TRANSCRIPT: Warren Buffett Tells Charlie Rose Why Congress Should Stop 'Coddling' the Super-Rich

Source: Charlierose.com

Warren Buffett

Warren Buffett spoke with broadcast journalist Charlie Rose for one hour on his PBS and Bloombergtelevision interview program that aired on Monday, August 15, 2011.

Leading the conversation: Buffett's controversial call for Congress to stop "coddling" the super-rich and raise tax rates for the wealthiest Americans.

This is a transcript of the entire program, courtesy the Charlie Rose program:

CHARLIE ROSE, HOST: Welcome to our program.

Tonight from Omaha, Nebraska, a conversation with Warren Buffett; his op-ed piece in today’s "New York Times" argues that we should stop coddling the rich, that the rich like him should pay more taxes. A conversation about taxes and spending with Warren Buffett.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, CHAIRMAN AND CEO, BERKSHIRE HATHAWAY: I think -- I think it’s important that whatever is done restores to a degree -- and we can’t do it overnight -- but restores to a degree people’s faith in the fact that their government can work.

Now, I also think fairness is important and I think getting rid of promises that you can’t keep is important. I don’t think we should cut spending dramatically now. I don’t think that what I’m talking about on taxes solves the -- the deficit gap at all. But I think fairness is important. I think having a sensible long-term plan is important to explain and I think having it be believable is terribly important because people don’t believe these out year things generally with Congress. They see too much of what’s happened.

ROSE: Is part of this -- being in the position that you’re in you want to start a conversation about the reality of taxes.

BUFFETT: Sure.

ROSE: And the reality of balance and fairness.

BUFFETT: Yes. I think it’s -- I think the American people deserve to be educated on what fellows like me are paying in taxes, for example. But they have to be educated on the reality of future promises. They have to be educated on the necessity of running significant deficits when the economy is weak. I mean, there’s a lot of things in terms of economic education. But this is the time to do it. If we don’t do it now, if these 12 members who have been appointed now to the super committee --

(CROSSTALK)

ROSE: Yes.

BUFFETT: -- if they come back with something that’s a lot of mush, you know, the American public’s had it.

ROSE: And what happens to the country?

BUFFETT: It isn’t good. It isn’t good. The country will still come through, believe me.

ROSE: Right.

BUFFETT: We can -- we will -- we’ll rise to whatever occasions -- occasion demands eventually. But we are wasting so much in the way of potential output, in terms of the opportunities for people that we ought to get on with it. I mean, the job of government is to govern.

(END VIDEO CLIP)

ROSE: Warren Buffett for the hour. Next.

(COMMERCIAL BREAK)

ROSE: We are in Omaha, Nebraska, for a conversation with Warren Buffett. Like so many people, I got up this morning in New York and read "The New York Times" editorial page and I found the following column written by him. It is an op-ed which is called "Stop coddling the super rich." Here are some excerpts.

"Our leaders have asked for shared sacrifice, but when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting, they, too, were left untouched. While the poor and middle-class fight for us in Afghanistan and while most Americans struggle to make ends meet, the mega-rich continue to get our extraordinary tax breaks."

Buffett speaks directly to the newly-designated 12-member super committee of Congress outlining the stakes for the country.

"Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality."

He spoke to spending as well as taxes saying: "Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here."

And then he turned to his theme of taxes on the rich. "The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current two percentage-point reduction in the employee contribution to the payroll tax."

His argument is specific. "For those making more than $1 million -- there were 236,883 of them in 2009 -- I would raise rates immediately on taxable income in excess of $1 million including, of course, dividends and capital gains. And for those who make $10 million or more-- there were 8,274 in 2009 -- I would suggest an additional increase in rate."

So there it is. At a time of great political debate about taxes and spending, one of the richest people in the world looks at his country and says people like him should pay more taxes.

Warren Buffett joins me now to talk about his column, the U.S. economy, the global economy, the deficit and the debt and what he thinks we should do about taxes.

I am pleased to have another conversation with my friend Warren Buffett.

Welcome.

BUFFETT: Good see you, Charlie.

ROSE: All right. Let me -- this is not a new idea for you.

BUFFETT: No, it’s not a new idea. It’s -- I’ve done this three times in terms of checking in my office and every time I come out to be the low taxpayer but this time I got a little more upset than usual.

ROSE: So you got more upset and decided you wanted to write and express what central idea?

BUFFETT: Well, we’ve been hearing about shared sacrifice. And believe me the people out there know what they’re talking about on that. I mean there is sacrifice going on all over this country and we’re talking about people making sacrifices about the promises that have been made to them in the future on some entitlements.

So I decided to look around and see if any of my friends were being affected by shared sacrifice and they, like me, are enjoying these extremely low tax rates and then in the very high percentage of these cases the very rich are paying less in the way of taxes than the people that clean their offices.

ROSE: Between a ten-year-period, the rich -- the rate they were paying has gone down and more of them have much larger taxable income.

BUFFETT: Yes, well, the IRS publishes statistics. They’ve done that since 1992. About the top 400 earners in the country -- it’s not the same every year. Those earners have had their income since 1992 quintupled. Now, I don’t know very many of our listeners that have had their earnings quintupled. During that same period, their tax rates have gone down from 29 and a fraction percent overall to 21 and a fraction percent.

ROSE: You are also in favor of spending cuts.

BUFFETT: We have to, Charlie. I mean we -- we are a very, very, very rich country. We’ve got close to what -- $48,000 of GDP per capita. If you told me when I was a kid that that would happen I would have thought you lost your marbles. But we had -- even a rich country has limits and we have promised things that we can’t deliver on and that’s a mistake. But we’re also in the process under-taxing the very rich. What I propose, incidentally, would not touch the taxes of 99.7 percent. I’m talking about three-tenths of one percent of the American public. But the people from a million dollars on up I think should be asked to share in a little of the sacrifice that we’re being asked to share in.

ROSE: What’s the formula are you looking for?

BUFFETT: Well, I think -- what really gives the low rates to the very rich like me is the -- is the low tax on dividends and capital gains. If you take these rich people what the IRS singles out, from 1992, they’ve almost had a tenfold increase in capital gains. They’ve had a tenfold increase almost in dividends. And those -- those are taxed at 15 percent and there’s no payroll tax on it. Now, the payroll tax accounts for almost as much revenue to the government as the income tax. It’s close -- $800 billion plus on payroll taxes last year; about $900 billion on income taxes. That’s where the money comes from in Washington. And they don’t get any payroll tax to speak of on my income. I’ve got my tax return here.

