When Warren Buffett speaks, everyone--for good or ill--listens. The wry, aphoristic Omaha Oracle stepped into the pages of The New York Times this morning to give kudos to Obama's economic team and a grim warning to Congress. First, the compliment:
The crisis required our government to display wisdom, courage and decisiveness. Fortunately, the Federal Reserve and key economic officials in both the Bush and Obama administrations responded more than ably to the need.
On this point, Buffett echoes a number of pundits who have, as we covered here, praised the government as the crisis lifts. But then comes the dark forecast. While some celebrate recovery, Buffett fears that if the dollar spigot isn't turned off soon, the economy will face grave consequences. To avoid catastrophe, he even calls for a tax:
With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can't come close to bridging that sort of gap.
Of course, Buffett has a reputation for contrariness. He is fond of saying that his secretary pays more taxes than he does. During the worst of the crisis last October, he wrote another op-ed in the New York Times that was comparatively sunny, exhorting Americans to buy during the market trough. This is partly because, as Megan McArdle explains in this month's Atlantic magazine, Buffett has become the last true avatar of value investing, which he aptly summed up in the October article this way:
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.
But in his economic views as well as in his investing, as McArdle argues, this does not always mean Buffett is right. His minions have yet to come anywhere close to his summits of success. She leans toward siding with those who doubt that the trusted oracle's contrarian wisdom holds as much water today as in yesteryear:
In the coming years, we'll find out if rising above the madness is enough of a success. In many ways, it's not even clear that Buffett could replicate his own success if he started out today.