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 Sidney McCainOvernight Defense: US to send 1K more troops to Mideast amid Iran tensions | Iran threatens to break limit on uranium production in 10 days | US accuses Iran of 'nuclear blackmail' | Details on key defense bill amendments Overnight Defense: US to send 1K more troops to Mideast amid Iran tensions | Iran threatens to break limit on uranium production in 10 days | US accuses Iran of 'nuclear blackmail' | Details on key defense bill amendments Senators revive effort to create McCain human rights commission MORE (Ariz.), the senior Republican on the Armed Services panel, and Sen. Lindsey GrahamLindsey Olin GrahamThe Hill's Morning Report - Is US weighing military action against Iran? The Hill's Morning Report - Is US weighing military action against Iran? Trump wishes 'Happy Father's Day to all,' including 'worst and most vicious critics' 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. 

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“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 Ann AyotteSinema, Gallagher fastest lawmakers in charity race New Hampshire senator to ask 2020 Dems to back repeal of state residency law Schultz recruiting GOP insiders ahead of possible 2020 bid MORE (R-N.H.), Susan CollinsSusan Margaret CollinsOvernight Defense: US to send 1K more troops to Mideast amid Iran tensions | Iran threatens to break limit on uranium production in 10 days | US accuses Iran of 'nuclear blackmail' | Details on key defense bill amendments Overnight Defense: US to send 1K more troops to Mideast amid Iran tensions | Iran threatens to break limit on uranium production in 10 days | US accuses Iran of 'nuclear blackmail' | Details on key defense bill amendments Senators revive effort to create McCain human rights commission MORE (R-Maine), Rob PortmanRobert (Rob) Jones PortmanHouse passes bill to establish DHS cyber 'first responder' teams House passes bill to establish DHS cyber 'first responder' teams Democrats needle GOP on standing up to Trump MORE (R-Ohio) and Roger WickerRoger Frederick WickerHillicon Valley: Democratic state AGs sue to block T-Mobile-Sprint merger | House kicks off tech antitrust probe | Maine law shakes up privacy debate | Senators ask McConnell to bring net neutrality to a vote Hillicon Valley: Democratic state AGs sue to block T-Mobile-Sprint merger | House kicks off tech antitrust probe | Maine law shakes up privacy debate | Senators ask McConnell to bring net neutrality to a vote Lawmakers demand answers on Border Patrol data breach 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 CornynThis week: Democrats move funding bills as caps deal remains elusive This week: Democrats move funding bills as caps deal remains elusive Trump puts GOP in tough spot with remarks on foreign 'dirt' 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 SessionsJefferson (Jeff) Beauregard SessionsSarah Sanders to leave White House Sarah Sanders to leave White House Barr compares his return to DOJ to D-Day invasion 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 ChamblissClarence (Saxby) Saxby ChamblissRepublicans say Democrats holding up disaster relief as 'Sandy payback' Ex-House Intel chair: Intel panel is wrong forum to investigate Trump's finances The Hill's Morning Report - Trump budget reignites border security fight 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 McConnellAddison (Mitch) Mitchell McConnellJon Stewart rips into McConnell for saying he's 'bent out of shape' over 9/11 victim fund Jon Stewart rips into McConnell for saying he's 'bent out of shape' over 9/11 victim fund Tensions with Iran reach new stage over uranium threat 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.