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Warren Buffett Watch
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Warren Buffett's Dateline Interview with NBC's Tom Brokaw: The Complete Transcript (Part 1)
BROKAW:
Did the president-elect talk to you about tax policy? You've been outspoken as well about-- for example, payroll taxes. It's unfair that your secretary pays more of her income, proportionally, than you do.
BUFFETT:
That's true. That's right.
BROKAW:
And there's that whole question about capital gains staying stuck at 15 percent. Did he ask your advice on that?
BUFFETT:
Well, we've talked about that some years back. I mean, not-- not-- not-- not recently. But-- actually, in his-- in his book, The Audacity of Hope we-- he-- he mentions it, conversation or two we had about taxes. But I think that, you know, what we learned in the last 20 year-- we learned that a rising tide lifts all yachts.
But-- but the-- the fellows in the row boat-- boats have been left behind. And-- while the aggregate wealth of the four-- four-- 400 went from 220 billion to a trillion 540 billion. Seven for one. The wage of the average American went no place.
And-- and tax policy has just consistently favored, more and more-- the rich. I mean-- basically you've got, you know, capital gains rates at 15 percent. And-- and-- and I don't pay any-- payroll taxes on that at all. So it's-- it's gotten tilted way to the rich, and everybody said this is wonderful because we need to encourage investment. Well, we've had the lowest tax rates for investment relative to earned pen-- income the last eight years and look at what it's produced.
BROKAW:
When Joe Biden said, during the course of the campaign, it's patriotic for the wealthy to pay more in taxes, those who are more conservative jumped all over him. Do you think it's patriotic for the wealthy to pay more taxes?
BUFFETT:
Well, I-- I-- (LAUGHTER) I-- yeah, but I wouldn't want to rely on patriotism. I'd rather rely on the tax code. (LAUGHTER)
BROKAW:
But is-- is it gonna have to come to that?
BUFFETT:
Well, we-- we're gonna-- we're gonna spend a lot more money now. But here just-- the last-- in the last year-- you know, we spent about 2.9 or-- trillion dollars. We raised about 2.6 trillion. And-- you know, we are raising more and more of that from the people that-- that are-- you know-- are-- are the-- are the working people in the world, (LAUGHTER) and less-- less from people like me.
And we've gotta the money from someplace. I mean, we-- we-- we-- and-- and it's just-- Congress makes that decision as to-- as to whom shall contribute to these things that contribute to our common good. And-- and, in the last decade, the proportion that, counting payroll taxes, and you gotta count them, because they're over 30 percent of the receipts of the federal government, but counting payroll taxes-- the proportion has gone down on guys like me and it's gone up on people like my secretary.
BROKAW:
And do you think that that can get changed in this administration?
BUFFETT:
I-- I think it will get changed, yeah.
BROKAW:
Do you think that Congress and Secretary Paulson, between them, have been tough enough on the financial institutions that have their hands out all over Washington trying to get money out of this bailout program? Bank of America [BAC
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], Citi Bank [C
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], AIG [AIG
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], these huge financial institutions that helped get us in trouble in the first place now are being underwritten by the ordinary taxpayer who's out there worrying about losing his job the next day?
BUFFETT:
Well, I-- I-- I think what's been done has been necessary. I mean I-- I-- if your financial system becomes totally dysfunctional everything else becomes dysfunctional in the country. Now the-- you may hate to help them out, because you-- you may-- you know, they-- they may have gotten us in trouble in many ways.
And the people at the top may have made out like bandits in-- in terms of it. But I wouldn't let that stop me from doing what's right to make next year better. I-- the-- we-- you know, I-- the searching for villains is less important to me now than figuring out a solution that gets us out of this promptly. And-- and-- and-- but I-- I do think that boards that vote big golden parachutes and all that sort of thing. I mean, I think they ought to reexamine their activities.
BROKAW:
Your friend-- Arnold Schwarzenegger, is the governor of California. That state, in many ways, is ground zero for all of this. I mean, they've got a housing crisis that it'll take years for them to get out of. And their budget deficits are running into the, now--
BUFFETT: 
Huge.
BROKAW:
--40 billion dollars maybe. Is he asking for your advice?
BUFFETT:
No-- (LAUGHTER) no, I'm not sure what I'd tell him. But what you will see down-- for one thing, the pension plans of states and-- and cities-- has been decimated-- have been decimated in the-- in the last year. And the costs from that, the lack of revenue they're going to face as the-- economy slows, means that you are going to see a parade of mayors and governors to Washington like you've never seen it.
And they're gonna say, "If you can help out General Motors [GM
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], and you can help out Citicorp, you can certainly help out, you know, this state or that state." So I-- I think you're going to be-- I think it's gonna make inauguration day look like nothing in terms of the public officials that come in here and say, "We-- we need help." Their revenues are gonna be down. Their expenses, particularly including pension expenses, are going to be up. And you're going to have unbalanced budgets just all over the country with states and cities.
CLICK FOR PART TWO OF THE COMPLETE BUFFETT/BROKAW DATELINE INTERVIEW
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