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Warren Buffett Betrays His Father’s Memory . . . Again.

Written by Gary North on November 27, 2012

Howard Buffett was the Ron Paul of the late 1940s and early 1950s: the most libertarian member of Congress. There have only been two of them since 1965. They and Grover Cleveland were all we have had in Washington.

His son Warren is the most successful investor in modern times. There is no question that Warren Buffett will go down in history as a legendary investor. But along with that investment wisdom has come a commitment to Keynesianism. The media love to promote Warren Buffett’s view of taxes.

Buffett believes that people like himself will always invest, no matter what the tax rate is, as long as it is reasonable. Reasonable in this case means about 35% of their gross income if they are multimillionaires. In other words, he says, rich people really do not care, or act any differently, just because a government agent comes to their door, pulls out a gun, sticks it in their bellies, and says: “Fork it over, you rich SOB. You owe it to the government. You owe it to the people. You owe it to us federal bureaucrats, and I’ve got a gun to show you beyond a shadow of a doubt that you will pay. Got it, fat cat?” This wouldn’t bother Warren, and he thinks it would not bother any of his peers.

Well, it bothers me. It’s my money. I don’t like having it taken by a government I do not trust.

When the government taxes us at these rates, it always wastes most of the money. The government gets stronger, and the public gets weaker. This is what high taxes do, and if Buffett thinks taxes don’t do this, then he needs to pay somebody to collect all of his father’s speeches, and then he needs to lock himself in a room for a week and read them.

Buffett is a classic Keynesian liberal. He appeals to the middle class voter, and anybody else who might be reading his New York Times op-ed piece, on this basis: “Tax the rich. Make the rich guy pay as high a percentage as you do.” Rather than saying that the middle class ought to have their taxes cut, so as to match whatever percentage the rich are really paying, he says that the rich should pay more.

This is always the strategy with Keynesians. They believe that taxpayers are never paying enough. They believe that the public should not be allowed to retain the vast bulk of their earnings. They always want the government to get bigger, and the only question for them is a technical one: “Is it better to hike taxes on the rich, thereby imposing an envy tax, or is it better to collect more revenue by getting rid of their tax breaks, and taking advantage of the Laffer curve?” The question is never this: “How can we shrink the government?”

Buffett does not want to see a balanced budget. He says:

Our government’s goal should be to bring in revenues of 18.5% of G.D.P. and spend about 21% of G.D.P.– levels that have been attained over extended periods in the past and clearly can be reached again. 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.

Why shouldn’t the government’s revenue be twice as much as government spending? Why shouldn’t the government be paying down the federal debt to zero? Why is it that Uncle Sam has always got to have a deficit? The reason is obvious: Buffett likes big government, and Buffett likes to have the government-issued debt, which he and his cronies can purchase. They want guaranteed returns for part of their portfolios. They like big government. They make money through big government.

Buffett gets lots of attention when he makes his annual statement calling for higher taxes. He knows that Congress isn’t going to do it. He gets lots of good publicity for making the statement, and he gets richer the following year.

He complains that there ought to be higher capital gains taxes. Why shouldn’t there be zero capital gains taxes? That’s what you pay in an IRA retirement fund. Why not have 100% of capital gains as part of an IRA retirement fund? Why should the government get any money from profitable sales of assets? Why not just tax all income as regular income, except that income which is kept in the market, expanding the capital base, and providing jobs?

In 1933, rich people would have called Buffett a traitor to his class. In fact, his father was a traitor to his class. Wealthy people since World War II have called for higher taxes, as long as the taxes fund big government projects, which they can get rich from by manipulating the system.

I say this: “Impose high taxes on the government.” How? By cutting its revenue stream. Cut spending and taxes. Push America over the fiscal cliff this way, not Buffett’s way. I believe in austerity: for the government.

I am a true son of Howard Buffett. I believe what he taught. I approve of how he voted. Call me an S.O.B.: son of a Buffett. Howard, not Warren.

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40 thoughts on “Warren Buffett Betrays His Father’s Memory . . . Again.

  1. Gary, you are wrong. At times, responsible government requires increasing revenues. Now is the time for all responsible Americans to come together and support a position of concession. We need increased revenues balanced by spending cuts. We do not need you or Grover Norquist wringing your hands. Norquist is the most dangerous man in America. He is irresponsible. Warren Buffett is responsible.

  2. futurelife says:

    not me anymore… I got out at end of Summer and won't get back in till I know what I have left is safe….. don't trust this obama liar on anything and now don't even trust Buffett as think his mind is getting weak.

