Legendary investor Warren Buffett said he expects the federal government to increase taxes rather than cut spending as the U.S. struggles with mounting national debt.
Buffett, billionaire investor and chairman of conglomerate Berkshire Hathaway Inc., made the comments Saturday.
“I think higher taxes are likely,” he said at Berkshire Hathaway’s annual shareholder meeting in Omaha.
“They may decide that some day they don’t want the fiscal deficit to be this large because that has some important consequences. So they may not want to decrease spending and they may decide they’ll take a larger percentage of what we own, and we’ll pay it,” he said.
In March, the Congressional Budget Office projected the deficit would reach 8.5% of gross domestic product by 2054.
“My best speculation is that U.S. debt will be acceptable for a very long time because there’s not much alternative,” Buffett said, referring to the U.S. dollar as the world’s leading reserve currency.
Earlier this month, the International Monetary Fund warned the United States that government spending and increasing national debt were not sustainable and could hurt the global economy.
“Amid mounting debt, now is the time to bring back sustainable public finances,” according to the latest IMF Fiscal Monitor report.
In February, a Congressional watchdog told President Joe Biden and Congress that the federal government was on an “unsustainable long-term fiscal path.”
In November 2023, Moody’s Investors Service gave the federal government a negative credit outlook citing large deficits, high interest rates and waning political interest in addressing the nation’s deficit. The other two credit-rating agencies, S&P Global and Fitch, grade U.S. credit at AA+. In August 2023, Fitch Ratings decided to downgrade the government’s credit rating from the highest level of AAA down one tier to AA+. Fitch pointed to the U.S. government’s high national debt and deficits and an “erosion of governance.”
