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Hasta la vista, Buffett
townhall.com ^ | August 18, 2003 | Jack Kemp

Posted on 08/19/2003 6:50:26 PM PDT by OESY

There is a long and tragic tradition that runs through American politics in which politicians spend themselves into a fiscal crisis during good economic times and then raise taxes to bail themselves out when a recession hits and revenues plummet. This is precisely what's going on today in Alabama and California.

In both states between 1997 and 2000, state spending increased more than three times faster than the combined rate of inflation and population growth. Not only does government continuously get bigger and more intrusive, politicians on the left forever manipulate the tax system as a mechanism of income redistribution and social engineering in a counterproductive cycle that makes government an ever-growing impediment to economic growth and entrepreneurial risk-taking.

The jury is still out in California whether voters will accept the populist scam this time around or throw liberal Gov. Gray Davis out and replace him with a candidate who understands the need to break the tax-and-spend cycle. In Alabama, it is a conservative Republican governor, former Congressman Bob Riley, who is proposing such massive spending increases, tax hikes and redistribution of the tax burden that Alabama Republican Party Chairman Marty Connors was moved to exclaim, "If a Democrat had proposed this, we would be burning down cities."

Arnold Schwarzenegger is one among three other serious candidates for the California governorship - Sen. Tom McClintock, businessman Bill Simon and former baseball commissioner Peter Ueberroth - who has a chance to reverse this harmful cycle if he wins the California statehouse. But Schwarzenegger will never succeed if he insists on listening to billionaire investor Warren Buffett, whom he recently appointed his economic adviser. He should instead listen to former Treasury Secretary George Shultz, Milton Friedman and Art Laffer.

Buffett is in a long tradition of self-made rich guys who forget how the dynamics of capitalism allowed them to accumulate their money. Secure in their wealth, they recommend policies in the name of "fiscal responsibility" and "fairness" that prevent the poor and middle class from getting rich.

For example, Buffett completely misunderstands the important role employee stock options play in giving workers an ownership interest in up-and-coming companies. He would change the rules by which stock options are accounted for on financial statements in a way that would reserve them for top executives and make it virtually impossible for entrepreneurs to continue giving their workers a piece of the company in exchange for their sweat equity.

In the past, Buffett repeatedly has opposed tax-rate reductions at the federal level, and he even opposed the recently enacted legislation lowering the tax on dividends and capital gains, revealing his almost total lack of understanding of incentive economics. Now he has said California taxes are too low, and his statements suggest he would advise Schwarzenegger to back repeal of Proposition 13, the restriction on property-tax growth that has been a thorn in the side of big-spending California liberals for 25 years.

Schwarzenegger does understand the urgent need to attract businesses that have been leaving in droves in recent years back to California. In a recent Chamber of Commerce poll, 93 percent of companies doing business in California, including the small businesses that employ 82 percent of all California's working people, believe the state is moving in the wrong direction, and 90 percent believe business conditions are worse than two years ago.

Buffett says of Schwarzenegger, "Arnold is a very smart fellow. He has brains and muscle. Some of us have neither." He also once said, "If calculus were required, I'd have to go back to delivering papers. I've never seen any need for algebra, either."

Buffett, as Winston Churchill might have observed, is a very modest fellow with much to be modest about, which is not to demean the Wizard of Wall Street, who is one of the most successful investors of all times. It is merely to point out that being the world's best stock picker doesn't qualify you for much beyond, well, picking stocks. It certainly doesn't qualify one to advise the governor of a state with an economy the size of France. Whether or not Buffett can do algebra, I cannot say, but it is obvious from listening to his ill-conceived pontifications on economic policy over the years that he doesn't understand Adam Smith, much less the Laffer Curve.

On the other hand, Schwarzenegger, who came to America from his native Austria with only $25 in his pocket, does understand Friedman. In fact, he introduced Friedman's television series on the virtues of free markets and small government, "Free to Choose," with these words: "I come from Austria, a socialistic country. ... I felt I had to come to America, where government isn't always breathing down your neck or standing on your shoes." Wouldn't it be a shame if Arnold were elected governor and the first thing he did on the advice of Buffett was to stick his hand in the pockets of California taxpayers?

As a native Californian, my instincts tell me Schwarzenegger will never see the inside of the governor's mansion in Sacramento unless he says hasta la vista to Buffett before Election Day arrives.


TOPICS: Business/Economy; Editorial; Government; Politics/Elections; US: California
KEYWORDS: buffett; california; connors; davis; friedman; jackkemp; kemp; laffer; mcclintock; riley; schwarzenegger; shultz; simon; taxes

1 posted on 08/19/2003 6:50:29 PM PDT by OESY
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To: OESY
Maybe Jimmy Buffet would have been a better choice.
2 posted on 08/19/2003 7:16:39 PM PDT by Chi-townChief
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To: OESY
Maybe a manager from the local "Old Country Buffet" would have been better !! ;-)
3 posted on 08/19/2003 7:25:55 PM PDT by HP8753 (My cat hates static electricity....)
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To: OESY
Well, as a amused outsider in Arkansas, I still see Arnold as the only pubbie (even if in name only) that could win a statewide election.

