Michael Bloomberg: 'Impossible' to Reduce Long-Term Deficits with Spending Cuts Alone

He says defaulting would be a 'seismic event' that would damage America's word.

ByABC News
July 24, 2011, 8:33 AM

WASHINGTON, July 24, 2011— -- New York City Mayor Michael Bloomberg believes a U.S. default on its debt obligations would be a "seismic event" that would damage "America's word" and its status as a dependable financial standard.

He even is willing to see his taxes increase in order to reach a long-term budget agreement.

"I don't think anybody will look ever again at America and the dollar as the reserve currency, where this is the standard by which all other risks are measured," if the U.S. defaults on its debt obligations, Bloomberg told "This Week" anchor Christiane Amanpour. "It's one seismic event that says you can never depend 100 percent on America's word anymore."

"The world won't come to an end," Bloomberg added. "We will find a way to pay people afterwards and get government going again, but it puts a doubt in the back of people's minds that you would find it very difficult to erase."

Bloomberg said he believes "it's impossible" to reduce long-term deficits with spending cuts alone, insisting that revenue increases must be part of the final budget deal still being negotiated.

"There's just no way if you look at the numbers. You can't cut enough to balance the budget, and you have to if we're going to eliminate the deficit and reduce the debt," Bloomberg said. "You have to raise money from someplace."

The billionaire mayor said that he is willing to see his own taxes go up as part of a long-term deal to reduce the deficit.

"I get pretty good value for my taxes... We get a lot for our tax dollars," Bloomberg said. "I don't want to pay any more taxes than is necessary, but I do want the services, and I want us to live within our means. So, if we want more services, we've got to come up with the revenue."

Bloomberg does not think the Bush-era tax cuts for the wealthy should be eliminated right now while the economy is still weak, but does think they should be allowed to expire in the future.

"I think right now is not exactly the right time to let those tax cuts expire," Bloomberg said. "But if you told me six months from now or a year from now, when the economy was better and job creation was better, yes, I don't have a problem with that."

He does believe a final budget deal will be reached before the nation defaults on its debt obligations.

"I cannot believe that either party or either end of Pennsylvania Avenue wants to let the government shut down, which is essentially what would happen for a short period of time," Bloomberg said.

Beyond the current budget debate, Bloomberg said "we've lost track" at the city, state, and federal level of "the fiscal sanity of living within your budgets."

"At some point, the public's got to say, 'look, I'm tired of these shenanigans,' whether it's in Washington or state capitals or cities," Bloomberg said. "We're just not acting responsibly, we're not acting as adults, we're not making the long term investments… We're mortgaging our kids' future. We're destroying this country."