Bill Gross, PIMCO: US Must Do More To Cut Deficit & Debt
August 3, 2011
say the new agreement to cut some U.S. spending and allow the government
to borrow more money is just the first of many steps needed to solve the
debt and deficit issue.
The agreement cuts around $1 trillion in spending over the next ten
years and mandates a complex process intended to bring another $1.5
trillion in deficit reductions.
The head of the world's largest bond mutual fund says the agreement does
not put a "significant dent" in U.S. spending next year. Writing on the
PIMCO company website, Bill Gross says it will take trillions of dollars
in further deficit reduction for the United States to keep its top-level
credit rating. He says the government could depreciate the currency or
use inflation to ease the burden of repaying the huge debt.
government, which holds trillions of dollars in U.S. debt, says the
agreement is "good news" for the U.S. and global economies, but makes
only a "small dent" in the nation's huge debt. The commentary appeared
on the government-controlled People's Daily website. It urges Washington
to "live within its means." It says sharp budget cuts could hurt
economic growth and raise unemployment in the short term, but are
necessary for the health of the economy.
An article in The Boston Globe, says national government spending cuts
could raise unemployment and hurt the economy in Massachusetts, which
has many military, medical, and educational institutions funded by
But other experts say the impact will not be felt for some time because
the cuts over the next two years amount to tens of billions of dollars,
a small percentage of federal government spending. Deeper cuts are set
for later years.