Warren Buffett predicts feds will raise taxes to get massive fiscal deficit under control

Warren Buffett predicted that the federal government will raise taxes in order to get US deficit spending under control.

“I think higher taxes are likely,” the billionaire investor said on Saturday at Berkshire Hathaway’s annual shareholder meeting in Omaha.

“They may decide that some day they don’t want the fiscal deficit to be this large because that has some important consequences. So they may not want to decrease spending and they may decide they’ll take a larger percentage of what we own, and we’ll pay it,” he said.

In its latest budget projections, the Congressional Budget Office estimated that federal deficits will rise to 8.5% of gross domestic product in fiscal 2054 from 5.5% in fiscal 2024.

US budget deficits are expected to deteriorate if tax cuts introduced in 2017 are renewed next year.

The Congressional Budget Office has estimated in its latest long-term budget projections federal deficits will rise to 8.5% of gross domestic product in fiscal 2054 from 5.5% in fiscal 2024. US budget deficits are expected to deteriorate if tax cuts introduced in 2017 are renewed next year.

Asked whether he was concerned about the rapidly rising levels of US government debt, Buffett said what worried him was the fiscal deficit more than the size of the Treasuries market – which is now nearly $27 trillion.

“My best speculation is that US debt will be acceptable for a very long time because there’s not much alternative,” he said, referring to the US dollar as the world’s leading reserve currency.

Buffett said while the market focus is on the next steps the US central bank will take to tackle inflation, fiscal policies could be more problematic.

“Jay Powell is … a very, very wise man,” he said, referring to the chairman of the Federal Reserve, Jerome Powell.

“But he doesn’t control fiscal policy.”

Last month, the International Monetary Fund criticized the Biden administration’s rampant spending as “out of line with what is needed for long-term fiscal stability.”

The Washington-based group tasked with fighting financial crises worldwide warned that the ballooning national debt and the fiscal deficit threatened to exacerbate inflation while posing a long-term risk to the global economy.

The IMF noted in its forecast that the US federal budget deficit grew from $1.4 trillion in fiscal 2022 to $1.7 trillion last year.

The debt held by the public, which surpassed $34 trillion, is on course to exceed $45.7 trillion within a decade — which is roughly 114% of the gross domestic product, according to CBO projections.

“Something will have to give,” the IMF warned.

Since entering office, Biden has spent trillions on COVID relief as well as infrastructure. The US has also spent billions in helping Ukraine fight off the Russian invasion.

But the Biden administration said that tax cuts signed into law by former President Donald Trump are to blame for ballooning debt.

“The Trump tax cuts added $2 trillion to the debt with unpaid giveaways skewed to the wealthy and big corporations, and now Congressional Republicans are proposing another $5.5 trillion in tax cuts skewed to the rich, while raising taxes on millions of middle-class families,” Michael Kikukawa, a White House spokesperson, told The Post.

With Post Wires