Ayotte: Door still open to ‘big agreement’ on tax code, entitlement reform

Despite failing to reach a deal on thwarting $85 billion in automatic cuts, Sen. Kelly Ayotte (R-N.H.) said Sunday there was still room for a “big agreement” to address the nation’s fiscal crisis.

“I think we need to do a big agreement for the country,” Ayotte (R-N.H.) told ABC host George Stephanopoulos on “This Week.”

Ayotte said she would accept larger tax revenues in such a deal if they were coupled with broader tax reforms that lowered rates and went towards reducing the debt.

“If we're going to increase revenue again, it's got to go to the debt with real entitlement reform,” she said on Sunday. Ayotte also said she wanted to see “real tax reform, where you actually lower rates. And I think that none of that's been in this discussion.”

“If we take the form of lowering [tax] rates so that we can focus on economic growth, and then we take a portion of that, and apply it to the debt with real entitlement reform, but it has to go to the debt,” she said. “I'm not going to agree to any more tax increases that are going to go to increase more government.”

Ayotte’s comments come as Washington braces for the fallout from the across-the-board sequestration cuts which began to take effect on Friday.

President Obama and congressional leaders met on Friday but were unable to reach a last minute deal to avert the cuts, with both sides at an impasse over new revenues. Democrats want tax hikes to help offset part of the sequester, but Republican say they allowed new revenues in January and want the sequester replaced with other spending cuts.

Ayotte introduced a bill with Sens. Lindsey Graham (R-S.C.), Jim Inhofe (R-Okla.) and John McCain (R-Ariz.) last week that would replace the sequester with a continued freeze on federal salaries and pensions, among other cuts and reforms to federal agencies aimed to reduce redundancy. 

The Senate voted on GOP and Democratic bills to avoid the sequester, but both measures failed to receive 60 votes.

But the budget battles aren’t anywhere near over.

Next week, Congress will come back and discuss its next budget deadline – March 27, when government funding is set to expire. Without a Continuing Resolution, the government would shut down.

But Ayotte remained hopeful that lawmakers and the White House could still take steps to rein in the deficit while boosting the economy.

“This sequester has to be dealt with within existing spending, and alternative cuts. And we need real entitlement reform, and real tax reform. That's what we need for the country if we're going to drive down our debt, and also be focused on economic growth,” Ayotte said.