Buffett Rule Hypocrisy
By Greg Hunter’s USAWatchdog.com
It looks like President Barack Obama is making the tax proposal called the Buffett Rule (also known as the “Paying a Fair Share Act”) into a wedge issue. This weekend, the President was pushing the tax proposal, named after billionaire Warren Buffett, as a way to reduce the deficit. The pending legislation says anyone making more than $1 million a year should pay no less than 30% federal tax. Democrats are going to try to vote on the Buffett Rule this week, but it probably will not get very far in the Senate, and it is a non-starter in the Republican controlled House.
The reason why I say this is merely a “wedge issue” is because it will not do much to reduce the $15.6 trillion deficit. It will set up another totally false narrative that will not help the country. According to the Joint Committee on Taxation, which provides the official Congressional analysis of tax legislation, the Buffett Rule will only raise $4.7 billion a year over the next ten years. Mr. Buffett’s plan is nothing more than a proverbial drop in the bucket. Counting TARP, QE 1, QE 2 and the $16.1 trillion the Federal Reserve pumped out after the 2008 meltdown, we are well on our way to the $23.7 trillion Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program, predicted the crisis would cost back in 2009. But, even that number, as big as it is, does not tell a complete story, and Mr. Buffett knows it.
The banks are continually being bailed out in many backdoor ways, and to be fair, neither party will say a word about it. The recent $25 billion “Robo signing/foreclosure fruad” settelement was a form of a bank bailout. Foreign bank bailouts are also American bank bailouts in disguise. Take Fannie Mae and Freddie Mac, for instance. Taxpayers now own a 100% stake in these two failed mortgage giants. Last year, Fannie and Freddie either forgave or bought a total of nearly $200 billion in mortgage debt liability from Bank of America–alone. (I wrote about this before.) Let that sink in, and then consider Warren Buffet invested $5 billion, last year, into B of A at $7.14 a share. Friday, the stock price closed at $8.63 a share. If Buffett sold B of A today, he’d make about $750 million by my calculation. Give me a break! Would Mr. Buffett have invested the money into B of A if he knew the bailout party would stop? I think not. Why doesn’t Buffett talk about one of the real problems facing America and that is the continuing bailouts for billionaires! These bailouts have greatly contributed to the ballooning $15.6 trillion U.S. deficit. Now, there is talk of committing another $100 billion to Fannie and Freddie to add to the $170 billion already blown in backdoor banker bailouts. (Click here for more on that story.)
Other companies Mr. Buffett invested in or owns include: American Express, Goldman Sachs, General Electric, JP Morgan, Wells Fargo and US Bankcorp. All of these companies have or continue to get financial help from taxpayers. If the government would not have stepped in and bailed out these companies (and others), Mr. Buffett’s Berkshire Hathaway fund would have been decimated! Had there been no bailouts, no zero percent interest rates and no government sanctioned accounting fraud with the suspension of “mark to market” accounting by FASB in 2009, I’ll bet it would be difficult for Mr. Buffet to still be called the “Oracle of Omaha.” Party on, Mr. Buffett. Party on at the taxpayer expense. I think this is exactly what is meant by “privatize the profits and socialize the losses.” Of course, no one on financial TV would ever call Mr. Buffett out on this shame called the “Buffett Rule.”
I think Mr. Buffett is directing the debate away from the obscene corporate bailouts that have been going on since the financial crisis of 2008 and on to a contrived issue of class warfare that will do little to address America’s severe financial problems. If we are really serious about fixing the deficit, then let’s stop the bailouts. Mr. Buffett is supposed to be an expert investor. So, why do so many of the companies he owns or invests in need to be bailed out! What kind of strategy is this? It looks to me like Buffett made some bad bets, and when they blew up, he became an advisor to the administration. Then, he watched as the bailouts not only saved his bacon, but made him and his shareholders even more insanely rich than they already were.
We haven’t heard much from Mr. Buffett’s investing partner Charlie Munger, since 2010, when he said, “So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.” And for those not doing so well in the downturn, the 86-year old Munger says “suck it in and cope.” (Click here for more on this story from the Christian Science Monitor.)
“Suck it in and cope.” That’s what Buffett, Munger, Berkshire Hathaway shareholders and all the bankers should have done after the meltdown of 2008. Instead, people like Buffett used their influence and power to debase the dollar with massive money printing for bailouts that helped cause the credit rating of the United States to be cut. Mr. Buffett’s actions define him. If he really wants to look like a statesman instead of a bagman, he should forget the Buffett Rule hypocrisy and stop the Buffett bailouts!
