Buffett: First stimulus program was ‘half tablet of Viagra’

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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