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Buffett talks on need for second stimulus
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Legendary investor Warren Buffett told ABC's Good Morning America that he believes a second stimulus package may be needed in order to get the American economy moving again. But he quickly added, "you hope it doesn't get watered down in many ways."
Buffett, who backed current President Barack Obama's bid for the White House last year, likened the stimulus package passed a few months ago to "taking half a tablet of Viagra and having also a bunch of candy mixed in ... as if everybody was putting in enough for their own constituents. It doesn't have really quite the wallop that might have been anticipated there."
Plan in the works?
Administration officials have hinted that they are considering a second plan to jump-start economic activity,
Vice President Joe Biden's stunning admission last Sunday on ABC's "This Week," that the administration "misread how bad the economy was" suggests Washington insiders are growing increasingly concerned about the economic and political consequences of staying the course.
It also calls into question how attentive the current group in the White House was to what was happening then. Go back to last September and the stock market was imploding, the credit markets were dysfunctional, and some money markets broke the buck. And that was quickly followed by company after company conceding that they had never seen conditions shift so dramatically.
The weakened economy and the lack of response so far puts the Democratic majority in an unenviable position. Do nothing and continue to focus on a more activist agenda could leave them in a difficult spot come next November if unemployment remains high.
Embark on a new government stimulus plan that's heavy on government transfer payments (and the pork that always accompanies massive new spending programs) and you add to the public's queasiness over the gargantuan federal deficits that lie ahead.
When asked whether the unemployment rate might hit 11%, Buffett said he isn't predicting that, but it would not surprise him if that threshold was breached.
All is not dour in the Buffett camp, however. The Oracle of Omaha acknowledged that tough times will continue and a stimulus is no "panacea," but he expects the US economy to eventually recover and come out stronger than ever.
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