Buffett: Cut Our 'Greenback Emissions'

With recovery in sight, Congress should curb deficit spending
By Kevin Spak,  Newser Staff
Posted Aug 19, 2009 7:20 AM CDT
In this May 21, 2008 file photo, Warren Buffet speaks during a news conference in Madrid, Spain.   (AP Photo/Paul White, file)
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(Newser) – Just as carbon emissions could have a dire effect on the environment, Warren Buffett thinks “greenback emissions” could wreak havoc on the economy, he writes in the New York Times. The government has spent staggering sums to avoid economic disaster, and that was wise. Now, the economy is “out of the emergency room. But enormous dosages of monetary medicine continue to be administered,” and it’s going to have side effects.

Excluding the World War II years, the country’s highest deficit-to-GDP ratio since 1920 was 6%—until now. This year, the deficit will rise to roughly 13% of GDP. “Fiscally, we are in uncharted territory.” With expenditures at 185% of receipts, it’s going to take major political will and big time overhauls to get that deficit under control. A revived economy won't begin to do the job, Buffett writes, and if Congress takes the politically safe way out, increasing inflation rather than raising taxes of cutting expenditures, the dollar will crumble.