(ConservativeSense.com) – Investor and businessman Warren Buffett has warned that taxes will likely rise in the US to tackle fiscal deficits. Speaking at Berkshire Hathaway’s annual shareholder meeting in Nebraska, Buffett said the federal government will realize the potential consequences of enormous deficits while refusing to cut spending, leaving tax increases as the only viable option. “They may decide they’ll take a larger percentage of what we own,” he said.
The billionaire noted, however, that given the lack of alternatives, US debt will “be acceptable” for a long time. He said the present market priority is whether the US central bank will raise interest rates to tackle inflation, but he warned that fiscal policy is far more critical.
The Congressional Budget Office estimates that federal deficits will rise to 8.5% of GDP by 2054 from 5.5% this fiscal year.
As part of his fiscal policy for 2025, President Biden addresses his plans to reduce the deficit further, saying he has already brought it down by more than $1 trillion. A White House statement in March furthermore claimed that the Fiscal Responsibility Act will cut a further trillion from the deficit over the coming decade.
Signed last summer, the Fiscal Responsibility Act of 2023 ended a Congressional standoff regarding the debt ceiling, suspending it until 2025 and avoiding a federal government default. The Act also suspended discretionary spending through the fiscal years 2024 and 2025, rescinded pandemic relief, and broadened eligibility requirements for some social welfare programs.
According to the White House, the President’s plan for 2024 and 2025 focuses primarily on inflation reduction and cutting the deficit through tax fairness and closing avoidance loopholes. The President promises to increase taxes on billionaires to 25% of their income, raise tax rates for corporations, and crack down on avoidance by multinationals and drug conglomerates.
Furthermore, the Biden administration says it will save $3 trillion over ten years by targeting wasteful spending on “Big Pharma, Big Oil, corporate jets and other special interests.”
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