"First on CNBC" Interview: CNBC's Becky Quick Interviews Billionaire Investor Warren Buffett (Transcript Included)

Warren Buffett
CNBC.com
Warren Buffett

WHEN: Wednesday, June 25 at 12:05 PM ET
WHERE: CNBC's "Power Lunch"

The following is an unofficial transcript for a "First on CNBC" interview with billionaire investor Warren Buffett on CNBC's "Power Lunch," which aired June 25, at 12:05 PM ET.

All references must be sourced to CNBC.

HERERA: NOW TO BECKY QUICK AND MR. BUFFET IS ALSO WITH HER RIGHT NOW. BECKY?

QUICK: SUE, THANK YOU VERY MUCH. WE'RE STANDING BY IN NEW YORK CITY FOR AN ANNUAL GATHERING, SOMETHING THAT HAS BEEN HAPPENING FOR YEARS NOW. THIS IS A BENEFIT TO – BENEFITS THE GLIDE FOUNDATION. THAT IS AN ORGANIZATION THAT WARREN BUFFET VERY CLOSELY ALINED W WE WANT TO THANK YOU VERY MUCH FOR JOINING US.

BUFFETT: THANK YOU.

QUICK: OUR FIRST QUESTION, WE WANT TO TALK ABOUT WHY WE'RE HERE TODAY. THE GLIDE FOUNDATION IS AN ORGANIZATION YOU'VE BEEN WORKING WITH FOR MANY YEARS AT THIS POINT. SO FOR PEOPLE NOT FAMILIAR IT WITH, WHY GLIDE AND WHY THIS LUNCH WHERE YOU'RE GOING TO BE MEETING WITH PEOPLE TODAY WHO PAID OVER $600,000 TO GET THE CHANCE TO BREAK BREAD WITH YOU?

BUFFETT: WELL, GLIDE IS AN ORGANIZATION IN SAN FRANCISCO, IT'S RUN BY A REMARKABLE MAN NAMED CECIL WILLIAMS WHO MORE THAN 40 YEARS AGO WENT OUT THERE AS A YOUNG BLACK PASTOR TO A DYING INNER CITY CHURCH. HE TURNED IT INTO A MARVELOUS, MARVELOUS REALLY SOCIAL ORGANIZATION. HE TAKES PEOPLE WITH THE WORLD'S GIVEN UP ON, SOMETIMES HAVE GIVEN UP ON THEMSELVES AND HE BRINGS THEM BACK. HE GIVES THEM HOPE. THEY FEED 750,000 MEALS A YEAR. THEY TRAIN PEOPLE. THEY HAVE CHILDCARE. THEY HAVE HEALTH CLINICS. THEY HAVE 52 ROOMS WHERE PEOPLE WHO DON'T HAVE SHELTER CAN COME. AND THIS FELLOW DID IT ALL BY HIMSELF BASICALLY. AS THE YEARS HAVE GONE BY, PEOPLE IN SAN FRANCISCO HAVE GROWN TO APPRECIATE HIM. AND I HAVE LEARNED ABOUT HIM SOME YEARS AGO.I JUST DECIDED THAT MONEY COULDN'T GO TO A BETTER CAUSE.

QUICK: TODAY OVER $600,000 WILL BE GOING FROM THIS LUNCH. WE'LL TALK ABOUT THE PEOPLE YOU'RE EATING LUNCH WITH TODAY. WHILE WE HAVE YOU HERE, I'D LIKE TO GET TO THE NEWS OF THE DAY. PEOPLE ARE WAITING TO HEAR ABOUT SOME OF THOSE THINGS. THE FED IS GOING TO BE COMING OUT WITH ITS ANNOUNCEMENT IN A LITTLE OVER TWO HOURS. AND THERE'S BEEN A HUGE DEBATE ABOUT WHETHER THE FED SHOULD BE MORE CONCERNED ABOUT HIGHER INFLATION OR SLOWING GROWTH. IN YOUR MIND, WHAT IS THE MOST IMPORTANT FACTOR?

BUFFETT: THEY SHOULD BE CONCERNED ABOUT BOTH. BOTH ARE GOING ON. GROWTH IS SLOWING AND IN FACT I'M NOT SURE IT'S GROWTH ANYMORE. AND INFLATION IS REALLY HEATING UP. SO IT'S NOT AN EASY JOB TO HAVE WITH, YOU KNOW, CERTAINLY TWO MASTERS IN EFFECT. AND THAT'S WHY I'M GLAD THAT BEN BERNANKE HAS THE JOB AND I DON'T.

QUICK: PRETEND YOU WERE IN HIS SHOES. WHAT WOULD YOU DO?

BUFFETT: I WOULD BE OFFERING MY RESIGNATION.

QUICK: YOU WOULD KEEP RATES STEADY? IF IT WAS YOUR JOB TO DECIDE THIS NOW?

