Buffett: First stimulus program was 'half tablet of Viagra'

Warren Buffett has come up with an interesting analogy for the shortcomings of the Obama administration's $787-billion economic stimulus plan, which Congress approved in February.

"Our first stimulus bill . . .  was sort of like 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," the billionaire investor said on ABC’s "Good Morning America" today.

He reiterated his support for another stimulus program, saying of the economy, "We are not in a freefall, but we are not in a recovery either."

"I think that a second one may well be called for," Buffett said, adding, "You hope it doesn't get watered down in many ways."

He also took aim at the Treasury’s program to partner with major investment firms and buy up rotting mortgage-backed bonds from banks and other financial institutions. The Treasury on Wednesday named nine firms as its initial partners, including BlackRock Inc., TCW Group and Oaktree Capital Management.

By offering cheap loans to the buyers, the government structured the program to increase private firms’ likelihood of profiting from the purchases in the long run, even if mortgage defaults continue to surge.

"I do not like the idea of any kind of a plan involving the government where Wall Street makes a lot of money," Buffett said. "I just think that Wall Street owes the American people one at this point."

-- Tom Petruno

Photo: Warren Buffett. Credit: Nati Harnik / Associated Press

Comments

[Joyce Schulte]

Being a woman, I don't relate to viagra, but I do know when we only slow the bleeding of an open wound, and our nation is still bleeding.

I would suggest that each taxpayer be given a federally controlled account of up to $50k........and that each taxpayer then identify which loans that $50k should be directed to cover. If a taxpayer did not need the full $50k, then we could easily send that residual back to the Treasury.

That would take care of a lot of car loans, education loans, medical expenses, some of a home loan, credit card loans.........and I think it would put a lot of money into action at the lower level of living. As the taxpayer I would not see the money, but I would direct the use of the money in my name.

Maybe it would also encourage trading of cars, spending in better ways, maybe it would life a lot of families above the treading-water-level. But it would not go to bail-out big corporation, or Wall St.

thanks............Go take the other half of the viagra, guys, if you need it.

[Mark]

With a total resident population close to 306M, the $787B stimulus package would have resulted in $2500 per person. Not even close to the $50K the previous poster proposed.

[poco]

I think that we want to stimulate taxpayers not head count. So that would be more like a 130 million. That'd be about $6K each. Nevertheless, Joyce's point is a good one. I wasn't offered the Viagra or the candy so what's the difference? It is clear that I, the taxpayer, am asked to stimulate someone else until they get a proper boner. And my anticipated return-on-investment is what exactly?

[CommonCents]

So I guess Warren is saying that we have not been screwed enough by the government yet?