Hatch says taxes, debt reduction need separate discussions

By Vicki Needham - 06/20/11 05:11 PM ET

Sen. Orrin Hatch (R-Utah) is urging congressional leaders and White House officials to keep tax reform separate from ongoing debt-reduction discussions.

While Hatch acknowledged that the current tax system is "burdensome" and is "a drag on our economy," he said any attempt to overhaul the tax system during talks between Vice President Biden and congressional leaders could, instead, lead to an increase in taxes.

"That’s a wrong-headed approach since spending is causing our debt crisis — not too few taxes," he said. "Furthermore, as one of the leading drivers of our debt, entitlements must be on the table in these negotiations or we will have solved nothing.”

Hatch added another voice to the debate over how to best move toward a reduction in the nation's $14.3 trillion debt, which was hit May 16, and a yearly deficit topping $1 trillion.

"Most Republicans believe we ought to maintain the taxman's take where it has historically been," Hatch said. "In other words, tax reform ought not to be a ruse for a backdoor tax increase," he said.

Congressional Republicans are opposed to any tax increases to lower the nation's burgeoning debt and deficits, favoring instead cuts in spending.

Over the weekend, Sen. Lindsey Graham (R-S.C.) said on NBC's "Meet the Press" that he would back a debt deal that eliminates tax loopholes and that uses the revenue raised for deficit reduction.

Graham said that no Republican would vote to raise tax rates, but eliminating special interest subsidies — such as for ethanol — is acceptable, he said.

“No one in the Republican Party is going to vote to raise taxes,” Graham said. “Many of us would look at flattening the tax code.”

“One way to do that is to do away with ethanol subsidies,” he said. “That doesn't raise taxes. ... That is one way to help pay off the debt."

The statement conflicts with the stance of Americans for Tax Reform's Grover Norquist, who insists that any elimination of tax breaks must be accompanied by an equal reduction in taxes elsewhere.

Even with movement toward revenue increases in a deficit reduction deal, the Senate's top Republican is trying to put off the tax discussion for now.

"We're really interested in corporate tax reform — for that matter, tax reform across the board," said Senate Minority Leader Mitch McConnell of Kentucky, on CBS's "Face the Nation. "It's very hard ... to deal with a big subject like tax reform within a month. We need to do it. But it's hard to squeeze that into this time limit we have in connection with the deficit. So we need to concentrate on cutting spending."

Senate Majority Whip Dick Durbin (D-Ill.), speaking on the same program, reiterated his view that a grand bargain on the deficit “puts everything on the table,” including entitlements. He said that he backs changes to Medicare but not along the lines of the House-passed budget. "That budget replaces traditional Medicare for future seniors with subsidies for purchase of private insurance."