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Warren Buffett Defends His Secretary


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Politics in the US is a blood sport. You need very thick skin. The fact she went to Washington, intending to or not, she has now entered the ring on this debate. My advice be to turn down these sorts of invitations and to exit gracefully. No one needs this kind of attention. 

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If she earned upwards of $500,000 as suggested by that pundit, it seems unlikely that she'd be buying a very modest $144,000 house to retire to.

 

While it is possible she earns that much it is highly unlikely.  The article in Forbes by Gregory is terrible.  His analysis is worse than Buffett's analysis of comparative taxes.  He didn't understand that Buffett used taxable income and not salary as the denominator.  Her reportedly high rate is not due to a high income tax rate, it is due to the attribution of both employee and employer portions of payroll taxes. 

 

Buffett reportedly said "They can't attack the facts, so they attack the person. It's ridiculous."  I wholeheartedly agree that it is wrong to attack his Secretary; however, I for one would gladly debate him on the facts.   

 

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Would the Warren Buffett of 10 or 15 years ago ever allow an innocent employee to get caught in this political Maelstorm??  I don't think so.  For that reason,and I hate to say this, I think he is beginning to lose it. When I bought the stock in 1999 I never expected him to become a political pundit. I liked the fact that he stayed above all this crap, was low key, sotto voce, and concentrated on business. And part of the "business" is to work hard to minimize taxes in every way shape and form.  My degree of disappointment in him is quite enormous.

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Would the Warren Buffett of 10 or 15 years ago ever allow an innocent employee to get caught in this political Maelstorm??  I don't think so.  For that reason,and I hate to say this, I think he is beginning to lose it. When I bought the stock in 1999 I never expected him to become a political pundit. I liked the fact that he stayed above all this crap, was low key, sotto voce, and concentrated on business. And part of the "business" is to work hard to minimize taxes in every way shape and form.  My degree of disappointment in him is quite enormous.

 

I feel the same.  It's is hard to watch a man who I hold in such high regard voluntarily allow himself (and others who work for him) to be used as a political pawns.  The cheapening of his legacy is heartbreaking to watch.  I never expected perfection from him.  Someday, I will likely see this as a minor hiccup in the context of a superlative life, but today I see it as simply unnecessary.  The fact that he is giving away almost all his wealth (while politely encouraging others to do the same) speaks loud enough about his views on the inequities in society. 

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I suspect he's figured out that there's the potential to create as much positive change through his public persona as he does through his wealth.  In effect, he's solving the global problems with his money, and solving with the national problems with his jawboning.

 

He's an impressive guy, making such an effort near the end of his life to leave the world in a better place than it was when he entered it.

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I suspect he's figured out that there's the potential to create as much positive change through his public persona as he does through his wealth.  In effect, he's solving the global problems with his money, and solving with the national problems with his jawboning.

 

He's an impressive guy, making such an effort near the end of his life to leave the world in a better place than it was when he entered it.

 

Completely agree with you, Richard.

 

I get more fond of the guy the more I hear from him.  WEB is a national treasure.

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Would the Warren Buffett of 10 or 15 years ago ever allow an innocent employee to get caught in this political Maelstorm??  I don't think so.  For that reason,and I hate to say this, I think he is beginning to lose it. When I bought the stock in 1999 I never expected him to become a political pundit. I liked the fact that he stayed above all this crap, was low key, sotto voce, and concentrated on business. And part of the "business" is to work hard to minimize taxes in every way shape and form.  My degree of disappointment in him is quite enormous.

 

I would suggest that you feel this way because you don't agree with what he is advocating, and if his views and values were aligned with yours, you'd be cheering him on and wishing he spoke out louder.

 

I have learned that these discussions don't lead anywhere. People have deep rooted feelings about these topics and I am yet to see one of us walk away with a changed opinion from our debates on these internet boards.

 

For what it's worth I completely agree with Richard, and if some of us could put our personal bias aside you would realize that WEB has been fighting for equality for decades and decades and this is nothing new. Maybe he is getting more vocal because he feels the inequality has gotten out of hand as of late, and notwithstanding how I feel about it, if speaking out is what he feels can help bring about change, then I applaud him.

