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McCain Promotes Tax Reform in Debt Deal

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Updated: 6:47 p.m.

In a return to his “maverick” style, Sen. John McCain took to the Senate floor Wednesday to join the growing GOP chorus calling for revenue reform in the ongoing deficit reduction and debt ceiling debate.

On the eve of a White House meeting between President Barack Obama and Congressional leaders, the Arizona Republican called on his colleagues to support closing tax loopholes and eliminating subsidies, which he said the GOP has “long favored,” and offsetting the potential costs to businesses with a cut in corporate tax rates.

Since losing the 2008 presidential election to Obama, McCain has tended to stick to the conservative line. But on Wednesday, he showed his independent streak, making an impassioned plea to party leaders to find a “breakout strategy” and quit digging in their heels on measures that cannot find support from Democrats.

“What this debate needs is a breakout strategy — to wit, Republicans should answer Mr. Obama’s tax call by accepting his business tax increases in return for a lower corporate tax rate,” McCain said. “We’ve long favored such a reform, and last year so did the Simpson-Bowles deficit commission and the White House economic advisory council headed by Paul Volcker.”

McCain went on to voice his support for ending the ethanol tax credit, agriculture subsidies and “corporate welfare.”

He went so far as to say Republicans should support ending tax breaks for corporate jets, the new pet cause of Democrats. But the veteran Senator added that Democrats should stop demagoguing on the jet issue. “Everyone knows that eliminating all tax breaks on corporate jets won’t amount to any real progress,” he said. “But if we seriously looked at curbing corporate subsidies, like the ethanol subsidy I just mentioned, then all Americans would benefit.”

McCain also told his colleagues to stop insisting that a deal to raise the debt limit should include a balanced budget amendment to the Constitution, even though he supports the amendment in principle.

“Our reality today dictates that we simply do not have the votes in this body to enact such a measure,” he said. “For our purposes today — in order to avoid what could be disastrous consequences for our markets, our economy as a whole and our standing in the world, I encourage my colleagues to lay aside, at least temporarily, their insistence that amending the Constitution be a condition of their support for a solution to this terrible problem.”

McCain’s comments Wednesday marked a shift in the budget debate rhetoric just weeks before the nation is expected to start defaulting on its debts. The Treasury Department has forecast that the situation will become critical Aug. 2.

House Majority Leader Eric Cantor suggested earlier Wednesday that Republicans are open to talking about closing tax loopholes, so long as they are coupled with offsetting tax cuts elsewhere.

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