March 22 (Bloomberg) -- Senator John McCain of Arizona, the 2008 Republican presidential nominee, said in an interview with Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that Republicans should compromise and increase tax revenue as part of a “long-term grand bargain” on the budget, and praised President Barack Obama for reaching out to senators across the aisle.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
HANS NICHOLS, BLOOMBERG NEWS: Hello, I’m Hans Nichols, in for Albert R. Hunt this week. We have Senator McCain joining us.
Senator, thanks for being with us. Just this week, it looks like we have a continuing resolution, keep the government funded for six months. But if Obama came to you, came to Senate Republicans and said, $600 billion in savings, chained CPI, real cuts, right, chained CPI, medical devices, something on Medicare eligibility, means-testing, and said couple that with $600 billion new revenues, not rates, new revenues, is that a deal you could take to replace the sequester?
JOHN MCCAIN: I think 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. Now, what the details of that is - you know, you and I could think of a whole bunch of different scenarios.
NICHOLS: But you’re open to new revenue?
MCCAIN: I’m open - have always been open to closing loopholes, eliminating special deals for special interests, like ethanol subsidies, like moviemakers get particular subsidies, like algae growers. And so if you call that, quote, “raising revenues,” I’ve been guilty all my political career, because the influence of special interests here is what has given us a tax code that that’s high. Most of all, I’m for tax reform.
NICHOLS: How much? How much do you think you can get out of it?
MCCAIN: Oh, I’m not sure.
NICHOLS: $600 billion?
MCCAIN: But I think you could get - I think you could get tens of billions, I mean, huge amounts of money by closing these various loopholes. Look, Facebook just went public, made huge amounts of money, and then got money back. How - how does - how does that ever compute with the American people, who are paying taxes that are - that are very - relatively high? Because they don’t have the special deals that special interests give them.
NICHOLS: So no - no kickbacks for Facebook?
MCCAIN: No. And - and no deal - the movie - last time I checked, the movie business was pretty - pretty good. Why are we giving them a tax exemption? Why are we doing all these things that only benefit the special interests who still have enormous influence here?
The last bill that we just passed, the continuing resolution to avoid this cliff, it had in the Department of Defense, if you’re a native - Hawaiian-owned corporation, the Department of Defense is required to pay you an extra 5 percent for a government project.
They put all kinds of stuff into it. It’s infuriating, and Republicans have betrayed our base by allowing this kind of pork-barrel and earmark spending to go on.
NICHOLS: If I could shift the conversation towards immigration a little bit, Gang of Eight is moving along. How close are you? And is the holdup going to be on the contours of the guest-worker program? Who gets to decide where the limits are?
MCCAIN: I think there’s a number of issues. I think we are making progress. I think there’s an environment of corporation. There’s a number of issues that are still out there. This is a far more complex -
NICHOLS: The guest-worker - is that the biggest one, the -
MCCAIN: No, no, I think that there’s a number of - of issues out there that are - that are still very important. But every time I go into some detail, then there’s a pushback. And so we’ve been trying to be careful about saying exactly where we are on a number of these issues, but we do have a number of important issues.
NICHOLS: Let me try to make a gallant attempt at one of those details, border security. You’ve said the border needs to be secure and then we can have the pathway. Who secures the border? Who verifies that the border is secure, the governors, the federal government?
MCCAIN: Well, I think that we look at parameters of metrics. A 90 percent effective border control is really an important criteria. 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. And I think that will give us a great deal of advance in getting an effective operational control.
NICHOLS: On -
MCCAIN: And that doesn’t mean that it’s sealed. We will never seal our border. In fact, one of the least discussed aspects of this is the drug trafficking through Mexico and into the United States.
NICHOLS: On Iraq, you just mentioned, 10th anniversary, marked with a fair amount of blood on the streets of battleground. How much danger is there that all the gains of the surge are for naught? Do we need to send troops back?
MCCAIN: Well, we’ll never send troops back, whether we, quote, “need to” or not. We never will. The American people wouldn’t stand for it. But in the worse of General Keane, who was the architect of the surge, we won the war and lost the peace.
Intentionally, President Obama wanted all our troops out of there. We knew we needed to have a robust force behind of about 20,000 to help them, and now the whole place is unraveling, and it’s an ongoing tragedy, and the influence of Iran in Iraq has dramatically increased.
NICHOLS: Well, another place where Iran has a fair amount of influence in Syria, you are for arming the rebels in some way. What’s to ensure that those arms don’t get in the hands of the mujahedeen? What safeguards would you put in?
MCCAIN: It’s hard for me to give you a short answer, but everything that the critics of intervention said would happen if we didn’t intervene have happened because we didn’t intervene. Weapons have gone to the wrong people. The flow of jihadists and Muslim extremists is - is increasing all the time. Bashar Assad has increased his use of scud missiles, airpower, et cetera.
NICHOLS: Do you believe -
MCCAIN: The Iranians - the Iranians have stepped up their involvement, including troops on the ground. The Russians - despite what the Obama administration said, well, the Russians will take Bashar Assad - for months, that was their policy. Hasn’t happened.
And just one vignette. The refugee camp in Jordan, about 50,000 people there. We met with the leaders. They were very angry at us. And there’s a young woman who was a teacher, who said, see those children? This place was - children everywhere. He said, those children will take revenge on those who refuse to help them. And we are now breeding another generation of jihadists who - who hate America because we wouldn’t help them. It’s a disgraceful chapter in American history.
NICHOLS: Reports of chemical weapons being used, Senate intel, House intel. They’re indicating that it’s likely. What’s your latest intel on that?
MCCAIN: Latest intel is - is conflicting reports. There are some that say they are. Some would say they have - I find it interesting that the Russians and Assad have said the rebels are using chemical weapons. Well, the rebels don’t - don’t have chemical weapons. So it means to me that it’s very possible they are. The president said that’s a red line. By the way, Bashar viewed that as a green light to do anything short of that. And so we’ll find out.
NICHOLS: Is he backing away from his - his red line, the president?
MCCAIN: I don’t know. But if I were the - I think the president should find out whether they are using - or have used them or not. But we know this, that there are scud missiles that are loaded with chemical weapons.
NICHOLS: Improving relations with the White House, you were over with Lindsey Graham. Have relations improved?
MCCAIN: Yes. Yes. And we have a dialogue. And we always - and I think the best way to get things done is to have that dialogue. And I think the president has changed significantly and is reaching out. He came to lunch with the Republican senators the other day.
The question is, is will that translate into what I think we’ve got to do sooner or later, and that’s a grand bargain? Every president that I’ve seen has established a relationship with people with dialogue and involvement with each other, and then that’s led to agreements. That didn’t happen over the last four years. And 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.
NICHOLS: Senator, thank you very much. Appreciate you taking the time.
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