Warren Buffet Isn't Serious About Taxing the Rich, and Neither is Obama
President Obama's attacks on the rich go over well with megawealthy supporters like Mr. Buffet, who feel virtuous for nodding their heads, and with his entitled base, who still believe in Santa Claus. Neither Warren Buffet nor President Obama is being serious.
Warren Buffet isn't serious when he says, please, tax me more. He was asked by CNBC reporter Rebecca Quick in 2007 why he shelters his fortune in tax-exempt foundations instead of giving it to the government, as he exhorts others to do. Buffet replied, "I think that on balance the Gates Foundation, my daughter's foundation, my two sons' foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government." In other words, he thinks he has better ideas for how to spend his dollars than the government, and would do a better job of it, too.
Mr. Buffet, we all feel that way.
Liberals like to spend their own money. They want to spend yours as well -- it buys them moral superiority. Without actually giving the government an extra dime of his billions, Mr. Buffet can bask in the glow of his own liberality and fair-mindedness, merely by attacking his wealthy peers.
The other problem with Mr. Buffet's well-publicized support for Obama's tax increases is that President Obama is not serious about taxing the wealthy, either. He has made no proposals -- only speeches. Obama harps on raising taxes on the rich. He defines "rich" as all families earning above $200,000 a year, not Mr. Buffet's million-dollar-a-year taxable incomes. Obama would raise taxes on our doctors, lawyers, small business owners -- successful upper-middle-class people of all stripes. It sounds good in speeches to his base, but it is a political minefield.
The speeches themselves harm our economy by creating an anti-business climate. If enacted, Obama's suggestions would contribute only a laughable amount to fixing our debt and deficit. Attacking oil companies, corporate jets, and the rich works for President Obama politically, and he enjoys it personally, whereas trying to actually raise taxes would divide and embarrass his own party. Let us recall that the Democrats had two years of a veto-proof majority and proposed no new taxes beyond ObamaCare.
Mr. Buffet agrees when President Obama badmouths successful Americans as selfish and unfair. Warren, wake up! Obama has one purpose: to distract attention away from Obama's own colossal failure and dwindling political support. He has nothing constructive to say. He has not one good idea for how to correct the economic mess he has plunged us into with his irresponsible spending. Attacking the rich for being rich is pure, old-fashioned demagoguery. Demagoguery is a serious evil, but not a single Democrat seems to have noticed that -- certainly not Mr. Buffet.
Demagoguery is the last resort for an Obama in panic. His followers are in a rage over the slowdown in federal spending increases (euphemistically called "cuts" in Washington-speak) and the unemployment rate, above 30% in some black communities. Obama is desperate to deflect blame away from himself. Hence the class warfare.
Mr. Buffet has nothing serious to say about fixing our economy either. He used the New York Times to hector America's wealthiest about paying more taxes, but he didn't crunch any numbers to show how doing so would solve our nation's problems. Like Obama, he did not make a specific proposal on how much the rich should pay, or compare the supposed revenue increase to our national debt. No numbers from an investor? He isn't serious.
The Times tried to help him out with a parallel article filling in some figures. They suggest a 50% tax rate on incomes over $1 million, which would bring in $50 billion over a decade, and eliminating "carried interest" for hedge funds, $20 billion more. Seventy billion is a small number compared to our $4-trillion budget and $14.6-trillion debt, so the Times then added in the repeal of the Bush tax cuts on capital gains and dividends, to bring in $340 billion in a decade. The Times didn't note that now they've left the realm of millionaires and moved on to anyone in America who owns stocks -- small businesses, pension funds, and middle-class investors. This sleight-of-hand was necessary, because targeting just the super-wealthy doesn't get us close to closing the budget gap. The Times added up their figures and declared that the revenue would obviate a third of the federal spending cuts promised by 2021.
The Times' calculations weren't serious either. The Congressional Budget Office projects the federal debt will rise to 101% of GDP in ten years. That's Greece territory. Using the CBO figures, in order to merely stabilize our crisis at the current atrocious level, spending needs to be cut -- or revenue raised -- by $7.6 trillion over the next ten years. The New York Times scenario would amount to a 6% contribution to that modest goal, which barely covers the interest on our debt.
Remember President Obama's debt ceiling speech with its odd focus on the terrible problem of a tax break for corporate jet owners. (Obama forget to mention that the tax break was part of his own stimulus plan, passed in October 2010.) Charles Krauthammer crunched the numbers for Obama on fixing the corporate jet problem. Here's the math:
If you collect that tax for the next 5,000 years -- that is not a typo -- it would equal the new debt Obama racked up last year alone. To put it another way, if we had levied this tax at the time of John the Baptist and collected it every year since -- first in shekels, then in dollars -- we would have 500 years to go before we could offset half of the debt added by Obama last year alone.
Senator Marco Rubio crunched the numbers on Obama taxing millionaires and billionaires.
Here's the fact: the fact is it doesn't solve the problem. First of all, if you taxed these people at 100 percent, basically next year you said, "Look, every penny you make next year the government's going to take it from you," it still doesn't solve the debt. Not only does that not solve the debt problem, but I looked at a host of other ... tax increases being proposed by our colleagues in the Democratic Party and the president to solve the debt problem. ... -- the jet airplanes, the oil companies, all of the other things they talk about -- you put them all together in one big batch, and you know what it does? It basically deals with nine days and 23 hours worth of deficit spending. Nine days and 23 hours of deficit spending. That's how much it solves. So all this talk about going after people that make all this money, it buys you nine days and 23 hours. Let's round it off. Let's give them the benefit of the doubt. It buys them 10 days of deficit spending reduction.
The Wall St. Journal crunched the numbers. How much do we need to raise taxes to cover our spending? You can't use Mr. Buffet's idea of people earning over a million a year paying a higher marginal rate. There isn't enough income there. If we're going to be real, we have to go to the bulge in the bell curve of American incomes, because that's the only place to find enough money to satisfy the government's spending appetite. We are genuinely a middle-class country. How much would we need to raise taxes? Congress is spending $4 trillion a year. How about a 100% tax -- every penny you earn? How far down into the income bulge would we have to go with 100% taxes to cover our politicians' $4 trillion of expenses?
If you took all the income of people (earning) over $200,000, it would yield about $1.89 trillion... So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners.
The Journal concludes:
... Mr. Obama's speech ... contained nothing remotely commensurate to the scale of the problem. If the President had come out for a large tax on the middle class, like a VAT, then at least the country could have debated the choice of paying for the government we have or modernizing it a la Mr. Ryan so it is affordable. Instead the President will continue targeting the middle class for tax increases to pay for an entitlement state on autopilot, while claiming he only wants to tax the rich.
Obama is serious about the joys and benefits of class warfare to promote his own reelection. Mr. Buffet enjoys promoting false solutions that bolster his sense of moral superiority. Meanwhile, millions of Americans are sleepless tonight, worrying about how they will pay their rent, their mortgage, their car payments. Where will they find a job?
Senator Marco Rubio got to the heart of the matter: how does a single one of the Democratic tax increases help us create jobs and grow our economy?
If you have no answer to that question, you are not a serious man, and you do not deserve to be our president.