December 7, 2012
Before Warren Buffett's recent op-ed "A Minimum Tax for the Wealthy" (NYT), it was reasonable to regard the political "Oracle of Omaha" as nothing more than a Democratic shill who presumed to argue for tax sense and justice without uttering a word about problems that are destined to tax the nation to death.
Specifically, the oracle went stone silent in the face of about rampaging deficits, ruinous debt, outrageous waste, as well as the virulently growing reach, power, and growth associated with the "social democracy" beloved by the current president.
Now, however, there is a possibility Buffett can become a true American oracle. But we'll find out only if Republicans open up a dialogue with him.
The reason for that optimistic assertion begins with these specific statements Buffett makes about the relationship between taxes and spending:
"Our government's goal should be to bring in revenue 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 clearly can be reached again..."
"In the last fiscal year, we were far away from [this] fiscal balance — bringing in 15.5 percent of G. D. P. in revenue and spending 22.4 percent. Correcting our course will require major concessions by both Republicans and Democrats."
To be honest, most Republicans will find the proposal out of "balance" as they argue for a lower deficit target or a balanced budget.
However, Buffett's thoughts are worthy of serious discussion because in reacting to them, Republicans can create an invaluable national dialogue about a number of crucially important economic issues, many of which will reveal that Barack Obama and Omaha's Oracle are not as simpatico as the public thinks.
First, and of prime importance, there is reducing federal spending from its current 23% of GPD to 21%, a proposal sure to have Obama shouting "deal!" ... the Obama of another universe, that is.
Next, there are the important realities that arise when Buffett's spending/GDP proposal is applied to last year's budget.
Given the $15.7 trillion GDP in FY '12, the Buffett formula would have brought in $470 billion more in taxes than the feds actually collected.
Now, if Warren Buffett of the Real World can bring in an extra $470 billion simply by increasing taxes on the highest earners, he'll be hailed universally not just as the Oracle but The Alchemist of Omaha.
However, since every alchemist is doomed to failure, Reality dictates he'll become a prime player in destroying Obama's implied lie that a budget "ought of joint" by a deficit of $1.1 trillion can be "set right" simply by taxing the rich.
Furthermore, when it turns out his plan will require raising taxes on ordinary Americans, Buffett will be forced to explain how a beleaguered middle class whose wealth has been in a three-decade decline can afford to pay hefty new taxes, another task he'll find impossible and thus face the decision of separatinmg himself from Obama's "Big Government or Bust" philosophy.
The benefits of the dialogue don't end there, for in FY '12, Buffett's plan would have cut only $300 billion from $3.6 trillion in annual spending.
With the Government Accounting Office admitting there is $200 billion of annual waste in federal duplication alone, Buffet will find himself answering questions about why he defines "major concessions" on the part of Democrats as cuts that don't even account for the totality of Washington's waste.
As is evident, such a dialogue is likely to result in positions by Buffett welcome to those working to convince the public of the unsustainable nature of the nanny state, the new Black Death plaguing Western Europe.
Moreover, in a win for the country and Republican politicians, the Buffett/GOP conversation will place Barack Obama under immense pressure to produce real solutions to the federal spending problem.
However, whatever Obama decides to do, the outcomes are not good for him; for he can abandon his dogmatic liberalism and agree to downsize government, or he can continue to behave as a fiscal Know-Nothing/Do-Nothing, thereby exposing himself as a president who would rather see America become Greece or Spain before he gives up on the dogmas he picked up from his Marxist professors and Chicago Machine mentors.
Republicans can exacerbate Obama's predicament even more if they accept that Buffett has some wise things to say.
For example, they should join him in calling for the elimination of the special interest tax provision called "carried interest," which, for example, allows hedge fund managers to make billions while enjoying a lower tax rate than the one imposed upon many middle class citizens.
But sunlight is an equal opportunity disinfectant; and if Republicans continue to support the carried interest provision, they will find themselves besieged by millions of conservative voters who want to know why the GOP apparently deems their social and economic contributions to the nation as minor when compared to the gigantic good produced by mere speculators whose computers have relieved them even of the burden of pushing pencil and paper.
And in an irony of ironies, those millions will include the natural Republican constituency of citizens who through their businesses invent, design, fabricate, build, market, sell, install, maintain, repair, and provide other services — the very hard working, risk taking, innovative people Obama mocks for believing they built their enterprises.
As the above makes clear, a Republican dialogue with Warren Buffett stands a good chance of advancing the prospects for honest fiscal reform needed if this nation is to avoid the fate now uglifying Western Europe socially, politically, and economically.
Who knows, such a dialogue might also prompt Warren Buffett to challenge the GOP to join him in proposing a fair, efficient tax system (perhaps a simple national sales tax, not a VAT) that gets rid of the IRS as we know it.
Or it might cause him to unite with Chris Cox and Bill Archer, who have spent a frustrating fifteen years trying to warn the nation about a horrendously destructive fiscal time bomb about which Barack Obama and his ilk shamelessly keep their heads deep in the sand.
As explained by the former congressmen (WSJ), the bomb lies in this mathematical reality:
"The actual liabilities of the federal government — including Social Security, Medicare, and federal employees' future retirement benefits — already exceed $86.8 trillion, or 550% of GDP."
To conclude, the GOP ought to reach out to Warren Buffett, and he ought to accept the invitation; for time's rapidly a-wastin for the nation and for the oracle who certainly wishes to be remembered as a remarkable, brave, independent voice who spoke the whole truth to power.
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