WASHINGTON – Billionaire investor Warren Buffett said a failure to raise the nation’s $16.7 trillion debt limit would be “pretty damn dumb” as Democrats and Republicans square off in a showdown that could lead to the first-ever federal government default.
Buffett called the fight “disturbing” in a CNBC TV interview that aired Friday. But he said it’s “so dumb” that investors and business people know it would get resolved quickly.
“The market is not going to fall apart because they expect Washington will only act irrationally for a certain length of time,” said Buffett, chief executive of Berkshire Hathaway. “It would have to get solved.”
But a solution appears a long way off with little time left.
Treasury Secretary Jacob Lew has estimated the nation would run out of borrowing authority as early as mid-October and be faced with an inability to pay all its bills on any given day.
Republicans are balking at raising the limit without significant deficit-reduction measures. Some conservatives also want to link a debt limit increase to a delay in President Barack Obama’s health care law, or to cut off funding for the initiative.
“Republicans have no interest in defaulting on our debt – none,” House Speaker John A. Boehner, R-Ohio, said Thursday.
But they want to find a way to reduce the national debt, he said.
Every major deficit-reduction plan in the past 30 years has been tied to a debt limit increase, Boehner said.
Obama has been adamant he will not negotiate with Republicans over a debt limit increase, saying Congress has the responsibility to act to pay for spending that already has been authorized.
Lew warned this week of dire economic consequences of not raising the debt limit.
Congress routinely has raised the limit over the years, he said, and should do so again.
And although there were “a handful of times when a debt limit increase was embedded in congressional legislation dealing with broader fiscal challenges . the threat of default was not a bargaining chip in the negotiations,” Lew said.
With both sides at odds, Buffett was asked about the effect of not raising the limit.
“That would be pretty damn dumb,” he told CNBC.