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Debt Talks Worry Lobbyists

Tom Williams/Roll Call

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"Fundamentally, the Biden discussions are not about taxes, they are about spending," he said.

Alexander's position that tax breaks can be eliminated to shrink the deficit, however, is gaining support among Senate Republicans.

Sen. John McCain (Ariz.) is one of a number of Senate Republicans who voiced support for eliminating tax subsidies after the ethanol vote. He said K Street lobbyists who have been protecting special tax provisions for decades should be on notice.

"I hope they're worried, and I believe that Sen. Alexander is right and that we should look at a lot of these subsidies and repeal a bunch of them," McCain said.

"The debt and the deficit is obviously having an impact on what otherwise used to be sacred cows," he added.

Sen. Lindsey Graham agreed.

"You can't be everything to everybody, so we're going to have to take some tax breaks and deductions off the table just to pay the bills," the South Carolina Republican said.

House Democrats, led by Rep. Chris Van Hollen (Md.), have proposed a broad menu of tax subsidies to eliminate from tax breaks for private jets to oil and gas provisions. They are making their inclusion a condition for backing a broader deal that cuts spending programs Democrats have long supported.

Still, House Majority Leader Eric Cantor, who represents House Republicans in the Biden talks, on Tuesday afternoon rejected the possibility of eliminating tax loopholes and subsidies as part of a final agreement on the debt limit. He argued that targeting subsidies for the oil and gas industry and other corporations won't generate enough revenue to help solve the nation's debt crisis. As a result, Cantor said, "You have to sort of wonder, is this about policy and substance or politics?"

The Virginia Republican insisted that when Congress does take up the issue of tax subsidies and loopholes, it must come as part of a broader reform of the tax code.

Cantor also called on President Barack Obama to step up.

"The onus is really on the president and his party, I think, to step up and show they're willing to do that because we've said all along it is as reckless for us to just check the box and raise the debt limit and not reform the system and cut spending, as it is for us to just abandon the thing altogether," Cantor said.

The lobbying push also extends to spending programs, with health care providers particularly worried that they will get whacked first in a Biden-led deal and then again later this year to help pay to extend the "doc fix" that prevents payment cuts to doctors who treat Medicare patients.

"What's happening is most of the constituencies that seemed to avoid heavy cuts in health reform are all on the chopping block physicians' interests, hospitals and those that thought they had made deals are all about to take a whack this time," one health care lobbyist said. "Everything is situational. ... How long could the pharmaceutical industry fend off different proposals?"

Democrats have pledged to oppose cuts to Medicare benefits and are resisting Republican proposals that would allow states to kick millions off of the Medicaid rolls, but they have been open to cutting payments to providers.

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