NYC Mayor Bloomberg: Highly-indebted U.S. could go the way of Europe

May 4, 2012

New York City Mayor Michael Bloomberg slammed the federal government for following the same fiscal path that has cost European governments so dearly, perhaps offering Democratic President Barack Obama and Republican challenger Mitt Romney hints about what policies he would like to see from them to win his endorsement as a moderate independent. Bloomberg’s seal of approval carries added weight because he is a billionaire businessman with close ties to Wall Street, a source of donations as well as a powerful force in the economy.

I think it is clear that we have a deficit problem that is going to hurt this country dramatically and unless we do something about it is a cloud on the horizon. It doesn’t mean America is going to go to zero… But I think if you take a look at Europe and other places and it shows you when you live above your means –  It’s different than the city, the deficits we project are aspirational deficits, in the end we balance our budgets, the federal government does not.

The city by law must close any deficits. In contrast, the U.S. government can borrow to fund its operations – and at very low rates in recent years.

The mayor, now in his third and final term, was presenting an update to his $68.7 billion budget plan. One reason private employment in New York City has broken the 1969 record high is the city’s budget discipline, he said.

“We have to give people the clarity and confidence that we are going to face fiscal realities,” he said. The country’s failure to wrestle its deficit under control is curbing businesses from growing, he said. “Nationwide, there are some real questions in people’s minds and they are not willing to do that.”

New York City has regained about 180 percent of the private sector jobs lost during the Great Recession; the nation has only won back about 40 percent, he said. Private employment has climbed to 3.291 million, topping the decades-old high of 3.275 million. “We’re part of America; we want America to grow,” Bloomberg said.

Disappointing profits on Wall Street – the city’s economic motor – forced the mayor to slice his forecast for tax revenue by $352 million in the current budget and the new one that starts on July 1. The city is home to some of the world’s wealthiest individuals – including the billionaire mayor himself. Added Bloomberg:

Income inequality may be bad but we still need to have companies come here and make a lot of money and wealthy people to come here and live here. (A) very large percentage of our taxes come from a very few people.

Presidential candidates seeking other tips about what sort of policies the mayor favors could also glean clues – some clear, others foggy – from the mayor’s own record.

Bloomberg’s budget plan, for example, imposes no new taxes and it freezes wages for public workers. Some 45,000 daycare slots will be cut, along with 20 fire companies.

Crime rates are at record lows, and the mayor said he was continuing to invest in the police department. Schools will get an extra $300 million of state aid if Bloomberg can negotiate an accord on teacher evaluations with their union. Another 2,500 teachers will be hired for the biggest U.S. school system with 1.1 million pupils.

And Bloomberg said he is increasing spending on social services, as demand has grown because many city dwellers are still struggling. “We still are going to provide the services the less fortunate need to keep us all having a future,” he said.

Asked if Wall Street’s weaker profits reflected the nation’s inability to cut the deficit, Bloomberg replied testily:

I think the federal government is doing everything that it can to destroy the engine that we need to take us out of it, but I don’t remember saying that in that context. The federal government’s got other problems. They are trying to drive industry overseas with our immigration policy, and hurt industries here, they are trying to create chaos in the streets, that’s going to hurt the economy and it’s certainly inhumane, with more guns than people – stop me when you get bored.

Bloomberg has long favored granting more visas to highly-skilled workers from overseas and said it is impractical to round up illegal immigrants who have been living here peacefully, paying taxes, and taking care of their families. He has also organized a coalition of mayors to fight illegal guns.

The mayor appeared unwilling to even engage with his critics, however, asking a reporter who mentioned a city councilman’s criticism why he should care given that the councilman was not elected to run the city.

“I don’t have to respond to everything,” he said.

 

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Bloomberg doesn’t know we have a fiat currency. And the author of the article thinks we “borrow” money.

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