Warren Buffett: Good Investor, Crummy Economist

Warren Buffett once said that it wasn't right for his secretary to have a higher tax rate than he faced, leading me to point out that he didn't understand tax policy. The 15 percent tax rates on dividends and capital gains to which he presumably was referring represents double taxation, and when added to the tax that already was paid on the income he invested (and the tax that one imagines will be imposed on that same income when he dies), it is quite obvious that his effective marginal tax rates is much higher than anything his secretary pays. Though he is right that his secretary's tax rate is much too high.

Well, it turns out that Warren Buffett also doesn't understand much about other areas of fiscal policy. Like a lot of ultra-rich liberals who have lost touch with the lives of regular people, he thinks taxpayer anger is misguided. Not only does he scold people for being upset, but he regurgitates the most simplistic Keynesian talking points to justify Obama's spending spree. Here's an excerpt from his hometown paper.

Taxpayer anger against President Barack Obama and Congress is counterproductive because policy makers took measures including deficit spending to stimulate the economy, billionaire investor Warren Buffett told CNBC. ...“I hope we get over it pretty soon, because it’s not productive,’’ Buffett said. “We will come back regardless of how people feel about Washington, but it is not helpful to have people as unhappy as they are about what’s going on in Washington.” ...“The truth is we’re running a federal deficit that’s 9 percent of gross domestic product,” Buffett said. “That’s stimulative as all get out. It’s more stimulative than any policy we’ve followed since World War II.”

About the only positive thing one can say about Buffett's fiscal policy track record is that he is nowhere close to being the most inaccurate person in the United States, a title that Mark Zandi surely will own for the indefinite future.

The "Tea Party's Already Won"

That's the tile of an insightful column at Thehill.com, which points out that Tea Party activism has succeeded in shifting the debate from making government bigger to making government smaller. The columnist also is correct in explaining how the Tea Party, by dethroning some entrenched incumbents, is forcing the GOP to at least pretend to be on the side of taxpayers.

The Tea Party insurgency will not only cost Democrats dozens of seats in Congress, and likely their majority — it will define the coming GOP presidential nominating process, determine the direction of the GOP for years to come and threaten any remaining plans Obama has for sweeping reforms of education, energy policy or our immigration system. Last March, Republicans joined Democrats in calling on Sen. Jim Bunning (R-Ky.) to end his filibuster against the extension of unemployment benefits paid for by deficit spending, embarrassed he was blocking aid to the jobless. But it took just three months for the grassroots pressure to reach the Capitol — Bunning was a Tea Party hero. By the time the $30 billion expired on June 2, Senate Republicans had united behind a nearly two-month filibuster of the next round of $34 billion in “emergency spending” for unemployment insurance. They were joined by Sen. Ben Nelson (D-Neb.), and some House Democrats warned their own leaders at the time that the days of votes on “emergency spending” would soon have to come to an end. ...The Tea Party candidates themselves — like O’Donnell, whom Karl Rove called “nutty,” — matter little. Only a few will actually get elected this fall. Yet the Tea Party has won without them. There are no tea leaves left to read. Democrats have been spooked and Republicans threatened, cajoled or cleansed. The results are already in.

Is the Tea Party Movement a Net Plus for America?

Steve Chapman points out that the Tea Party movement (like any other large group of people) has a few odd characters, but he is delighted that there is a growing mass of citizens who think it's important to restrain government and not impose burdens of future generations.

Here's my first impression of the tea party movement: It's a rabidly right-wing phenomenon with a shaky grasp of history, a strain of intolerance and xenophobia, a paranoia about Barack Obama, and an unhealthy reverence for Fox News. Any movement that doesn't firmly exclude Birchers, birthers, and Islamaphobes is not a movement for me. Here's my second impression of the tea party movement: We are lucky to have it. That's because the tea partiers, who may not all agree on gay marriage or birthright citizenship, are united behind a couple of sound goals: curtailing the cost of government and refusing to live at the expense of future generations. Those are goals that, for eight years, had many rhetorical supporters in Washington, but few authentic champions. Blame that on George W. Bush, who arrived billing himself as a compassionate conservative, a description that was accurate except for the adjective and the noun. Whatever his ideology, his policy was to expand federal spending at a rate unseen since President Lyndon Johnson, the architect of the Great Society. He didn't do it alone, though. Had Bush been a Democrat, Republicans would have fought his budget plans at every turn. But since he was one of theirs, they joined in the spree with gusto, even as they cut taxes and piled up deficits. The prevailing attitude was: Live it up now, and let someone else worry about paying for it later. Budget hawks were left wondering what happened to Republican tightwads, who thought every dollar spent by the government was a dollar that had to be justified as a vital necessity. The tea partiers were dismayed to see these penny-pinchers replaced by poll-driven insiders with an appetite for earmarks. That's one big reason hard-right candidates have scored so many upsets in recent GOP Senate primaries—including Rand Paul in Kentucky, Sharron Angle in Nevada, Joe Miller in Alaska, and Christine O'Donnell in Delaware. They didn't get nominated because they look and sound like the popular image of a savvy, experienced, well-informed, practical-minded U.S. senator. They got nominated because they don't.

