Split in GOP Revealed With Repeal of Tax Breaks

Sen. Lamar Alexander, R-Tenn., broke with Republican orthodoxy on taxes Wednesday saying revenue obtained through ending some tax subsidies could be used to reduce the nation's skyrocketing debt. To date, Republicans have hewn to a tax pledge most have signed that promises to replace any elimination of a tax break with a corresponding reduction in tax rates, a one-to-one exchange, depriving the federal government of that revenue.

But on Tuesday, 34 Senate Republicans voted in favor of an amendment by Sen. Tom Coburn, R-Okla., that would end subsidies for the ethanol industry. The Coburn measure would take that savings, an estimated $6 billion annually, and use it reduce the debt.

"Getting rid of unwarranted tax breaks is a good idea," Alexander, the number three Republican in Senate leadership, said, "I'm particularly against...the tax subsidy for windmills...and it could be used to reduce the debt."

To date, Republicans have adamantly refused to consider any measures that might bring in revenue, such as ending subsidies or raising tax rates, as lawmakers and the Administration try to cobble together a deficit reduction package ahead of a vote to increase the nation's $14.3 trillion debt ceiling.

The Alexander remarks, coupled with the action by him and 33 of his GOP colleagues Tuesday, revealed an unexpected split in the Republican party.

Senate Democrats saw an opening and pounced.

"This opens the door for more revenues, generally," Sen. Chuck Schumer, D-NY, told reporters Wednesday on a conference call. "It's a watershed moment."

But Alexander's counterpart in the House, fiscal hawk Rep. Jeb Hensarling, R-Tex., disagreed with his Republican colleague's position.

"We believe this ought to be done in a deficit neutral fashion," Hensarling said, "Personally, I've never been a fan of the ethanol subsidy...but I would want to ensure that we use that revenue to lower tax rates."

Still, Alexander is plowing ahead to find ways within the energy sector to find more savings that could, the senator said, be used to reduce the debt. The Tennessee Republican said he and his staff are looking at "all energy tax incentives" to find savings.

"Permanent subsidies for mature technologies are inappropriate," Alexander said.

The senator plans to offer legislation to repeal any such subsidies, and he added, "The money could go for energy production, to reduce the debt, or reduce marginal rates. I'm not sure yet."