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Buffett: Debt limit is 'political weapon of mass destruction'

Wednesday, 16 Oct 2013 | 8:06 AM ET
DC's 'political weapon of mass destruction': Buffett
Wednesday, 16 Oct 2013 | 6:05 AM ET
Warren Buffett, Berkshire Hathaway chairman & CEO, says not raising the debt ceiling is an "improper" weapon to use against the American people. This is like "poison gas," he added.

Warren Buffett said Wednesday the threat to not raise the nation's debt limit "after you've already spent the money" is a "political weapon of mass destruction" comparable to poison gas and shouldn't be used by either party.

"I know it's been used in the past, but we used the atomic bomb back in 1945 but we decided we weren't going to do something like that again," he said hours before the government's midnight deadline to raise the debt limit or possibly default.

Buffett: 'Credit worthiness is like virginity'
On "Squawk Box," Warren Buffett says it would be hard for the United States to regain financial credibility if it is unable to resolve Washington's fight over raising the debt limit.

Buffett called on both sides to pledge not to use the debt limit as a weapon. "There are plenty of weapons that can be used," like filibusters, he said.

In a live interview on CNBC's "Squawk Box, the Berkshire Hathaway chairman said he doesn't expect the U.S. will do anything to damage its 237-year reputation of paying its bills on time, but if it does it would be a "pure act of idiocy" and "asinine."

"Credit worthiness is like virginity, it can be preserved but not restored very easily, so it is crazy to play around with it," he said.

Buffett said Berkshire owns short-term Treasury securities but he isn't worried about getting paid.

Buffett: It's not a mistake to buy stocks now
Warren Buffett, Berkshire Hathaway chairman & CEO, says despite the "mess" in Washington, there are still long-term investment opportunities in the U.S.

He also said the ongoing crisis in Washington over spending and the debt limit is no reason to avoid buying securities, pointing out that Berkshire subsidiary Marmon Group just paid $1.1 billion for a British drinks dispensing business. "We did not buy it with a condition that we could call off the deal" if there was no vote to raise the debt limit, he said.

He added that in his long career, he has never put off a deal by a few weeks to see what might happen in Washington.

(Read more: Berkshire Hathaway's 15 Biggest Stock Holdings)

Buffett: It would be asinine to jeopardize US credit
Warren Buffett, Berkshire Hathaway chairman & CEO, explains why he is concerned the "full faith and credit" of the U.S. is at risk because of the stalemate Washington.

When it was pointed out to him that he may be "unique" because he is a long-term investor, he replied that "most people are."

"If you take the people I meet in Omaha, you take the people who own farms, you take the people who own apartment houses, most people are long-term investors, thank heavens," he said.

'Stocks are not selling at bubble levels': Buffett
Warren Buffett, Berkshire Hathaway chairman & CEO, explains why stocks still offer the best investment opportunities compared to cash or long-term bonds.

Buffett rejected the idea that investors should be worried about a bull market "bubble" for stocks. He said, "We could at some point, but no, stocks are not selling at bubble levels. What do you diversify in? You want to diversify into cash? I think it's a terrible investment compared to equities. You want to diversify into long-term bonds? I think it's a terrible investment compared to equities."

Buffett also said Berkshire's spending rate on acquisitions this year is as "high as ever."

He told Becky Quick he had been working on a big acquisition, a $12 billion "elephant," but the deal didn't come together.

Buffett was interviewed in Washington where he is attending Fortune's Most Powerful Women summit.

Buffett on JPMorgan's woes
Warren Buffett, Berkshire Hathaway chairman & CEO, weighs in on the government's inquiries into JPMorgan's banking problems. "Jamie (Dimon) will survive, he knows how to run a bank, Buffett says.

Moments after Bank of America announced better than expected earnings, Buffett said "the banks are in the best shape I can remember."

He also defended JPMorgan Chase CEO Jamie DImon amid the bank's many legal problems, some of which are the result of its acquisition of Washington Mutual at the height of the financial crisis in 2008. "If a cop follows you for 500 miles, you're going to get a ticket. And believe me, you've had a lot of cops" following JPMorgan, he said.

(Read more: Buffett on JPMorgan: Jamie Dimon will survive fine)

Buffett sides with Apple against Icahn's call for buyback
Warren Buffett says he thinks Apple's management has done a great job and he would side with them against activist investor Carl Icahn's call for a big stock buyback. "I just wish I'd bought the stock years ago," he joked.

Responding to activist investor Carl Icahn's public calls for a large Apple stock buyback, Buffett said, "I think Apple's management has done a pretty good job of running the company... and my vote would be with them." He joked, "I just wish I'd bought the stock many years ago."

"I do not think companies should be run primarily to please Wall Street and largely shareholders who are going to sell. I believe in running Berkshire for the shareholders who are going to stay and not for the ones who are going to leave," he added.

Buffett on JC Penney's future
Warren Buffett, Berkshire Hathaway chairman & CEO, discusses the multiple connections Berkshire Hathaway has with JC Penney and the retailer's efforts to turnaround the company.

Buffett said he has a "rooting interest" for the troubled retailer J.C. Penney because he worked in one of their stores when he was younger, but acknowledged it's "very, very tough" to compete against competitors who are always moving. "Coming from behind in retailing is just plain tough," he said.

Berkshire companies are still selling a "significant" amount of goods to Penney under "normal terms," he said and he's not worried about the retailer's survival.

In response to a question about the Obamacare health exchange rollout, Buffett said with a chuckle that he's glad he wasn't in charge, but argued that something is going to have to be done to control medical costs. They are the "tapeworm" of the American economy, he said.

On the economy, Buffett said he continues to see slow improvement and pointed out that "two percent a year growth with less than one percent population gains means one percent real growth per capita. In 20 years that's 20 percent. If every generation lives 20 percent better than the generation before them, that's not terrible."

Benjamin Moore will not go into Lowe's or Home Depot: Buffett
Warren Buffett, Berkshire Hathaway chairman & CEO, discusses his promise not to bring the paint company into big box retail stores and keep it into the dealer network.

Buffett wouldn't comment on reports the CEO of Berkshire subsidiary Benjamin Moore was fired due to sexual harassment. "Recently we had to make a change for reasons I can't get into," he said, but pointed out the paint company is still making a lot of money.

- By CNBC.com's Alex Crippen

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