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Greg,
Thanks for pointing out that the rich continue to get bailed out while the poor and the middle class get crumbs. The only reason I am voting Rebulican this time (I am an Indie) is that we can not take another 4 year of Obama. Outside of Ron Paul, I don’t see anyone offering real solutions but Obama’s in your face take over of the economy and his executive orders setting up his kingdom scare the heck out of me.
George Too,
Thank you for weighing in man!
Greg
The truth is that the national debt will never be paid off since it is statistically impossible to do so! In 11 years the interest payment will be the size of the Pentagon budget… what about the principal?
The numbers don’t lie and eventually a major default will happen the only question is whose will it be made from their end or ours…..
Thank yopu Mitch, Ben, Blt and Guy for the comments.
Greg
I don’t agree that the debt can never be paid off. There are ways..they just aren’t mainstream. Sell off some assets. What is Alaska worth? $4 or $5 Trillion maybe? I would rather sell of Alaska to Russia/Canada/China and pay down the debt, then hold Alaska. What is Hawaii worth? Again, a few trillion at least. I’m sure Japan/China would love to buy it.
Also, most of our payments go to SS and Medicare. What if there was a new flu that wiped out the weak and in-firmed (elderly). The 1918 flu killed something like 20M in the US alone. A pandemic like that where any vaccines would have to be rationed would surely go last to the elderly. Nature could strike with another pandemic or one could be manufactured.
Saying the debt can never be paid off is just 2 dimensional thinking.
Great article, Greg. Once again succint and to the point.
Keep up the great work!
+JMJ+
Greg,
Very well said…very well said indeed.
Way to go greg. I got goosebumps. Love hearing truth!
Hi!, USAWatchdog Patrons Et Al:
The truth and nothing but the truth so help me God is that the head of the deficit/bailout snake should be cut off: KILL THE FED!!
RUSS SMITH, CALIFORNIA
[email protected]
This scrutiny of Buffet is top notch journalism. It shows that Buffet didn’t gather his billions merely by being canny and timely capitalizing on trends, but by having government under the covers with him. Unfortunately he isn’t a brilliant investor to be idolized, but a bizarrely dangerous monopoly capitalist using government power to vitiate his aspiring competitors. Ruin competition, the public loses. The Buffet proposal of 30% tax on (ordinary) millionaires is another strategy to prevent capital formation among prospective competitors of himself and his kind, who are absorbing the nation’s wealth and devastating the middle class, as manufacturing jobs have been exported (“Trilateralized”) and home ownership has been on a long decline, transitioning into apartment residency (feudalism). Just get a food service job at the shopping mall, little people! There are influence circles who collude with government to inject financial venom into business domains not controlled by their members, as in Stuart Symington and Floyd Odlum wrecking Northrop Aviation when Jack Northrop wouldn’t accept a lowball offer from Odlum to merge into Atlas Corporation. This is how monopoly capitalism functions. Buffet is a known participant at the annual “Bilderberg” conferences, founded 58 years ago by someone (allegedly) worth far less than himself. The Pilgrims Society stands at the absolute pinnacle of influence in the United States, despite having a profile almost unknown to the public. It’s the only organization Bilderberg founder Rockefeller belongs to which he didn’t mention in his memoirs, and the USA President is always an “honorary” member of this virtually unknown organization which was set up to effect “the seizure of the wealth necessary” (Review of Reviews, May 1902 pp557-558). It’s extremely probable that Buffet is a long time member of this British Crown sponsored organization, which remains the only major globalist group refusing to release a roster into the public domain; last leaked list dates to 1980. The Buffet rule is about preventing capital formation outside Pilgrims Society influence circles, which include its visible subsidiary, the Council on Foreign Relations. Wealth of monopoly capitalists, shielded by foundations, trusts and other ploys, won’t be touched by the proposed Buffet Rule. That’s why The Pilgrims Society (motto “Hic Et Ubique” Latin means here and everywhere) always has high powered Wall Street attorneys in its ranks. For details on the secretive group tracing to 19th century oil, banking and railroad barons, see also Joel Van Der Reijden. Another highly likely member is Ben Bernanke; several of his predecessors were known members, including Volcker, Obama’s top adviser. I do sincerely believe we could start towards the light of day as a nation under the Constitution and free enterprise if the shroud of secrecy could be lifted from this one organization, as the others are mere distractions.
