Saint Buffet's Chutzpah

'I'll donate a dollar to pay down the deficit for every dollar that Congressional Republicans donate' taunts Warren Buffet in a Reuters article (n.b. indirect quote).

He must have finished President Obama's copy of "Rules for Radicals" and decided to get on the fun side--the media's side--of the Statist v. Liberty conflict.  Annoying your enemy, especially to the delight of Alinsky's realistic revolutionaries, is a winning tactic according to the handbook for community organizers.

The irony of the quintessential "Have" speaking in the name of the "Have Nots" to persuade the "Have Some, Want Mores" to play in a game that gives him, not them, yet more is rich.

This "Have Some, Wants More" isn't fooled.

In return for his advocacy of Statist governance, Buffet gets the President's private assurances that BankAmerica, for instance, won't be allowed to go bankrupt, and that it is safe for him to invest billions of dollars in it on buccaneer terms.

The person who said that higher risk was necessary to earn higher returns didn't understand crony capitalism.

If Warren Buffet wants to squander the prestige he earned as a capitalist on behalf of Statist politics and governance, that's his business.  We the people are free to ignore him, as we surely must do if only for the sake of self-preservation and that of the our country.

There were a couple of passages in the article, however, that begged a rejoinder.

The jabs over voluntary payments come as higher taxes for the wealthy and extension of payroll tax breaks for middle-class Americans are becoming increasingly contentious issues for the 2012 presidential race. Obama is trying to paint Republicans as only favoring the wealthy, while Republicans are trying to brand the president as relying on tax hikes to fund excessive spending.

While it is certainly the case that each Party is jockeying to paint the other in the least favorable light, someone should point out that the picture Republicans are painting accords with a plausible reading of reality, whereas the one that Democrats are painting does not.

Borrowing a line from the immortal Josh Steiner, Republicans' claims are more a Manet than a Monet; Democrats'  are much more a Munch--they say more about the painter's state of mind than about what they depict.

First, the President's claims that Republicans favor only the wealthy, are pure bloviation.

Unlike Warren Buffet, George Soros, Jon Corzine, Jeff Immelt, George Kaiser and the cadre of deep-pocket donors from Wall Street to Sunset Blvd. that fill the President's war chest to overflowing, Noman is not wealthy.

He knows that what passes for government since Harry Reid and Nancy Pelosi took over Congress in 2006, and especially since Barack Obama took over the White House in 2008, favors neither the middle class, no-family nor him.

To benefit from Democrats' favor, one must know somebody rather than something useful, have pressure group connections, join the metastasizing public sector, or generally be willing to lay down, roll over and beg.

Democrats' economic initiatives hinder the nation.  Republicans' initiatives to reduce the scale and scope of government, taxes and regulation help the middle class and Noman by stimulating rather than suffocating private initiative, thereby unleashing rather than shackling the economy.

Republicans' economic initiatives promise hope for those skillful, lucky and blessed enough to seize opportunity.  Democrats promise effortless abundance that exists nowhere but in heaven and in utopian fantasies.

Noman prefers freedom--even if it means the possibility of failure--to servitude and a life dependent upon whom one knows rather than upon what.

On the other hand, the President is relying on tax hikes to fund excessive spending.  He fights like a rabid wolverine--a low-biting one at that--to defend every ounce of pork and patronage in the budget.  He snarls and growls for tax increases through the use of euphemisms like "fairness."

Then he has the audacity to lambast Republicans for not compromising.

Total national debt has levitated by 60%, to over $16 trillion, during his Presidency despite the government's receipt of $2.1 trillion in tax revenues each and every year of it.  How much is enough?

While current annual taxes slightly exceed 2005's amount, today's deficit surpasses that year's by $1.3 trillion. The difference is big government's spending of $3.8 trillion. The facts are plain to see.

That would constitute excessive spending in most people's estimation.  But, for Liberals, the Goldilocks standard applies.  Whatever the amount spent, as long as it increases year-to-year by a higher rate, it is never excessive and always just right (barely).

But, not for baby bear, whose belongings are casually appropriated by somebody else.

Before President Obama arrived in the White House with his notion of fairness, the federal government never spent more than $3 trillion in a single year.  Thanks to his exertions, it will never again spend less, and is projected to spend $4 trillion by 2015.

Any bets on the actual figure reaching $5 trillion as ObamaCare bureaucrats settle into their offices?

Which Party is painting a realistic picture, and which is just doodling?  You be the judge, in November.

The second point regards Saint Buffet's social theory, specifically his confusion of government with society.

Buffett said in the Time interview the United States needed a tax system that favored people who were not born investors. 

"We need a tax system that takes very good care of people who just really aren't as well adapted to the market system, and to capitalism, but are nevertheless just as good citizens, and are doing things that are of use in society," he said.

Noman begs to differ.  We need strong intermediate associations--e.g., family, church, schools; in short, educational, religious, cultural, charitable and other organizations--not a tax system that robs these associations to favor pet groups, and recycle money with strings attached.

In a revealing moment of the New Hampshire debate last Saturday night, Newt Gingrich, Rick Santorum and Mitt Romney explained how this operates for good citizens doing useful things for society.

For instance, the Catholic Church was forced to abandon its role as a provider of adoptions in the state of Massachusetts because of its unwillingness to genuflect before Liberals' sexual dogma.  For refusing to serve Baal, Catholic Charities has been denied millions of dollars in federal funding used to help victims of sex trafficking.

