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U.S. mayors put pressure on Congress over debt deal

Seal of the U.S. Conference of Mayors

Jeremy Hobson:There are now just 11 days to go before the federal government hits its borrowing limit and risks defaulting on its debt -- if there's no deal
to raise the debt limit.

And so far lawmakers and the President have not reached an agreement. Today in Washington, the Senate is likely to vote down a Republican plan called "Cut Cap and Balance."

And here in L.A., 50 mayors from around the country are meeting to urge Congress to come up with something fast. Republican Scott Smith, the mayor of Mesa, Ariz., joins me in our L.A. studio. Good morning.

Mayor Scott Smith: Good morning.

Hobson: So, why are you so worried in Mesa about the consequences of a default in Washington?

Smith: Cities are where economic activity happens; over 85 percent of the economic output of this country happens in cities. We're worried [by] the risk of what might happen. I know there's a lot of debate over whether default is as bad as people think it is. We just believe that the risk is too great to toy with.

Hobson: What specifically would you feel in Mesa if there were big cuts at the federal level?

Smith: Well, you know, the federal government doesn't give that much aide to cities anymore. But the aide that they do give us, and the financial contribution they give us are to handle things -- societal issues -- for example, in Mesa, we take some of our federal money to run a men's shelter. That men's shelter is made up primarily of homeless men, many of them vets. And just because cuts are made in Washington or our state capitals, doesn't mean that it will go away. And if we don't have the money, we still have to pay the price. And that price, usually, is much greater if we have to depend on public safety and other officials to take care of it if we get this aide.

Hobson: Hey, you're a Republican mayor, what do you make of the GOP position in the House, which is basically either don't raise the debt ceiling, or if you're going to raise the debt ceiling, have an equal amount of cuts to the federal budget, and don't raise taxes.

Smith: As a Republican I understand the debate, and the intensity of the debate in Washington over the budget. But, we want to make sure that we understand we didn't get into this overnight. Congress and the Executive Branch got us into this over many, many years. And if we're going to slam on the brakes, understand there are consequences. There are real consequences that maybe create more disproportionate damage than I think the point that we're making. And in cities we've had to make quick cuts, hard cuts, deep cuts -- but we've tried to make smart cuts. We've tried to make cuts that don't create more damage than they're intended to.

Hobson: Would you be OK with a federal increase?

Smith: I think that looking at loopholes, looking at revenue issues definitely have to be on the table. I believe we have to have some kind of balance. We will enhance revenue, I don't think there's anything wrong with that. Again, you can't take things off the table that could help solve the problem. Mayors are pragmatic. They want to solve problems. And I think on this one, the solution to the problem will involve all different tools.

Hobson: Finally, while you're here, let me just ask you, how's the economic recovery going in Mesa?

Smith: Not as quickly as we hoped. There's a lot of bright spots in the economy. It seems like I've gone to a lot of ribbon cuttings lately, but overall, we're still dragged down by the lack of construction activity. There's just a lot of uncertainty -- people are holding onto their money -- consumers and businesses. We need investment, we need consumer spending, we need certainty in Washington, we need these problems solved so we can get back to creating jobs and spending money.

Hobson: Republican Scott Smith is the mayor of Mesa, Ariz. Thanks so much for coming in.

Smith: Thank you, Jeremy.

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Hey Mayor Smith, there is no such thing as 'revenue' in government. It's someone else's hard earned money that the government takes, otherwise known as taxes. Oh and Smith, you can't enhance revenue, its called raising taxes. You should know this with all of your 'business experience'. Put down the tools Smith, and leave small business alone with your phony baloney comments. Its clear you do not represent business owners in Mesa.

Hey Mayor Smith, there is no such thing as 'revenue' in government. It's someone else's hard earned money that the government takes, otherwise known as taxes. Oh and Smith, you can't enhance revenue, its called raising taxes. You should know this with all of your 'business experience'. Put down the tools Smith, and leave small business alone with your phony baloney comments. Its clear you do not represent business owners in Mesa.

Hey Mayor Smith, there is no such thing as 'revenue' in government. It's someone else's hard earned money that the government takes, otherwise known as taxes. Oh and Smith, you can't enhance revenue, its called raising taxes. You should know this with all of your 'business experience'. Put down the tools Smith, and leave small business alone with your phony baloney comments. Its clear you do not represent business owners in Mesa.

In answer to your question, “Why haven’t we seen this coming” deserves another perspective. I remember reading Economist Lester Thurow’s The Zero Sum Game back in about ’87, in which he pointed out that, during the Reagan Administration, we engaged “in more deficit spending than any country in history---during peace time---with the exception of France in 1789” Other economists, including John Kenneth Galbraith, expressed concern over the debt, and yet, REPUBLICANS just kept right on clamoring for more tax cuts, and have never said thing one about it, as long as there were corporations to bail out and a massive defense industry to finance. The first time I remember any politician even mention the debt as a potential issue was H.W. Bush during his presidential campaign. It disappeared from the radar screen almost as fast as it appeared. The nineties gave us deregulation on steroids, thanks to a capitulating president who bought into neo-cons’ supply-side ideology, allowing for the sort of financial “innovation” that brought us Enron and a global derivatives market that is bringing down sovereign nations. Enter G.W., two wars waged with massive, worldwide opposition, more tax cuts for the wealthy, complete with an extension last December, and now, suddenly we’re facing national default because of burdensome and excessive entitlement programs? Pure BS. Make no mistake about it, this is starve the beast by another means; namely, feed it toxic assets and blame it for existing.

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