ROSE: We’ll take look at them in a moment.

BUFFETT: And -- and they -- they get -- I get taxed on up to $100,000. And -- and -- and my super rich friends get taxed up to $100,000. And that tax hits the people in my office very, very hard. Often they have a spouse working, so they get taxed on up to $200,000 that payroll tax. And that’s at -- this year we’ve had a waiver of two points but that’s normally at 15.3 percent. That alone is higher than the tax rate on capital gains or dividends.

ROSE: You point out that the average tax rate for people in your audience -- in your -- the average rate for people in your office is 36 percent of taxable income.

BUFFETT: Yes, 36 percent. And nobody’s below 33 percent. And incidentally, the lowest income person in the office is higher than the 33 percent. They don’t have the low rate. So from 33 percent to 41 percent they range and they average 36 percent and I’m in there with a fat 17.4 percent I think it is.

ROSE: And why is that?

BUFFETT: Well, taxes -- if you make money with money, you get taxed very -- at very low rates; 15 percent dividends in capital gains. No payroll tax. If you make money with muscle or hard work or sweat of your brow, you get taxed at rates that move on up. And most of the people, the middle-class gets taxed at rates of either 15 percent or 25 percent on their income tax, but then they get really hit hard on the payroll tax and that’s what brings the rates in our office up to an average of 36 percent if you leave me out.

ROSE: What has happened to the tax rate for the lowest 20 percent?

BUFFETT: The poor don’t pay any.

ROSE: Right.

BUFFETT: I mean there -- there’s 80 plus million actual taxpayers that pay tax. Incidentally, some of the extremely wealthy don’t pay, but that’s just an aberration. But no, the taxes -- taxes are falling -- the high rates are falling on the middle-class and the upper middle-class.

ROSE: The argument is sometimes made by people who believe that it is always good economic policy to reduce taxes that if, in fact, you reduce taxes you will create economic expansion and economic growth. People will go out and create jobs if they’re not paying as much taxes. People if they’re paying a higher tax will not make as many investments.

BUFFETT: Well, I worked with investors for 60 years, small ones, large ones, super large ones.

ROSE: Yes.

BUFFETT: I have yet-- and I’ve worked with capital gains rates of 39.9 percent and 36 percent and 25 percent, I have yet to hear one person say to me, "If I call you in the middle of the night Charlie and I say Charlie I’ve got this hot investment idea." Your reaction is not to say "No matter what the tax rate, forget it, I’m going back to sleep because the capital gains rates are too high." No, what you’re going to do is you’re going to say, "Tell me the name, quick, Warren, before you change your mind." And you know, I have never had one person decline to invest with me.

ROSE: Yes.

BUFFETT: And I was running money 40, 50 years ago when rates were much higher and I never had one person to show the slightest reluctance to take an investment idea and run with it.

ROSE: What are the other reasons that for -- that is essential to do now?

BUFFETT: Well I think it is essential. I think people are very, very upset about how their government works and particularly how it worked during this raising the deficit ceiling period. I mean, so as I talk to people, they’re very disillusioned. Howard -- Howard Schultz of Starbucks --

(CROSSTALK)

ROSE: Right.

BUFFETT: -- came out with an article just the other day on that. So I think -- I think it’s important that whatever is done restores to a degree -- and we can’t do I overnight, but restores to a degree people’s faith in the fact that their government can work.

And I also think fairness is important and I think getting rid of promises that you can’t keep is important. I don’t think we should cut spending dramatically now. I don’t think that what I’m talking about on taxes solves the -- the deficit gap at all. But I think fairness is important. I think having a sensible long-term plan is important to explain and I think having it be believable is terribly important because people don’t believe these out year things generally with Congress. They see too much of what’s happened.

ROSE: Is part of this -- being in the position that you’re in you want to start a conversation about the reality of taxes.

BUFFETT: Sure.

ROSE: And the reality of balance and fairness.

BUFFETT: Yes. I think it’s -- I think the American people deserve to be educated on what fellows like me are paying in taxes, for example. But they have to be educated on the reality of future promises. They have to be educated on the necessity of running significant deficits when the economy is weak. I mean there’s a lot of things in terms of economic education. But -- but this is the time to do it. If we don’t do it now -- if these 12 members who have been appointed now to the super committee --

(CROSSTALK)

ROSE: Yes.

BUFFETT: -- if they come back with something that’s a lot of mush, the American public’s had it.

ROSE: And -- and what happens to the country?

BUFFETT: It isn’t good. It isn’t good. The country will still come through.

ROSE: Right.

BUFFETT: Believe me. We can -- we will -- we’ll rise to whatever occasions -- the occasion demands eventually. But we are wasting so much in the way of potential output, in terms of the opportunities for people. But we ought to get on with it. I mean the job of government is to govern.

ROSE: Let me go t the debt ceiling debate and just talk about it for a moment.

BUFFETT: It’s just like -- let’s -- let’s just say, Charlie, that you and I agree that after we left the studio here we were going go out to a track near here and I was going to get at one end with my car and you were going to get at the other end and there’s this line down the middle and whichever one flinches loses his net worth to the other guy. Do you want to play?

ROSE: Yes.

BUFFETT: What do you want to play depends on how crazy you think I am.

ROSE: Yes.

BUFFETT: So what do we do if we go out there? Your net worth is on the line and my net worth is on the line and the engines are revved up, you know. And I make all these menacing gestures at you. I tried to look like a --

(CROSSTALK)

ROSE: You make me think you’re crazy.

BUFFETT: Oh yes, yes, absolutely. Absolutely. And you’re trying to make me think I’m -- you’re crazy. And we both get in our cars and we don’t think the other guy is crazy.

ROSE: Yes.

BUFFETT: So what do we do? Right as the engines start, I throw out my steering wheel. Now you believe me, right? Well, Boehner didn’t throw out the steering wheel, McConnell didn’t throw out the steering wheel but a group behind them said "Throw out the steering wheel, Mr. Speaker and make those people realize that we’re not going to agree to anything unless we get our way." And -- and if you have a sane person dealing with somebody that you feel may be insane, by that point when they draw the steering wheel you feel they’re insane "you lose". And the American people lost, incidentally.

