Buffett's Political Dilemma: Who to Choose?
Someday soon, Warren Buffett may have to apply his legendary stock-picking skills to the candidates clamoring for his endorsement in the 2008 presidential race.
For now, the plainspoken Nebraska billionaire appears to be enjoying his role as an unaffiliated kingmaker, raising money for Democrat Hillary Rodham Clinton while promising to do the same for her chief rival, Barack Obama. He's even heaped praise on New York Mayor Michael Bloomberg, who recently left the Republican Party and might join the race as an independent.
"As the markets often would follow Buffett's investments, I think that same mentality would follow his political activities, too," said Joseph Marbach, a Seton Hall University political science professor.
An outspoken critic of economic inequality in the U.S., Buffett is using his newfound political prominence as a platform to speak out on the obligation of the privileged to help the poor.
The 76-year-old Buffett is one of the world's wealthiest men, typically ranked third on Forbes Magazine's annual survey behind Microsoft founder Bill Gates and Mexican telecom magnate Carlos Slim.
In 1956, armed with $105,000 raised from a handful of friends and relatives, Buffett founded the investment company now known as Berkshire Hathaway. Today, the company has assets of nearly $262 billion and owns more than 60 subsidiary businesses including insurance, clothing, candy and furniture.
In 2003, Buffett served as a top economic adviser to Republican Arnold Schwarzenegger's first campaign for California governor, but he advised Democrat John Kerry's presidential campaign a year later. He's also been active in several Nebraska contests.
Investing in Candidates
When it comes to investing dollars in candidates, Buffett clearly favors Democrats. He's donated $65,600 to federal candidates since 1992, almost all of it to Democrats with a handful of contributions to moderate Republicans like Connecticut Rep. Chris Shays, according to Federal Election Commission records available through the nonpartisan Web site opensecrets.org.
He gave $4,000 to Clinton's Senate campaign in 2000, and $5,000 to Obama's political action committee, Hope Fund, in 2005.
Buffett's political involvement reached a new level this year, as he began more forcefully criticizing the Bush administration's foreign and tax policies.
Buffett helped Clinton pull in at least $1 million at a New York fundraiser last month, and has said he would do the same for Obama later this year. But in a recent Time magazine interview, he also said he dreamed of a Bloomberg-Schwarzenegger presidential ticket.
"That would be one hell of a team, wouldn't it?" he said.
Buffett's political views have at times been controversial in the business world, particularly on the subject of taxes. He's made no secret of his belief that rich people have a duty to pay more taxes and that President Bush and Republicans in Congress have erred by pushing tax cuts for the wealthy.
"If you're in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%," Buffett told attendees at the Clinton fundraiser.
In 2003, Schwarzenegger had to distance himself from Buffett after the billionaire was quoted criticizing Proposition 13, California's landmark initiative that keeps property taxes artificially low. The measure is revered by Republicans and many homeowners in the state, but it has also been blamed for badly underfunding public schools.
"I told Warren if he mentions Prop. 13 one more time he has to do 500 sit-ups," Schwarzenegger said at the time.
Dubbed the "Oracle of Omaha" by his many admirers, Buffett is revered in the business world. His annual investment lecture draws at least 25,000 people to Omaha.
Buffet's Political Allegiances
Buffett grew up a Republican like his father, Howard, who represented Nebraska's 2nd District in Congress from 1943-49 and 1951-53. The younger Buffett switched parties during the early 1960s, saying his views on civil rights aligned more with Democrats.
Andy Kilpatrick, the stockbroker who has chronicled Buffett's life in "Of Permanent Value: the Warren Buffett Story," said Buffett's political activity seems to be attracting more attention now than it has in the past.
Kilpatrick attributed the new interest in part to Buffett's growing visibility as a philanthropist, particularly his plan to donate most of his fortune to the Bill & Melinda Gates Foundation.
While carefully withholding a formal endorsement, Buffett has said he'd be happy with either Clinton or Obama as president. Federal Election Commission records show that Buffett donated the maximum $4,600 to Clinton's campaign in January, while no donations to Obama have yet been reported.
University of Nebraska political scientist Loree Bykerk said Buffett's reluctance to officially back either Clinton or Obama suggests he still believes the race for the Democratic nomination is wide open. When he does decide, Bykerk said, the endorsement will carry that much more weight.
"Insofar as he's seen as to be an excellent decision-maker, very competent, down to earth, and with Middle American values, there's almost no downside to that endorsement," she said. "He's a name almost anyone would be happy to be associated with."