Tuesday, March 09, 2004

A Rich Ally, But Don't Expect Too Much

Warren Buffett is a politically conservative billionaire, yet is countering those among the administration and his fellow tycoons who have lately been attacking him from the right. What does this mean? Well, among other things, that the business world and the rulers of this country aren't even so mainstream as to be conservative -- they are in fact classic reactionaries.

Buffett the other day released Berkshire-Hathaway's annual report, and in it his chairman's letter rebutted a Treasury official's insult, condemned greedy CEOs as well as corrupt and incompetent fund managers, and rightly exposed the intent of the Bush adminstration's Reaganesque tax code.

Some highlights from Buffett's letter (which is in .pdf format):

"On May 20, 2003, The Washington Post ran an op-ed piece by me that was critical of the Bush tax proposals. Thirteen days later, Pamela Olson, Assistant Secretary for Tax Policy at the U.S. Treasury, delivered a speech about the new tax legislation saying, 'That means a certain midwestern oracle, who, it must be noted, has played the tax code like a fiddle, is still safe retaining all his earnings.' I think she was talking about me.

"Alas, my 'fiddle playing' will not get me to Carnegie Hall - or even to a high school recital. Berkshire, on your behalf and mine, will send the Treasury $3.3 billion for tax on its 2003 income, a sum equaling 2% of the total income tax paid by all U.S. corporations in fiscal 2003. (In contrast, Berkshire's market valuation is about 1% of the value of all American corporations.) Our payment will almost certainly place us among our country's top ten taxpayers. [...]

"I can understand why the Treasury is now frustrated with Corporate America and prone to outbursts. But it should look to Congress and the Administration for redress, not to Berkshire. Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year's percentage is the lowest recorded since data was first published in 1934.

"Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration's 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning. Today, many large corporations - run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs - pay nothing close to the stated federal tax rate of 35%.

"In 1985, Berkshire paid $132 million in federal income taxes, and all corporations paid $61 billion. The comparable amounts in 1995 were $286 million and $157 billion respectively. And, as mentioned, we will pay about $3.3 billion for 2003, a year when all corporations paid $132 billion. We hope our taxes continue to rise in the future - it will mean we are prospering - but we also hope that the rest of Corporate America antes up along with us. This might be a project for Ms. Olson to work on.
[Emphases Added.]

Oooh. Plainly Mr Buffett knows whose bread is buttered by the administration; his last quoted comment show he knows that the buttering is intentional. Of course everyone else in America knows that corporations don't pay their fair share, but those who actually run the corps live with a sense of entitlement or live in a state of denial -- and sometimes both simultaneously.

There is so much in this certain to get under the skins of the Rulers. For one, Buffett says the unsayable, that he hopes his company's taxes continue to rise in the future; no matter the capitalist common sense of this wish (that higher taxes mean his company made more money) it's considered the ultimate faux pas to state anything resembling an acquiesence to the concept of taxes. It implies that corporate taxes are necessary; worse it implies that taxes aren't inherently immoral. Tsk tsk. As if this isn't enough Buffett is also saying that many corporations aren't paying even the paltry tax rate in which they are bracketed due to the virtuoso manipulations of loopholes and other accounting tricks. He, with a wink and a nod, acknowledges the winks and nods of the Administration when it allows these tricks.

The grandfatherly Omaha billionaire didn't like Enron, and he seems to know that Enronisation is the hallmark of the Bush Administration -- short-term looters whose criminal habits have been encultured into the corporate community; Mr Buffett's smart and cautious, and knows that abuses eventually lead to a massive correction, hence like a Progressive he's for Good Government over business, but as a means to thwart rather than effect socialistic safeguards. His worry is that since Corporate America is left to pretty much police itself, it had better do a damned better job of it, before the government steps in.

This is pure conservatism: warning his corporate brethren whose greed for greed has gone too far and for too long. But the reactionaries don't like conservative warnings: there's nothing laissez-faire about restraint, after all. Most don't understand the concept of "unseemly;" many don't understand the meaning of "law-abiding."

Later, he teases Thuh Preznit over inviting himself to a share of the credit for a Buffett success-story. "'Victory,' President Kennedy told us after the Bay of Pigs disaster, 'has a thousand fathers, but defeat is an orphan.' At NFM, we knew we had a winner a month after the boffo opening in Kansas City, when our new store attracted an unexpected paternity claim. A speaker there, referring to the Blumkin family, asserted, 'They had enough confidence and the policies of the Administration were working such that they were able to provide work for 1,000 of our fellow citizens.' The proud papa at the podium? President George W. Bush." That Buffett made the cautionary but good-natured slap come from the mouth of JFK must have been especially galling to the reactionary fucktard readers at 1600 Pennsylvania Avenue.