  3. Well, your "responsible government" wants your money, and you should give it to them. What happened to taxation with representation. Our government has enacted policies that encourage corruption, sloth, and greed. As of late, they have enacted very few, if any policies, that I have voted for or agreed upon. That's theft. It is only legal because they can do it by force. When LBJ made SS part of the general fund, he created the Ponzi scheme that SS now represents. There is no way that fund should be insolvent with all the baby boomer contributions over the last forty years. Yet here we are. How about all the onerous rules and waster created by HIPAA. A big part of the heathcare problem, yet no one even talk about it. We should be spending more on military, to keep our country strong, yet it is the one area where the exact opposite is being enacted.
    I could go on and on, but that's enough. BO and his cronies, of which Buffet is now a member, are the problem with this country.

  4. Elaine Connelly says:

    Warren Buffett is a tool of the devil. Even with all of his money, he is collecting SS. That strikes me as highly disengenious, and greedy. Warren Buffett is a tool of Satan, I would not trust him. He is colluding with the spawns of Satan, Obama and Bill Gates.

  5. It's truly amazing that you'd describe our government and Warren Buffett as "responsible". That word infers trust and neither the government nor Buffett are deserving of it. The only thing the government is responsible for is making harmful policies and keeping their thieving butts in office. As for Warren Buffett, he's been fighting IRS to escape paying taxes on at least 2 cases, one for 10 years and another for 14 years. You can verify this on Google. He blathers on about everyone having to pay taxes, and then fights tooth and nail to not pay his. He is a hypocrite with a capital H.

  6. BobK, you sound like you're ready to jump off the planet.

  7. Any suggestions you have on getting out?

  8. Responsible government is an oxymoron. Give me one example where the government has run a program that is not supported by an increase in tax revenues. The government does not sell a product nor produce a product so there can be no profit. Profit is the stimulus for economic growth. Therefore, when profit is taken out of the system by the government it reduces the amount of working capital a business has to work with, as a result the growth slows. If government was the answer then why don’t we all work for the government? Answer: the government does not make money, in fact it is the black hole where money goes and is never seen again. If government could create a profit it would perpetually fund its self and there would be no need for taxes.

  9. Exactly what I was about to say, Recmanmc. Thank you.

  10. Why, cause he's not an old white man? Cause he's half black? A proud Christian? You brainwashed teabilly. You got out? Stay out.

  11. Anyone using the words "devil" and "satan" as much as you do shouldn't be trusted.

  12. Perhaps you'd be willing to explain some puzzleing information:

    1. WB, as recently as 2009, employed 28 tax lawyers and CPA's. Is that how you'd volunteer to pay more taxes.

    2. In 2005 and on several subsequent occassions, republican passed and attempted to pass laws that would allow democrats (especially WB) to pay all the tax they want. WB has never accepted this opportuity. Why?

    3. WB allegedly felt stungby the revelation that he had 28 people fighting to keep his taxes low. Three were publicly released, while six more were hired by another of his affiliates. Why?

    4. WB is still in fighting a tax assessment from late 1990's and one from 2005. Hefty sums are involved. the last public accounting I saw on these two cases (January 2012) seemed to indicate that WB tax manipulators would prevail over the government lawyers and keep these massive sums. Why?

  13. Anarchocapitalist says:

    Baffett is just another cronie capitalist.

  14. Richard Hertz says:

    How can one be "wrong" about an opinion? You opinion is no more right or wrong than Gary's.

    I happen to disagree with your opinion, but it would be impossible to prove you "wrong."

    And if you think Norquist is more dangerous than Obama, I also think you're probably not thinking clearly. Norquist has no power over anyone. Obama does, and doesn't mind using that power for various ends.

  15. Randy Gacke says:

    I'm a Berkshire Hathaway investor. I've done well with Warren but I don't agree with his philosophy on government spending or taxation. He's become entirely too liberal for me since his friendship with Mr. Gates who is about as liberal as you can get. Warren knows how to play the game, take advantage of tax loop holes and avoid them. He has a staff of lawyers to help him do exactly that. If he's really so concerned about the wealthy not paying enough in taxes, there's nothing stopping him from not using all the tax loop holes or, better yet, just writing a check to the government for what he feels his "fair share" should be. He's more than willing too write such checks to Mr. Gates. I lived in his home town of Omaha, NE for 30 years and there are a lot of wealthy and well known philanthropists there who give back generously to the community. Warren is not one of them.

