Key Senate Republican Clarifies on Taxes --- No Revenue to Be Had!

Lest anyone think Sen. Jon Kyl has strayed from Republican orthodoxy on taxes, the Arizona Republican took to the Senate floor Monday to set the record straight.

Republicans, including GOP leader Mitch McConnell of Kentucky, and Kyl, a key member of the debt ceiling talks led by Vice President Joe Biden, have started to talk about tax hikes for some in the overall context of comprehensive tax code reform, which will come after the debt ceiling talks. But is has led some Dems to ask - why not now? Why not bring in more revenue so spending cuts do not have to go so deep?

But what Kyl made clear on Monday was that any closure of a tax loophole or ending of a subsidy must be met by a corresponding reduction in tax rates.  That is, after all, part and parcel of the "no-new-taxes" pledge most Republicans, including Kyl, have taken, courtesy of the conservative anti-tax group, Americans for Tax Reform (ATR).  Republicans often say that the problem is too much spending, not too much taxing.

The grammar would make any Language Arts teacher cringe, but it, perhaps, underscores just how weighty the topic is these days in GOP circles - with Kyl explaining, "I would be very much in favor of taking a look at these tax expenditures, various subsidies, for example, to different groups to see whether we could reduce some of those subsidies and thereby reduce tax rates in a revenue-neutral manner so that our tax code would be more conducive to growth, but in a revenue-neutral manner, meaning not in order to raise revenues but in order to have a more sensible tax code so that we could be more competitive with our trading partners, for example."

As lawmakers scour every corner of the federal budget to find savings before any increase in the nation's $14.29 trillion debt limit, which the U.S. hit Monday, Democrats have said increased revenue must be part of any solution.  Though most Republicans have balked, a handful in the "Gang of Six" have risked the ire of party stalwarts in agreeing. ATR's Grover Norquist has been in a virtual war with "Gang" member Tom Coburn of Oklahoma over any possible tax compromise.

Tax hike opponents have been looking for any sign that others might stray, but Kyl wanted to make crystal clear Monday that he's not one of those Republicans.

The senator mentioned ethanol subsidies (no doubt a major fight for another day) and other "green" measures that could possibly be terminated in favor of lowering rates somewhere else in the code.

When all was said and done, though, it was clear that the debt ceiling talks are far from a conclusion.  Republicans have drawn a very bright line in the sand on taxes.  Democrats have drawn their own on Social Security.  That leaves the very difficult issue of how to shrink the outsized growth of Medicare and Medicaid to find the needed savings, political quicksand for many.

To that, Kyl said, "This isnt a matter of keeping in law what we have now. This is matter of either fixing programs now or having a dramatic reduction of benefits down the road."

But just how lawmakers will "fix" the problem is anyone's guess at this point.

Kyl said he was "hopeful" a solution could be found to slash spending and raise the debt ceiling before an early August deadline, and to anyone who might be concerned that the partisan bickering might lead the U.S. to a total default on its obligations, Kyl said, "I would not be concerned the U.S will ever default on our debt. We can't. We won't. I don't think any creditor should be of a view that somehow we're not going to pay them when their 'T-bill' comes due."