WASHINGTON - U.S. Sen. John McCain, R-Ariz., says Republicans should compromise and increase tax revenues as part of a "long-term grand bargain" on the budget, and praised President Obama for reaching out to senators across the aisle.
"I'm open - have always been open - to closing loopholes, eliminating special deals for special interests," McCain said in an interview on "Political Capital With Al Hunt," airing this weekend on Bloomberg Television. "If you call that, 'raising revenues,' I've been guilty all my political career" of trying to cut special-interest loopholes.
Obama and congressional Democrats want to combine higher revenues with spending cuts to replace the $1.2 trillion in automatic budget cuts that began taking effect March 1. Many Republicans, including House Speaker John Boehner of Ohio, have rejected tax increases, and the House last year voted to cut food stamps and other domestic programs rather than defense in order to avoid the reductions known as sequestration.
McCain, who lost to Obama in the 2008 presidential election, said that in contrast to his first term, the president "has changed significantly" and is reaching out to Republicans.
"The question is: Will that translate into what I think we've got to do sooner or later, and that's a grand bargain?" he told interviewer Hans Nichols. "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."
The government could reap "tens of billions" of dollars by ending tax breaks for Hollywood and companies such as Facebook, McCain said. The social media company went public with $16 billion in deductions to lower future tax bills because of the way current law allows it to value stock options. In many cases, though, executives who receive the options will have to pay taxes on income from them.
"Why are we doing all these things that only benefit the special interests who still have enormous influence here?" McCain, 76, said. "Republicans have betrayed our base by allowing this kind of pork-barrel and earmark spending to go on."
He didn't identify enough loopholes to close in order to reach the $600 billion in new revenue that Obama has called for.
The two-year extension of special expensing rules for movie and television productions that Congress enacted in January is estimated to cost only $248 million over 10 years. McCain also mentioned breaks for ethanol, a 45-cent tax credit that expired in December 2011 after senators opposed its extension.
Sen. Carl Levin, D-Mich., has estimated that reducing corporate deductions for stock options and taxing carried interest as ordinary income rather than as capital gains could help raise at least $200 billion over 10 years.
On immigration, McCain said bipartisan talks on Senate legislation to address the 11 million undocumented immigrants now in the United States are "making progress," though issues remain to be resolved. The Arizona senator, who is part of the group developing the measure, declined to elaborate, saying only that improving border security is a key element of any legislation.
"A 90 percent effective border control is really an important criteria," McCain said. "There is a commitment not only to spend more on the border and expand the fences, but to use the technology that will dramatically improve surveillance capabilities."