Republican senators eye loophole fix to avert mandatory Pentagon cuts

Six Republicans on the Senate Armed Services Committee have signaled they would consider using revenue from closing tax loopholes to avert pending cuts to the military.

Sen. John McCainJohn McCainEx-Bush aide Nicolle Wallace to host MSNBC show Meghan McCain: Obama 'a dirty capitalist like the rest of us' Top commander: Don't bet on China reining in North Korea MORE (Ariz.), the senior Republican on the Armed Services panel, and Sen. Lindsey GrahamLindsey GrahamTop admiral: North Korea crisis is 'worst I've seen' Comey to testify before Senate Judiciary Committee Overnight Defense: US moving missile defense system to South Korea | Dems want justification for Syria strike | Army pick pushes back against critics of LGBT record MORE (R-S.C.) are discussing a deal to raise between $40 billion and $50 billion in new revenues. 

Four other Republican members of the Armed Services Committee say they would consider supporting such a deal, even though it would likely violate the Taxpayer Protection Pledge championed by anti-tax activist Grover Norquist. 

McCain and Graham are eyeing tax loopholes and fees identified by Sen. Pat Toomey (R-Pa.) during the negotiations of the so-called supercommittee and other deficit-reduction talks last year. 

“If Republicans would put some revenue on the table — it’s $110 billion we have to offset in 2013,” Graham said Tuesday. “So McCain and I are trying to find some revenue from the Toomey-supercommittee-Gang of Six-Biden-Kyl talks where we could put revenue [on the table] by closing deductions or selling property, increasing fees.”

Graham proposed a 3-to-1 ratio of spending cuts to revenue-raising provisions, similar to the Simpson-Bowles deficit-reduction plan.

The Pentagon is facing $55 billion in cuts, but any proposal to avoid them would need to erase a similar amount in cuts planned for non-defense programs to win Democratic support. 

Graham said if Republicans agree to raise $40 billion or $50 billion in new revenues, “it’s going to be easier to get Democrats’ help with the $60 billion or $70 billion that we’ll have to find throughout the other parts of the government.” 

Sens. Kelly AyotteKelly AyotteBottom Line How Gorsuch's confirmation shapes the next Supreme Court battle THE MEMO: Trump set to notch needed win with Gorsuch MORE (R-N.H.), Susan CollinsSusan CollinsThe Hill's 12:30 Report Overnight Energy: Lawmakers work toward deal on miners’ benefits Schumer: Senate Russia probe moving too slowly MORE (R-Maine), Rob PortmanRob PortmanTrump talks big on trade, but workers need action Trump tax plan prompts GOP fears about deficit Overnight Regulation: Senators call for 'cost-effective' regs | FCC chief unveils plans to roll back net neutrality MORE (R-Ohio) and Roger WickerRoger WickerNet neutrality fight descends into trench warfare Ryan praises FCC chief's plans to roll back net neutrality FCC head unveils plan to roll back net neutrality MORE (R-Miss.), all members of the Armed Services Committee, said they would consider such a compromise.

“I would support looking at some of the revenue sources that were looked at on the supercommittee. I think the overwhelming majority should be spending reductions, but that’s certainly something I would be willing to consider, depending on what the loopholes were and what the revenue sources were,” Ayotte said.

Ayotte said she would oppose any proposal that raised tax rates. 

Said Collins, “Whether or not I could support it would depend very much on the specifics, but I am very eager to avoid sequestration, which I think would be an absolute disaster for our economy as well as for our national defense and for many of the smaller discretionary domestic programs that would be hit hard.”

Portman, a leading candidate to join Mitt Romney on the GOP presidential ticket, said, “We’re willing to look at anything, we’re concerned enough about it.”

Portman, a member of the 2011 supercommittee, said Republicans in those negotiations were looking more closely at measures classified by the Congressional Budget Office as fees. 

“There are a number of items that CBO terms revenues, which are fees, that were part of the discussion,” he said. “But those wouldn’t be as much [tax] loopholes as fees.” 

When asked whether he could support ending some niche tax breaks to avert the sequestration, Wicker said, “I wouldn’t rule it out.”

Other Republicans on the Armed Services Committee have taken a different stance.

Sen. John CornynJohn CornynSenate's No. 2 Republican: Border tax 'probably dead' McConnell: Senate will pass short-term funding bill to avoid shutdown The Hill's 12:30 Report MORE (R-Texas) said special tax breaks should be reviewed as part of broader tax reform, a position shared by House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Norquist. 

“This is totally unnecessary to solve the sequester problem at least for a year, to start raising taxes on anybody,” Cornyn said. 

Sen. Jeff SessionsJeff SessionsNew chief selected for Justice Department unit overseeing Russia probe Sessions: Some judges ‘using the law to advance an agenda’ Sessions on Flynn: ‘You don’t catch everything’ MORE (Ala.), the third-ranking Republican on Armed Services, said closing tax loopholes is tantamount to raising taxes.

“I don’t think we need to be raising taxes for more spending,” he said. “I don’t think we have to raise taxes, period, to get this country under financial control. 

“I’m not supportive of this. I don’t think the Democrats have that much leverage to say they’re prepared to cut all this out of defense but Medicaid, food stamps, a lot of other programs have no cuts at all,” he said.

Sen. Saxby ChamblissSaxby ChamblissGOP hopefuls crowd Georgia special race Democrats go for broke in race for Tom Price's seat Spicer: Trump will 'help the team' if needed in Georgia special election MORE (R-Ga.) said lawmakers should eliminate special tax breaks through comprehensive reform, not one at a time. 

When asked about McCain’s efforts to strike a deal on defense cuts, Senate Republican Leader Mitch McConnellMitch McConnellStudy: Trump tops recent GOP presidents in signing bills in first 100 days Senate passes stopgap funding bill to avert shutdown Let’s never talk about a government shutdown — ever again MORE (Ky.) deferred to his second-in-command, Senate Republican Whip Jon Kyl (Ariz.).

“The House of Representatives passed legislation, raised over $300-and-some billion to demonstrate it can be done without raising taxes,” he said. “Clearly, we believe that the best way to avoid the sequestration is to do so with reductions in spending, not raising taxes.”

Kyl noted that he and McCain have also introduced legislation that would use spending cuts to offset the cost of wiping out the defense sequestration.