Why is this money in the governments' hands to begin with so that it can meddle with the religious beliefs of Catholics, and others?

Buffet apparently doesn't realize that the agency of government is not the only means to assist people that aren't as well adapted to the market system and capitalism as he is.

Yet, he uses his celebrity to debilitate the very system in which he honorably earned it.  By doing so he exposes his ingratitude, as well as ignorance of political economy and life in the middle class--as opposed to among those who deign from the heights to speak for it.

Then again, the government doesn't work as well for most people as it does for him.  He's in a select club of cronies, membership in which makes it worth his while to shill for Statists.

Noman prefers a less contrived game: one in which he and his no-children are free to become the next Warren Buffet, and in which the living legend doesn't labor to ensure that everybody stays in his or her place.

Class Warfare and the Buffett Rule

Noman was delighted to find an Arthur Laffer opinion piece in this morning's paper.  In it, he argues that a millionaire surtax would hurt everyone but the super rich like Warren Buffet.  Noman imagines that Buffet knows this, which is why he feels safe in being so bold as to champion the notion.

Waving Mr. Buffett's op-ed for all to see, Mr. Obama wasted no time in proposing a surtax on millionaires called the "Buffett Rule." Putting aside all the oohing and ahhing over Mr. Buffett's selflessness, his effective tax rate on his true income would hardly budge if this "Buffett Rule" were applied.

Mr. Buffett's net worth rose by $10 billion in 2010 to $47 billion, according to Forbes Magazine. That increase, an unrealized capital gain, is part of his total income by any standard definition, including the one used by the Congressional Budget Office. After also including a $1.6 billion gift to the Bill and Melinda Gates Foundation, Mr. Buffett's true income in 2010 was much closer to $11.6 billion than the $40 million figure cited in his op-ed. Hence his true effective tax rate was only 6/100ths of 1% as opposed to 17.4%. And these are just the additions to his income that we know about.

That untaxed $11.2 billion of income would still not be touched by the Buffett Rule, after application of which his taxes would increase by $7 million. His effective tax rate would rise to .12% from .06%.

Zowie!  Meanwhile, the rest of us would have our growth ceiling, and probability of reaching it, lowered.

One might argue that Buffet's paltry tax relative to his true income only underscores his point, which is that he doesn't pay enough.  But, the real point is that under his own proposal, he still wouldn't.  The rest of us, on the other hand, would have to endure higher rates, higher taxes, a less prosperous economy, fewer routes to upward mobility, and the ignonimy of having to laud Buffet's selflessness.

After laying Mr. Buffet's pretensions to waste, Laffer targets his hypocrisy.

Mr. Buffett's donation to the Gates Foundation goes to the heart of my critique of his public call for higher tax rates on the rich...  [I]f his gift weren't tax sheltered he wouldn't give it. So much for "shared sacrifice."

In a 2007 CNBC interview, when asked why he shelters his money through tax-free strategies rather than writing big checks to Uncle Sam, Mr. Buffett responded: "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." 

So Mr. Buffett thinks he and his family can put their money to better use than the government can. I guess he's really not so different from the rest of us after all.

That article of clothing lying about your ankles, Mr. Buffet, is your pants.  Whatever was once holding them up has been plucked off.

Laffer is the foremost advocate of the well-documented and statistically-verified policy argument that if you want the rich to pay more taxes in both absolute and relative terms, then the high end of marginal tax rates should be lowered, not raised.

When it comes to raising tax revenues by raising tax rates on the rich, Mr. Buffett would again appear to be on the wrong side of the argument. Between 1921 and 1928, the top marginal income tax rate fell to 25% from 73%. During this period, tax receipts from the top 1% of income earners rose to 1.1% of GDP from 0.6% of GDP. The top income tax rate dropped to 70% from 91% after the Kennedy tax cuts began in 1964, while tax receipts from the top 1% of earners rose to 1.9% of GDP from 1.3% of GDP in the period 1960 to 1968. By the way, these periods were two of the biggest booms in U.S. history. 

Guess what was the third period of boom? Since 1978, the top earned income tax rate fell to 35% from 50%, the top capital gains tax rate fell to 15% from 39.9%, and the highest dividend tax rate fell to 15% from 70%. After taking office in 1993, President Clinton virtually eliminated the capital gains tax from the sale of owner-occupied homes and cut government spending as a share of GDP by the largest amount ever. 

Meanwhile, the top 1% of earners saw their tax payments climb to 3.3% of GDP in 2007 from 1.5% of GDP in 1978, while the bottom 95% saw their tax payments drop to 3.2% of GDP in 2007 from 5.4% of GDP in 1978. Why would Mr. Buffett want to reverse these numbers? 

Laffer's facts are tough to argue with.  But, that doesn't prevent Statists from trying.

Of course, cynics and die-hard progressives might object to the above evidence on the grounds that it was driven by an explosion of income gains. But that's largely the point.

The evidence suggests that big government Lefties' real attraction to higher taxes is that they leave the vast majority of people worse off, not better.  Widespread poverty, not increased receipts to the government, appears to be the true aim of the "fair share" set.  Anything to reduce the sphere of private decision-making, and increase the dominion of centralized power, eh?

And, that's just fine with Warren Buffet.  He'll cut his own deal with whatever hegemon needs to be placated.

Noman has written about Laffer, and Buffet, and encourages you read the former's "The End of Prosperity" (2008).  It sheds a great deal of light on class warfare as an economic stratagem, and makes one question the morals of those who foment it as a political one.