WASHINGTON – Billionaire investor Warren Buffett today called the U.S. debt limit a “political weapon of mass destruction” and said both political parties should pledge never to use it as leverage because of the financial damage it can cause.
As lawmakers and the White House scrambled to raise the $16.7-trillion debt limit before a Thursday deadline, Buffett said it would be “asinine” for the U.S. to risk its hard-won reputation for paying its bills on time.
“There are certain weapons that are just improper to use against humanity,” he told CNBC. “It is a political weapon of mass destruction and both sides should say we’re not going to touch it, just like with poison gas or nuclear weapons. It’s too powerful.”
Buffett is among many well-known executives who have called for Congress and President Obama to solve their differences and increase the debt limit or risk chaos in world financial markets.
Treasury Secretary Jacob J. Lew has said the U.S. will run out of borrowing authority if the debt limit is not raised by Thursday, putting the nation at risk of default.
Echoing those concerns, Fitch Ratings on Tuesday put the U.S. AAA credit rating on watch for a downgrade because of a fiscal standoff that also has partially closed the federal government since Oct. 1.
The Treasury should still be able to pay all the nation’s bills into early next week, officials estimate.
But analysts warned the risk of default rises each day if the debt limit is not raised by the deadline, because the Treasury will have to depend on about $30 billion cash on hand and the flow of incoming tax revenues to make payments.
Buffett, whose company Berkshire Hathaway owns The Buffalo News, said he’s not worried that interest and principal on government bonds won’t eventually be paid, and that he believes a deal will be struck before the deadline.
He said his concern is for the U.S. reputation as a credit-worthy nation. The dollar is the world’s reserve currency.
“I’m worried about damage to ... an asset that we’ve carefully cultivated for 237 years,” he said.