ERSKINE BOWLES: They've already spent it. (LAUGHTER)
BUFFETT: Yeah, yeah—
BOWLES: You know, they've already—
BUFFETT: It's— no, it's done. It's— so it is— it— to— and so to waste weeks on that and— and to hold— hold— legislation hostage over it, it— I mean, that— that's— that's for school kids. And— and— you know, the— let's just get the— get down to the needs to be done.
BECKY: And Senator—
BUFFETT: I mean, if— if— if— if Berkshire were in trouble financially, you know, Charlie (LAUGH) and I and everybody else, the directors, we'd sit down and say, "You know what, we gotta figure out a plan to get out of this, and we'll do it today." (LAUGH)
BECKY: Is anything going to happen before this election, gentlemen?
ALAN SIMPSON: No. The— we thought the easiest thing to do would be to restore solvency to Social Security for 75 years. All of us— all 18. I thought that at one point—
SIMPSON: And Lord's sake, here came the A.A.R.P. and the senior groups, and the Catfood Commission, I mean, just absolutely stupefying. And what we're— and we've— and then we said, "Take the lowest 20 percent and give 'em 125 percent of poverty," that'll cost some money. And give the older 80 percent to 85 percent kick a year and do it for— keep the progressivity and— and raise the wages subject to the tax.
We did all that stuff, and then get nailed by groups who really, really don't care. They are mar— the A.A.R.P.— I asked their leadership, "Are there patriots in here or just marketers?" That did not go well that day either. (LAUGH) It was just one of those days. (LAUGH)
BOWLES: To— to show you, we recommended raising the retirement age one year, 40 years— from now. We wanted to give people a chance to get ready.
BOWLES: You know, I mean, it's like, you know, give me a break, you know?
BUFFETT: I'm for anything 40 years from now.
BOWLES: Yeah, right. (LAUGHTER)
BECKY: No, and, I mean, as somebody who could be affected by this, I— I would even take it sooner than that. I'd say—
BOWLES: Yeah, sure.
BECKY: — "Okay, let me know what I'm getting ready for, tell me what's coming rather than having a crisis where you look like Greece all of a sudden, and you've gotta pull back the promises you've made to people over 40, 50 years."
BOWLES: Right, and what we did is the same time we took care of a truly disadvantaged, we raised the minimum payment to 125 percent of poverty, we gave people between 81 and 86 a 1 percent bump-up, because that's when every economist, Republican or Democrat told us their private pension funds general run out. You know, so we tried to do the kinds of things that really made a difference for people who desperately need Social Security, you know, as that s— you know, s— sounding board for them.
SIMPSON: And not one person will— will argue with this number, that in the year— if you do nothing, in the year 2033, they moved it up three years in one year, you're gonna waddle up to the window and get a check for 27 percent less. And what is—
BECKY: If nothing's done—
SIMPSON: What is smart about that— and as I say, when we said, "Raise the retirement age to— to 68 by the year 2050," and the A.A.R.P. said, "How will people ever be able to prepare for that?" Well, we said, "We think they can figure it out." (LAUGHTER) We just know they can. (LAUGHTER) Try to help them do that.
BECKY: Andrew's got another question. Sorry, Andrew?
ANDREW: Hey guys. This question, I'll start with Warren, but— but all three gentlemen can jump in. The president recently proposed extending the Bush era tax cuts— for those making less than $250,000. A number of Democrats, including— Senator Schumer and others have come out and said, "$250,000 is the wrong number. It should be a million dollars." Warren, you have the Buffett rule. How do you think about this?
BUFFETT: Well, I— I am— I am generally in favor of making the— the— the tax code more progressive. Certainly, when the most recent figures for the 400 highest incomes in 2009, incomes that average $200 million per taxpayer, showed that over half of them paid less than 20 percent in a combination of income taxes and payroll taxes, which means that they— those— over half of them paid less than 23 of the 24 people in our office, the only one lower was me.
I— I— I— I think there's some changes needed. But I say let's— if they are gonna do anything, I'm— I'm for doing that. But— but— why not— why not just solve the problem? I mean, why— why— why just— why— why work around the edges? So I— I— I— I am— I am for what these gentlemen propose.
