According to billionaire investor Warren Buffett, Republicans in Congress aren’t dumb enough to hold the credit and full faith of Americans hostage to politics, but they will get very close.
On Thursday while on CNBC, he also told Andrew Ross Sorkin that Congress is probably going to raise the ceiling of the nation’s debt just in time to avoid defaulting on its obligations, although it’s most likely not going to happen until the 11th hour.
“We will go right up to the point of extreme idiocy, but we won’t cross it,” said Buffett this Thursday on “Squawk Box.”
If Congress does not raise the borrowing limit for the nation – also known as the debt ceiling – by the 17th of October, the United States will not have enough money to pay its bills, we learned from Jack Lew, Treasury Secretary. The Congressional Republicans are saying that they are going to use the increase in the debt ceiling as a way to leverage the delay of a critical provision of the Affordable Care Act of Pres. Obama, or they may try to get backing for the otherwise controversial Keystone pipeline.
If the current debt ceiling debate results in an impasse, it could have the potential to cause a meltdown financially. Even though Congress ended up reaching a deal, there was a similar stalemate back in 2011. The cost: Standard & Poor’s dropped the US’s credit rating which hurt businesses and consumer confidence. It also shook up the stock market.
“Many people in Congress, they feel if they can get their way on some other issue they will use the threat of defaulting on the government’s credit to get their way,” said Buffett on Thursday. “That won’t work long term.”
Despite Warren Buffett’s nonchalance, there could certainly still be a cause for concern. On Wednesday, the president warned the CEOs of Wall Street that the debt ceiling debate might be different this time around, telling them that they should not assume that Republicans are going to agree to a deal in time.
“I think they should be concerned,” said Obama on CNBC.