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Graham Says Fiscal Deal Must Boost Revenues, Cut Benefits

Sept. 27 (Bloomberg) -- Republican Senator Lindsey Graham said he supports a package of entitlement-program trims and revenue increases to replace across-the-board spending cuts that are hurting federal programs and the military.

“I would look at three pots of money to replace sequestration,” Graham, of South Carolina, said of the automatic budget cuts in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

Graham, who breaks with most members of his party in supporting revenue increases, said a bipartisan package to settle Washington’s fiscal showdowns could include three components. Those would comprise cuts to “inefficient measures in the government” generating $500 billion in savings, entitlement revisions that include ending subsidized Medicare premiums for higher-income seniors, and closing loopholes in the tax code, he said.

Graham’s approach will draw opposition from both sides of the political aisle in Congress as Democrats oppose cuts to Social Security and Medicare programs for seniors and Republicans rule out increased revenue. Such a deal is further complicated by a Republican drive to derail President Barack Obama’s health-care law, a dispute occupying both congressional chambers.

If Congress can’t agree on a stopgap spending bill, the federal government faces a shutdown of non-essential services on Oct. 1, the start of the 2014 fiscal year.

Debt Limit

Separately, Congress must vote to raise the nation’s borrowing limit. Treasury Secretary Jacob J. Lew has told lawmakers that measures to avoid breaching the debt ceiling will be exhausted by Oct. 17. Obama says he won’t negotiate over the raising of the debt limit.

“Challenge your colleagues to do things they don’t feel comfortable with,” Graham implored his fellow lawmakers in the interview. “A lot of our guys don’t feel comfortable closing loopholes. A lot of Democrats don’t feel comfortable reforming entitlements.”

Graham predicted that while Republicans will have to abandon the bid to defund the 2010 Affordable Care Act, their efforts to delay its individual mandate for insurance coverage “has a chance” of passing the Democrat-led Senate.

West Virginia Senator Joe Manchin, a Democrat, said at a Bloomberg Government breakfast in Washington yesterday that he would support a one-year delay as part of legislation to fund the government or lift the nation’s borrowing limit.

In his interview, Graham said: “The best way to deal with this is challenge our Democratic friends to delay the implementation for a year, to look at relieving the medical-device taxes hurting the economy.”

The Senate is accelerating debate on a spending bill that would strip House-approved language to defund the health-care law. In the Republican-led House, Republicans are weighing options that include repealing an excise tax on medical devices, delaying the individual mandate by one year and ending government health-insurance contributions for members of Congress.

-- Editors: Mark Silva, Robin Meszoly

To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net;

To contact the editor responsible for this story: Jeanne Cummings at Jcummings21@bloomberg.net

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