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National debt talks: Signs some in GOP may yield on tax 'loopholes'?

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“If we could come up with two or three things that made sense to the American people, then I think not only would we raise the debt ceiling but Republicans would win this debate,” said Sen. Lindsey Graham (R) of South Carolina on Wednesday. “I’m willing to close loopholes for upper-income Americans and recapture that income to lower [tax] rates and pay down the debt.

“If you took the ethanol subsidy and [then] paid down the debt [with the resulting revenues], I’d be OK with that. To lower tax rates to create more jobs but also pay down the debt, that makes perfect sense to me,” he added.

Until recently, GOP opposition to tax breaks has strictly followed Americans for Tax Reform (ATR) pledge, crafted in 1986. The pledge commits lawmakers to two positions: The first is opposition to “any and all efforts to increase the marginal income tax rates for individuals and/or businesses.” The second – and the crux of the current debt negotiations – rejects “any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

First to break with GOP antitax orthodoxy, in December 2010, were Sens. Tom Coburn of Oklahoma (R) and Michael Crapo (R) of Idaho, who backed the Bowles-Simpson deficit commission’s plan to cut $4 trillion from the federal deficit over 10 years through a mix of spending cuts, entitlement reform, and net tax increases. The Republicans said America’s fiscal situation is so dire that additional revenue had to be part of the mix.

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