Sign In  |  Register  |  About Walnut Creek Guide  |  Contact Us

Walnut Creek, CA
September 01, 2020 1:43pm
7-Day Forecast | Traffic
  • Search Hotels in Walnut Creek Guide

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Warren Buffett predicts higher taxes due to rising deficit

Warren Buffett said at Berkshire Hathaway's annual meeting he thinks the federal government will look to increase taxes to address widening budget deficits rather than cut spending.

Billionaire Warren Buffett believes the federal government will raise taxes in the future to address widening budget deficits rather than cutting spending.

"I think higher taxes are likely," Buffett said Saturday at Berkshire Hathaway's annual shareholder meeting. The 93-year-old co-founder and CEO of Berkshire said tax hikes may be more palatable to policymakers than cuts to government spending.

"They may decide that some day they don't want the fiscal deficit to be this large because that has some important consequences," he explained. "And they may not want to decrease spending, and they may decide they'll take a larger percentage of what we earn, and we'll pay it."

The national debt, which surpassed $34 trillion for the first time in January, has surged in recent years amid government spending meant to stimulate the economy during the COVID pandemic. Higher interest rates meant to tamp down inflation have caused interest payments on the debt to soar, while spending on entitlement programs such as Social Security and Medicare have increased as the U.S. population ages.

NATIONAL DEBT TRACKER: AMERICAN TAXPAYERS (YOU) ARE NOW ON THE HOOK FOR $34,563,348,818,204.50 AS OF 5/3/24

Buffett said he has no hesitation about paying federal taxes, adding that Berkshire is proud of its contributions to the federal government's coffers.

"We always hope with Berkshire to pay substantial federal income taxes, we think it's appropriate that a country that's been as generous to our owners," Buffett said and added that the company is "lucky it was here" in America.

"If we send in a check like we did last year, we sent in over $5 billion to the U.S. federal government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes – whether income taxes, no Social Security taxes, no estate taxes – it's up and down the line," Buffett said.

US NATIONAL DEBT INTEREST EXCEEDS DEFENSE SPENDING: CBO

Buffett was asked if the rising U.S. national debt would eventually reach a point when the market can no longer absorb U.S. debt and the dollar loses its status as the world's leading reserve currency.

"My best speculation is that U.S. debt will be acceptable for a very long time because there's not much alternative," Buffett responded. "There really isn't any alternative to the dollar as a reserve currency, and you get a lot of speeches on that, but that really is the answer."

BUFFETT TALKS SUCCESSION PLAN, PAYS TRIBUTE TO MUNGER AT ANNUAL MEETING

"And Paul Volcker worried about that back in, you know, before 1980. But he had threats on his life and I happened to have a little contact with him at that time, and he was an amazing, amazing fellow that in effect, decided that he had to act or the financial system would fall apart in some way that he couldn't predict… He was the man for that crisis," Buffett said.

"It wasn't the quantity of U.S. debt being offered that threatened the system, it was the fact that inflation and the future value of the dollar – the 'cash is trash' type thinking – that was setting up something that could really affect the future of the world in terms of this economic system and Paul Volcker took it on," he explained.

IMF SOUNDS ALARM ON BALLOONING US NATIONAL DEBT: 'SOMETHING WILL HAVE TO GIVE'

"I don't worry about the quantity, I worry about the fiscal deficit," Buffett said. "I'm not a worrier, just generally, I mean I think about it, but I don't sit and get upset and work myself into a stew about it in the least."

"But again, I'm thinking about it and we've got a great attention – I think the media enters into this and the focus is on the Fed, and they just love it because things are always happening and economists are always saying what's going to happen with the Fed and everything else. But the fiscal deficit is what should be focused on."

Buffett noted that the Fed doesn't control fiscal policy and that Federal Reserve Chairman Jerome "Jay" Powell has noted the potential impact of growing deficits on government spending in his public comments. 

GET FOX BUSINESS ON THE GO BY CLICKING HERE

"Jay Powell is not only a great human being, but he is a very, very wise man. But he doesn't control fiscal policy and every now and then he sends out a kind of a disguised plea to 'Please pay attention to this' because that's where the trouble will be if we have it."

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 WalnutCreekGuide.com & California Media Partners, LLC. All rights reserved.