 

At the end of the day, some people will never be happy paying any taxes because they feel they're single handedly responsible for their status in life even though they drive their expensive cars on roads someone who probably makes $40K a year had to break his back building... I personally disagree and do not mind contributing more to this society that benefits me so much than that guy who built the road I drive on;

But at the end of the day that's what elections are for... At least the guy building roads and the guy shuffling money around for a living both get 1 vote in a democracy and they both have to live with the outcome.

 

Edit:

PS: I personally haven't seen anything that would lead me to believe that WEB is "losing it". And I kind of resent the fact that you would portray him as "losing it" just because his political opinion is not in line with yours. If WEB is "losing it", then I would suggest Sarah Palin, Michele Bachmann, Herman Cain etc.... are raving lunatics that need to be institutionalized, and the sooner the better.

 

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I think what rubs people the wrong way is not Buffet's opinion or trying to get others join his movement to reduce inequality but using the gov't to do this as there is very little flexability and the gov't has a tendancy to be arbitrary with no recourse if something doesn't go right. 

 

He does realize that spending has to come down (he has so in his statements) but he has not provided specifics or lobbies Obama for spending cuts only tax increases.  He also has allowed himself to be used by Obama for this one-sided argument rather than also insisting that Obama link spending custs to the tax increases before he will get involved.  I think the one sided effort to date is what folks are reacting to not a disagreement with his point of view.

 

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I suspect he's figured out that there's the potential to create as much positive change through his public persona as he does through his wealth.  In effect, he's solving the global problems with his money, and solving with the national problems with his jawboning.

 

He's an impressive guy, making such an effort near the end of his life to leave the world in a better place than it was when he entered it.

 

 

He is following the example of past tycoons -- Andrew Carnegie pushed for the inheritance tax, for example.

 

JP Morgan stepped up in a big way to temper the financial crisis of 1907 -- this time around, it's Buffett injecting large sums into financial institutions and making big media appearances to instill market confidence:  "Buy American, I am", for example.

 

I guess with all that time on his hands he is reading his history -- how to be a text book tycoon of change.

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PS: I personally haven't seen anything that would lead me to believe that WEB is "losing it". And I kind of resent the fact that you would portray him as "losing it" just because his political opinion is not in line with yours. If WEB is "losing it", then I would suggest Sarah Palin, Michele Bachmann, Herman Cain etc.... are raving lunatics that need to be institutionalized, and the sooner the better.

 

And LOL

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Warren is not "losing it" a second. His rationale about taxes is clear and lucid. He has billions that he gives to charities and at this point, focus on lemonade stands things like a lot of us do is not going to move the needle.

 

He put decades of brick after brick build reputation on the table for a cause that he deeply believes in.

 

And the least that I we can say is that nobody can accuse him of tax policies lobbying for personal wealth interest!

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I suspect he's figured out that there's the potential to create as much positive change through his public persona as he does through his wealth.  In effect, he's solving the global problems with his money, and solving with the national problems with his jawboning.

 

He's an impressive guy, making such an effort near the end of his life to leave the world in a better place than it was when he entered it.

 

Completely agree with you, Richard.

 

I get more fond of the guy the more I hear from him.  WEB is a national treasure.

 

I see it the opposite.  He is a man.  A great investor, but a very flawed man.  While he could be just making an honest mistake, it looks more consistent with the theory laid out in The Snowball  - that he is is continuing his lifelong desire for others to love him.  Instead of offering ideas that would tackle America's fiscal problems he offers a prescription that makes him look better and fails to make a significant difference.  Implementing the Buffett rule (a 30% tax rate on all income over $200,000) is a $50 billion impact to a $1.5 trillion debt (based on 2009 tax data).  He isn't solving any problem other than his apparent need for others to praise him and Obama's desire to get re-elected.  (By the way, a 100% tax rate would still leave a deficit.)

 

The facts are that the bottom 60% has seen their tax burden reduced significantly over the last thirty years yet Buffett is telling them they have been getting screwed in favor of the rich.  Buffett's argument is wrong and his prescription is meaningless.  We are not coddling the super rich.  Their effective tax rates are largely unchanged from 30 years ago.  We are coddling the bottom 80%. 

 

Buffett's Secretary, assuming a $60,000 salary and normal life expectancy, will have a lifetime tax burden of 2.5% (income tax plus her half of payroll taxes less SS and Medicare benefits).  She isn't getting screwed in favor of Buffett.  She is getting an incredible deal.   

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I suspect he's figured out that there's the potential to create as much positive change through his public persona as he does through his wealth.  In effect, he's solving the global problems with his money, and solving with the national problems with his jawboning.