ROSE: Then along came Standard & Poor’s and basically downgraded.

BUFFETT: Yes.

ROSE: -- because they said it appears that the U.S. Congress is dysfunctional and unable to deal with the issue.

BUFFETT: Yes.

ROSE: You disagree with the downgrading?

BUFFETT: A 100 percent. I mean --

(CROSSTALK)

ROSE: But you understand why they made the decision?

BUFFETT: Oh I understand why they did it. But I will bet you -- McGraw-Hill owns Standard & Poor’s.

ROSE: Right.

BUFFETT: I bet if they have any short-term money around it’s in Treasuries. I don’t know that for sure but they would not be worried about it that being in Treasuries.

ROSE: And that’s, in fact, what happened the Treasuries --

(CROSSTALK)

BUFFETT: The Treasuries -- we can print money. There are 17 countries in Europe that gave up the right to print money and believe me, they don’t want to give up the right to print money.

ROSE: Because they joined the Euro zone.

BUFFETT: Yes they joined the Euro zone and now they -- they’ve got terrible problems because they can’t print money. We -- we can print money. We don’t -- we don’t have to worry so much about our government becoming dysfunctional as we have to worry about that damn printing press becoming dysfunctional.

ROSE: So in fact you are saying that the United States can always pay its bills and therefore it should not have had its AAA rating downgraded?

BUFFETT: Yes, that’s correct.

ROSE: Yes. But what about -- what do you make of the Chinese criticism?

BUFFETT: Well, I -- I’m sure they’re enjoying it in a way.

ROSE: Yes.

BUFFETT: I mean, they -- well I would criticize too, because if I were the Chinese sitting with a $1 trillion plus of U.S. government obligations one way or another, I would be very worried about what’s going to happen to the purchasing power of that. I mean I’ve got the right to get the $1 trillion back and I will get the $1 trillion back. The question is what will it -- what will it buy at that time? And our government gives you the impression at times that if they will resort to a printing press. They’ll resort to a printing press if necessary. And if they do enough of that, the value of the dollar goes down and it goes down significantly. So if you hold a lot of dollars which the Chinese do -- I can see getting unhappy about that.

ROSE: What do you think of the Federal Reserve’s announcement they’re going to keep interest rates low?

BUFFETT: Well, that’s a very, very stark statement. I mean the fed is saying, when they say we’re going to keep the rates low until 2013, that they say -- they’re really saying the economy is not going to be very good until then. That’s a -- that’s -- it’s an unusual statement.

ROSE: Would you disagree with it?

BUFFETT: I -- I think there’s a chance they’re wrong, yes. I think that -- I think it may pick up before then.

ROSE: Do you think the U.S. economy will pick up before then?

BUFFETT: Yes, the U.S. economy. I think it’s -- well, it’s been picking up ever since the summer of 2009. Right up until last month. I mean I -- I -- I see figures on 70 plus businesses. What is unusual about this is we had a huge recession caused in large part by a housing bubble. I mean, you had -- you have 67 percent of the people in the United States own their own homes roughly.

ROSE: Right.

BUFFETT: And those people who have a $22 trillion asset at the peak saw the value shrink dramatically. That’s -- that’s affecting two-thirds of the households in the United States. That had had incredible impact on the economy and we won’t come back big time until we’ve worked off the excess inventory that was created during our binge on housing a few years back. We are -- we are making progress on that every day, every week, every month. I mean, we are producing less houses than we are households.

ROSE: The household formation has to increase beyond --

(CROSSTALK)

BUFFETT: Beyond the housing construction. And that’s been happening for a couple of years and it’s exactly what should happen. Now, I actually read some article today by people talking about blowing up a few houses or something. If you blew up a million houses you’d probably be in balance now. I’m not advocating that, right. And if you started having households being formed by 12-year-olds you -- you -- you could speed up household formation. But we’re not going to have that either. But we are going to have households being formed. That’s baked into the demographic pie.

ROSE: You are saying that what’s wrong with the American economic growth picture right now is housing and construction --

(CROSSTALK)

BUFFETT: Right.

ROSE: -- and -- and --

BUFFETT: Every one of our businesses virtually or our 70 something businesses are doing better quarter by quarter by quarter except those tied to housing.

(CROSSTALK)

ROSE: Keeps on paying in things like that.

BUFFETT: But housing -- housing is way bigger than construction workers. Unemployment will fall significantly in my view when we get back up to a million housing starts because it won’t just be construction workers, it will be our carpet workers where we’ve laid off 6,000 people, and it will be our brick workers. And go up and down the line. So the big recovery -- we’ve recovered our corporate profits. We’ve recovered in terms of -- of getting the banks back in shape, banks are in good shape now. We’ve recovered in all kinds of areas.

Corporate America is doing fine in most areas. It’s not doing fine in things tied to residential construction. That won’t come back until we work off the excess inventory. But the inventory is not as -- the amount of excess inventory is not as high as a lot of people think in my judgment and that’s why I say it could be before mid-2013.

ROSE: Going down to eight percent or something?

BUFFETT: And I think it’s -- and I think if -- when -- when home construction is a million units or more running at that rate, I think we’ll be at seven percent or below.

ROSE: You have a bit -- a bet with Peter Orszag, the former Director of the Office of Management and Budget?

BUFFETT: Yes, but I’m talking settlement with him.

ROSE: What was the bet?

BUFFETT: The bet -- the bet was on by election time that it would be down to 7.3 percent and I thought -- I thought housing construction would come back by that point.

ROSE: Yes.

BUFFETT: And I may be wrong. I may be right but --

ROSE: Yes.

BUFFETT: -- but when -- I will guarantee you when housing construction gets back to a million units -- and it can go beyond that.

ROSE: Right, right, right.

BUFFETT: I mean it could even be a million or two, we will have -- and unemployment will fall dramatically.

ROSE: To six percent at some point?

BUFFETT: Well, certainly below seven percent.

ROSE: Below -- oh, close to six.

BUFFETT: Yes, yes.

ROSE: By 2013?

BUFFETT: Oh, I -- I think -- I think it’s likely to happen -- the Federal Reserve disagrees with me.

ROSE: Yes.

BUFFETT: And Bernanke is a lot smarter guy about that than I am. But -- but I -- we are working it off. I mean we have -- we have never had this low a level relative to population --

(CROSSTALK)

ROSE: Right.

