STEPHANOPOULOS: OK, Senator Graham, you've signaled that you're willing to raise revenues as part of an overall deal that also includes spending cuts, and that's drawn the fire of Grover Norquist, you know, the author of that no-tax pledge that's been in place among so many Republicans for 20 years right now. He thinks the best solution is actually not to negotiate a compromise right now, is to go over the cliff. He says the world won't come to an end if this isn't resolved before January. Take the sequester. The only thing worse than sequester cuts is to not cut spending at all. He's saying don't raise taxes, accept those spending cuts.
GRAHAM: Well, what I would say to Grover Norquist is that the sequester destroys the United States military. According to our own secretary of defense, it would be shooting ourselves in the head. You'd have the smallest Army since 1940, the smallest Navy since 1915, the smallest Air Force in the history of the country, so sequestration must be replaced.
I'm willing to generate revenue. It's fair to ask my party to put revenue on the table. We're below historic averages. I will not raise tax rates to do it. I will cap deductions. If you cap deductions around the $30,000, $40,000 range, you can raise $1 trillion in revenue, and the people who lose their deductions are the upper-income Americans.
But to do this, I just don't want to promise the spending cuts. I want entitlement reforms. Republicans always put revenue on the table. Democrats always promise to cut spending. Well, we never cut spending. What I'm looking for is more revenue for entitlement reform before the end of the year...
STEPHANOPOULOS: I want to ask Senator Durbin about that, but let me press you one more time on Grover Norquist, because he's had some tough words for you. In the end, he says, you're not going to go through on this promise to raise revenues, because you, quote, "like being a senator." Your response?
GRAHAM: I love being a senator, and I want to be a senator that matters for the state of South Carolina and the country. When you're $16 trillion in debt, the only pledge we should be making to each other is to avoid becoming Greece, and Republicans -- Republicans should put revenue on the table. We're this far in debt. We don't generate enough revenue. Capping deductions will help generate revenue. Raising tax rates will hurt job creation.
So I agree with Grover, we shouldn't raise rates, but I think Grover is wrong when it comes to we can't cap deductions and buy down debt. What do you do with the money? I want to buy down debt and cut rates to create jobs, but I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform.
STEPHANOPOULOS: Let's talk about that entitlement reform, Senator Durbin, because you see your allies in the Democratic Party are already starting to mobilize with ads from labor unions, the AARP airing across the country right now. I want to show part of it right now.
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(UNKNOWN): How do we move our country forward and reduce the deficit? By creating jobs and growing our economy, not by cutting progress that families rely on most. For working families, it's all about putting Americans back to work, not cutting the things we rely on most.
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