US Administration 'Insensitive' to Debt Risks: Zell

The US government will have to cut down on borrowing by giving up on some publicly-financed programs or face inflation in one or two years, Sam Zell, chairman of Equity Group Investment, told CNBC Tuesday.

"I do believe that the current administration is insensitive to the risks of the scale of debt we're creating," Zell told "Squawk Box."

If things do not change, it is "very hard to imagine" that the US is not going to be confronted with inflation in one or two years, he said.

"If you continue to raise the debt level… it's just mathematically impossible for us not to have inflation," Zell said.

Zell is not loading up on gold but thinks that part of the reason the precious metal's price has risen so much is that paper currencies around the world have been devalued "almost universally in tandem."

The dollar's weakness is worrying, but on the other hand there is no other reserve currency in the world yet, he said. "As the owners of that reserve currency, that gives the US an enormous international power that it should not throw away."

"I don't get it," he said of the idea of the budget deficit being increased for the health care reform or the cap and trade initiative.

Washington should deal with "jobs, jobs, jobs" and postpone the other thinks for when the economy gets better, he said, adding that the recovery hinges on the government.

"I think the question is, if Washington doesn't screw it up, we'll have a normal recovery," Zell said.

"Under the medical thesis, the rule is: 'do no harm'. I think somebody has to go to Washington and tell them: 'do no harm'," he added.