CEOs Asleep at the Switch
by Kyle Weidleman | August 19, 2011
This week, billionaire investor Warren Buffett, writing in the New York Times, and Washington Post columnist Steve Pearlstein called out corporate leaders for getting the United States into our current economic mess as well as creating a political environment in which it’s impossible for lawmakers to take the responsible actions needed to get the nation back on track.
Pearlstein argued that what started as CEOs’ pushback against some regulators in order to shave a few percentage points off their tax liability has grown into an extreme, corporatist, anti-tax, anti-regulation, anti-worker ideology:
“What started as a reasonable attempt at political rebalancing turned into a jihad against all regulation, all taxes and all government, waged by right-wing zealots ... For them, this isn’t just a tactic to brush back government. It’s a holy war to destroy it — and one that is now out of your control.”
CEOs are not just at fault for pushing lawmakers to relax regulations and then gambling away the American economy, but must now take responsibility for creating the intransigent attitude of the Republican Party. A bipartisan commission co-chaired by former Republican Senator Alan Simpson and Democrat Erskine Bowles called for balancing the budget through a combination of 60% spending cuts and 40% revenue increases. Simpson had this to say about members of his party who balk at any revenue increases: “If you can't compromise on anything, go home.” Meanwhile, every single Republican candidate for president has promised to veto a budget-balancing deal in which every $10 in spending cuts would be matched by just $1 of tax increases.
All of this damage has been done under the guise of keeping capital available for innovation. Yet, "[i]nstead of focusing your attention and ingenuity in developing new products and services, you’re spending most of your own time on financial engineering — buying up companies at one moment because of synergies and cost saving, then spinning them off the next moment because they no longer fall in to your ‘core mission,’” wrote Pearlstein.
If Pearlstein tried a left hook, Buffett hit his super-rich colleagues with an uppercut. Buffett compared his tax burden with that of his employees:
“[W]hat I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”
Buffett then went on to attack the argument that taxes must be lowered over and over to spur investment and job creation.
“I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000.”
