WASHINGTON -- Sen. John McCain (R-Ariz.) said Thursday he is open to "revenue increases" to help balance the federal budget and avert the massive automatic spending cuts set to take effect in January 2013.
Pointing to some of the revenue-raising proposals from last year's failed congressional super committee, McCain told the Bloomberg Government Defense Conference that provisions for "raising revenues, closing loopholes, whatever you want to call it ... could serve as a blueprint for further action" to prevent mammoth, across-the-board spending cuts known as "sequestration."
While McCain did not explicitly endorse raising taxes, he supported closing tax loopholes and eliminating subsidies for certain industries, specifically ethanol producers. Such proposals have been rejected by many Republicans. Americans for Tax Reform President Grover Norquist, for example, has argued that eliminating ethanol subsidies is tantamount to a "tax increase."
"Norquist and my dear friend Sen. Tom Coburn (R-Okla.) had a big fight about whether it was a tax increase if you eliminated ethanol subsidies," McCain said. "We don't need ethanol subsidies, and we're finally doing away with them. Is that a tax increase? I don't think so."
Raising taxes, of course, is anathema to many in contemporary Republican politics, which is why the framing of such policies is so important. Whether "raising revenues" is equivalent to raising taxes is in the "eye of the beholder," McCain said.
This month, Sen. Lindsey Graham's (R-S.C.) also broke with Norquist, announcing that he supported revenue increases to deal with the country's fiscal imbalances.
In his remarks on Thursday, McCain revealed senators were having closed-door conversations on how to reach an agreement to avert the cuts, complicated by partisan tensions over how to raise revenues and where to make spending reductions.
McCain also expressed concerns about the job impacts of reducing the military budget, citing "some estimates" that as many as 1 million jobs would be eliminated as a result of the $500 billion in military spending cuts in the defense component of sequestration.
Norquist, whom deficit hawk Alan Simpson suggested was the "most powerful man in America" for his sway over Republican members of Congress, has had a rocky relationship with McCain. The anti-tax crusader once called McCain "the nut-job from Arizona" and a “gun-grabbing, tax-increasing Bolshevik” because of the senator's opposition to policies like the Bush tax cuts. However, Norquist later showed support for McCain's 2008 presidential bid and indicated that McCain supported the "entire agenda" of Americans for Tax Reform.
This is not the first time McCain has signaled a willingness to put revenue increases on the table during budget battles with the Obama administration. Last year, McCain told CNN he would consider "revenue-raisers" as part of a budget agreement over raising the debt ceiling, but did not provide specifics.
McCain's office did not return a request for further comment.