From the Huffington Post:
Republicans are playing a dangerous game by refusing to raise the debt ceiling, according to Berkshire Hathaway CEO Warren Buffett.
“We raised the debt ceiling seven times during the Bush Administration,” Buffett told CNBC on Thursday. Now, the Republican-controlled Congress is “trying to use the incentive now that we’re going to blow your brains out, America, in terms of your debt worthiness over time.”
If Congress fails to raise the borrowing limit of the federal government by August 2, the date when the U.S. will reach the limit of its borrowing abilities, it will likely begin defaulting on its loans.
Buffett, who according to the Washington Post has helped raise money for Democratic candidates like Hilary Clinton in the past, has been highly critical of the actions of the Republican-controlled Congress. In May, Buffett stated at a Berkshire Hathaway shareholder’s meeting that if the Congress failed to raise the debt ceiling, it would constitute “the most asinine act” in the nation’s history, reports Reuters.
According to the U.S. Debt Clock, America’s total public debt equals close to $14.3 trillion which, according to the CIA World Factbook, is roughly 60 percent of the annual gross domestic product.
But even with this information, Buffett is unfazed.
“We had debt at 120 percent of the GDP, far higher than this, after World War II and no one went around threatening that we’re going to ruin the credit of the United States or something in order to get a better balance of debt to GDP.”
Some experts, like former Federal Reserve Chairman Alan Greenspan, have floated the idea of the Treasury paying some obligations while not paying others. This, Buffett says, is ludicrous.
“If you don’t send out social security checks, I would hate to think about the credit meeting at S&P and Moody’s the next morning,” Buffett told CNBC. “If you’re not paying millions and millions and millions of people that range in age from 65 on up, money you promised them, you’re not a AAA.” A triple-A credit rating is the highest possible rating that can be received.
Buffett should be listened to about anything to do with money. He has more than most people. Many of us who have been around for a while have lived with national debt. Countries do what they have to do. They don’t default. Its time to stop pushing the panic button for political gain.
“Its time to stop pushing the panic button for political gain.”
Exactly. The Senate needs to enact a bill, in public, and set forth the needed spending cut, so that we can raise the debt limit.
Remember, its the Democrats that are not willing to raise the debt limit without tax increases on job producers. The Republicans are perfectly willing to raise the debt limit if the there are real cuts in spending.
Btw, Buffett may be a genius with money, but he’s also an Obama supporter. And he makes much of his fortune by buying up companies that can’t afford to pay the death tax.
First off, there wouldn’t be a “Default”. The treasury takes enough revenue every month to cover service on the debt, and then some. By statute, this must be paid first, and this includes Social Security, medicade, pensions, VA disabilty, etc. Failure to pay this, would constitute a default.
In the event that the debt ceiling isn’t raised, non-debt related functions of government would be prioritized, and the essentials funded by the remaining revenue available. Would there be department shut-downs, furloughs etc.? Possibly.
Let me try to understand where the Democrats are coming from. Say I make $50K a year, but I am borrowing and spending at a rate of $150K per year. My salary isn’t going up, but I continue to spend as if it were. So now all my credit cards are maxed out. I try to get a new card or a bank loan, and am denied because my debt-to-income ratio is too high. So what do I do? I call up the bank who denied me, as well as the rest of my debt holders and tell them they need to give me another loan, or I am going to start defaulting on the loans I already have. I’m not going to pay my mortgage, or my car note. I won’t even buy groceries, because I can’t put them on a credit card.
All of this “default” talk is pure hogwash, especially when used as a justification to raise the debt ceiling. I will say, if we don’t curb spending and deal with entitlements, we will one day be looking at a default…a default of the entire US economy.
Curious to hear opinions on Dr. Paul’s idea.
http://curiouscapitalist.blogs.time.com/2011/07/05/debt-ceiling-could-ron-pauls-plan-save-us-from-disaster-twice/
I find it fascinating that it was posted on TIME.
I don’t think anyone wants default. But I think people see the political opportunity to make real change happen.
I’m with Cargo here. I’ll read anything Buffett says about investing because his track record shows his genious in that area. However, he comes to this discussion with a well-known political bias. That’s OK, because I prefer to know where someone stands rather than listen to a person spout what they represent as independent views when they are clearly speaking from their politcal perspective.