Another Shot Across the RINO Bow

I thought it was shocking when Senator Bennett of Utah was denied renomination, but I'm even more stunned that Senator Murkowski of Alaska is trailing her opponent in preliminary results from Tuesday's primary. As the Wall Street Journal explained in an editorial this morning, this is a big sign that voters are not merely interested in electing big-government Republicans instead of big-government Democrats. They actually want leaders who will fight to limit government and expand freedom. After nearly 10 years of Bush-Obama statism, I'm very happy to see the American people still value liberty.

GOP Members of Congress who think they can return to business as usual if they regain the majority should pay attention. The biggest shock came in Alaska, with incumbent Senator Lisa Murkowski trailing unheralded challenger Joe Miller by roughly 1,700 votes with as many as 16,000 absentee ballots still to be counted. ...Though heavily outspent, Mr. Miller was helped by former Governor Sarah Palin's endorsement and especially by Ms. Murkowski's failure to understand the anti-Washington mood. When he asked Senator Murkowski in a debate which part of the Constitution permitted Roe v. Wade and bank bailouts, she responded that the nation might suffer if the government only funded things explicitly authorized by the Constitution. Bad answer. Ms. Murkowski opposed ObamaCare but Alaskans punished her for her 2009 refusal to rule out a government-run health-care plan. She is learning the lesson that ousted Utah Senator Bob Bennett did: GOP voters don't want their representatives to negotiate with President Obama. They're looking for people who can defeat his agenda.

The Tea Party Manifesto

Former House Majority Leader Dick Armey and Matt Kibbe of FreedomWorks have a column in today's Wall Street Journal that explains the spontaneous, grassroots phenomenon of tea parties. They have plenty of interesting political and social analysis, but the most important part of their column is when they point out that the tea party movement is not a GOP-support organization. Instead, the tea party is engaging in a hostile takeover, forcing out the establishment Republican politicians that have become philosophically corrupted by the back-scratching network in Washington.

The tea party movement has blossomed into a powerful social phenomenon because it is leaderless—not directed by any one mind, political party or parochial agenda. The criteria for membership are straightforward: Stay true to principle even when it proves inconvenient, be assertive but respectful, add value and don't taking credit for other people's work. Our community is built on the Trader Principle: We associate by mutual consent, to further shared goals of restoring fiscal responsibility and constitutionally limited government. These were the principles that enabled the Sept. 12, 2009 taxpayer march on Washington to be one of the largest political protests in the history of our nation's capital. ...While the tea party is not a formal political party, local networks across the nation have moved beyond protests and turned to more practical matters of political accountability. Already, particularly in Republican primaries, fed-up Americans are turning out at the polls to vote out the big spenders. They are supporting candidates who have signed the Contract From America, a statement of policy principles generated online by hundreds of thousands of grass-roots activists. Published in April, the Contract amounts to a tea party "seal of approval." It demands fiscal policies that limit government, restrain spending, promote market reforms in health care—and oppose ObamaCare, tax hikes and cap-and-trade restrictions that will kill job creation and stunt economic growth. Candidates who have signed the Contract—including Marco Rubio in Florida, Mike Lee in Utah and Tim Scott in South Carolina—have defeated Republican big spenders in primary elections all across the nation. These young legislative entrepreneurs will shift the balance in the next Congress, bringing with them a more serious, adult commitment to responsible, restrained government. But let us be clear about one thing: The tea party movement is not seeking a junior partnership with the Republican Party, but a hostile takeover of it.

The NAACP's Shameful Descent to Partisan Hackery

Deroy Murdock unloads on the NAACP's decision to condemn supposed Tea Party racism. I'm sure there are a handful of cranks and racists at Tea Party events, just as there are similar people at Kiwanis clubs, union halls, insurance conventions, and NAACP meetings. But as Deroy explains, there is nothing racist in the actions or agenda of the Tea Party movement. My two cents, for what it is worth, is that the NAACP is acting like an interest group of the Democratic Party rather than an organization genuinely focused on promoting the interest of black Americans (if they actually did care about the African-American community, school choice would be their top issue).

