Billionaire Warren Buffett shared his perspective on the future of U.S. taxes and government spending during Berkshire Hathaway’s annual shareholder meeting. He believes that instead of cutting spending, the federal government is likely to raise taxes to tackle the growing budget deficits.
Buffett, aged 93 and co-founder and CEO of Berkshire, explained that policymakers might find it more acceptable to implement tax hikes than to reduce government spending. With the national debt surpassing $34 trillion for the first time in January, fueled by increased spending during the COVID pandemic, Buffett highlighted the consequences of high fiscal deficits.
Despite the mounting debt, Buffett expressed confidence in the long-term acceptability of U.S. debt, citing the lack of viable alternatives to the dollar as the world’s leading reserve currency. He recalled the concerns raised by economist Paul Volcker before 1980 about the inflation and future value of the dollar but emphasized that the U.S. debt quantity itself isn’t the primary concern, rather the fiscal deficit.
Buffett stressed the importance of focusing on the fiscal deficit rather than solely on monetary policy controlled by the Federal Reserve. He acknowledged the Fed’s limitations in influencing fiscal policy and referenced Federal Reserve Chairman Jerome “Jay” Powell’s remarks on the impact of growing deficits on government spending.