  16. Bill McCroskey says:

    Buffet is the classic example of watch what I do ..not what I say … if the IRS showed up at his door and actually took 35% of his total income …. he'd be on the phone to his 'buddies' in D.C. so quick it'd make your head spin.

  17. LiberatedCitizen says:

    I wish someone would expose this Crony Capitalist for what he really is. Not only did we bail his Billions out but none of these tax proposals would affect him since the majority of his Bailed Out Billions are in Gates Tax Exempt Foundation the other Billions were put in Charities for his kids to run and make millions on. It would be one thing if he were calling for those loopholes to be closed but he isn't.

    Dimon Best to Lead Treasury in Crisis, Buffett Says

    Norquist: Buffett is a Crony Capitalist

    Buffett’s Betrayal

    Implementing Warren Buffett's Gift

    How Buffett Saves Billions On His Tax Return

    Warren Buffett Is A Punk


    Meanwhile, Buffett has given each of his kids a charitable foundation with billions each to manage. If a foundation has $3bb in it, then something like $90mm can go to salaries. I think his kids will do fine with that kind of money.

  18. Charles Mangerian says:

    While not a libertarian, I agree with Gary North on most matters, and his observations on Warren Buffett are spot on. It may appeal to the envious, but making sure "the rich" join us at the same or even a faster rate along the slide to bankruptcy or worse isn't much of a strategy. I can't accept the anarcho-capitalist vision,, however libertarians and conservatives should both agree on the need to return to limited government. I also wonder about "shane" and "recmanmc", as I've noticed that pro-life and pro-family websites often find their comboxes hit with a blizzard of off-topic, often abuse comments that appear to be coming from professional "trollers" on the left who monitior conservative websites. Thoughts?

  19. I don't know about "recmanmc", but "shane" is a paid troll. That's one thing the left does very well. It pays its operatives. The right has to make do with volunteers.

  20. LiberatedCitizen says:

    My thoughts are we should have let the banks fail and the bailed out buffoon would have lost billions and wouldn't have as much money to pay off obama and other politicians but since we didn't we could at least hope for some prosecutions right? Sigh all hope is gone our government is bought and paid for by these pigs.

    CONVICTED: Bush 1300+, Clinton 1000+, Obama 0.0 (+/-)
    Report: Cronyism, political donations likely behind Obama, Holder failure to charge any bankers after 2008 financial meltdown

    Five Senior Goldman Sachs Execs Gave $130K To 'Obama Victory Fund' WHILE Eric Holder Was Deciding Whether To File Criminal Charges

    Buffett’s Betrayal


    A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.

    Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money. The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.

    To put that in perspective, 75 percent of the debt these companies have issued since late November has come with a federal guarantee.

    Without FDIC’s debt guarantee program, even impregnable Goldman would have collapsed.

    And this excludes the emergency, opaque lending facilities from the Federal Reserve that also helped rescue the big banks. Without all these bailouts, the financial system would have been forced to recapitalize itself.

    Banks that couldn’t finance their balance sheets would have sold toxic assets at market prices, and the losses would have wiped out their shareholder’s equity. With $7 billion at stake, Buffett is one of the biggest of these shareholders.

    He even traded the bailout, seeking morally hazardous profits in preferred stock and warrants of Goldman and GE because he had “confidence in Congress to do the right thing” — to rescue shareholders in too-big-to-fail financials from the losses that were rightfully theirs to absorb.

    much more

  21. Phillip the Bruce says:

    If you believe in "responsible government" as described in the book of Exodus, as Gary and I and many other do, such a government requires very little revenue – certainly much less than it is currently extorting.

  22. ObamaPhone says:

    racist much?

  23. ObamaPhone says:

    troll harder

  24. Jacob Steelman says:

    Warren Buffett is just another character out of Atlas Shrugged – the businessman feeding at the government trough. He needs fiat money produced by the central bank. He advocates Jamie Dimon, CEO of JP Morgan, for Treasury Secretary to take over from the lap dog Geithner. Dimon is top executive in JP Morgan which just recorded a USD6billion loss. So why does America need Dimon? To increase America's deficit even more? I think it is time for Warren to retire and give all his money to the government that has so helped him become a billionaire many times over. Then Warren can retire and live like the rest of the retirees that he has helped to loot through creation of central bank fiat currency.

  25. Then requiring little government would mean that we would eliminate the Defense Department, the largest department in government. Then where would we be in the world? With over 26 years of military and civilian service in the Defense Department, I know that as a nation, we cannot survive without a military. If we fail to reach a compromise on the budget and deficit, one-half of the cuts will come from Defense. I would rather have some tax increases than risk the safety of our country by going over the fiscal cliff.

