Back in February, I wrote a piece called Congressional Lifers Are Killing Us, where I laid out what I thought the biggest challenge for this country was: ridding ourselves of the lifelong members of Congress who have corrupted our legislative and economic systems, with no term limits to help us.
I've recently seen a thread running around Facebook, highlighting an idea proposed by the Oracle of Omaha himself, Warren Buffett. He discussed the then-pending debt ceiling increase in an interview with CNBC's Becky Quick on July 7, 2012, in which he said, "I could end the deficit in 5 minutes. You just
pass a law that says that anytime there is a deficit of more than 3% of
GDP, all sitting members of Congress are ineligible for re-election."
I am not a fan of Warren Buffett. He's hypocritical and inflated with a self-importance that defies comprehension (and this is coming from a guy who, some might say, is bathed in intellectual arrogance). Buffett is the guy who said his secretary paid more in taxes than he did. He revised the statement to correctly reflect that her tax RATE was higher than his. He does earn a $100,000 annual salary, and $300,000-$400,000 in a securities based compensation package, that he does pay the top rate on as CEO of Berkshire Hathaway. If you take that alone, his claim is false. But his $46 million total income is mostly investment related, aka Capital Gains, of which the current rate is 15% - which dropped his overall adjusted rate to 17.7%. His secretary's $60,000-$70,000 salary netted her a 30% WAGE rate. Because of this disparity that dismayed him so, Buffett came out in support of raising the income tax rate of the wealthiest Americans, saying he should be paying so much more than the government demands. And Obama, giddy as a schoolgirl, proposed "The Buffett Rule" as the lynchpin to eliminating the Bush tax cuts, bringing the top rate back up to 39.6%, and an additional 3% on the über-wealthy. And the crowd goes wild!.....
Well, not so much. To begin with, Buffett skips over the part that he - and all Americans - can pay as much as they want to the Treasury Department - there is no limit. And I'm a big believer in putting your money where your mouth is. Set the example you wish of other people. But nay, Buffett has no interest in that. He'll only pay more if the government makes him. Like most people, big on words, not so much on actions. And the other thing that's generally glossed over is the fact that, even if Obama managed to raise the wage rate to 80%, he STILL wouldn't get much more out of Buffett. Remember, Buffett's income is mostly investment based. So aside from the tiny sliver of income that is his Berkshire Hathaway compensation package, Buffett would pay not much more now at the higher rate than he does at the current one.. And that goes for all the billionaires in this country. As long as they pay mostly CapGains, they'll pay just as much wage tax after the increase as they do now - which is next to nothing.
And this is how you know Obama is full of it when he talks about making the wealthy pay their fair share. If he really meant that, he would jack up the CapGains rate, not the wage rate, since that's where all the money of the wealthy resides. He's mentioned doing that, but only mentioned bumping the rate up to 20%. Not exactly a barn-burner. This may or may not have something to do with the fact that Obama's millions from his two books are invested in a blind trust (as all presidents' investments are when they take office - essentially, a fund manager takes over the Obamas' investments until they leave the White House, the term "blind" meaning that they don't know where the money is invested, and so can't try to influence markets in a way that they knowingly benefit from). This is also how you know that, for all his rhetoric about sticking it to the rich, Obama knows where his bread is buttered. It makes great lip service, but if he raised the CapGains rate too much, the wealthy will simply move more of their money overseas and invest more heavily in foreign markets, rather than our own. Obama's not dumb enough to play that gamble. So what we end up with is the grandest of empty gestures, with little real impact on anyone except the small business owners, who are, naturally, the loudest voices of opposition. That's why Buffett can shout his support to the heavens - he gets to sound prophetic and benevolent, the masses ignorantly cheering his name, because he knows it will have little actual impact on him.
And this is why his quote in that CNBC interview rings hollow. He makes a good sound bite, but Warren Buffett contributed over $100,000 to campaigns and PACs for this election cycle, just one of many big money donors to the people whose jobs he's threatening. For what it's worth, his idea has merit. I wrote an op-ed a couple of years ago, pushing an idea to tie legislators' incumbencies to performance incentives, the deficit, debt, unemployment rate, and GDP growth being key barometers. If parameters were not met, they wouldn't be allowed to run for re-election for a minimum of two terms. I proposed it as an end-around to the term-limits we all know Congress would never, ever vote for. They would never vote for my idea either, but if enough states were in favor of some form of it (15 states currently have term limits), they could push for an amendment by constitutional convention, bypassing Congress altogether.
I admire Buffett's business acumen - he's an investment genius, and all due credit to his many decades at the top of the food chain. But when it comes to politics, I take him in the same vein I take Donald Trump: amusing caricatures, but not people I take seriously, once you put a little thought into what they say.
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