As Washington policymakers continue to race against the clock to solve their budget stalemate ahead of the August 2 deadline to raise the federal debt limit, the issue has begun reverberating in cities and towns across the country.
The head of the U.S. Conference of Mayors is urging Congress and the White House to reach an agreement on the debt limit to prevent a first-ever default by the federal government.
“Default will have an immediate and catastrophic impact on our cities, the implications are global, and economists agree. A credit downgrade will plunge us into a deep, double-dip recession,” says Los Angeles Mayor Antonio Villaraigosa, president of the nonpartisan association of U.S. mayors. “We urge leaders in Washington to act now.”
Negotiations in Washington, meanwhile, continue to be chaotic at best, as the GOP-controlled House and the Democratic Senate reportedly are pursuing separate plans to avoid default.
The mayors, meeting in Los Angeles, cite a Congressional Research Service estimate that if the debt ceiling is not increased, “the federal government would have to eliminate all spending on discretionary programs.”
That means every federal payment to cities will stop, either immediately or shortly after default. The cuts would eliminate support for housing and community development, law enforcement, homeland security, job training, and transportation infrastructure.
Additionally, the security of local government’s tax-exempt bonds would be under threat. And, the mayors warn, cuts in Medicare, Medicaid and Social Security — which have been under discussion in recent weeks as the talks have dragged out in Washington — would take billions of dollars more out of local economies.
The mayors note that the federal debt limit has been repeatedly raised in the recent past: 17 times under President Ronald Reagan, four times under President Bill Clinton, seven times under President George W. Bush, and has been raised three times thus far under President Obama.
In addition to resolving the debt-ceiling matter, the mayors also want Congress to approve a new transportation bill in line with the Senate version of the legislation. The current surface transportation bill, which authorizes projects nationwide, is set to expire on September 30. Hundreds of thousands of jobs nationwide are at stake, they say.
“The Senate Bill will protect jobs and put people to work,” the U.S. Conference of Mayors says in a statement. “The bill approved by the House proposes a thirty percent reduction in the nation’s transportation programs – dealing a devastating blow to local projects and local jobs. According to an analysis by the Federal Highway Administration, if these cuts go forward, a half-million Americans will lose their jobs in 2012 in the highway program alone. Another 130,000 will lose their jobs in the transit program.”
Scott Nance is the editor and publisher of the news site The Washington Current. He has covered Congress and the federal government for more than a decade.