President Obama sure has been talking about Warren Buffett’s taxes a lot lately. At his speech before a joint session of Congress this month, the president said that the billionaire shouldn’t pay a lower tax rate than his secretary, a point Buffett has often made. The secretary’s tax rate, and her boss’s, made another appearance Monday in Obama’s address on his deficit-reduction plan.
When the president invokes Buffett’s name, he is using it to enhance his own economic credibility. It’s an old habit for him. On the campaign trail in 2008, when Obama wanted to talk about the unjustness of the tax code, he often turned to Buffett — sometimes referring to him as “my friend Warren Buffett.” For his part, Buffett appears pleased to play along; he’ll headline an Obama fundraiser in Chicago next month.
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But why should the president stop at using Buffett’s name as shorthand for tax reform? The entirety of Buffett’s life and career offers lessons that could guide Obama as he works to steer the U.S. economy toward recovery.
Buffett made his $39 billion fortune by picking stocks and buying companies. (Berkshire Hathaway, which Buffett heads, owns a substantial minority stake in The Washington Post Co., and Buffett is a former longtime member of the company’s board of directors.) He is sometimes labeled a populist. But he’s better classified as a progressive who believes that the privileged are bound by a covenant to share society’s rewards with the less fortunate. However you label him, his best-known political belief is this: The rich should pay higher taxes.
For a decade, Buffett has been making an appeal to shift the tax burden in the United States further toward the wealthy. He began challenging the Bush administration’s tax reductions in 2001, and in 2003 he focused on opposition to lowering the tax on dividends. Buffett believes that government is the expression of a republican social contract, not a faceless, coercive state. In his view, unchecked capitalism is a route to plutocracy and social oppression. You may like these views or detest them, but by attaching Buffett’s name to the tax proposal, Obama sent a message of what it stands for in a single word.
The “Buffet rule” debate got bogged down this past week with quibbling over whether Buffett literally pays a higher tax rate than his secretary. He is getting picked apart by critics because he has already benefited so much from the current tax code that any changes would essentially be irrelevant to him. This has prompted some to say that he’s either a hypocrite or simply not the right spokesperson for the president’s plan.
Resentment toward Buffett also springs from another source, one that, if turned on its head, suggests what may be his real value to Obama. The unpopular estate tax has long been one of Buffett’s primary causes. In 2001, he set off a storm of criticism by saying that President George W. Bush’s move to repeal that tax was a “terrible mistake,” the equivalent of assembling the 2020 Olympic team by picking the children of the 2000 gold medalists.