The United States shouldn't have a debt ceiling because the debates surrounding lifting the limit only waste time in Congress, says famed investor Warren Buffett.
"All it does is slow down a process and divert people's energy, causes people to posture. It doesn't really make any sense ... To have this artificial limit, which always gets raised in the end, disrupt the activities, in an important way, of Congress, periodically, I think it is a waste of Congress's time," Buffett tells CNBC.
The government has hit its $14.3 trillion debt ceiling and needs Congress to lift it to avoid an Aug. 2 deadline.
Some in Congress are proposing a backup plan that would allow the President to increase the debt ceiling in three increments through 2012 with approval.
That won't solve the problem at hand.
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"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," Buffett says.
"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."
Moody's Investors Services agrees with Buffett and adds that a backup plan must call for spending cuts.
"Any proposal that reduced the risk of payment disruptions would be a positive step in the short term," the agency says, according to CNNMoney.
"Without more substantial deficit reductions being included in such a plan, it would be negative for the long-term outlook," the report said.
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