Warren Buffett said the expects politicians to go “up to the point of extreme idiocy” in regards to the debt ceiling crisis, but that “we won’t cross it,” in an interview on CNBC’s Squawk Box.
Warren Buffett not worried about government shutdown
Like much of Wall Street, Buffett doesn’t seem worried about the current government shut down, and he still believes that politicians will find a way to avoid the nation’s first ever default. But he also hinted that the debt ceiling wasn’t the red line that many people have made it out to be.
“If it goes one second beyond the debt limit that will not do us in,” said Buffett. “If it goes a year beyond, that would be unbelievable.”
When the U.S. hits the debt ceiling it will no longer be allowed to borrow money, but that doesn’t mean it has actually run out of cash. Just like a business, the government doesn’t wait until it has spent its last cent before it starts looking for financing options. October 17 is the deadline that Treasury Secretary Jack Lew has set for when the U.S. will no longer be able to pay its debts, even after taking extraordinary measures, but most people think there is some wiggle room worked into that date.
That doesn’t mean nothing will happen, as the government prioritizes where its limited reserves can go, more and more essential functions will become defunded. Financing our debts probably isn’t the nation’s highest priority, but there is a lot that can be cut before we actually enter default.
“Many people in congress … feel if they can’t get their way on some other issue, they will use the threat of in effect defaulting on the government’s credit to get their way,” said Buffett. “That won’t work long-term, and they’re going to find that out.”
Buffett’s political views
Whatever Buffett’s political views, he obviously thinks the tactics being used right now won’t and shouldn’t work. But he also doesn’t buy into accusations that some politicians are seriously trying to hurt the country to get what they want.
“These guys may threaten to take their mother hostage, but they’ll never hurt their mother,” he said.