BUFFETT: -- for as long as I’ve known the figures on. I mean this -- this is a huge correction of a bubble that popped.

ROSE: And -- and what is necessary to take place over the next two years in order to increase household formation and decrease the amount of construction?

BUFFETT: Well, we’re doing pretty well on the decrease in construction.

ROSE: Right.

BUFFETT: We’ve -- we have not done --

(CROSSTALK)

ROSE: Demand is a factor in that.

BUFFETT: Demand is a factor and we artificially gave it a little boost when we went with the credit a year or two ago on -- on -- on purchase of homes. I think it’s a mistake to try and -- to try and front end it. I mean it just delays the eventual recovery. If you’ve gone in excess of something -- if I’ve got too many purple dresses and I run a dress shop, I get rid of those purple dresses and -- and then I can start all over again with the dresses that the people want.

ROSE: Yes.

BUFFETT: And I -- I mark them down to whatever it takes. You could -- you could -- you could have -- you could have a bunch of rich immigrants come in and they’d all need houses, for example. I mean if you wanted to change your immigration policy so that you let 500,000 families in but they have to have a significant net worth and everything, you’d -- you’d solve things very quickly. But naturally it’s being solved. Capitalism is solving this. But we’re fortunate in doing this, Japan has a declining population. I mean, if they get in excess of something it isn’t going to get worked off. We have households being formed every day. I’ve got a grandson getting married this weekend so we’re -- we’re forming them all the time. And -- and we’re forming it a lot faster than we’re building homes.

ROSE: And we have an economy that’s based on domestic demand.

BUFFETT: Sure.

ROSE: Yes whereas China was trying to shift around from an export

demand to a -- to a domestic demand.

BUFFETT: Yes, they will be a strong exporter for a long time.

ROSE: When you -- when you look at economic growth first there’s a job question but then there’s also the rate of economic growth, increase in GDP. How do you see that?

BUFFETT: I think it will be -- I think it will be very good over time. I mean I -- I -- we have -- we have the same things that have been working for us for 200 plus years. We -- we -- Charlie, I was born on August 30, 1930. That was the high day of the Dow Industrials in that year. It was at 242. They’d come back people thought that they make that we’re going to recession.

(CROSSTALK)

ROSE: Right, sure.

BUFFETT: What happened the next couple years? And 4,000 banks closed, the Dow went to 41; that’s like the present Dow going to 2,000. My dad lost his job we had the dust bowl here and everything. We’re living six times better than now.

The American system works. It works terrifically and -- and it has -- it has occasional recessions. I mean we’ve got -- probably had 15 of them since the country was formed and this was a particularly bad one because we had a bubble in the biggest asset around for the American public.

ROSE: You have made the point that I guess it was in 1779 or somewhere right about then that the Chinese population was like 290 million.

(CROSSTALK)

BUFFETT: Yes, 290 million.

ROSE: The American population was about four million and Europe’s was about 50 million.

BUFFETT: Yes.

ROSE: And look what happened.

BUFFETT: Look what happened. And we weren’t smarter, we didn’t work harder, we didn’t have greater natural resources, we just had a system that worked and they’ve been smart enough to catch on.

ROSE: But -- but there are interesting things that are at work as well, the demographics are at work. So they have more domestic demand possibilities in China because of their population or in India because of their population or in Brazil and places like that.

Some will argue that it’s going to be a much more competitive environment for the United States. While we may have a system, other people are learning from our system and they also have some built-in advantages that we don’t have.

ROSE: Yes, they’ve got -- they’ve gotten smarter about things.

(CROSSTALK)

ROSE: Yes.

BUFFETT: I mean if you go back 50 years in China, the Chinese were just as smart then. They worked just as hard but they weren’t getting results. And now they’re -- they’re getting incredible results. They -- they picked up on the system but that’s not bad for us. I mean we do not -- the world isn’t a zero-sum game at all. We want the rest of the world to prosper.

We’ll sell them a lot of things. You know, most people don’t realize it but our exports as a percentage of GDP have doubled in the last four 40 years. We have become better at exporting things. But just we -- they import a lot better.

MORE ECONOMIC STIMULUS?

ROSE: Two big debates coming up in terms of this country and the political season. One is about taxes which you are speaking to in this piece. Basically saying, the rich ought to pay more. And the other is the role of government. A debate -- how do you see that debate?

BUFFETT: Well, I think -- I think if we get back on more or less the formula we had which was getting 18.5 percent or 19 percent of our revenues from taxes, we can spend 21 percent then. We can run a deficit of a couple percent of GDP on average over time because our -- our country will grow and we have a lot more debt capacity than we had back in 1790, just like I’ve got more paying capacity than I had 50 years ago.

So as your income grows, your population grows, your wealth grows you can handle more debt. But you can’t let it keep increasing as a percentage of your income or wealth and which is what we’ve been doing like -- like crazy lately.

So I don’t mind a couple of percentage point gap; 18.5 percent or 19 percent on revenues, 21 on thereabouts on expenditure but that means we have to hit both sides. And we can’t put ourselves on a trajectory that takes the expenditure side up automatically as the years pass, which is what we’ve done with entitlements.

ROSE: Do we need another stimulus program?

BUFFETT: Well, we’ve got to -- we’ve got the -- we’ve got the biggest stimulus program the world’s seen virtually going on right now. It’s very -- that debate has really gotten somewhat ridiculous in my view, because stimulus -- fiscal stimulus is when the government spends a lot more than it’s taking in.

ROSE: So the deficit is our stimulus?

BUFFETT: The deficit is our stimulus. You can -- you can say a bridge someplace is part of that act, you can say cutting taxes is part of it as was the case in our stimulus act. But the stimulus is the government pouring more money out than it’s taking in. And we have a -- a stimulus going on that’s 10 percent of GDP which we haven’t seen since World War II. So we have a huge stimulus going on. Nobody wants to call it a stimulus because that’s gotten to be a dirty word. But we have a big stimulus. So we do -- in my view, whether we have a 10 percent of GDP deficit --

(CROSSTALK)

ROSE: Right.

BUFFETT: -- which is a huge stimulus or a 12 percent or eight percent it doesn’t make much difference. I -- I think that we pushed monetary policy to a level, we’ve pushed fiscal policy to the limit but fortunately the most important thing in terms of this country ever coming out of recessions has been the natural workings of capitalism and I think you’ve seen that for the last couple of years.

