Buffett said it would be a "terrible mistake" if both sides agree to a compromise in which the White House would be able to raise the debt limit without the approval of Congress.
He also repeated the 'Russian roulette' analogy we first heard from him in his live CNBC interview on July 7. While no one knows what would happen if there's no deal by the August 2 deadline, Buffett said there's no reason to find out. "You're running a totally unnecessary risk and you're sending a signal to the rest of the world that we really can't think ahead in this country."
Despite all the cataclysmic talk we're hearing, Buffett said he doesn't think the U.S. will actually default on its debt. "That's a level of immaturity that I don't believe even this Congress is up to."
A video clip of the entire NBC interview is attached to this post. Here's our transcription:
KRISTEN WELKER, NBC News: Thank you for doing this interview, we appreciate it. So, what was just discussed in your meeting in regards to the debt ceiling?
WARREN BUFFETT: Well…are you talking…excuse me…yeah, well I want to get clear first, are we talking about the meeting, the big meeting …?
WELKER: That you just had, just had, with the President. Where did…what came out of your discussions today with the President on the debt ceiling?
BUFFETT: Well, I agreed with him going in, so there wasn’t much in the way of new thinking on it. It was just, I certainly encouraged him to keep shooting for something very big. The American people want something big, he wants something big, and I certainly hope we get it out of the next week or two.
WELKER: Do you think it’s realistic, the big plan, four trillion dollars in deficit reductions over the next ten years, is that a realistic plan do you think?
BUFFETT: Well I know it’s realistic, I mean we’re going to have to come to terms with it, so the real question is whether, you know, we have the foresight to do it today, or we keep waiting and waiting and waiting. But we, the problem is with us, and the President believes in addressing a problem like that, and addressing it in a big way. I believe in that. The American people believe in it. I mean, my friends, back in Nebraska, believe in that. So I hope it gets done.
WELKER: A lot of people are saying the most realistic option right now is the plan that’s being hammered out behind the scenes between Senators McConnell and Reid that would allow the President to increase the debt ceiling in three increments through 2012. What do you think of that plan?
BUFFETT: I think it’s designed to give political cover to people, and I don’t think we need political cover now. I think we need a real deficit reduction plan, and I think it’s an opportunity to do that. I think the President’s said he’s willing to talk about things that, that hurt in terms of his, what he would like to see in this world, and he expects the other side to do the same thing. And I think that any plan that simply says, you know, we’re going to think about this later, essentially, and we’re going to try and figure out how if things go wrong we can blame it on the other party, is a terrible mistake.
WELKER: The President has said it might be the last, best option in terms of preventing Armageddon. Do you see it that way, do you agree with the President or no, should he…?
BUFFETT: Well, in the end you prevent Armageddon, sure. I mean we, we cannot go to August 2 and tell the rest of the world that because we’re having this little fight in our sandbox back here, that we’re going to essentially default on obligations of the United States for the first time in our history. That, that, that’s a level of, of, of immaturity that I don’t believe even this Congress is up to. So I…it’ll happen, we’ll get something and, and in the end we have to get something. But why not, why not aim high rather than aim low?
WELKER: Do you worry that if the McConnell-Reid Plan does pass, that it looks like the Republicans have won this fight?
BUFFETT: Well I don’t worry about whether it’s the Republicans. I think what, what it looks like is that Congress couldn’t stand up to making a decision on something like this that they’ve known about for, for years and years and, I think it reflects badly on Congress. But forget about which party.
WELKER: Moody’s has just come forward and said ‘You know what, maybe we should just get rid of the debt limit all together.’ What’s your reaction to that?
BUFFETT: Well I think they’re right. I mean here’s a debt limit, we’ve changed it almost a hundred times over the years. We changed it, I think, seven times during the Bush administration. It’s, all it does is slow down a process and divert people’s energy, causes people to posture. It doesn’t really make any sense. The way to limit debt is by taking in revenues that are appropriate in relation to your expenditures. And, to have this artificial limit, which always gets raised in the end, disrupt the activities, in an important way, of Congress periodically I think is…it’s a waste of Congress’s time.
WELKER: I’m getting the wrap so one more quick question. As you know, Treasury Secretary Timothy Geithner has been hammering this point that if August 2 comes around and we haven’t resolved this, it could be calamitous. Do you think the Treasury Secretary is right, or is that overstating?
BUFFETT: Well I think he’s right in that it could be. I mean nobody knows exactly what would happen. If people thought that ten minutes later it was going to get solved it wouldn’t be calamitous. But they’re, but…you’re running a risk that’s absolutely silly to run. I mean why, why stick a gun to your head and say ‘Well there’s only a bullet in one of the six chambers, so I’ll spin it and pull it and probably it won’t happen.’ You’re running a totally unnecessary risk, and you’re sending a signal to the rest of the world that we really can’t think ahead in this country.
WELKER: Thank you.
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