Warren Buffett is out with an op-ed in NYT that calls for more taxes AND more deficit spending.
Our government’s goal should be to bring in revenues of 18.5 percent of G.D.P. and spend about 21 percent of G.D.P. — levels that have been attained over extended periods in the past and can clearly be reached again.This is simply a bizarre view by Buffett. As he correctly points out in his op-ed, this will result in an expansion of the deficit. How can he possibly justify this? With a very weak argument:
As the math makes clear, this won’t stem our budget deficits; in fact, it will continue them. But assuming even conservative projections about inflation and economic growth, this ratio of revenue to spending will keep America’s debt stable in relation to the country’s economic output.What's with the modifier "even conservative" projections? What point is he trying to make? Conservative projections are the problem. The man is completely ignoring the very strong possibility of an increase in price inflation and interest rates which would send the deficit soaring. Further, he is ignoring unfunded off the books liabilities of trillions. Buffett knows better. He has totally sold out and become a big government promoter.
Which means Buffett is also for more taxes on high income earners:
Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours.As I have pointed out many times before, it is the high earners who have funds to put into capital investments. They are really the last people you want to tax. It is their investments that are the key to the high standard of living we all experience here in the U.S.
This aggressive pro-government stance is mind numbing. He also writes very misleadingly:
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.
Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.
So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased.First, as mentioned above, if taxes are raised on the rich, the rich will have less to put into investments. Second, why is Buffett bringing up the 91% tax rate? It has been shown many times that no one paid taxes at the 91% rate thanks to loopholes. But, most important, Buffett clearly states that for capital gains the rate was only 25% and then 27.5%. Could that be why he did well as a stock broker in those years, because the tax edge was given to those hustling stocks?
And, I note, that Buffett again does not address where any of this money directed to government is actually going. It's as though if you put the big government G on it, Buffett is for it. Which is completely different from his personal life, where he appears to be quite the cheapskate. In the Buffett biography by Alice Schroeder, Snowball, the index references 34 pages for Buffett, Warren frugality and tightfistedness.
Buffett has been quite suspect in his dealings with government from the time he started dating Washington Post publisher Katharine Graham. He took a sleazy further step by investing five billion dollars in Goldman Sachs just days before the government put in billions.
Now, this op-ed is over the top. Buffett is clearly much too cozy with Barack Obama. There are cards Buffett isn't showing. When he plays the cards, they will all read "BENEFIT OF COZYING UP TO GOVERNMENT."