Here's Warren Buffett on CNBC this morning, discussing a possible solution to keep the government current if we can't raise the debt ceiling by Aug. 2 -- the day the Treasury says the U.S. will default if no deal is reached:
You could have corporations like Berkshire Hathaway (NYSE: BRK-B) voluntarily prepay some of the corporate tax they're going to owe in a few months anyway. If you really knew [that a deal was coming] and you just had a one-day gap, or a two-day gap, I mean, we're going to be paying a lot of taxes on Sept.15, and Jan. 15. ... I don't think there would be a problem in getting a number of corporations to prepay a couple of their quarterly payments if they felt they were doing something patriotic and they really felt that the crisis would be over in a few days. That would be something that would be sensible to do.
"And you'd do that?" asked host Becky Quick.
"Yeah, Berkshire Hathaway would do it. And I'd make a few phone calls."
Technically, this probably could work. The Treasury's monthly cash deficit has averaged $123 billion over the past seven months, or about $4 billion a day. If a few big corporations like Berkshire, Wal-Mart (NYSE: WMT), and AT&T (NYSE: T) prepaid just one quarterly payment, you could probably keep the Treasury current for a day or two.
In dollar amounts, corporate taxes are fairly concentrated -- Buffett in the past has noted that Berkshire alone pays about 2% of all corporate taxes -- so there are probably only a few companies out there that could make a dent. Complicating things is that plenty of corporations have large loss carryforwards from the recession and don't owe U.S. corporate taxes. Plenty more use offshore tax shelters to avoid it altogether. In reality, there are probably fewer than 10 companies whose prepayments would make a difference.
And would those companies feel as patriotic as Buffett? Who knows. Tell me what you think below.
