Americans Will Need to Work 10 Years Longer to Pay US Debt

(Getty Images photo)

NewsMax.com
July 17, 2011

Americans need to work on average 10 years longer to pay off the country's mounting debts, says Philippa Malmgren, a former economic adviser to George W. Bush and founder of Principalis Asset Management.

"Will the U.S. go into technical default? This is quite possible," Malmgren tells CNBC.

"It is a serious problem, but the U.S. can easily fix it by having everybody work 10 years longer, which they'll do anyway."

Government debt issues have been grabbing headlines lately.

The U.S. has hit its $14.3 trillion debt ceiling and Congress must approve lifting that ceiling.

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Republicans and Democrats want to lift the ceiling, but Republicans want no tax hikes as part of the deal to narrow deficits while Democrats are against some spending cuts.

Focusing on eventual recovery, Malmgren says manufacturing, agriculture and innovation will fuel economic recovery, although banks need to step it up a bit and lend more.

"I think lending in the U.S. is a great business with great returns. If big banks cannot and will not lend then are there smaller local banks who will Hoover up the best loans," she says.

Moody's has threatened to yank the country's AAA credit rating if it defaults, which would come after an Aug. 2 deadline.

"What has been beginning to spook Moody's and some other people is that Congress may be dumb enough to actually default on the debt," says Cliff Draughn, chief investment officer at Excelsia Investment Advisors in Savannah, Georgia, Reuters reports.


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