 

He's an impressive guy, making such an effort near the end of his life to leave the world in a better place than it was when he entered it.

 

Completely agree with you, Richard.

 

I get more fond of the guy the more I hear from him.  WEB is a national treasure.

 

I see it the opposite.  He is a man.  A great investor, but a very flawed man.  It looks more like he is is continuing his lifelong desire for others to love him.  Instead of offering ideas that would tackle America's fiscal problems he offers a prescription that makes him look better and fails to make a significant difference.  Implementing the Buffett rule (a 30% tax rate on all income over $200,000) is a $50 billion impact to a $1.5 trillion debt (based on 2009 tax data).  He isn't solving any problem other than his apparent need for others to praise him and Obama's desire to get re-elected.  (By the way, a 100% tax rate would still leave a deficit.)

 

The facts are that the bottom 60% has seen their tax burden reduced significantly over the last thirty years yet Buffett is telling them they have been getting screwed in favor of the rich.  Buffett's argument is wrong and his prescription is meaningless.  We are not coddling the super rich.  Their effective tax rates are largely unchanged from 30 years ago.  We are coddling the bottom 80%. 

 

Buffett's Secretary, assuming a $60,000 salary and normal life expectancy, will have a lifetime tax burden of 2.5% (income tax plus her half of payroll taxes less SS and Medicare benefits).  She isn't getting screwed in favor of Buffett.  She is getting an incredible deal. 

 

I disagree with your assessment of WEB's motivation.  I think he's being supremely rationale, rather than being a bleeding heart, or having a burning desire to make others love him.  Clearly, he doesn't feel the need to have hardcore conservatives love him, since he's willing to go against them so readily.

 

WEB's philosophical viewpoint is simply different from yours.  WEB believes in the notion of the ovarian lottery, and that a just society should be structured so that the vagaries and randomness of life is accounted for in the rules put into place.  This is simply a folksy restatement of the Rawlsian Theory of Justice.  (See http://www.youtube.com/watch?v=LiTkU9eIFPs ; http://en.wikipedia.org/wiki/A_Theory_of_Justice. )

 

In other words, WEB has put his philosopher/policy maker hat on, not his "I want everyone to love me" hat on.  The "I want everyone to love me" theory is how hardcore conservatives who admire WEB reconcile the fact that one of the most supremely rationale (and awesome) investors of all time disagrees with their viewpoint.  You might even call it "cognitive dissonance."

 

Regarding the so-called Buffett Rule, WEB himself has noted that it is really directed at fairness and having a system where everyone knows (or at least feels) that the rules are set up in a fair way.  All Americans will have to pay more taxes in the future.  Furthermore, all savers will pay the tax of inflation, as we will have to monetize some of our debt.  But we simply cannot expect the middle class and lower upper class to not get pissed when their taxes go up if the upper upper class are able to retain favorable tax rules that allow them to increase their wealth at a faster rate and possibly gain/keep disproportional influence in the political sphere. 

 

WEB has said time and time again that taxes must be raised and spending must be cut.  Remember, he specifically stated that what happened to Simpson-Bowles was a "tragedy."  If you read between the lines there, he's saying that Obama should have gotten that done instead of allowing the fiasco that occurred last summer.

 

I don't really get your tax burden as 2.5% argument.  For your whole working life, you have taxes taken out of your labor income that go into government coffers and are used for public spending.  And at the end of your life, you get SS benefits (a pittance when you really see what SS benefits are) and Medicare (which may not even exist in the future for non-baby boomers).  At the same time, your income has stagnated, the cost of housing, education and energy has gone up, and risk has been shifted from the private sector back on to your household.  So you actually have an incredible deal now?

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I find it interesting that the most rational person I have studied, and the most success investor of all time - Is deranged, has serious characters flaws, has fallen off the wagon, and possibly suffers from dementia - all simply because he happens to be a liberal instead of a conservative.

 

These comments say much more about the intolerance, and  inability of the posters to accept others viewpoints then Warren Buffett......

 

What did Munger say again about dogma?

