UPDATE 2-Buffett: Economy on mend, health care big problem

* Buffett says economy is getting better

* Buffett calls health care costs “out of control”

* Buffett praises Obama
(Adds details throughout, byline)

By Jonathan Stempel

NEW YORK, Mar 1 Reuters) – Warren Buffett said the U.S.
economy has passed the worst of its troubles, but faces an
uneven recovery as consumers keep a tight rein on spending.

“We got past Pearl Harbor,” Buffett said on Monday on the
CNBC business news channel. “We will win the war, and it’s
going slightly our way.”

Buffett said business remains “slow” in many areas,
including at his Berkshire Hathaway Inc (BRKa.N: )(BRKb.N: ), as
consumers adopt a more cautious mindset about spending.

He also said consumers must fend off “out of control”
health care costs, which he called “a national emergency” and a
“tapeworm” eating at the economy.

Even as the economy improves, Buffett said it may not make
stocks more attractive to buy. Buffett lamented not buying more
aggressively last March, when stocks were hitting decade lows.

“My enthusiasm for stocks is in direct proportion to how
far they go down,” he said. “Stocks are a lot less attractive
now than they were a year ago.”

Buffett spoke two days after Berkshire published its annual
report, including Buffett’s widely read shareholder letter.

Full-year profit at the Omaha, Nebraska-based company rose
61 percent. Berkshire has about 80 operating businesses that
sell things from car insurance, carpeting and ice cream to
industrial components, paint and underwear.

“There’s a few businesses that have really had a fair
amount of bounce,” while others show no improvement, he said.
“It’s getting better, but at a very, very slow pace.”

Buffett said U.S. President Barack Obama is doing a good
job in restoring the country from difficult conditions. “I give
Obama high marks,” he said.


A $26.5 billion takeover last month of Burlington Northern
Santa Fe Corp, the second-largest U.S. railroad, cost Berkshire
the last of its “triple-A” ratings from major credit agencies.

Buffett raised about half of the $15.9 billion of cash used
for the takeover, Berkshire’s largest, in credit markets.

He said the downgrades had virtually no impact on
Berkshire, perhaps costing just a few hundredths of a
percentage point in extra yield on its debt.

“I think we deserve a quadruple-A” rating, which does not
exist, he joked.

Buffett also said there remain three potential candidates
to succeed him as chief executive, including one ready to take
over immediately if needed.

He praised David Sokol, who chairs Berkshire’s MidAmerican
Energy unit and whom he installed to slash debt and restore
profit at the troubled NetJets plane leasing unit. “What Dave
has done there is miraculous,” Buffett said.

Buffett also praised Ajit Jain, a 25-year Berkshire veteran
who runs much of its insurance business and talks with Buffett
each day. He called Jain “incredibly valuable” to Berkshire,
and said he is responsible for “a huge part” of its success.

Investment Basics

(Reporting by Jonathan Stempel; Editing by Derek Caney and
Robert MacMillan)

UPDATE 2-Buffett: Economy on mend, health care big problem