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Obama Panel’s Deficit Plan Should Be Basis for Deal, McCain Says

U.S. Senator John McCain said a proposal by President Barack Obama’s debt commission should form the basis of a deal to balance the nation’s budget, joining a growing number of lawmakers who back reviving the plan.

While McCain, an Arizona Republican who lost to Obama in the 2008 presidential election, said he doesn’t endorse the panel’s recommendation to cut deficits by raising some taxes, he would negotiate a compromise “with everything on the table.”

“Everybody knows what the solution is, and that’s Simpson- Bowles,” he said in an interview with Bloomberg Television’s Peter Cook on the new program “Capitol Gains.” “We are prepared to support it as an outline.”

The debt commission -- led by former Republican Senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton -- called for cutting individual and corporate tax rates. It also favored reducing Social Security benefits and Medicare, raising the gas tax and cutting federal discretionary spending.

The panel’s plan, released in 2010, didn’t win enough support among commission members to be sent to Congress for a vote. A group of senators, including Lamar Alexander, a Tennessee Republican, and Michael Bennet, a Colorado Democrat, said they want to offer their own plan based on the commission’s recommendations during the lame-duck session of Congress after the Nov. 6 election.

Fiscal Cliff

Without a budget compromise, the U.S. faces a so-called fiscal cliff in January, when $1.2 trillion in automatic spending cuts over 10 years will start and the George W. Bush- era tax cuts will expire. Democrats propose letting tax cuts expire for top earners, while Republicans want spending reductions instead of more tax revenue.

McCain said Congress and the administration shouldn’t wait to begin talks because some defense contractors may be legally bound to notify workers of potential firings as early as Nov. 1.

“We are begging the White House to sit down with us and try and avoid” defense-spending cuts, he said. “So far, no answer.”

Should the spending cuts be allowed to take effect, the biggest hit would be to the Defense Department, with $52.2 billion in fiscal 2013. The Department of Health and Human Services would receive the next largest cut, at $6.6 billion. The departments of Education and Homeland Security would each lose $3.7 billion, followed by Housing and Urban Development with $3.6 billion, according to a Bloomberg Government analysis.

‘Great Rip-Offs’

Rather than raising taxes, McCain said he favored closing tax loopholes, such as subsidies for the ethanol industry, calling them “one of the great rip-offs in American history.”

Obama needs to do more to encourage a compromise, McCain said.

“Nobody’s ready to step forward so far. And I say, as a partisan, it does require some presidential leadership,” he said.

McCain also faulted Obama for what he called a lack of command over foreign policy as U.S.-led forces suffer repeated attacks from Afghan troops or infiltrators, Iraq becomes less stable and Iran continues to enrich uranium potentially to build a nuclear bomb.

Obama’s refusal to arm rebels opposed to Syrian President Bashar al-Assad is the “grossest lack of leadership that I have seen of a president of the United States,” said McCain, who was first elected to the Senate in 1986 and has four years left in his term.

Romney Comments

McCain also reproached members of his own party for criticizing the tone and direction of Republican presidential nominee Mitt Romney’s campaign as a series of recent national polls show Obama ahead of the former Massachusetts governor.

This week, Romney had to explain secretly recorded remarks to donors in which he described 47 percent of Americans as government-dependent “victims” who don’t pay federal income taxes and won’t vote for him. Republican lawmakers, including Senator Dean Heller of Nevada and Senator Scott Brown of Massachusetts, have questioned the remarks.

“Everybody’s free to comment, but why would Republicans now try to harm a Republican candidate?” he said. “I’ve never been able to get that.”

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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