We should tax all excess wealth of individuals who have over $100M in assets. This would raise more than taxing income of millionaires. Buffett wants to tax your income because he already has wealth. Tax his wealth
Greg.
Great artical. My thoughts exactly..This will go stright to facebook,and emails.
Jay,
Thank you for the promotion!!!
Greg
A Banksters defeatism nightmare, Being forced to Return to Real Money=United States Note=Lawful Money. The real reason you pay an income tax, is for the privilege of using a private currency. Also known As A: Federal Reserve Note, Demand from your bank or brokerage, lawful money and the tax goes away, with a tax exemption on lawful money, all of your money is yours. Use the Remedy within the Federal Reserve Act. http://savingtosuitorsclub.net/ Stop being a Slave!!!!!!
http://www.21silver.com/?show=merrill&read=federal_reserve_act_remedy
Tax Exemption: http://stormthunder.com/federal-reserve-act/ Web search these four different phrases: Redeemed in Lawful Money or United States Note or Redeemed in Lawful Money Pursuant to Title 12 USC §411 or deposited for credit on account or exchanged for non-negotiable federal reserve notes of face value
Dear Greg,
Love you like a brother.
On Youtube you can see a video of Ron Paul’s speech at UCLA.
About 8 minutes in a large guy on the stage who does not interact with SS agents suddenly spends about 30 seconds continuously recording every person in the venue…then he checks it. Bold as brass, right there in front of everyone. Digital ID for the supercomputer database.
I recommend walking to work.
See ya in the camps.
tw
Tim,
Scary stuff man! Please post the video here when you get the chance. I am sure many would like to see it. Thank you.
Greg
Well put Greg!
Notice that at no time did anyone suggest that instead of raising taxes on a small group they should instead rein in big government and lower the tax rate of average workers to what Mr. Buffet pays.
What Mr. Buffet has done is irresponsible, it will eventually cast a very dark shadow over his legacy.
Dave and rrrr,
I like to use the word weasel when referring to Mr. Buffett when talking with my friends. A dark shadow indeed. Thank you both for the comments.
Greg
There was a photo of Warren a few days ago accepting a medal from Obama. Now it’s clear that Warren said what he said because he knew he’d get a medal for it. It doesn’t matter to him that his influence would be unjust and harmful to others. There are many men who would do anything for a medal or a prize, regardless of whether it was a real an honor or not. Now we have one more proof of this fact. I like what the American composer Charles Ives said: “Awards are merely the badges of mediocrity.”
Greg Hunter’s article, Buffett Rule Hypocrisy, is excellent!
There is little mention in the American media (Bloomberg
excepted) of the staggering magnitudes of these bailouts of
incompetent losers in the financial sector. Apparently, only
Iceland has the guts to face up to their mistakes and let the
free market actually work? if you bet and lose – you lose, period!
Right on targtet Jim! Thank you for commenting
Greg
Greg,
Thank you for your insight and wisdom. I agree with every word! It would seem that Obama,Buffet,and the big banks are partners in crime.
The sad thing is that at the end of the day, all that money and power won’t buy either of them eternal life. They are hell bent on destroying so many innocent people’s lives with their bad decisions and greed. And I truly believe that they are instrumental in bringing in the One World or Global Government.
Greg, in a future article, can you give us some suggestions that would help us prepare for the economic tsunami that is most certainly approaching our shores?
And, are we going to be looking at tent cities like in the first Great Depression or worse? Do you think that we would fair better by moving to a more rural area if we live in a big city? Thank you for your response.
Valerie
Valerie,
Small towns and rural areas are going to be much better than a big city any day. Thank you for your comment and question.
Greg
The public and corporate driven debate on taxation is funadamentally flawed. A person who works hard every day to feed and shelter their family should never be taxed on wages or salary that comprises the fruits of their labor. There’s little difference between that and living outside the gates of a feudal lord and paying for the privledge, simply because you don’t have the option to own any land of your own.
A real and viable solution is to eliminate all taxes on individual income that’s generated as a wage or salary with a reasonable cap – up to $250k for example. And to increase taxes on all investment income and on corporate profit (not revenue, so prices remain unaffected), with no loopholes. Perhaps a sliding scale for both. An individual pays 30% (like today) on all investment income up to 250k, 45% on all investment income over $250k up to $1M, and 60% on all investment income over $1M. Corporations will always pay a flat 50% tax on profit.
