Debt - tough stuff for US

The time bomb for a revision of the United States debt ceiling is ticking away.
When the humongous debt ceiling of $14.29 trillion was reached on May 16 this year, bringing US debt-to-GDP ratio close to 100 percent, it was panic time for US legislators.
The only time in the history of the US when the debt-to-GDP was higher than it is today was during and immediately following World War II.
Naturally, lawmakers are contemplating rescue measures such as raising the debt ceiling and fiscal tightening steps, with the former being a critical need of the hour.
Unless the US raises its debt ceiling to borrow further, bills such as social security and health insurance may have to be held back. Payments into two federal pension funds have already been suspended, buying the US time till August 2.
And this means, the US doesn have much time left to raise the debt ceiling as a quick cure. Failing to do this could "trigger a partial default", to quote the words of CNN, and that in itself sounds mighty scary.
The bone of contention in implementing this measure is the disagreement between Republicans and Democrats. While both sides realise that US debt needs to be contained, and for that, both see fiscal tightening as an imperative, an agreement on how to go about it is surfacing as a rocky road.
Where Obama is proposing raising taxes - especially for the higher income group - to enforce some fiscal discipline; Republicans oppose any new or higher taxes. The resultant stalemate has left the debt ceiling issue in limbo, leaving markets to speculate over the fate of US debt repayments.
Though most observers are convinced that the legislators will eventually reach an agreement on raising the debt ceiling; the real call is to strike the hammer when the time is ripe. An editorial by FT earlier this month said, "Republicans and Democrats should curb their ambitions for this settlement, make a deal that gives something to both sides and postpone broader negotiations until later."
What the editor implied here is not that relevant concerns about curbing expenditures and enhancing revenues should be brushed aside. It is suggested that such contentious issues should be shelved for the time being to concentrate on the more pressing issue - raising the debt ceiling.
The situation, however, is grave. Leading credit rating companies S&P and Moodys, have downgraded USs sovereign rating. Question marks on the sustainability of US debt can lead to sky rocketing interest rates on dollar-denominated instruments, and the possibility of the dollar depreciating also increases.
The recent debt problem is a warning bell for the US and fiscal discipline is direly needed for the economys healthy survival. China, the biggest foreign creditor to the US, has also become wary.
"China still need(s) to speed up the diversification of its foreign currency investments away from US assets because the dollar (is) set to decline in coming decades", FT quoted Xia Bin, an official on the monetary policy committee of the Peoples Bank of China.
Therefore, fiscal tightening is not something to be left on the backburner. US ought to put its fiscal house in order.