Regarding tax cuts and revenue, here’s an anecdotal item. I’ve started watching “Fringe” and have come to really enjoy that show. I was reading an interview with one of its producers this week. He said that the show filmed in New York City during its first and maybe second seasons. However, when they got stuck with a tax hike from NYC, they shifted production to Vancouver, which is where they anticipate working from now on, beause of the far lower taxes.
New York City raised taxes (rates) and revenues fell. Vancouver lowered taxes (rates) and revenues rose. Perhaps supply-side economics isn’t voodoo after all.
My deployment date got delayed by 24 hours…..bad winds over the target, late night at home, laziness…something like that……. BUT, I will depart tomorrow! To SAVE THE ….. the,,,, something…I forget…..
A little something about Buffet from http://washingtonexaminer.com/blogs/beltway-confidential/2011/07/warren-buffett-continuing-profit-his-investment-bailout-why-okay
By: Timothy P. Carney | Senior Political Columnist Follow Him @TPCarney | 07/08/11 9:52 AM
At the peak of the financial panic, a billionaire fundraiser for the President of the United States makes a big bet on a politically connected investment bank, openly admitting he’s counting on the government to bail that bank out. A year later, the investment bank is booking record profits. A couple of years later, the billionaire fundraiser for the President is cashing in his chips, making bank, while the rest of the economy slips.
This story is true. Why isn’t it a huge scandal? Is it only because the president is Barack Obama and his billionaire bailout-profiteering fundraiser is the affable Warren Buffett?
The latest news is that he’s making a $900 million gain this year by exercising his right to buy $5.9 billion in Goldman stock for $5 billion. This might sound like the sort of thing that is between Buffett and Goldman. But it’s not. Taxpayers are paying for this.
Here’s a quick walk through the timeline:
* During the 2008 campaign, Buffett was an economic advisor for Obama, and he hosted at least one fundraiser for Obama.
* In September 2008, just after the collapse of Lehman Brothers, Warren Buffett made a $5 billion investment in Goldman Sachs. At the time, he said:
If I didn’t think the government was going to act, I would not be doing anything this week….
It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal. Last week will look like Nirvana if they don’t do something.
* Obama voted for the bailout, kept bailout captains Ben Bernanke and Tim Geithner.
* (side note: Around this time, Sen. Dick Durbin pulled six figures out of the stock market and invested $98,000 in Buffett’s Berkshire Hathaway)
* Goldman received many billions from the TARP and from the bailout of AIG.
* Nine months later, Goldman reported record profits.
* Today, we learn Buffett will profit $900 million just off the stock warrant purchase of his 2008 deal.
What would we think if this happened in Russia?
Read more at the Washington Examiner: http://washingtonexaminer.com/blogs/beltway-confidential/2011/07/warren-buffett-continuing-profit-his-investment-bailout-why-okay#ixzz1RdifFgnQ
I have no problem with politicians engaging in politics to accomplish something worthwhile. But Boehner was one of those that championed outrageous spending increases during the Bush administration. It gets me angry to see him sitting on his high horse now pretending to be want to cut spending. How can he look at himself in the mirror after having been so two-faced.
@El Guapo
That’s probably why he was orange for a while. I agree.
Cargo, the point is, Buffett took the risk. It could have all backfired also. You are predictable. It would be impossible for you to comment on anything a non-republican did in a positive way.
Maybe we should just half all the social security benefits and give the millionaires a tax cut. Would that make you happy?
How about a few less wars and a few less Halliburtons and other defense contractors making the big bucks from the feds. There’s a place to cut spending.
While they are at it, how about the feds negotiating better rx prices out of Canada…or some bulk buying of drugs? How about the republicans kicking the drug companies and drug company money out of their beds? That might cut some entitlement spending.
By the way, where are those jobs that all the millionaires are/have created? Can you even name one? What jobs is the head of anthem going to create with the $10 million she makes? bwaaaahahahahahah zilch.
Keep on quoting the party line. No out outside of R land believes a word of it.
@Moon-howler
Buffett skated the line on insider trading. When will a Democrat supporter be seen as being corrupt in your eyes?
Maybe we should do some SS reform instead of exaggerating? How about a few less wars? Libya is illegal. The other theaters are supporting the original war. And remember, Halliburton first became famous for no bid business under your buddy Clinton. Also, if there was a company that could compete with them, bring it. But there are only three. And Halliburton bought one of them and the other is French.
