By Paul Leroux
July 2, 2012

Former Treasury Secretary Henry Paulson told the nation's mayors that the economy was slowly recovering from 2008 financial crisis and subsequent recession. Paulson applauded the ongoing work of local leaders to speed their cities' recoveries, and called upon mayors to push for national economic reform.

The remarks came in an interview with Conference of Mayors President and Los Angeles Mayor Antonio Villaraigosa, on June 14 in Orlando. Paulson served as U.S. Secretary of the Treasury from 2006 to 2009, and was previously CEO of Goldman Sachs.

"I think we're on the road to recovery, but it's a very slow road," Paulson said. "It's going to take a considerable amount of time to work through this." He noted that a speedy recovery would likely not come about until the nation addressed what he called "longer-term structural competitiveness issues."

Paulson cited the need for a tax overhaul, and reforms of entitlements, healthcare and immigration in order to spur economic growth. He was clear that, "We can't just cut our way out of this. We need pro-growth reforms."

According to Paulson, such reforms begin with cities. When pressed by Waukegan Mayor Robert Sabonjian as to what cities can do to attract investment, Paulson said, "Everything possible to make your city as competitive as it possibly can be." Three examples he cited were workforce development, local fiscal responsibility, and simpler regulations.

Paulson acknowledged that mayors have already been making efforts on these fronts, stating that mayors have "…more power to do things than very senior people in the federal government." He applauded their nonpartisan leadership, saying, "When you get close to the people and the issues it's not ever very partisan." In this regard, Paulson suggested that mayors "…show the way to the federal government."

Paulson saw one clear leadership void in terms of managing the federal deficit, citing the need to "take some uncertainty off the table." "Can our Congress have the capacity…to restore competitiveness in our economy?" Paulson asked, citing Congress's failure to take substantive action on the Simpson-Bowles deficit reduction plan. He said this lack of action means that, "It's as much a political and leadership crisis as it is an economic crisis that we're dealing with."

Calling bipartisan solutions the only way to bring about structural reforms, Paulson challenged mayors to advocate more strongly on the national stage. "You need to make your voices heard and say that we need bipartisan reform at the federal level," he told the mayors, stressing their role as advocates and educators.

Paulson also tackled inequality, saying, "You'd have to go back to the early 1900s to find a time when the top one percent or half a percent had such a big percentage of the income in the U.S." He tied this to the need for increased competitiveness, suggesting immigration reform and workforce development as solutions.

Additionally, Paulson took questions on his famous TARP efforts, the Euro, China, the Federal Reserve, and the need for mayors to travel to promote their cities.