Although there are better candidates like McClintock (sp), I don't see him winning this one. The numbers would be even worse than Simon's last year.(When they should have run Riordan(sp?)

But then, who cares what I think. Hell, I can't even spell their names.

4 posted on 08/19/2003 7:31:29 PM PDT by Cold Heat (Nothing in my home is French!)
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To: OESY
"who is one of the most successful investors of all times."

How in the world did this man become so rich? It seems he has the worst ideas in the world.

And that Gov. of Alabama should be thrown out just like Davis.

I don't care if they are Dims of Repubs. If they can't do the job; they don't need to be there.

I hope those yellow-bellied Texas Dimwits camping out in New Mexico are listening because pretty soon; they may not have a place to roost in Texas. I hope our state bars them.
5 posted on 08/19/2003 7:50:28 PM PDT by freekitty
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To: OESY
Buffoon can't wait to belly up to the "all you can tax and spend" buffet.
6 posted on 08/19/2003 8:12:58 PM PDT by PGalt
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To: OESY
It sounds to me like asking Buffett to advise you on economics is like asking Forrest Gump to explain the physics of table tennis, or the biology of shrimp.
7 posted on 08/19/2003 9:08:53 PM PDT by TrappedInLiberalHell (Pete Rose, but then he fell)
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To: Chi-townChief
Maybe Jimmy Buffet would have been a better choice.

Don't get sidetracked, the 2nd richest man in the world is the ACTUAL candidate.


8 posted on 08/19/2003 10:18:53 PM PDT by PeoplesRep_of_LA (Stop Dividing the Republican base; vote McClintock on October 7, 2003!)
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To: Ernest_at_the_Beach
Puppetmaster Ping to ya!
9 posted on 08/19/2003 10:20:27 PM PDT by PeoplesRep_of_LA (Stop Dividing the Republican base; vote McClintock on October 7, 2003!)
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To: Chi-townChief
Listen to Shultz?! Under Nixon Shultz was the man
who lead the way on wage and price controls.
And supported higher taxes and spending.
No I don't think anyone needs to listen to him.

And Laffer is NOT supporting Arnold.

I don't know why Friedman hanging out with Arnold,
but isn't Friedman quite old now? May not be all
there still.

Anyway Arnold sucks! McClintock is the man!
10 posted on 08/19/2003 11:25:55 PM PDT by Princeliberty
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To: OESY
Warren Buffet is a typical guilty, rich, liberal white guy.

He just can't stand the fact he was smarter than most people and created wealth. He now feels it was some bad karma of being white and well off that forces him to take the path of the dark side and believe he, and he alone, can fix the inequities of the white man (just like Green Goblin).

Of course he's not going to do this with HIS MONEY! No, no, no...he's going to do it with OUR MONEY!

Well, excuse the f**k out of me if I don't bow and kiss the feet of the anointed one, Mr. Warren Buffet. If he doesn't think he's paying enough property taxes in California then I suggest he write a F**KING check for what he thinks he should be paying and send it to Gray Davis.

Oh, but we all know the enlightened ones never create utopia with THEIR money. Only ours. I'm still surprised the Democrats haven't recreated the Kremlin somewhere in the U.S.

OH WAIT...I forgot about San Fransisco, the cesspoool.



11 posted on 08/19/2003 11:34:41 PM PDT by Fledermaus (Democrats have stunted brain development!)
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To: OESY
Great op ed from Jack Kemp.
One question: Wasn't it Jack Kemp, along with Bill Bennett, who campaigned against Prop 187 because they believe Californians should continue to be forced to flop open their wallets and shell out the cash to pay for the education and health-care of every third-worlder who can sneak across the border?
Maybe I have the wrong guy?
12 posted on 08/19/2003 11:35:07 PM PDT by Lancey Howard
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To: OESY
Warren Buffett is like a lot of rich guys: They simply don't want the club to have to admit the slobs.
13 posted on 08/19/2003 11:38:32 PM PDT by Bush2000
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To: Lancey Howard
Correct. Kemp and Empower America was all for illegal immigration in that they didn't want the laws enforced.

Of course, illegal immigration and VISA abuses let 17 out of 19 SAUDI ARABIAN'S to thwart our so called laws and kill 3,200 people.

I'd say "innocent" people but we all know, through the teachings of the left and DU'ers etc., that we deserved it and should have seen it coming. But if the idiots on the left said they could see it coming, would they have wanted to stop it? No. They relish in the attacks. They probably have keg parties about the deaths like Muslims in a strip joint.

It's amazing their idea of security is hugging our killers while they complain when the lights go out for a day.

14 posted on 08/19/2003 11:39:38 PM PDT by Fledermaus (Democrats have stunted brain development!)
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To: OESY
PING!

Join Us for a Complete Listing of All The Recall Threads.


15 posted on 08/20/2003 1:39:00 AM PDT by DoctorZIn
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