The NAACP is like a talking G.I. Joe doll with a cord coiled in his back. Pull it, and G.I. Joe says something manly and combative. Pull the NAACP’s string. “Racism!” squawks the shopworn voice. Pull it again. “Bigotry!” it squeals, as it has so many times before. The NAACP was totally justified when it decried the racism and bigotry that the Jim Crow South’s Democrat-led governments mandated by law. In 2010, however, screaming “racism” sounds increasingly delusional, given that America is governed by a black man whom voters comfortably elected in November 2008 and wished well, largely across the political spectrum, on Inauguration Day 2009. ...If the tea-party movement really is fueled by bias, why did they invite a black man like me to address one of the first tea parties in Washington, D.C., on February 26, 2009? Why would these alleged racists invite me to rally an even bigger tea party in Manhattan on July 1, 2009? Did prejudice inspire them to let David Webb, a black man, organize that Times Square event, and also run the New York Tea Party? Did racial insensitivity lead the tea party to showcase Congress of Racial Equality national spokesman Niger Innis, Project 21's Deneen Borelli, and other black conservatives and free-marketeers? ...Some have accused the tea-party movement of being racist just because its huge crowds are mainly white. By that measure, the NAACP should organize a boycott of the New York Philharmonic. I attended its delightful concert in Central Park on Tuesday evening. Gershwin’s beautiful “Rhapsody in Blue” might as well have been a rhapsody in white. Scanning the thousands of faces on the Great Lawn, I spotted only a handful of black ones. What a racist orchestra! Yes, the tea party’s events feature few black faces. This is true at most center-right gatherings. The unfortunate fact is that black Americans tend to be liberal Democrats. President Obama won some 95 percent of the black vote. It should shock no one that those who reject most of Obama’s agenda would attract few of his most ardent supporters. Thus, the tea-party movement is no more racist than an Easter dinner is anti-Semitic because so few Jews show up to eat ham and venerate Jesus of Nazareth.

Considering the NAACP's shameful behavior, here's a card that should be distributed to everyone who voted to condemn the Tea Party movement. It was sent to me, by the way, by a black friend (not Deroy).

The Tea Party Strikes Again as Pro-Bailout Congressman Loses Primary

There were closely-watched primaries yesterday in South Carolina and Utah. Most of the attention was on the Palmetto State, where an Indian-American woman won the GOP nomination for governor and an African-American won the nomination for the first district congressional seat. Both are positive developments since the respective candidates appear to be solid, limited-government conservatives. But the most important race, in my humble opinion, was the battle to unseat incumbent GOP Congressman Bob Inglis, who was a TARP-supporting, pro-tax Republican. As this Politico story indicates, he got completely stomped as voters wisely recognized that he had become a fan of big government.

Rep. Bob Inglis (R-S.C) became the third House member and the fifth member of Congress to be defeated this year, losing by an overwhelming margin Tuesday in a GOP primary that served as a referendum on Inglis’s conservative credentials. ...After finishing a distant second in the June 8 primary, Inglis’s loss did not come as a surprise. Still, the margin of defeat was stunning: Spartanburg County Solicitor Trey Gowdy, who had slammed Inglis for his positions on everything from the Iraq war troop surge to drilling in the Arctic National Wildlife Refuge in an effort to paint the congressman as insufficiently conservative, won 71 percent to Inglis’s 29 percent. ...Before the ballots had been cast Tuesday, many Republican operatives in Washington and South Carolina had written off the prospect of an Inglis victory, chalking up his seemingly inevitable loss to a combination of an anti-incumbent tide and local frustration with his departures from conservative orthodoxy. ...As town halls raged last summer, Inglis came under glaring criticism from conservative activists after he told a room of angry town hall attendees to “turn off” Glenn Beck.

Americans Are More Ethical than Europeans - and We Should Fight to Preserve that Exceptionalism

Arthur Brooks of the American Enterprise Institute explains in the Wall Street Journal that Americans protest to restrain government while European riot to expand the burden of the state. But this American spirit of self reliance may not last if government seduces more and more people into dependency - and I think fighting against this grim possibility is the chief motivating force of the tea party movement.

Many Europeans also expect others to work so they can live. The International Social Survey Programme asked Americans and Europeans whether they believe "It is the responsibility of the government to reduce the differences in income between people with high incomes and those with low incomes." In virtually all of Western Europe more than 50% agree, and in many countries it is much higher—77% in Spain, whose redistributive economy is in shambles. Meanwhile, only 33% of Americans agree with income redistribution. Simply put, Europeans have a much stronger taste for other people's money than we do. This is vividly illustrated by the recent protests in the U.S. and Greece. Why are citizens rioting and striking in Greece? Despite the worst economic crisis in decades, labor unions and state functionaries demand that others pay for the early retirements, lifetime benefits and state pensions to which they feel entitled. In America, however, the tea partiers demonstrate not to get more from others, but rather against government growth, public debt, bailouts and a budget-busting government overhaul of the health-care industry. In other words, the tea partiers are protesting against exactly what the Greeks are demanding. It is an example of American exceptionalism if there ever was one.

The Amazing Tea-Party Movement

Congratulations to FreedomWorks and other organizers of this past Saturday's protest in Washington. The establishment media did its best to ignore the huge crowd, but it is a remarkable achievement when so many Americans come together to defend their nation. The U.K.'s Daily Mail almost certainly overstated the numbers, but they had a very good summary:

As many as one million people flooded into Washington for a massive rally organised by conservatives claiming that President Obama is driving America towards socialism. The size of the crowd - by far the biggest protest since the president took office in January - shocked the White House. ...protester Richard Brigle, 57, a Vietnam veteran, said: 'It's going to cost too much money we don't have.' Another marcher shouted: 'You want socialism? Go to Russia!' Terri Hall, 45, of Florida, said she felt compelled to become political for the first time this year because she was upset by government spending.