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Warren Buffett does not expect the debt ceiling debacle to result in a US government default.
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He called the 2011 standoff a stupid waste of time and said the borrowing limit shouldn’t exist.
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Buffett warned that not raising the debt ceiling could be Congress’s dumbest decision.
Warren Buffett dismissed concerns that Congress would not raise the debt ceiling and the federal government would be forced to default on its loans. He went even further in a previous showdown, describing the clash as a silly waste of time and calling for the borrowing limit to be scrapped altogether.
Lawmakers won’t “let the debt ceiling throw the world into turmoil,” the famed investor and CEO of Berkshire Hathaway said at his company’s annual meeting of shareholders this month. “It will change.”
During the debt ceiling crisis in 2011, Buffett pointed out how foolish it would be for lawmakers to leave the country strapped for cash.
“That would probably be the dumbest act Congress has ever done,” he said, according to CNBC’s Warren Buffett Archive.
The billionaire executive compared the absurdity of the idea to the Indiana Pi Bill – a proposal to change the value of the irrational number Pi to 3.2 for simplicity. It was passed unanimously by the state House of Representatives in 1897, but deferred indefinitely by its Senate.
Buffett argued that a debt limit never made sense in the first place because America’s borrowing capacity increases as it grows.
“Having a debt ceiling to begin with is a mistake,” he said, before adding that it may not be desirable for US debt to rise as a percentage of its GDP.
“These games are being played, and all the time that’s wasted, and the number of silly statements you’re hearing,” he complained of the political stalemate in Washington during this time. “It seems like such a waste of time for a country that has a lot going on.”
“I would love to see them scrap the idea because it results in these periodic dead end ops where everyone uses it for posture purposes and everything,” he said of the debt ceiling.
Buffett claimed that as long as the United States issued bonds and other notes in its own currency, it would never suffer from a debt crisis. However, he warned that printing too much money and fueling runaway inflation is a concern when a country spends freely.
The United States passed its $31.4 trillion debt ceiling in January and experts believe it could run out of money by early June. It is now up to a politically divided Congress to raise the limit and allow the government to cover the costs of Social Security checks, veterans benefits and its other financial obligations.
Read the original article on Business Insider