(CROSSTALK)

ROSE: And you are saying at this table this day you do not see the likelihood of double dip recession because the other thing that needs to happen to make this economy strong as it is, is new construction.

BUFFETT: Yes.

(CROSSTALK)

ROSE: In the housing market.

(CROSSTALK)

BUFFETT: I would say -- I would say there’s only -- there’s only two things that could cause me to be wrong on that in my view. And -- and I don’t think either the way -- is people lose so much faith in government to handle things that they -- that they just -- that they -- they talk themselves into a huge funk in this country. And the second thing could be if somehow the troubles of Europe spilled over here.

ROSE: Confidence is an important thing.

BUFFETT: Sure it is.

ROSE: And there was a damage to confidence based on what happened in Washington.

BUFFETT: Charlie, I own stock in a lot of companies. If I get upset about the management, you know, what they’re doing, do I lose confidence? Yes. Do I feel bad about investing with them? Yes. I mean -- I mean you -- you want to have -- you’ve got to have confidence in your leaders. I mean, we went into World War II with confidence in our leaders. I mean, that -- it’s vital. It looked like we were losing the war for six months but we never lost confidence in our -- in our leaders. And we -- you have to believe in them and they have to give you a reason to believe in them.

ROSE: Help me understand now what the danger is that we face. If things don’t happen as well, if Washington cannot get back on track, maintain the confidence of -- of the American people and at the same time make the right decisions because if that super committee doesn’t do the right thing --

BUFFETT: They ought to do the right thing, yes. With Bernanke --

ROSE: But that’s why you tell them -- this is directed in part to

that super committee to say, look.

BUFFETT: Absolutely.

BUFFETT: You’ve got to look at taxes really strongly here.

BUFFETT: If I can pick 12 readers for this, they’re the ones.

No, if you go back to September of 2008, I mean, you had a month when everything was falling apart -- Freddie, Fannie, hey, you name it.

ROSE: Right.

BUFFETT: What our leaders were saying to us then, the key players are saying we’ll do whatever it takes. And I believed it. I knew they had the power to do whatever it took and I believed they would do it.

Now, the problem about government now is that if they come out and get on the Sunday talks shows and say "I’ll do whatever it takes", you know, people don’t believe them. And I mean, they -- they -- they’ve got to see action and -- and here they see something like the raising the deficit limit used as a hostage for something of vital importance to the United States. And if you -- you can use it as a hostage in terms of spending, you can use it as a hostage on funding on education or anything else. I mean, it isn’t limited about it; if you’ve got something that comes up like it.

People do not want to see the instruments of government used as weapons the whole idea of the -- of the -- of the law that’s a shield not a sword. I mean the minority has become the sword in this respect. And I don’t blame this on Speaker Boehner. And I think that he -- I think that he --

(CROSSTALK)

ROSE: He had members of the Tea Party --

BUFFETT: The people that said -- the people when back in the back room said -- said to him, "You’re not going to have our support if you go in there and bend an inch on this." They said throw away the steering wheel.

ROSE: You have also said that you guarantee that there was one way to get people to vote differently on this, which is in fact, you say unless you reduce the deficit to --

BUFFETT: Three percent of GDP.

ROSE: Three percent of GDP, and it’s now about 10 percent.

BUFFETT: Right.

ROSE: Unless you reduce it then you’re not eligible for re-election.

BUFFETT: Yes.

ROSE: If you had that facing them you would get a decision about these issues right away.

BUFFETT: Tomorrow. But it’s still tongue in cheek, though Charlie. Because if you -- during a huge recession like we had during, an all-out wartime period you don’t want them operating with three percent. I mean, you need larger deficit but you certainly need something a little less than that on average over time.

But I just use it to illustrate that this is a world of incentives and we work on incentives in every way. If we work on education, in business, every other place. And what I try to think of the incentives to get somebody who comes up for re-election in a year to do something where the policy cycle goes out five years or ten years, how do you do it when the policy cycle exceeds the electoral cycle? You’ve got to make sure the electoral cycle is in the equation.

ROSE: What else do you want these 12 members of Congress who are sitting on this super committee to think about? Beyond taxes and a balanced approach which is also what was recommended by Bowles-Simpson, also recommended by the Gang of Six.

BUFFETT: It’s incredible. Here you had Alan Simpson and Erskine Bowles; you couldn’t have two finer people. Intelligent, good-humored, on opposite sides of the aisle. They get together and they get Tom Coburn and Dick Durbin to sign on to something. And they worked --

ROSE: A Democrat and a Republican --

BUFFETT: Absolutely, absolutely.

ROSE: -- a liberal Democrat from Illinois and a conservative Republican from Oklahoma.

BUFFETT: Yes, they were putting the country ahead of their personal feelings and they worked for months and months and months and they criticized. And I’m sure the hours they spent arguing over, given things that they had to compromise on. They get 11 out of 18 to agree and it just gets tossed aside. I think that was a terrible mistake. Simpson-Bowles should gain momentum.

When you get people who work like crazy, many months, personal reputations at stake and everything else and you get Coburn and Durbin, that’s -- I give credit to both of them, equal credit. I think -- I may not agree with Tom Coburn but I think that, you know, I think he’s a real statesman.

ROSE: A real statesman.

BUFFETT: I think he’s a statesman.

ROSE: And he was, in effect, he was prepared to take reductions in --

BUFFETT: Absolutely. Absolutely.

ROSE: -- in corporate income tax.

There is also this: the President’s leadership. You have said, "On most social issues and on distribution of wealth, the President and I are in sync." Yes?

BUFFETT: Yes.

ROSE: What did you mean by that?

BUFFETT: Well, I just mean that in terms of a woman’s right to choose, in terms of not having the rich get by with lower taxes than the people in their office, there are a bunch of things that I agree with. There’s limits to how much you can do in that.

ROSE: What about distribution of wealth?

BUFFETT: I think in the last 25 years, the Forbes 400 which is different from the (INAUDIBLE) -- the Forbes 400 has gone from a couple of hundred billion of wealth to a $1.2 trillion or something like that. I mean you’ve had the income at the top Americans quintuple, top 400 in the last 20 years.

This is becoming a nation of haves and have-nots and super-haves. Listen, anybody that makes $250,000, I don’t consider them rich, particularly if they live in New York or L.A. or some place like that.

ROSE: That’s why you put the level at a million dollars.