BECKY: Gentlemen, I mean, what— Senator Simpson and— and— and Mr. Bowles, what— what do you think about those proposals? There's two proposals out, one is to just extend— the Republicans say, "Just extend the Bush tax cuts for another year." And the president has laid out his proposal. What's the right solution for right now?
SIMPSON: Well, between November 6th, when they will do nothing, nothing will be done. Politically, nothing will be done between now and November 6th. It's just posturing. And guys will get up and say, "We can get this terrible thing resolved without touching precious Medicare, precious Medicaid, precious Social Security, and precious defense.
Let me tell you, that— that person would be described as a phony that's gonna do that in this election. We think, naïvely enough, that if you have the guts to do somethin' along the lines what we suggest, that people will reward you. And it won't come now. But in four months, as this thing closes in, man, you know, people are gonna say, "Hey, if I don't do somethin', they're gonna throw me out for sittin' here doin' this B.S. and mush that I've been pourin' out."
BOWLES: Can you imagine sittin' at Berkshire, and you know you have— the equivalent of a $7 trillion economic event hitting in December. You know, but if you do nothing, it will have an adverse effect on the economy of at least 1.5 percent next year, which is enough to throw us back into a recession. And you're not doing anything?
BUFFETT: No, they say—
MALE VOICE: I mean, that's crazy.
BUFFETT: — that you can't do anything in a election year, but wha— why pay 'em— we oughta pay 'em just for three years out of four, I mean, if they're only gonna work (LAUGH) three years out of four. (LAUGH)
BOWLES: Yeah, of course, we have election year every two years, too. You know, (LAUGH) so it's like crazy.
BECKY: Andrew, I'm sorry. Did I cut you off before?
ANDREW: No, no, no. I— I— look, I— I— the— the question I had is I— I completely understand that we have— a much bigger tax reform and— and reform broadly that we need to get to. And I guess I was just tryin' to understand from— from both gentlemen— given where we are, and that maybe we won't get any movement, if— if the million dollar number, or the $250,000 number, I know— I know— I know it's— it's peanuts in a relative basis to the— the bigger scheme, where they come out?
BOWLES: Andrew, it's not exactly peanuts, because the difference between the $250,000 and— the million is about $366 billion. And you know, we've gotta come up— we've gotta pay for that some way. You gotta come— that's what, you know, we're always ready to— to reduce— (LAUGH) to reduce revenue, but we're never willing to— to pay for it any way.
I really think talkin' about the Bush tax cuts is almost a waste of time. What we should be doing is talking about how do we reform the tax code to broaden the base, simplify the code, take some small portion to reduce the deficit, and take most of it to reduce rates, so we'll be globally competitive. That's what makes sense.
BECKY: But that's not gonna happen between November and January, right?
BOWLES: No, but what you could do is you could set up a framework between November and January that would call for that. You'd have to have some real s— specicifity— pesis— what is it? Specificity—
BUFFETT: You got— you got— Erskine — you got a framework. I mean, (LAUGH) you know, you fellows worked on it for ten months.
BECKY: So that could be set up— as something to say, "Here's what we will get to," and maybe it doesn't kick in January 1, but—
BOWLES: Becky, one of the things we've done is taken that 67-page report that you've read and we've now put it in legislative language.
BUFFETT: Why not have an up and down—
MALE VOICE: Yeah.
BUFFETT: — down vote on it?
SIMPSON: Well, anybod— anybody in the past could say, "I— I read their 67-page report, but it was a little vague." So if I saw legislative language, I would then get enthused. "Well, baby, you got it right now." And that's what they have in front of them. And— and then we say, "Do what you're supposed to do. If you don't like one, take it out. Amend something. Get in the game."
So Erskine has pushed that so beautifully. But if you— if you extend the Bush tax cuts just like that, it's between $3.8 trillion and $4.2 trillion in— in ten years, added to the pile. I mean, madness.
BECKY: Now you're talkin' some real money.
SIMPSON: And— and if I had been in Congress at that time, with what we had to do, and I'm not bein' a smart Alec, I would never— why would you give a tax cut when you're fightin' two wars, borrowin' money hand over fist, and give a tax cut? I think the American people when that came up were reading their newspapers saying, "What's goin' on?" Madness.
BECKY: We're gonna continue this conversation in just a moment, but Andrew, for right now, I'll send it back over to you.