

More Republicans have begun to distance themselves from Norquist, the president of Americans for Tax Reform (ATR) and a man whom senior Democrats, including Obama and Vice President Biden, have characterized as a puppeteer manipulating the Republican Party.

Last week, Sen. Saxby Chambliss (R-Ga.) indicated he will not abide by the anti-tax pledge if compromise is necessary to reach a deal. 

The ATR pledge, which has been signed by the majority of Republican lawmakers, including Boehner, commits lawmakers to "oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses … and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

According to ATF, only 16 House Republicans and six GOP senators in the incoming Congress have abstained from the pledge. But the pledge will no longer bind a majority of the House in its budget decisions, due to the number of GOP defections and Democratic pickups.

While most Republicans still hold to the principle of the pledge and maintain that raising taxes for any class of Americans would ultimately harm the economic recovery, more lawmakers are now indicating they see room for a deal by raising revenue through eliminating deductions.

That's a big change from last year, when the GOP presidential candidates — including Mitt Romney, who later, as the GOP nominee, reaffirmed his answer — said they would not accept $1 of increased revenue in exchange for $10 in spending cuts.

Sen. Carl Levin (D-Mich.) on Sunday hailed Republicans distancing themselves from the Norquist pledge as "key" to making a deal, and suggested that migrating from an "ideologically rigid position" could open the door to a grand compromise.

"When they move away from that pledge, and they must, as by the way all the presidents that I have ever served with, including Reagan, Clinton and the first George Bush, moved away from a position — no additional taxes," he said on NBC's "Meet the Press." "They all added revenues to deficit reduction, a significant amount of revenues."

"The election's over," Rep. Pete King (R-N.Y.) acknowledged, speaking of the fiscal cliff on "Meet the Press" Sunday. "We have to show the world we're adults.

"I think everything should be on the table. I myself am opposed to tax increases. The fact is the Speaker and the majority leader and the president are going to be in a room trying to find the best package. I'm not going to prejudge it. I'm just saying we should not be taking ironclad positions," he said.

Sen. John McCain (R-Ariz.), though, said the Democrats would be expected to show the same flexibility in negotiations.

“Obviously, we are going to have to look at entitlement reform,” said McCain on “Fox News Sunday.” “Entitlement reform is the only way we are going to really get the debt and deficit under control. And we've got to take it on.”

Four retiring lawmakers who spoke to CNN's Candy Crowley on Sunday — Sens. Jon Kyl (R-Ariz.), Kay Bailey Hutchison (R-Texas) and Joe Lieberman (I-Conn.) and Rep. Barney Frank (D-Mass.) — shared what Lieberman called a "general hopefulness" about reaching a deal to avoid the fiscal cliff by the time they leave Congress.

"I believe we will come up with a way forward," Hutchison said. "Do I think we'll do everything by the end of this year? Probably not."

But Lieberman cautioned that since the election had done little to solve the status quo that has resulted in widespread congressional gridlock, the deal is not a foregone conclusion.

"It's not a done deal; it's not a certainty," he warned.