In an interview with Lou Dobbs on CNN, Warren Buffett, chairman and CEO of Berkshire Hathaway, claimed that we are indeed engaged in "class warfare" and that
the rich are winning.
BUFFETT:
Yeah. The rich people are doing so well in this country. I mean, we never had it so good.
DOBBS: What a radical idea.
BUFFETT: It's class warfare, my class is winning, but they shouldn't be.
DOBBS: ...At the same week the House passed the estate tax, Congress passed the bankruptcy legislation, which they had the temerity to call bankruptcy reform, Democrats and Republicans passing this legislation, which is onerous to the middle class. Half of the bankruptcies in this country take place, because people fall ill, serious illnesses result in bankruptcy. Nearly half of the people involved. How do you -- you have watched a lot of politics. What is going on in this country?
BUFFETT: The rich are winning. Just take the estate tax, less than 2 percent of all estates pay any tax. A couple million people die every year, 40,000 or so estates get taxed.
Warren Buffet, second in personal fortune only to Bill Gates, has made these criticisms before, but it's worth reiterating his concerns.
Mr. Buffet is worried about our ginormous, endlessly growing deficits and our burgeoning sharecropper society:
DOBBS: You're investing -- I think that's the correct way to put it -- in currencies, not the dollar. The fact of the matter is, you have described what is happening in this context:
tremendous deficits, rising debts as a result of budget deficits, trade deficit, those mounting debts that this country is taking on.
You are talking about something you refer to as the sharecropper society and economy. What does that mean to you, because the rest of us, those are strong and powerful words for all of us but especially for those of us who are concerned about the middle class in this country, and who want this country to be all it is aspired to be.
BUFFETT: Well, if we keep doing what we're doing -- and we have shown no signs of slowing down -- the world will own a substantially greater percentage of this country or have our IOUs in the form of government bonds 10 years from now than now, and the cost of servicing the debt or the cost of paying dividends on the ownership will mean that we will send abroad a few percent of our GDP every year just to service debts that arose from the over-consumption that has taken place currently. So, our sons will pay for the sins of their fathers, to a degree. Now, we'll always have a rich country. This is the best country in the world.
DOBBS: Absolutely.
BUFFETT: But if the rest of the world has $10 trillion of our assets instead of $3 trillion, we will be shipping some of our product abroad every year merely to service the debt that we've run up.
DOBBS: And do you see this as an irremediable situation, a direction that cannot be avoided now?
BUFFETT: It can be addressed. We'll be taxable.
Mr. Buffett is concerned about the Republican's Social Security Bamboozlepalooza:
DOBBS: Are you surprised when you focus on the two deficits we just talked about, the trade deficit, and the budget deficit? The budget deficit is 3.6 percent of our GDP. The trade deficit is reaching just almost 6 percent of GDP. And the president is talking about reforming Social Security. Does that surprise you?
BUFFETT: Well, it's an interesting idea that a deficit of $100 billion a year, something, 20 years out, seems to terrify the administration. But the $400-plus billion dollars deficit currently does nothing but draw yawns. I mean the idea that this terrible specter room looms over us 20 years out which is a small fraction of the deficit we happily run now seems kind of interesting to me.
DOBBS: In point of fact, the Congressional Budget Office, which is considered to be the bipartisan objective standard of such things, has research that suggests that the deficit in Social Security would be only 0.4 percent of our GDP over 75 years as compared to the other large deficits percentages that associated with trade in the budget deficit. Do you have, we're talking about fixing the fixes we're in, a quick answer for Social Security?
BUFFETT: I personally would increase the taxable base above the present $90,000. I pay very little in the way of Social Security taxes because I make a lot more than $90,000. And the people in my office pay the full tax. We're already edging up the retirement age a bit. And I would means test ... I get a check for $1,700 or $1,900 or something every month. I'm 74. And I cash it. But I'll eat without it.
DOBBS: You will eat without it. So will literally more than a million other Americans, as well. Means testing, the idea of raising taxes, the payroll tax. In 1983, Alan Greenspan, the Fed chairman, he had a very simple idea: raise taxes. That's what you're saying here.
BUFFETT: Sure. But I wouldn't raise the 12-point and a fraction payroll tax, I would raise the taxable base to above $90,000.
DOBBS: That's a progressive idea. In other words, the rich people would pay more?
BUFFETT: Yeah. The rich people are doing so well in this country. I mean, we never had it so good.
Mr. Buffett is concerned about the depletion of revenue from corporate taxes and the elimination of the estate tax
BUFFETT:
The rich are winning. Just take the estate tax, less than 2 percent of all estates pay any tax. A couple million people die every year, 40,000 or so estates get taxed.
We raise, what, $30 billion from the estate tax. And, you know, I would like to hear the congressman say where they are going to get the $30 billion from if they don't get it from the estate tax. It's nice to say, you know, wipe out this tax, but we're running a huge deficit, so who does the $30 billion come from?
...snip...
DOBBS: Yet we hear the Business Roundtable, the U.S. Chamber of Commerce, whining that it's so onerous, so difficult to obey the law and to meet these regulations. What's your reaction?
BUFFETT: Well, right now corporate profits as a percentage of GDP in this country are right at the high. Corporate taxes as a percentage of total taxes raised are very close to the low.
DOBBS: Historically we're talking about.
BUFFETT: Historically. So, you know, corporate America is not suffering, I'll put it that way.
DOBBS: Corporate America is not suffering. In point of fact, those same organizations that I just mentioned, the U.S. Chamber of Commerce and the Business Roundtable representing some of the largest companies are saying "You tax us, you are taxing our consumers, our customers." Do you think corporations in this country should be paying more? Taking some of that burden?
BUFFETT: I think that ... you have seen companies be able to repatriate earnings with a very small tax that were taxed at very low rates abroad. Corporations are doing better in the total tax picture than the people I'm going to walk by on the street when I leave here.
DOBBS: And some of the people you are going to meet are going to say, perhaps this evening and otherwise in business circles, are going to say, Warren, what are you talking about, raise our taxes.
BUFFETT: They are still friends of mine, Lou.
So, can anyone tell me, is it that the second-richest man in the world doesn't understand the free market system, or is he just antagonistic towards it? </snark>