Getting The U.S. Economy In Order

The United States is facing challenges with growth, and tightening austerity measures can strike uncertainty into the hearts of many. The country is changing how it handless its money, and sequestration was only the beginning. David Steinberg, founder of DLS Capital Management, and Robert Kaplan, Harvard University Professor and former Goldman SachsGS Vice Chairman, sat down on CNBC's Squawk Box this morning to talk about their views on revenue growth in the U.S. and what might get us moving in the right direction, while highlighting what they saw as good investments along the way. Steinberg expects somewhat grim things for this year in the U.S., and possibly beyond. "We're not going to see any growth. I mean, between the deficits and entitlement expenses and what the government is doing in terms of regulation, forget it. You're going to see a 1% plus or minus growth rate , and you're going to look more like Europe as time goes on, unless you get some systemic changes," said Steinberg. As far as where to put your money as an investor, Steinberg said to look towards emerging markets. According to Steinberg, 1/3 of the world's GDP is coming from emerging markets. "Ten years ago it was a fraction of that, and ten years from now, with a per capita growth and consumption and so forth, emerging markets are going to be the driving force," Steinberg said. Having a good partner in such investments is preferred. Steinberg admits that there are obvious risks involved, but the obvious thing is that those countries are growing faster. So a good partnership is key to riding the wave of emerging markets smoothly. Kaplan expressed concern for the U.S.'s economy as well, but put forth some strategies to get things moving in the right direction while investing in a more sustainable economic future on the larger scale. As for growth in the near future... "It could be sluggish, and the reason is, this is against a broader backdrop, we've got a massive deleveraging that is going on in the Western governments. And it's going to take years, the U.S. government hasn't even started. We're still increasing our leverage in the United States and deleveraging by its nature creates a real headwind, and the thing that's offsetting that is the Fed and the ECB," said Kaplan. Kaplan explained that because we're in a period of tight fiscal conditions, we must slow the rate of growth on entitlements to adjust. "At the state level, we're definitely in a period of austerity, but I'm afraid we've got more tightening probably to come. It's going to be done in a balanced way. The Fed is going to keep easy money, I think, for longer than people think to help offset it," said Kaplan. "But I think the sooner we get this debt on a different trajectory, the sooner we can get back to growth." Most of this, Kaplan says, will come from restructuring Social Security, our healthcare system, and Medicare/Medicaid. "It's painful, but it's not very painful if we do it now," said Kaplan. Kaplan offered investing in infrastructure as his way to drag the U.S. out of debt, and Steinberg agreed. "We need to repair the infrastructure in this country. It's critical…The nation's highway system, the air traffic, all the things we do, they're critical to our productivity. We can make investments in those and I think we should. And that'll help growth," said Kaplan.