Buffett: Budget cuts shouldn’t hurt economy too much
Los Angeles Times
Billionaire investor Warren Buffett is not a big fan of the automatic federal budget cuts that kicked in Friday, but he said they help reduce the deficit and shouldn’t hurt the economy too much.
The government still is running a deficit, he said, and that amounts to stimulus for the recovery even if there will be $85 billion less in federal spending in 2013. “I think that’s still giving the economy quite a juice,” Buffett, the chief executive of Berkshire Hathaway Inc., told CNBC on Monday.
President Barack Obama has warned of the economic impact of the sequestration, which the nonpartisan Congressional Budget Office says will reduce growth by 0.6 percentage points this year and cause the loss of 750,000 jobs.
Buffett echoed Democrats and Republicans in Washington in describing the across-the-board, budget-cutting process as a “meat ax” approach to deficit reduction.
“It’s a very dumb way of attacking a very serious problem,” he said, noting that the automatic cuts don’t deal with the growth of Medicare, the main driver of long-term deficits.
But Buffett said the tax increases that began Jan. 1 also were a heavy-handed approach because the expiration of the temporary 2 percent payroll-tax break hit workers across the board.
“We’re going to bring down spending, and we’re going to bring up revenues, and we may get there in fits and starts, and everybody may scream each time we do it. But the deficit is going to come down,” he said.
“We may be doing it in a meat-ax way in this particular move,” he said. “We did it in kind of a meat-ax way in terms of the revenues going up at the start of the year.”
Such an approach to deficit reduction probably is better than no deficit reduction at all, Buffett said, expressing hope that Washington politicians would find a way to improve on it and ultimately strike a broader deal.
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