With 400 individuals in the US earning more than all of the remaining households combined, and with some corporations paying zero tax despite billions of $’s in profits, this kind of revised tax policy would allow all of them to remain wealthier than anyone else might dream, while increasing federal tax revenue significantly higher than the Buffett scam, while adding more money to wage earner paychecks that will flow into local economies.
The real debate (the question that’s not discussed in mainstream media) is the one between taxing wage earners, or taxing profit from investement or corporate activity. Taxing investment and profit is always presented as socialist, when in reality, the bigger socialist activity is taxing everyone under a federal thumb, rather than enabling everyone to remain independent from government control.
Limit taxation to investment and corporate profit without making the tax prohibitive to wealth generation. That’s the solution for Americans, which cannot be achieved while the banksters remain in control of the American political process, the White House, and the media.
I think this is simply another wedge issue to distract the voters. Let’s remember a year or so ago when Mr. Buffet and Bill Gates traveled the country and the world urging their wealthy friends to leave their fortunes to the Gates Foundation. They want to set up a powerful Foundation and starve governments of needed tax revenue. In their view, only the little people pay taxes.
I oppose Foundations and believe they should end fifty years after the death of the donor. They have taken on a life of their own and have too much influence in government.
Thank you Jan for adding your points here!
Greg
Apparently Berkshire Hathaway is one of the VIPs in the too-big-to-fail club.
Bing, bing, bing. You are correct Mark!! That is a nice succinct way to sum it all up.
Greg
Hi Greg
The biggest problem as I see it is we can’t bring these scum in the government to court over this or anything because we’re paying for the lawyers on both sides. Where will it end? Are they really stupid enough to believe anyone gets out of this mess unscathed. Note are being taken by great reporters like you and the word is spreading. There comes a point of imbalance where the fallen seek retribution and when it comes, look out. Thanks for another unpopular report and I’ll be looking for more. Phil
Right on as usual Greg. Thanks for all your hard work! A little off the point but just as frustrating is the article today about the Feds staffing 6 federal attorneys to make sure this time they get that public enemy #1——ex-baseball er, Roger Clemens!! Now there is a danger to society! You think they would pursue the Banker’s who LIED to Congress about their culpability in the worst Banking crisis ever, Hell No, but lets get that dangerous Roger Clemens off the street so he can’t harm anyone again. Nothing will ever change in Washington as long as the Politicians continue to buy their votes with Wall Street money!!Jay
James Bouris,
You are so right. Clemens could go to jail and not a single financial elite will even see charges for forgery and fraud. Outrageous!!
Greg
Aw, now let’s cut poor ‘ole Warren some slack, shall we? It’s got to fry a man’s psyche in some sort of long-term way when he comes down to breakfast one morning, and his wife says, “Warren? I’m running off to California to be a hippie, and oh by the way, you’re a cuckold.”
Hi Greg
I know you didn’t mean to perpetuate this, but I have a problem with the notion that governments can just willy-nilly raise taxes and assume a certain return.
It never seems to occur to government officials and assorted worshipers of the State that if you raise taxes that the tax victim will respond in a way to minimize the pain. They will work less, or not at all or they will find some way around it. Few people just sit there and take it.
This is especially true of this particular demographic who have the most discretion in the market. What if a businessman making over a million dollars a year decides that the increased taxes just don’t make it worth his time to keep his doors open. He then closes up shop, lets his employees go, and heads to his beach house to fish and watch the waves come in.
The problem with the socialist/government worshiper mindset is that I think most of them really don’t care if they hurt a bunch of poor and middle class people, as long as they imagine that they can “stick it to the man.” In reality, they only stick it to everyone else.
-Ken
It seems to me that the issue about taxes rests upon fairness – everyone should pay taxes.
Greg,
The White House’s final report of the Buffett Rule (http://www.whitehouse.gov/sites/default/files/Buffett_Rule_Report_Final.pdf) oversimplified the tax problems and it contained misleading information. It didn’t mention any of the tax loopholes that many people use to avoid their taxes legally or evade their taxes illegally. The Buffett Rule won’t change anything. The IRS won’t get more money from the rich guys because they can still use the same old tricks to evade their taxes. Poor people who are on welfare continue to pay no income tax. Meanwhile the middle classes who rely on their paychecks are still stuck with their unfair tax rates. Even if the Congress passes the Buffett Rule, it won’t increase the tax revenue and therefore it has no effect on reducing the deficit.