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I agree with you about rationality but what I find unusual is he is allowing himself to be used in a political campaign to argue for something he stated he doesn't think is true - you can increase taxes and have little or no meaningful spending cuts.  He thinks the spending cuts are political suiside and buys into the this argument (and in my opinion allows it be an excuse for Obama) but you have Paul Ryan out there talking about it and putting a plan out and Buffet is mum about support for him.  He may not like the specifics but at least he has a plan with the folks Buffet supports having no plan but the status quo and tax increases.  I guess Buffett is not immume to the irrationality of politics/dogma as we have seen with folks on this board (myslef included). 

 

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Buffett & Debbie Bosanek have been both together on ABC News a couple of days ago.

 

here is the video:

 

2012-01-26 (2:53min)

 

http://abcnews.go.com/GMA/video/warren-buffett-secretary-debbie-bosanek-interview-discuss-tax-rate-inequality-15446023

 

other shorter but more interesting version of the video,... worth watching:

 

2012-01-26 (1:17min)

 

http://abcnews.go.com/Business/video/warren-buffett-secretary-talk-taxes-15442489?tab=9482931&section=1206834&playlist=1363932

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I agree with you about rationality but what I find unusual is he is allowing himself to be used in a political campaign to argue for something he stated he doesn't think is true - you can increase taxes and have little or no meaningful spending cuts.  He thinks the spending cuts are political suiside and buys into the this argument (and in my opinion allows it be an excuse for Obama) but you have Paul Ryan out there talking about it and putting a plan out and Buffet is mum about support for him.  He may not like the specifics but at least he has a plan with the folks Buffet supports having no plan but the status quo and tax increases.  I guess Buffett is not immume to the irrationality of politics/dogma as we have seen with folks on this board (myslef included). 

 

Packer 

 

I believe WEB is letting himself be a symbol of how things work and how things should be changed so that we have a fairer system.  I'm pretty sure he really does believe in the Buffett Rule, though not that putting the Buffett Rule in place will solve our debt problem. 

 

Actually, I'm not sure I have ever heard even President Obama say that the Buffett Rule will be a panacea for our problems, and I don't think it's accurate to say that Obama thinks "you can increase taxes and have little or no meaningful spending cuts."  That's just the way that Republicans spin the President's position because they dislike him so much. 

 

Paul Ryan's plan is simply the wrong policy for the moment.  Frankly, I believe the GOP will lose this round and put up Paul Ryan for president in 2016 -- and Ryan will be a much stronger candidate than any of the current slate of Republicans.

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I disagree with your assessment of WEB's motivation.  I think he's being supremely rationale, rather than being a bleeding heart, or having a burning desire to make others love him.  Clearly, he doesn't feel the need to have hardcore conservatives love him, since he's willing to go against them so readily.

 

WEB's philosophical viewpoint is simply different from yours.  WEB believes in the notion of the ovarian lottery, and that a just society should be structured so that the vagaries and randomness of life is accounted for in the rules put into place.  This is simply a folksy restatement of the Rawlsian Theory of Justice.  (See http://www.youtube.com/watch?v=LiTkU9eIFPs ; http://en.wikipedia.org/wiki/A_Theory_of_Justice. )

 

In other words, WEB has put his philosopher/policy maker hat on, not his "I want everyone to love me" hat on.  The "I want everyone to love me" theory is how hardcore conservatives who admire WEB reconcile the fact that one of the most supremely rationale (and awesome) investors of all time disagrees with their viewpoint.  You might even call it "cognitive dissonance."

 

Regarding the so-called Buffett Rule, WEB himself has noted that it is really directed at fairness and having a system where everyone knows (or at least feels) that the rules are set up in a fair way.  All Americans will have to pay more taxes in the future.  Furthermore, all savers will pay the tax of inflation, as we will have to monetize some of our debt.  But we simply cannot expect the middle class and lower upper class to not get pissed when their taxes go up if the upper upper class are able to retain favorable tax rules that allow them to increase their wealth at a faster rate and possibly gain/keep disproportional influence in the political sphere. 

 

WEB has said time and time again that taxes must be raised and spending must be cut.  Remember, he specifically stated that what happened to Simpson-Bowles was a "tragedy."  If you read between the lines there, he's saying that Obama should have gotten that done instead of allowing the fiasco that occurred last summer.

 

I don't really get your tax burden as 2.5% argument.  For your whole working life, you have taxes taken out of your labor income that go into government coffers and are used for public spending.  And at the end of your life, you get SS benefits (a pittance when you really see what SS benefits are) and Medicare (which may not even exist in the future for non-baby boomers).  At the same time, your income has stagnated, the cost of housing, education and energy has gone up, and risk has been shifted from the private sector back on to your household.  So you actually have an incredible deal now?

