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Warren Buffett: “fiscal cliff” will be solved but afterthought deadline

Publish Date29/11/2012 01:27:56 PM

Last Update29/11/2012 02:05:41 PM

Warren Buffett: “fiscal cliff” will be solved but afterthought deadline

Warren Buffett, the billionaire investor said he believes the U.S. “fiscal cliff” may be solved but he has doubts about Congress`s ability to meet deadline.

Both Senate and House of Representatives have until December 31 to strike a deal on a new budget. Any further delays may push the U.S. into the so-called “fiscal cliff” of automatic tax hikes and spending cuts and would blow the economy back into recession.

Republicans control the House of Representatives, while Democrats control the Senate, the main wedge between the two parties lies in the taxing theme; Republicans want to impose equal taxes on everyone, while Democrats insist on cumulative income tax. Both political parties have to compromise in order to make a deal.

Mr. Buffett stated that politicians may miss the deadline and take several months beyond the December 31 deadline. He also chose not to expect any of the decisions that the Congress would take.

Furthermore, Mr. Buffett also stressed that he expects the final result of Congress’s decision would bring the U.S. economy an estiamted revenue of 18.5% of GDP.

"I would say that 90% of the Republicans and 90% of the Democrats understand that you have to raise about 18.5% or thereabouts of GDP in revenue, and they know that you can spend about 21%, and it`ll work out okay," Mr. Buffett said.

According to Buffett, tax imposed on middle class people may be unfair for both social security and health care, where he described those taxes to have adverse consequences

Mr. Buffet said that applying it on incomes exceeding 100 thousand dollars a year would achieve revenue of 800 billion dollars a year and this represents only one-third of U.S. revenues.

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