March 23 (Bloomberg) -- Senator John McCain said Republicans should compromise and increase tax revenue as part of a “long-term grand bargain” on the budget, and praised President Barack Obama for talking to senators across the aisle.
“I’m open -- have always been open -- to closing loopholes, eliminating special deals for special interests,” McCain, of Arizona, said in an interview on “Political Capital With Al Hunt,” airing this weekend on Bloomberg Television. “If you call that ‘raising revenues,’ I’ve been guilty all my political career” of trying to cut special-interest loopholes.
Obama and congressional Democrats want to combine higher revenue with spending cuts to replace the $1.2 trillion in automatic budget cuts that began taking effect March 1. Many Republicans, including House Speaker John Boehner of Ohio, have rejected tax increases, and the House last year voted to curb food stamps and other domestic programs rather than defense to avoid the across-the-board reductions known as sequestration.
The Senate early today adopted a nonbinding budget blueprint for fiscal 2014 that would reduce U.S. debt through higher taxes for top earners. Lawmakers voted 50-49 to approve the Democratic-sponsored measure, with all the chamber’s Republicans, including McCain, voting no.
McCain, who lost to Obama in the 2008 presidential election, said that in contrast to his first term, the president “has changed significantly” and is reaching out to Republicans.
“The question is: Will that translate into what I think we’ve got to do sooner or later, and that’s a grand bargain?” he told interviewer Hans Nichols. “I am more than willing to give the president of the United States the opportunity to sit down and work with us. And we may have to make some concessions on our side.”
He added: “What we would want to have is a really long-term grand bargain, not one of these that lurches a couple of months to a couple of months. And at least the dialogue has begun.”
The government could reap “tens of billions” of dollars by ending tax breaks for Hollywood and companies such as Facebook Inc., McCain, 76, said. The social media company went public with $16 billion in deductions to lower future tax bills because of the way current law allows it to value stock options. In many cases, though, executives who receive the options will have to pay taxes on income from them.
“Why are we doing all these things that only benefit the special interests who still have enormous influence here?” McCain said. “Republicans have betrayed our base by allowing this kind of pork-barrel and earmark spending to go on.”
He didn’t identify enough loopholes to close in order to reach the $600 billion in new revenue that Obama has called for.
The two-year extension of special expensing rules for movie and television productions that Congress enacted in January is estimated to cost only $248 million over 10 years. McCain also mentioned breaks for ethanol; a 45-cent tax credit expired in December 2011 after senators opposed its extension.
Senator Carl Levin, a Michigan Democrat, has estimated that reducing corporate deductions for stock options and taxing carried interest as ordinary income rather than as capital gains could help raise at least $200 billion over 10 years.
On immigration, McCain said bipartisan talks on Senate legislation to address the estimated 11 million undocumented immigrants in the U.S. are “making progress,” though issues remain to be resolved. The senator, who is part of the group developing the measure, declined to elaborate, saying only that improving border security is a key element of any legislation.
“A 90 percent effective border control is really an important criteria,” McCain said. “There is a commitment on the part of all members not only to spend more on the border and expand the fences, but to use the technology that -- if there’s anything good that came out of Iraq and Afghanistan -- it’s this dramatically improved surveillance capabilities we have.”
McCain, a member of the Armed Services and Foreign Relations committees, criticized Obama for not intervening in the civil war now raging in Syria. He talked of his visit to a refugee camp in Jordan where residents were angry at the U.S. for not supporting the insurgents.
“We are now breeding another generation of jihadists who hate America because we wouldn’t help them,” McCain said. “It’s a disgraceful chapter in American history.”
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