(CROSSTALK)

BUFFETT: Yes. Listen, you want everybody to be able to get ahead in this country and you want to be able to enjoy the fruits of what they do.

ROSE: Do you like being rich?

BUFFETT: I’ve been poor; I’ve been rich. Rich is better.

ROSE: But the idea is that --

BUFFETT: No, no, it should be a land of opportunity and people that get rich, nobody’s going to confiscate everything or anything of the sort but the distribution in this country, the market system has led to extremes. A guy that’s wired like me -- I don’t have any special status in this world. I’m not a great nurse, a great teacher may be much more valuable to society than I am. I’m wired so I can figure out what things are worth.

ROSE: Allocate capital.

BUFFETT: Yes. I get super rich and somebody whose adenoids are in a certain arrangement gets rich but television makes a lot of people rich. Lou Gehrig held out for $25,000 in the late 30s and they benched him. He headed back to the street. He had a long struggle.

Television has made the .230 hitter or the .240 hitter better than Ted Williams at .406. So there’s a lot of serendipity. We -- everybody in this country owes their good fortune in some way to the rest of the country.

ROSE: This is your 2010 tax return.

BUFFETT: That’s my 2010 tax return.

ROSE: What will I see there?

BUFFETT: Well, you’ll see a lot of income. You’ll see total -- you’ll see adjusted gross income of about $62 million. But then I gave -- you’re only entitled to deduct 30 percent of your contribution so I’ve got a charitable carry forward of about $10 billion, I don’t think I’m going to use it up. But then you get to taxable income and I’ve got $39.8 million and you get down to tax and I’ve got $6.9 million.

ROSE: And this comes to what percent of taxable income?

BUFFETT: I think it comes to 17 percent.

ROSE: Seventeen percent. And other people in your office are paying an average of --

BUFFETT: 33 percent to 41 percent. Nobody’s below 33 percent. Nobody’s below 33 percent. I think that --

ROSE: How much of that has to do with the payroll tax?

BUFFETT: A lot because they all pay it. I pay it, incidentally, but it’s $15,000 now for me. $15,300 and it’s $15,300 for all the people in the office pretty much and many of them have spouses where it’s another $15,300 for the spouse. So for some of them it’s $30,000 and that’s a lot of money to them. A lot.

ROSE: And you said you want the 12 most important people to read this, the people in Congress or in the super committee. What else can be done to give it play?

BUFFETT: Well, I hope "The Times" is a launching pad. I think that it’s a subject worth serious discussion and I already heard from somebody this morning that they’re putting it on Facebook. I never thought of social media as being a way --

ROSE: Get this column on Facebook so it will get a wider and bigger distribution with 600 million.

BUFFETT: I think that the public is educated on what goes on. I think the representatives will follow through to some extent. I think some members of Congress don’t even understand that probably. I invite them to take their own tax return and make the same calculation I did. And incidentally, I don’t have a tax shelter. I don’t have -- I’ve never had a tax shelter. I don’t do any of that kind of stuff. The Congress has been my tax advisor. I mean, they’re taking care of me.

ROSE: You also make the point that in so many corporations that their biggest investment is not in plants and equipment it’s in lobbyists in Washington. So therefore they get deductions so that their effective tax rate is also much less whatever the maximum corporate tax rate is.

BUFFETT: Yes. Well, that’s true and they’re entitled, incidentally, to try and -- I mean, there’s a big rule book up there and if the rule book has flaws in it, the thing to do is change the rule book, not count on everybody to be on the honor system.

I mean the rule book is what counts. I’m probably creating a lot of business for lobbyists now because they’ll be very busy defending the present situation. But I think it’s the rule book that has to be looked at.

ROSE: Do we need tax reform?

BUFFETT: Yes, I think so but I think I would cure what I wrote about in the "New York Times" this morning first. That’s very easy to do.

ROSE: To do those two things?

BUFFETT: Yes and that doesn’t dove everything Charlie, but it probably tops -- it would be $50 billion a year. Now, everyday talks in terms of ten years so it would be $500 billion over ten years.

But this doesn’t close the gap. I want to move up toward that 18.5 percent or 19 percent and I hope we’ll get a lot of it out of growth. But I think it’s kind of silly at this point to count entirely on that. And I think we have to move the expenditures down to 21 percent or thereabouts percent.

ROSE: How do you measure President Obama’s leadership on this? Because he could have done more to be in support of Simpson-Bowles; he could have been out earlier.

BUFFETT: I wish he’d been. I wish he had. Both sides were afraid to touch Simpson-Bowles. I mean it’s pretty clear. It made too much sense. They didn’t want to be associated with it.

I would say this. In terms of the deficit limit negotiations when the other guy throws the steering wheel out the window, you have a problem. If you and I get in those cars and I see you throw the steering wheel out, I give up, you win.

ROSE: In fact, when you looked at the Republican debate the other night and they asked them to raise their hand if they were in favor of a level of spending cuts which were --

BUFFETT: 10 for 1.

ROSE: 10 for 1. And everybody would not go for that.

BUFFETT: That was pathetic. I me, listen, I like Republicans. I mean if you got Democrats on some core issue they’d probably do something just as silly. But when they take that attitude they are really saying, you know I want to win this primary. They are saying the country be dammed, I want to win this primary.

ROSE: And it means that a certain element of philosophy on taxation has taken control of the public debate within that party.

BUFFETT: It has particularly in terms of the primary because the primaries push people to extremes. That’s one of the problems we have in this country. But they can’t believe in their hearts-- all ten of them-- that a 10 for 1 ratio would in some way irreparably harm the country.

ROSE: but you said you’re prepared to make -- as I raised earlier in this conversation specific spending cuts in entitlements, changing social security, trying to reduce the cost of health care which is essential.

BUFFETT: Charlie, on my tax return here, you had George Will on a few days ago. George said he couldn’t understand why he was getting social security. Here it is. Social security benefits, $32,680.

ROSE: You get $32,000?

BUFFETT: $32,680.

ROSE: Right. You don’t need it.

BUFFETT: And a portion of it is tax free. Not a very big portion.

ROSE: So you’d make a means tested? In a second?

BUFFETT: Oh, I think it’s -- I think the idea when we’ve got this very, very rich family this country a lot of us have troubles. 60 million people live in households where the income is $21,000 a year or less. And I say to people who say we shouldn’t raise taxes just try that for a few weeks. Just try it.

