Worried about the fiscal cliff? Warren Buffet isn’t.
Despite a report from the Congressional Budget Office stating that the fiscal cliff—more than $600 billion in automatic tax increases and spending cuts which will kick in on January 1, 2013—will almost certainly send the nation spinning into another recession and increased unemployment numbers, Buffett thinks differently.
From Business Insider, quoting Buffett's interview with CNN:
"If we go past January 1st, I don't now if it will be January 10th, or February 1st, but we're not going to permanently cripple ourselves because 535 people can't get along.
He’s convinced that newly re-elected President Obama is justified in seeking $1.6 trillion in revenue.
"We need $1.6 trillion. We need to get our revenue up to about 19 percent of GDP, and we need to get our expenses down to 21 or 21.5 percent of GDP. Everyone knows that. So it's going to take significant action on both sides. And $1.6 trillion happens to be 1 percent of GDP, we'll need that much revenue, and we'll need to cut expenditures significantly too.
Indeed, Buffett pointed out that the divide in Congress is producing the majority of the setback, with cooperation particularly necessary from the Republican-led House.
Said the Sage:
"It really depends very much on the Republicans in Congress. It doesn't take the whole group in Congress to avoid that. I mean if 25 Republicans decide that they'll put country above party and sign up for something that makes sense then we don't need to go over the fiscal cliff."
But he also has faith that the economy will stand strong no matter what happens:
“We had Hurricane Sandy which disrupted the economy for a period, we had Katrina many years ago, we have things that will disrupt the economy, I mean 9/11 was an extraordinary case but we have a very resilient economy. We've had one for hundreds of years and the fact that they can't get along for a month of January is not something that's going to torpedo the economy."
So there you have it. Will history prove Buffett right, as it has so many times?
You can watch the entire interview here.