Buying drugs from Canada? Last I heard, CANADA doesn’t want us to do that because it reduces their limited supply. And those prices are that way because of gov’t price controls. Why do you say Republican need to kick said companies? It was drug money that push the Prescription drug plan and big pharma spent money promoting HCR.
From http://www.opensecrets.org/industries/indus.php?ind=h04
The industry’s political generosity increased in the years leading up to Congress’ passage in 2003 of a prescription drug benefit in Medicare. Contributions from the industry declined in the 2004 cycle, however, following the elimination of unlimited “soft” money contributions to the national political parties. The pharmaceutical industry has traditionally supported Republican candidates. But as Democrats have seized Congress and the White House in recent cycles, industry advocates have steadily become more generous toward traditional foes. These companies’ contributions split evenly during the 2008 cycle, after the GOP received two-thirds of drug company contributions in the run-up to the 2006 cycle.
As for the jobs, Obama’s policies killed them. And now, those businesses are dug in, trying to weather this recession that he has worsened. So, as soon as his policies are repealed, things will get better.
I can ask you the same thing? Where are all those jobs that liberals promised us? WE have a track record of creating jobs. The Democrats took control of Congress in 2007. By the end of that year, the recession started. Directly attributable to increase spending and policies.
And, according to the last election, a whole lot of people outside of R land believes it. The best thing for the Democrats would be to primary Obama and get a different candidate.
I am just laughing at this point. Psssttttt what about the crash of 2008?
Actually, I am all in favor of the rx plan. I always have been. I bet the Canucks would be more than happy to do the supply and demand thingie with us. You might want to check out the difference in cost and how many people in this country do mail order out of Canada.
Was that the royal WE? Do you even believe half of what you typed? Maybe you should suggest that to the Democrats. See what THEY think. Meanwhile, back to Buffett.
ACtually, I believe Buffett was a Hillary man. Should we discount all he says because of that?
If it comes down to listening to people like Buffett or Paulson or bloggers…guess which group gets my ear?
I didn’t hear anyone complaining when Bush raised the debt ceiling seven times in his eight-year term. It went right over the heads of these teajadis who are not whining and complaining about debts.
Cargo You’ll have to go easier on MH! It’s more difficult to answer policy questions when you can’t make up your own facts. Business is sitting on Trillions because why hire when you’re getting the job done with less people and you have huge tax loop holes. GE paid $0.00 tax last year and in fact got a rebate from the government. How did your $0.00 income tax return and rebate go last year?
The Worst Time to Slow the Economy
Published: July 9, 2011
There has never been any evidence that the federal debt is primarily responsible for the persistent joblessness that began with the 2008 recession. The numbers have remained high because of weak consumer demand and stagnant wage growth, along with an imbalance between jobs and job skills. Republicans have long tried to link unemployment and debt so that they can blame Mr. Obama for the poor economy, and build support for their ideological goal of cutting spending.
There is plenty of evidence, in fact, that the spending cuts already imposed by Republican intransigence are responsible for a great deal of joblessness.
http://www.nytimes.com/2011/07/10/opinion/sunday/10sun1.html
Starry,
Perhaps you just weren’t listening. The drubbing the GOP took in 2006 and 2008 was a direct result of the party abandoning its conservative core principles. A portion of the base stayed home in both of these elections. The reason I know this is because as a member of the local party leadership, I was getting an earful from many conservatives. Their complaints weren’t about social issues, or guns, etc. It was about spending and the growth of government. I tried to explain to them that the alternative of a hardcore left-led Democrat controled Congress and Whitehouse was far worse than a less than conservative led GOP. It didn’t work. These folks stayed home. They didn’t campaign. They didn’t donate. They felt the GOP needed to be taught a lesson. These are the same folks who joined the TEA Party, once the real consequences of the 06 & 08 elections became known.
Staying home is a rather dysfunctional way to show displeasure. AT least go write in someone.
I expect no one complained about social issues because GWB was covering his bases there. The no-gay-marriage vote got used up almost by Karl Rove trying to get out the vote. It worked pretty well in most states. I suppose our state elections being held in odd years makes it not as noticeable to Virginians.
Don’t know about guns. That just seems to go on and on.