New York City Mayor Michael Bloomberg Calls for Big Fiscal Reforms
Today at an event hosted by the Center for American Progress and the American Action Forum, New York City Mayor Michael Bloomberg called on the federal government and Super Committee to go way beyond the $1.2 trillion in mandated savings to enact real reform. In his speech, he presented his own plan for how to control debt and to eventually balance the budget by 2021. He cited the lack of having a plan in place to control our debt as a real impediment to economic growth by forcing businesses to hold off on "major investment decisions until they know how Washington intends to grapple with our huge deficits." Calling on Washington to end its political gridlock, Mayor Bloomberg implored both sides of the aisle to put aside their sacred cows and stand up to their own special interests for the good of the country.
In fact, he even stated that:
"I believe the best economic stimulus is fiscally responsible, long-term deficit reduction that sends a clear signal to the private sector about Washington’s commitment to economic stability."
CRFB certainly agrees that putting in place a plan would help our economic outlook, and we welcome you to the Announcement Effect Club, Mr. Mayor!
Mayor Bloomberg stressed the importance of exceeding the $1.2 trillion mandate, noting that even if it achieves that target our fiscal problems will be no where near solved. Additionally, $1.2 trillion in savings could be wiped out by just a single percentage increase in interest rates over current projections, which would also make further adjustment more difficult. And failure cannot be an option. It would only continue to send the signal that Washington cannot get our fiscal problems solved, both economically and politically. That's not the signal we need to be sending.
He also warned that a Super Committee deadlock that caused the triggered defense and domestic discretionary spending cuts to take effect would exact a "terrible price." He called for a "bold, long-term, and comprehensive plan" that stabilizes the fiscal outlook and puts the country on a path to long-term economic growth.
Mayor Bloomberg presented his own plan for how to navigate through these challenges:
"We need a plan that looks at the economic consequences for our country – not the political consequences for the next election. And that means having the courage to admit what everyone knows: We are not going to be able to just cut our way out of the problem and we are not going to be able to just tax our way out of the problem. We must do both."
The Mayor cited all the overlap between the latest competing proposals in the Super Committee, recognizing that spending cuts and new revenues won't be easy, but are necessary. The Mayor endorsed the spending cuts found in the Simpson-Bowles plan (including the Social Security reforms), reducing a variety of tax expenditures, such as carried interest and energy tax breaks, and called for the return to Clinton-era tax rates. He argued that the threat of the tax cuts expiring would provoke a real discussion on tax reform to simplify the code and to raise revenues. Doing all of this would quite likely solve our fiscal problems and balance the budget by 2021.
We congratulate Mayor Bloomberg for offering another potential path to bipartisan agreement, and for joining with the many other business leaders, lawmakers, and experts also calling on the Super Committee to think big.