  26. Richard, I know that you cannot be wrong about an opinion. Everyone is entitled to their own opinions. Be thankful that live in a country where we can express our opinions. While I think that Obama is dangerous, I think that any private individual like Norquist who can wield such power over the country is very dangerous. I suggest that read today's Washington Post article on Norquist.

  27. Jacob Steelman says:

    America cannot afford to keep these gunslingers or you ex-gunslingers on the payroll any more all over the world stirring up trouble. You don't get it – the party is over. There is no money left. The nation cannot and will not survive all the wars created by your military-industrial complex to date and in the future.

  28. Bill McCroskey says:

    Good point (s)

  29. Jacob, I agree with you. The US should not be the policemen of the world. We do need to pair down the size and deployment of the military. We can no longer afford to have thousands of troops in Europe or continue the war in Afghanistan, but we must remain strong and capable. We must streamline the Army so that they are capable of responding to today's threats, not equipped and organized as they were in WWII. The Iraq war was a mistake that I knew was a mistake before we got into it. We wasted billions and thousands of Americans' lives.

    At home, we need to curtail entitlement spending growth and reduce the size of many departments and agencies, beginning with the reduction of the Department of Homeland Security. It is out of control with a blank checkbook.

  30. LadyLiberty says:

    Thumbs up! The tax me proposal is a scam that hurts his competition and won't affect him at all.

    Watch out for the 50% Bubble

  31. AmericaBeautiful says:

    weak?…or gotten to?

  32. America Beautiful says:

    Thanks for the expose (expos-ay). Could you possibly turn this into an article for…say, the NY Tiimes? Washington Post?

  33. Jacob Steelman says:

    Charles – I have been involved with libertarianism and Austrian economics for over 40 years. I use to be a limited government libertarian for many of those years. It is a practical step but not a solution. The more I read of government including America's founding fathers the more I am convinced that man cannot handle power without abusing it no matter what level of government. Place the best mannered person you know (from the private sector or society) in government and he or she immediately begin to change. They immediately begin to lord it over others. The Ron Pauls of this world are rare. We must strive to eliminate government and perhaps along the way we will achieve limited government with merely a reservist military and coast guard to DEFEND America's borders against armed invasion. All else would go in a limited government – no fed, no fiat currency, no income tax, no deficit, no regulations, no bailouts, no state owned businesses such as public education or public utilities, no government supported/sponsored labor unions, no crony capitalism, no tariffs, no troops overseas, no entangling alliances with other countries, etc. Is this what you mean by limited government?

  34. Re: Recmanmc,

    — At times, responsible government requires increasing revenues. —

    Non sequitur. What is "responsible government"? Why would it require "increasing revenues"?

    Wouldn't a responsible anybody be more prudent with money so not to need "increasing revenues"? Why would spendthrifts and pilferers be construed as "responsible"?

    — We need increased revenues balanced by spending cuts. —

    What's with this "we" business, Kimosabe? You're confusing the citizenry with "government". Despite the rhetoric, government is NOT us; it is made of and for the bureaucracy.

  35. Texas Chris says:

    I was with you right up to the "We should be spending more on military"…

    We need to spend about 25% of what we do now, we just need the troops to be HERE. You know, actually DEFENDING.

  36. Texas Chris says:

    But who would build the roads! Roooooaaaddddssssss…

    Seriously, society will have to endure a collapse of government before it wakes up and realizes how little the bureaucracy actually contributes.

  37. Texas Chris says:

    Warren "I pay less in taxes than my secretary" Buffet's company Berksire Hathaway owes over $1,000,000,000 in back taxes. He refuses to pay.

  38. Texas Chris says:

    Norquist is not dangerous. Neither is he particularly powerful. Any politician can violate their promise to him at any time.

  39. Texas Chris says:

    I agree on all counts.

    But I wouldn't just "pare down" the size of the military, DOD, or DHS. I would slash it drastically.

    I would also eliminate most federal agencies, returning those powers to the states, if the individual states chose to fund and perpetuate them.

    It sounds drastic, but the alternative is a collapse of government and a subsequent violent shift in society.

  40. The Texan says:

    You state "Why shouldn’t there be zero capital gains taxes? That’s what you pay in an IRA retirement fund." You are sadly mistaken, if you believe this. While capital gains within an IRA are not taxed as long as they remain there, when they are taken out as distributions, they are taxed at ordinary income levels — now reaching 39.6 percent. Get your facts straight.