NEW YORK (Reuters) – Warren Buffett said he expects the U.S. government to raise taxes rather than cut spending to address the widening budget deficit.
“I think there's a good chance we're going to see a tax increase,” he said Saturday at Berkshire Hathaway's annual shareholder meeting in Omaha.
“They may decide at some point that they don't want the budget deficit to be this big, because that has some important consequences. So they may not want to reduce spending, and we… “They may decide to take a larger percentage of their assets and we will pay for it,” he said.
In its latest long-range budget projections, the Congressional Budget Office estimates the federal deficit will increase from 5.5% of gross domestic product in fiscal year 2024 to 8.5% in fiscal year 2054. The US budget deficit is expected to worsen next year if the tax cuts introduced in 2017 are reimposed.
Asked if he was concerned about the rapidly rising level of U.S. government debt, Buffett said he was more concerned about the budget deficit than the size of the U.S. debt market, which currently stands at nearly $27 trillion. Ta.
“My best guess is that U.S. Treasuries are going to be accepted for a very long time because there aren't many alternatives,” he said, noting that the dollar is the world's main reserve currency. .
Buffett said markets will be focused on the next steps the U.S. central bank takes to fight inflation, but fiscal policy could be more problematic.
“Jay Powell is…a very, very wise man,” he said of the Federal Reserve chairman. “But he doesn't control fiscal policy.”
(Reporting by Davide Barbuscia; Editing by Cynthia Osterman and Josie Kao)
