While the partial government shutdown—which will enter its fourth day today—affects millions of Americans, the upcoming debate over the debt ceiling will make a shutdown look like a minor inconvenience.
Senate Majority Leader Harry Reid seems to know this as well as anyone. In an interview on CNBC yesterday, Buffett suggested that while not reaching a compromise over the debt ceiling would not be the end of days, he did suggest that it needed to be resolved quickly.
“If it goes one second beyond the debt limit, that will not do us in,” said the chairman of Berkshire Hathaway. “If it goes a year beyond that would be unbelievable.”
Reid, however, took it a step further, suggesting that the issue could become “cataclysmic.” On Buffett Reid he said, “He knows how horrible it is.”
Former Treasury Secretary Henry Paulson cited a greater divide between Democrats and Republicans based on congressional redistricting and suggested that getting the two parties to compromise was growing more difficult each year.
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“The only way you are going to fix the economy is when Democrats and Republicans work together,” said Paulson.
“And we have this redistricting, which as far as I am concerned is legal corruption, corrupting the legal system, driving people on the right to the far right and people on the left to the far left and making it more difficult for people to compromise,” said Paulson. “If our founding fathers had really seen the 24-hour news cycle and the redistricting I think they would have been shaking their heads.”
With Republicans refusing to vote for a budget funding Obama’s signature Affordable Care Act, and Democrats refusing piecemeal funding bills, Buffett believes that Washington is reaching a line of idiocy but doesn’t see that line being crossed.
“If [Republicans] can’t get their way on another issue, they’ll use the threat of, in effect, defaulting on the government’s credit to get their way,” Buffett said. “That won’t work long-term.”
Former Treasury Secretary Hank Paulson joked in the same interview on the debate over the budget that, “These guys may threaten to take their mother hostage, but they will never hurt their mother.”
Meanwhile, brinkmanship between the leaders in Congress continues.
So far, Senator Reid shows no sign of backing down to Republican demands on Obamacare. Somewhat surprisingly, Republican House Leader, John Boehner, seems to believe that a measure through a combination of Republican and Democratic votes may be possible amidst a shutdown where neither side seems to even value the idea of compromise.