 

First I tried to make it clear that it looks like self-love is his motivation, because it does not appear obvious that rationality is the reason.  The main issue is this - Is Buffett actually taxed less than his secretary?  The answer is No.  Not currently when corporate taxes are figured in and certainly not over a lifetime (the whole point of the 2.5% analysis).  If that conclusion is disagreed with, that is what should be debated.  It is not about whether the rise in income for the middle class has stagnated in the last few years.  That is a separate issue from tax fairness.

 

If I come to the conclusion that Buffett is incorrectly assessing the situation, taxed more not less, then I cannot conclude that he is acting supremely rationale.

 

Here is another way to look at it.  Let's accept Buffett's math for the moment.  Under Buffett's logic, implementing the Buffett rule (a 30% tax rate on the super-rich) would result in what?  Him paying a 30% rate.  What rate did he state his staff paid?  A range of 33 to 41% and an average of 36%.  So his solution to the gross unfairness in our society is to keep it unfair?  That is absurd.  Even if I accept his analytical logic, his prescription is irrational. 

 

 

None of that has to do with philosophical/political viewpoint.  It is just objectivity.

 

   

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First I tried to make it clear that it looks like self-love is his motivation, because it does not appear obvious that rationality is the reason.  The main issue is this - Is Buffett actually taxed less than his secretary?  The answer is No.  Not currently when corporate taxes are figured in and certainly not over a lifetime (the whole point of the 2.5% analysis).  If that conclusion is disagreed with, that is what should be debated.  It is not about whether the rise in income for the middle class has stagnated in the last few years.  That is a separate issue from tax fairness.

 

If corporations are willing to give up corporate personhood, limitations (often complete limitation) of liability for officers and shareholders, and so on, then you can treat the income on a look-through basis.  Until then, they should be considered wholly separate entities.

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I have to agree with Tim on how little the Buffett rule does.

 

Whatever the motive, Buffett is smarter than that and should have only endorsed a solution where he truly believed that the outcome would result in a meaningful impact to society. The guy is 82, so if he wants to have a positive legacy on politics and the country, then the solution has to be a little bolder.

 

I used to consider Warren Buffett an independent and that is why I liked him so much before. He pushed hard for many years for companies to reform their pension assumptions which were unrealistic. He pushed hard also for stock options to be expensed. He also described very clearly the impact of continued trade deficit. These were logical things, totally removed from choosing a political side. He didn't care if it made a Democrat or Republican go mad, he just wanted to do what was right. 

 

While I do agree with him that the rich should pay higher taxes than now, he should have demanded Obama to commit to reduce spending by "X" amount or to reform certain program before accepting to have his name over the "rule". Now, it seems that he talked about the tax percentage paid by the rich being too low, then Obama proposed a plan that solves next to nothing and Buffett now is endorsing Obama or essentially giving him carte blanche.

 

Seems all about politics, just like Obama refusing natural gas in the early part of his mandate and now embracing it. At the same time, he refuses the XL pipeline. Now the Buffett rule is a way to side and appeal to the middle class. That is not leadership, it is just trying to gather votes from as many sides as possible.

 

By the way, I don't agree either with Gingrich to simply reduce taxes and somehow hoping for growth to create revenue and solve all the problems. I just wish that one guy could lay out a solid plan for the country to fix its debt issue and resume growth with realistic numbers.

 

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"...And I kind of resent the fact that you would portray him as "losing it" just because his political opinion is not in line with yours..."

 

Excuse me, I was not attempting to inject politics into the conversation. Although I firmly believe that giving more money to an inefficient, wasteful, corrupt entity such as our gov't is not rational, my main point had to do with my decision to invest in Berkshire in 1999. After following Buffett for years, assessing his behavior, and finally making a decision to invest a good amount of money with him, he changes and becomes a different person. He goes from being a low key, no nonsense, business first, laser focused value investor to a high profile, partisan politico. Not really my cup of tea. I believe his about face is similar to what many people on this board claim Biglari did. This political posturing has a definite potential downside to Berkshire and all its stockholders. Its great right now with Obama as President---But-----what if he loses and the Republicans get in---do you think they will forget??  Would the Buffett of 10 to 20 yrs ago ever put himself or Berkshire in a potentially vulnerable position??   

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