Iconic investor Warren Buffett took the wind out of Bidenomics’ sails on Saturday.
With a $34 trillion debt hanging over the United States and an administration that won’t stop spending, higher taxes are, he predicted, “quite likely.”
“With the present fiscal policies, I think that something has to give,” Buffett said at Berkshire Hathaway’s annual shareholder meeting in Omaha.
“I think higher taxes are quite likely,” he predicted. “If the government wants to take a greater share of your income or mine or Berkshire’s, they can do it.”
Faced with their choices, the government may prefer to carve more out of taxpayers’ livelihoods than rein in their reckless ways.
“They may decide that someday they don’t want the fiscal deficit to be this large because that has some important consequences,” Buffett reasoned. “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 added.
(Video: YouTube)
“The Congressional Budget Office has estimated in its latest long-term budget projections federal deficits will rise to 8.5% of gross domestic product in fiscal 2054 from 5.5% in fiscal 2024,” Reuters reports. “U.S. budget deficits are expected to deteriorate if tax cuts introduced in 2017 are renewed next year.”
But President Biden wants the tax cut to expire.
“Donald Trump was very proud of his $2 trillion tax cut that overwhelmingly benefited the wealthy and biggest corporations and exploded the federal debt,” he wrote on X in April. “That tax cut is going to expire. If I’m reelected, it’s going to stay expired.”
Donald Trump was very proud of his $2 trillion tax cut that overwhelmingly benefited the wealthy and biggest corporations and exploded the federal debt.
That tax cut is going to expire.
If I’m reelected, it’s going to stay expired.
— Joe Biden (@JoeBiden) April 23, 2024
Of concern to Buffett “was the fiscal deficit more than the size of the Treasuries market – which is now nearly $27 trillion,” according to the outlet.
With the U.S. dollar as the world’s leading reserve currency, debt is a fact of life.
“My best speculation is that U.S. debt will be acceptable for a very long time because there’s not much alternative,” Buffett said.
The market is looking to the U.S. central bank to tackle inflation, he said, but there’s not much they can do about bad policies.
“[Federal Reserve Chairman] Jay Powell is … a very, very wise man,” Buffett noted. “But he doesn’t control fiscal policy.”
Current market conditions “led to Buffet’s Berkshire reducing its stake in Apple, one of the many blue chip manufacturers, home builders, insurance companies or retailers in its stable,” the Daily Mail reports. “As a result, Berkshire reported a $135.4 billion holding in the iPhone maker at the end of the first quarter, down from $174.3 billion seen in December.”
Still, the investor was full of praise for Apple, calling it an “even better” stock than American Express and Coca-Cola.
“He said unless something changes dramatically, Apple will continue to hold the distinction of being Berkshire’s biggest position – glowing praise coming from one of the most respected minds in the country when it comes to finance,” according to the Daily Mail. “He added the iPhone, released in 2007, was one of the greatest products of all time, and hinted that tax implications played a part in the sale.”
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Melissa Fine is the former executive editor of Casino Player, Strictly Slots, and Poker
Digest magazines. She is a UCLA graduate, news junkie, and dedicated Stargate SG-
1 fan. Melissa currently lives with her dog and two cats in a tiny town in the Sierra
Nevada foothills.
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