August 3rd, 2011
06:14 AM GMT
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They bicker. They point fingers. They reluctantly agree to do something they really don’t want to do.

This is not a primary school classroom. This is the United States Congress.

A recent CNN poll shows that more than 75% of Americans feel their lawmakers have acted like “spoiled children.”

Obama signs debt-ceiling bill

The debt deal may now be signed but there’s still a lot more to be done. I asked several experts for their take on the classroom brawl and what homework they’d assign.

1. Spend less.

“Longer term any agreement on the ceiling addresses the symptoms and not the causes. The U.S. needs to reduce spending, raise tax revenues, curb unnecessary consumption and bring the budget back towards a balanced position – spending more does not solve the problem.”

Mark Konyn, CEO of RCM Asia Pacific

2. Pay attention to growth NOT the debt.

“It’s going to take time and effort to get the debt-to-GDP ratio down to a manageable level. It’s somewhat more difficult than usual because you have the retirement of…the Baby Boomers who are going to go from paying a fair amount in taxes to retirement whereby they will draw on Social Security, Medicaid and Medicare.”

Sean Egan, Principal, Egan-Jones Rating Company

(NB: Egan-Jones downgraded the United States’ AAA credit rating to AA+ on July 16, while the IMF projects the U.S. debt-to-GDP ratio to be 98.3% in 2011.)

3. Face reality and raise taxes

“I think what matters is the world is looking at the United States. We’re heading into the fourth year with a 10% of GDP deficit with parties that are denying reality. One’s saying 'No taxes.' The other says, 'You can’t touch entitlements or Social Security.' That’s the thing that should be scaring the world.”

David Stockman, former U.S. Budget Director under U.S. Pres. Ronald Reagan

4. Hey investors, look to the sidelines!

“Emerging Market (government bonds) in Asia will benefit… Emerging markets are in relatively good fiscal shape like China, Singapore, Taiwan or even Indonesia where we’ve seen sovereign finance improve dramatically over the last few years.”

Yonghao Pu, Chief Investment Strategist, UBS Asia Pacific

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soundoff (7 Responses)
  1. Borut Sladic

    Congratulations to Obama and the Democrats for their stance in the negotiations. Till the last possible moment they proposed reform, which would equal share in solving the crisis of public finances in the U.S. between the wealthy and the rest of Americans. Although importan decisions in state policy are always defined by wealthy, which are also repsonsible for quality of living in sociatey. Their greed caused the recession.
    Republicans were ready to defend the wealth of rich at the cost of another economic crisis, which would cause even more poor and more unemployed. Not only in America. Republicans have proven their egoistic attituted toward the rest of society memebers again.
    I hope most of Americans will realized that.. Republicans always produce some kind of the crisis. It is the poor that suffer and die afterwars for the profits of wealthy. It is quite clear.
    Why have Americans poor state of public finances? Because of the rich republicans who avoid paying taxes ( off shore, subsidies from goverment ) and spend taxpayer money for their war and war industry.

    August 3, 2011 at 8:36 am |
  2. Borut

    The wealthy people will never let other people the power to take decisons in the areas which can effect their wealth. But at the same time they also have to take responsibility for thier bad decisons. That is logical. Which they do not want. They prefer the costs ( generated losses human, nature , financial, health ) of their decisons are paid as much as possible by the rest of Americans and other countries. Is it realy so difficult for them to take repossibility for their decisions ? Telll me how difficult ?

    August 3, 2011 at 8:58 am |
  3. BRIGHT

    SIGNING OF THE DEBT DEAL CAME TO US ALL AS A WELCOME RELIEF. WE ALL LOVE AMERICA AND WE WANT HER GOING STRONG AND IN FRONT OF THE WORLD COMMUNITY.

    August 3, 2011 at 2:39 pm |
  4. David Leonardo

    what is amazing is that we're arguing about $300B in Defense cuts. What people don't realize is that these cuts are supposed to be done over the next ten years. that's about $30B on average a year. Our annual defense budget is approximately $660B a year. That means that this is less than a 5% cut in defense. Its amazing how people use the $300B number to scare average citizens into thinking that Defense of our country is going to be put in jeapordy. If we take out Iraq and Afghanistan from our military budget we would only spend approximately $553B in 2012. That's $100B a year and that is still only about a 20% reduction. Over ten years that's a trillion dollars all by itself and all we would need to do is get out of these countries.

    August 3, 2011 at 9:13 pm |
  5. Ruth in Ohio

    I DO NOT TRUST NOT EVEN ONE POLITICIAN IN THIS COUNTRY,FIRST WE HAVE ONE THAT SCARES THE ELDERLY INTO THINKING THEY WILL NOT GET THEIR SS CHECKS,THEIR MEDICARE WILL BE CUT AND ABOVE ALL BLAME THEM FOR THIS MESS THIS COUNTRY IS IN...WE TRUSTED OUR GOVERNMENT OFFICIALS TO MAKE THE RIGHT DECISIONS ,SOCIAL SECURITY IS IN AN INTEREST BEARING ACCOUNT WITH MORE THAN ENOUGH MONEY THAT THE POLITICIANS KEEP BORROWING FROM....THEY SIMPLY DO NOT KNOW HOW TO RUN THIS COUNTRY ....THEY HAVE PROVEN IT TIME AFTER TIME....WHAT ,YOU DID NOT KNOW THE BABY BOOMERS WERE COMING OF AGE? WHAT ARE THEY GOING TO DO WITH THE NEXT GENERATION , THEY DO NOT GRADUATE FROM HIGH SCHOOL,THE ONES THAT DO CAN NOT FIND A JOB,THANK YOU NAFTA,THAT WAS THE POLITICIANS IDEA TOO,IF I HEAR THE WORD GLOBAL ONE MORE TIME I THINK I WILL SCREAM!IF THEY GRADUATE FROM COLLEGE THEIR ARE NO JOBS, AND OBAMA IS GOING TO GO AROUND THE COUNTRY AGAIN TO FIND OUT WHAT PEOPLE THINK .....IS HE SERIOUS....I DO NOT THINK HE CAN HANDLE THE TRUTH, OR THE POLITICIANS DO NOT LISTEN TO US ANYWAYS....WHEN THEY GET TO WASHINGTON THEY HAVE ONE THING ON THEIR MIND.....THEIR AGENDA....AND THAT DOES NOT INCLUDE THE AMERICAN PEOPLE!

    August 4, 2011 at 2:12 am |
  6. Bonita

    Repent of the perversion and infanticide. Work hard with honesty. Give everyone only the appropriate wage. Make luxury a crime. Don't feed those who refuse to work; let them go to church and get helps. For the lazy citizens, set up labor camps and send them there until the nation recovers.

    August 6, 2011 at 5:26 am |
  7. Bonita

    America is fine. No one can starve there unless self-imposed. All they have to do is to grow their own wheat and eat them and keep the military strong. That's all.

    August 6, 2011 at 5:31 am |

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