I think that when we’re going to have to do things that are a little tough on them, I think you have to come after some of us and it shouldn’t be social security. It’s deposited in my bank account every month without me even knowing about it.

WARREN BUFFETT'S AMERICA

ROSE: Where does this populist instinct in you come from?

BUFFETT: I was born lucky. I was born the United States of America. The odds were at least 30 to 1 against that. I didn’t have anything to do with that. I was born wired for capitalization. I didn’t have anything to do that. So here I am. I won the ovarian lottery the day I was born, you know. A lot of people don’t.

They go off to Afghanistan or fight for us to preserve things for me. When some of my friends complain about their taxes I feel like saying let’s continue this conversation on the shore’s enormity. Let’s just go over there and we’ll just talk about this and how terrible your situation is.

I really think this country works wonderfully on a market system. We don’t want to give it up. Indeed, we have to control that market system in many ways. But it works. It works with the kind of incentives we have. It works with equality of opportunities. It’s not perfect. We’ve tried for it all the time.

But the lucky ones still prosper incredibly disproportionately. I’m not for having some kind of a czar in Washington besides what’s proper but I do think something that thinks about the 60 million people that are living at $21,000 a year or less in their household. I think a rich, rich, rich society should think about them a little bit every day.

ROSE: That’s the America you believe in.

BUFFETT: Yes, it is. I think it’s the America most people believe in.

ROSE: Are you ok by Dodd-Frank that, in fact, that was their appropriate reform?

BUFFETT: I haven’t read it, Charlie. I think there’s two things that are needed to keep the financial system from going crazy. One is keeping some limits on leverage and we didn’t do a very job of that last time. And incidentally --

ROSE: Dodd-Frank is devoted to that a little bit, isn’t it?

BUFFETT: Yes, but Congress, I mean they encouraged huge leverage in Fannie and Freddie. I mean that’s where the money was.

The second thing is having the proper incentives for people at the top of important financial institutions. We saw institution after institution go to the government and say we’re too important to this society that you can’t let us fail. So pour in the money, do whatever’s necessary and I’m going go off and be rich. I’m the guy that screwed it up.

I think you’ve got to have down side, really drastic down side for the people that run financial institutions, big ones that get into trouble. And we need those incentives and I don’t think they’ve attacked that yet. That can be done through the board of directors.

ROSE: Too big to fail continues to exist.

BUFFETT: Too big to fail will always exist. There will always be institutions that are too big to fail. They’re deciding over in Europe that Greece is too big to fail.

ROSE: Ok. But could they be broken up. I know that. Should those institutions be broken up?

BUFFETT: No, no, no.

ROSE: As one Federal -- former Federal Reserve --

BUFFETT: No, we decided the whole banking system was too big to fail when we put in the FDIC in effect. We can’t exist without them. So we have to do something to change the behavior of people that are at the top of those institutions so they have huge downsides. They didn’t have down side.

I’m not going to name names but those people did not have down side. They had down side to their reputation but they walked away with tens of millions of dollars so you can’t that have that situation exist and expect great behavior. And then you have to have some restrictions on leverage.

ROSE: But has that changed?

BUFFETT: The incentives have not changed very much. They say they’ve changed by paying them more stock and all that. But that isn’t draconian enough for me.

ROSE: I want to come back to Omaha.

BUFFETT: Great.

ROSE: And look at what the lessons of Berkshire Hathaway are, for you. I mean most of your businesses have grown.

BUFFETT: Yes.

ROSE: The railroad’s grown.

BUFFETT: Everything’s growing.

ROSE: Everything’s growing.

BUFFETT: Pretty much.

ROSE: You are finding that you need to hire new people.

BUFFETT: Sure. We’re investing a record $7 billion this year in capital investment, almost all of which is in the United States. That’s at least a billion more than we’ve ever invested in the past. There’s plenty of things to do here.

ROSE: You have often said that in a time like this in which there are difficult times, that’s the best time for you because you can have more opportunities to buy things that you think are of quality at better prices.

BUFFETT: There’s no question about that. It’s like buying on sale. Last Monday we spent more money in the stock market buying than any day this year. But it was --

ROSE: Buying stock.

BUFFETT: Right. Not business. But buying business is very infrequent. There’s a lot of happenstance in that but you have to be ready to do it.

ROSE: There’s much discussion in the paper about buying another acquisition of Transatlantic, I think it is -- an insurance company.

BUFFETT: Yes. We made an offer about a week ago. That offer is expired now. We don’t leave things out.

ROSE: You don’t like bidding wars, either.

BUFFETT: No, no.

ROSE: But if you look at Berkshire today it’s different the sense that more of it is owning businesses 100 percent than it is owning stock.

BUFFETT: Yes. And we’ve been in that direction for 20 years but people are seeing more and more evidence of it but we employ 260,000 people or more and we have added to employment this year.

ROSE: With the exception of homes and construction and carpet and

all those --

BUFFETT: Everything is --

(CROSSTALK)

ROSE: The second largest real estate agent and all that.

BUFFETT: Yes.

ROSE: And that’s the one thing -- So Berkshire in a sense offers an opportunity to look at where U.S. economic growth is.

BUFFETT: I can tell you how many people had Dilley Bars yesterday. Everything from Dilley Bars to corporate aircraft.

ROSE: Robert Zoellick, the President of the World Bank said this is a very, very, internationally is a difficult time and because what’s happening in the United States and in Europe could very well be a warning sign. You seem to say, look, my success of my companies is different except for construction.

BUFFETT: The United States has been improving. I mean, it went through -- we talked about it, it was economic Pearl Harbor.

ROSE: Right.

BUFFETT: I mean, I use that term. And we had a shock to our system that was really colossal and if a few people hadn’t acted right, even more so. But we have been coming back steadily. The mood has gone up and down more like this as we’ve gone but everything I see in business, we’ve been coming back steadily since the summer of 2009 and continuing up through last month.

Now can something happen that will interrupt that? Perhaps, but I haven’t seen it. Europe is a different story.

ROSE: Ok. Put Europe in the context of this, though. How could the sovereign debt crisis in Europe affect the rest of us?

BUFFETT: Well, the problem is I don’t know. I -- I don’t know -- I don’t know what’s going to happen over there. I know 17 countries that joined the European monetary union gave up the right to print their own money. That was a huge, huge decision. I hope the United States never does it.

I mean it changes the game --

ROSE: To be in control of your own finances, in fact.