Here is an interesting article from The Wall Street Journal – “How You Can Pull a GE on Taxes” (http://online.wsj.com/article/SB10001424052748704530204576235090332473366.html). May be we can learn something from it.
Ambrose
Ambrose,
Love it!! Thank you for the comment and link.
Greg
The old saying “the rich get richer and the poor get poorer” has never been more true for America. Corporate America & Government have merged and both parties are good with that. Remember, and please never forget, behind every large corporation are very rich men getting much richer at the peoples expense, all the while they claim it is owned by millions of the middle class. Good article Greg.
I read in the newspaper this morning the Senate Republicans killed the bill. This is nothing more than campaign fodder. It gives Obama something to run on, he sure can’t run on his record.
The Government keeps their rich banker friends happy. After all, they don’t have to pay for it, WE DO!
So Lets Have Another Little War
In the name of maximizing domestic production, the good little socialist President of Argentina has decided to nationalize a Spanish owned oil company YPF and setting of a diplomatic confrontation with Madrid. Just what the Spanish need in the wake of Iran announcing that it will cut off oil shipments to Spain is serial failure Argentina expropriating another source of oil it desperately needs even if it economy is contracting.
The government in Madrid has promised that it will have a “forceful response.” This is of course open to a variety of interpretations but it’s unlikely that Spain can handle having $5 Billion sucked out of its economy at the point of it already facing imminent collapse.
Never mind that Spain was the first if not the only European nation to come to Argentina’s aid during their latest currency failure. But I guess this is how Argentina’s President Fernández and would be Avita Peron thanks Spain for its help.
If there is any country in South America that has mimmicked Europe’s failed welfare stateism it is Argentina. Just how many times does it’s economy have to collapse before it becomes apparent that this socialism crap just does not work?
Meanwhile back in Spain where unemployment is at 23% and youth unemployment is over 50%, the Cental government is talking about taking over the financies of the provences because their even more out of control than the cental government’s. Now looking down the barrel of another $5 billion hole in its GDP one can only imagine the anger and panic set in motion by this little backstabing from Argentina. So much for Ibero American solidarity.
Neither can the dithering hands of the EU in Brussels be happy about this. One more unpredictable turn of events threatining the EU ponzi scheme. If it all was not so economicly dangerous it would be hilarious.
Well it’s not like Spain could actually go to war with Argentina but I’d bet they wish they could. One would have to wonder just how Obama will stick his bumbling fingers into this pie and make things even worse. But then I’m sure his refering to the Malvinas Islands as the Maldives has already endeared him to the hearts of the Argentines.
bring back the OTTOMAN EMPIRE!
I think you are leaving out the fact that the reason government is bailing out the banks is that politicians forced the banks to give sub prime mortgages that is mortgages that banks would not ordinarily give out because of the high likelihood that the people could not pay them back and they kept increasing the % of their portfolio that had to be sub prime. The government only helps out the banks that did what the government wanted and the government did not help out those who would not play ball. The politicians did that for votes, basically putting people into houses they could not afford and that with variable rates, as soon as the interest rose, the people defaulted on the mortgage payments.
TMay,
That is a Republican talking point. The government did not force the banks to sell “liar loans.” The government did not force the banks to package the “liar loans” into mortgage-backed securities and give them fraudulent AAA ratings. The government did not force the banks to commits forgery and fraud in mass foreclosure that was in the trillions of dollars in ripoffs and loss of value to the public. The government and (I mean both parties) allowed bankers to get away with crime by paying a $25 billion fine in the so-called “robo-signing” debacle that basically condones fraud as a business model. I don’t buy the “poor bankers only did what they were told” story. The facts and the law does not support this thesis. Thank you for your comment even-though we disagree.
Greg 15 trillion? Your far more akamai than that.
77 Trillion? 100???
Troy,
Yes, You are correct. By some estimates our real GAAP accounting debt is more than $200 trillion. (Laurence Kotlikoff BU professor)
Greg
Very good article Greg, maybe we should rework the moniker of the Oracle of Omaha to the Oracle for Obama.
Peter