But enough of the 2003 Annual Report. The point is that because Buffett is a conservative Democrat, owns a considerable chunk of the "liberal" Washington Post, vociferously advocates an inheritance tax, generally makes himself a nuisance on other tax issues, writes incredibly fat cheques to the antichrist organisation Planned Parenthood, excoriates his fellow CEOs, and eschews the typically ostentatious lifestyle of his class, he's a significant pain in the ass to the reactionary Bush Adminstration. They wish they could ignore him, they wish they could convert him, they wish they could enlist him (as did Ahnold, in rare fit of cerebral cortex activity); but they can't because he refuses, and still worse the Bushies can't squash him because, according to the October 6, 2003 issue of Forbes, Buffett is worth 36 billion dollars, second only to Satan himself, Bill Gates.

Therefore we may take some measured pleasure in Buffett; God knows Progressives have little else in the business world to take pleasure in.

I have a copy of the extremely sympathetic Buffett biography Of Permanent Value, which I speed-read a couple of years ago. Flipping through its index after reading the B-H Annual Report, I found some passages that may be salient:

"I have absolutely no complaint about these taxes. ..we work in a market-based economy that rewards our efforts far more bountifully than it does the efforts of others whose output is of equal or greater benefit to society. Taxation should, and does, partially address this inequity. But we still remain extraodrinarily well-treated." (1993 Annual Report)

"If we don't solve [arms control and population growth problems], we don't have a world." (Channels Magazine, talk to Particia Bauer, 1986)

Buffett avidly reads Bertrand Russell, not Lord Russell's mathematical works but, "The philosphical ones, [l]ike Has Man A Future?" He was a supporter of Russell's anti-nuclear Pugwash Group. (pp 471)

"Buffett said he favors a 'progressive consumption tax' to replace the federal income tax. The schedule would allow people to pay for basic living expenses and to deduct what they save or invest. They would pay taxes on the rest of the money they spend on consumption." (pp 124-5)

Well, this is self-serving; it targets the consumer for the benefit of the "producer." But the allowance for basic living expenses is nice, even though the tax-free savings proposal is a freebie to the banking industry. Still,

"As the amount spent on consumption increases, the taxed amount would increase... I personally would prefer to make it steeply progressive as a matter of social equity."

The porcine squeal you just heard was the reprehensible Bush Thug Grover Norquist calling Buffett a Nazi. "Social equity" is not a phrase often kindly or honestly uttered by the Corporate Elite, if uttered at all. It's Buffett's pragmatism that is revealed in this proposal -- also, his long-term thinking. One doesn't fashion a stable society by continually and vindictively fucking the poor. Though Buffett's plan clearly benefits himself and his kind to a great extent, it's not all take and no give. It offers an explicit benefit to the poor, which is more than can be said of the mendacious claims by the proponents of the flat-tax.

In fact, though I can't quite be enthusiatic about Buffett's fiscal proposals, I have to admit that it's incredibly conscientious coming from a man whose father was a member of the vile crypto-fascist John Birch Society.


Warren Buffett is a likeable little old man, without pretention, possessing a pithy writing style, full of midwestern good sense and classic American middle class values like caution and thriftiness. Leavened with this are the not so American traits he has: wit and ..well, shall we say, a French taste in marriage arrangements. This makes him interesting; his good sense, whistleblowing and reactionary-baiting commentary further the appeal. But he is not George Soros, the Progressive's Billionaire, even though the crappy state of the dollar has forced Buffett into the business of foreign currency arbitrage, Soros's speciality.

Buffett's company owns a large share of Coca-Cola, which has been a naughty company indeed in Southeast Asia; it owns Fruit Of The Loom, which, if I remember correctly, uses Chinese sweatshop labour; it owns PetroChina Limited, which is self-explanatory in its unsavoriness; it owns or owned one of the de-nationalised British utility companies, though I don't remember if it was one of those that contributed so oleaginously to Tony Blair's early Clintonisation. With such holdings, about which he apparently has no moral issue, Buffett can never be the Progressive's Capitalist. But he can be the Progressive's Conservative, and in milieu so desolate, surely that is something.