Photo: Screenshot via CNNMoney
The CBO has issued a report that says the U.S. would go back into a recession if it were to go over the fiscal cliff – over $600 billion in tax and spending provisions set to change on January 1, 2013.In fact the fiscal cliff has rapidly grown to become the number one concern for investors, climbing past Europe’s sovereign debt crisis, and China’s slowdown.
But Warren Buffett, the Oracle of Omaha, told CNNthat he does not think the U.S. will go into a recession. He also thinks president Obama is right in trying to raise $1.6 trillion in revenue:
“We need $1.6 trillion. We need to get our revenue up to about 19 per cent of GDP, and we need to get our expenses down to 21 or 21.5 per cent of GDP. Everyone knows that. So it’s going to take significant action on both sides. And $1.6 trillion happens to be 1 per cent of GDP, we’ll need that much revenue, and we’ll need to cut expenditures significantly too.
…”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.
…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.”
When asked if he thought the U.S. would go over the fiscal cliff now that the elections are done and we know the make up of Congress, he said it depends on the Republicans:
“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.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.