BUFFETT: Yes. And they linked themselves. They gave each other their credit cards and said let’s all go out. And some behaved better than others or worse than others.

ROSE: Should they dismantle the Euro Zone then?

BUFFETT: I don’t know. I mean it’s very complicated. You have to decide one or two things. You’ve either got to decide that these members are actually going to get their act together, the ones that have troubles in a very major way because they need lots of money. They have to refund their old obligations all the time. So nobody has to lend money to country a, b, or c. Nobody has to lend money to them.

The United States, nobody lends money to the United States, we print it. But not over there. If Greece owed their money in drachma they’d have a lot of inflation and, you know, devalue and all of that. But they wouldn’t have a problem paying their bonds. They gave up that right.

Now, either the weaker countries get their act together in some major way -- and I think that’s very, very difficult -- or basically the very strong companies, and we’re talking countries -- we’re talking Germany, have to say I’m willing to take care of my brother-in-law that’s been using my credit card.

ROSE: That’s what they’ve said so far.

BUFFETT: Well, they sort of half said it. I mean that’s their problem. If you’re having a run at a bank and you’ve got 10 people in front of it and no FDIC insurance that line isn’t going to stay at 10. You’re either going to get rid of those 10 or you’re going to have a hundred.

And so far, in Europe they’ve sort of kept talking to the 10 and a few more straggled up and so they didn’t get rid of the line and when then there’s a run the line only gets longer unless it gets taken care of very quickly.

ROSE: But what are the consequences for the United States and for Asia?

BUFFETT: I don’t -- I don’t know the answer to that. I don’t think they’re necessarily extremely dire. There have got to be consequences but I don’t -- Europe won’t go away. We’re selling a lot of goods in Europe.

ROSE: It is a huge market.

BUFFETT: Yes. It’s a huge market. And they’re not going to go away and the plants aren’t going to go away and the farmland isn’t going to go away. It’s just going to be kind of an economic mess for a while.

ROSE: You have said before to me and to others that Berkshire is your canvass that you paint on. It’s your masterpiece.

BUFFETT: Well, I don’t know about masterpiece, but canvass.

ROSE: So what is it if you look at it today, Berkshire, you find fault with?

BUFFETT: Find fault with?

ROSE: Yes.

BUFFETT: Well, I’ve made plenty of mistakes along the way so I have a lot of brush strokes just give me a little whatever things to remove that I would do it. So I’ve made mistake, but I expect to make mistakes and I’ll keep making mistakes.

ROSE: Because unless you take chances you won’t make mistakes.

BUFFETT: Oh sure and mistakes are part of the game. I mean you’re swinging at pitches and -- I don’t want to sound -- I feel good about Berkshire. I mean, the people I’m associated with at businesses, we have a -- we lay out our economic principles and I laid them out many, many years ago. And we don’t change them. I mean we try to operate that way.

Doesn’t mean we’re perfection. You’ve got a company of 260,000 people, I’ll guarantee you right now somebody’s doing something I wish they weren’t. You can’t have a city of 260,000 people and have no jails.

But overall I feel there’s a culture that I don’t think any other large -- any large public company has and I think it’s enduring because it’s so inculcated and the manager, the shareholders, the directors, everybody. So I feel that about Berkshire.

ROSE: Would I be wrong to suggest the thing you worry most about is whether after you are gone that that culture remains as it is? That you have in a sense made Berkshire strong enough to exist without you?

BUFFETT: Yes, I don’t worry about that. I worried about it over the years, which is why I did a bunch of things that I think ensure that future. But that’s always the question. You’ve seen all kinds of great companies topple from --

(CROSSTALK)

ROSE: You once said to me and to others you have to make your company idiot proof because at some point some idiot will run it.

BUFFETT: Yes. Well, that may be even the case now.

ROSE: Someone has said I think that the thing you worry most about is whether Berkshire will be intact 20 years after you’re gone.

BUFFETT: I don’t worry about it, but I care about it. And since care about it I put things in place which I think almost ensure that Berkshire will be a lot better 20 years after I gone than it is now.

ROSE: Where is succession today?

BUFFETT: Where is succession?

ROSE: yes.

BUFFETT: If I die tonight tomorrow morning it won’t take the board an hour to announce my --

ROSE: Who the CEO is?

BUFFETT: Absolutely. They know exactly who it is and they agree.

ROSE: But it may change six months from now.

BUFFETT: It’s unlikely to change six months from now. But it could. I mean that person could die.

ROSE: Is there a list of people or one person?

BUFFETT: No. There’s several people but there’s one person they’ve all agreed on.

ROSE: Takes over as CEO.

BUFFETT: Yes. And there should be. I mean, there’s no reason to have the board of directors start thinking about who the CEO should be the day after the present CEO leave. I mean they’ve neglected their job if they do that.

ROSE: Was the Sokol affair the thing that caused you most angst because it had to do with judgment of --

BUFFETT: Well, it caused angst. I don’t know whether it’s the most in my business life but it was up there.

ROSE: When you think about whatever legacy there is, your legacy is Berkshire Hathaway beyond family and philanthropy.

BUFFETT: Yes, well it’s -- I’ll settle for those.

ROSE: You quoted Sir Christopher Wren who I think, created St. Paul’s Cathedral --

BUFFETT: That’s right. He’s buried there too.

ROSE: And if you go there the epitaph he has written for himself is?

BUFFETT: I’ll paraphrase it there a little bit. "If you seek my monument, look about you." And I say that should be the -- That’s the way we should think about this country. I mean this country a monument to what was done a few years ago and the people that have followed. It’s incredible.

Just think if you would. Back in 1790 you said I want to create a monument to this new country I’m giving you and you’d envision the country of 2011. I don’t think anybody would have dreamt big enough. I mean this is something that -- so I just -- When I fly across the country that thought occurs to me that if you really seek this country’s monument, if you seek our founding fathers monument, just look around you.

ROSE: And you worry today that there’s some threat to that. Not because the system is not right, not because the system is not strong enough but you worry that there are things happening that will make it less great if they are not addressed.

BUFFETT: Right. I think we’re being tested, Charlie, yes. But we were tested in the Civil War. We were tested in the Depression. We were tested December 7 of ‘41. We were tested on September 11th of 2001. We will get tests. And this is one of them.

We will surmount them but I would just as soon get on with the job of surmounting them now.

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