BUFFETT: I THINK INFLATION IS REALLY PICKING UP. SO I THINK THAT THEY HAVE -- THAT HAS TO BE VERY CAREFUL TO DO ANYTHING THAT SIGNALS THAT THEY REGARD INFLATION AS A SECONDARY GOAL AND SOMETHING THEY'LL WORRY ABOUT LATER. BECAUSE IT'S HUGE RIGHT NOW. I MEAN WHETHER IT'S STEEL, OIL, YOU NAME IT. AND THERE IS -- THE PRESSURES AND YOU'VE SEEN IT IN CHEMICAL PRICES RECENTLY WITH 1,000 AN OUNCE AND WE SEE IT EVERY PLACE . IT'S EXPLODING.

QUICK: THAT IS AN ARGUMENT FOR RAISING RATES TODAY. THERE IS STILL A LOT OF WEAKNESS FOR CONSUMERS S THAT TOO MUCH OF A SHOCK IF THEY CAME OUT WITH A SURPRISE RATE INCREASE TODAY?

BUFFETT: I THINK IT PROBABLY WOULD BE. BUT THE ECONOMY IS WEAKENING. ALL THE DATA I SEE, I SEE A FAIR AMOUNT ON REAL TIME BASIS, INDICATES THAT THE WEAKENING OF ANYTHING IS GETTING WORSE.

QUICK: YOU MEAN FROM THE CONSUMER'S PERSPECTIVE.

BUFFETT: YEAH, FROM THE CONSUMER'S PERSPECTIVE. WEAKER CONSUMER BUYING TURNS INTO CREDIT CARD LOSSES AND THAT SORT OF THING.

QUICK: WHERE DO YOU SEE THAT WEAKNESS? YOU HAVE A BROAD AWAY OF BUSINESSES, EVERYTHING FROM BRICK BUSINESS TO INSURANCE BUSINESSES TO ACTUAL RETAIL BUSINESSES. WHERE DO YOU SEE THE BIGGEST WEAKNESS?

BUFFETT: EVERYTHING CONNECTED WITH CONSTRUCTION AND WITH CONSUMER I SEE WEAKNESS. AND IF ANYTHING, IT'S ACCENTUATING A LITTLE BIT.

QUICK: ALONG WITH THE CONCERNS OF INFLATION, THERE ARE A LOT OF PEOPLE WHO HAVE BEEN SCREAMING THAT THE FED HAS TO DO SOMETHING TO SAVE THE DOLLAR. THEY HAVE SEEN SO MUCH WEAKNESS RECENTLY. DO YOU HAVE ANY CURRENCY BETS RIGHT NOW?

BUFFETT: JUST -- I HAVE THAT TAIL END IN THE BRAZILIAN DOLLAR, BUT OVER TIME, IF WE KEEP DOING WHAT WE'RE DOING -- AND IT ISN'T THE FED -- IT STARTS WITH POLICY MAKERS IN CONGRESS. BUT IF WE KEEP DOING WHAT WE'RE DOING, WE'RE GOING TO GET THE SAME RESULT WHICH IS A WEAKENING DOLLAR.

QUICK: YOU MEAN IN TERMS OF RUNNING A BUDGET DEFICIT?

BUFFETT: IN TERMS OF RUNNING HUGE DEFICITS. PART OF THAT STEMS FROM OIL.THERE IS A LOT OF THINGS THAT GO INTO THAT. BUT THE TRUTH IS WE CAN'T SENDED 2 BILLION A DAY OUT TO THE REST OF THE WORLD AND NOT EXPECT A DOLLAR TO GET WEAKER OVER TIME. I MEAN THAT IS NOT A SHORT-TERM FORECAST. THAT IS GOING TO HAPPEN OVER TIME.

QUICK: YOU MENTIONED OIL PRICES. THERE'S BEEN A HUGE DEBATE WE'VE BEEN HAVING ON OUR SHOW AND THROUGHOUT THE DAY. PEOPLE ARE TRYING TO FIGURE OUT IS THE SUPPLY AND DEMAND PICTURE OR SOMETHING TO THE IDEA THAT THERE SPECULATION GOING ON IN THE MARKETS? THERE IS A LOT MORE MONEY IN THE MARKETS THAN THERE USED TO BE THREE YEARS AGO.

BUFFETT: IT IS SUPPLY AND DEMAND. YOU KNOW, IF SOMEBODY BUYS 1,000 FORWARD OIL CONTRACTS, SOMEBODY ELSE IS 1,000 FORWARD OIL CONTRACTS. THE ONLY WAY YOU COULD HAVE SPECULATORS HAVING A BIG IMPACT IS IF YOU HAD A HUGE AMOUNT OF STORAGE WHERE THEY STARTED WITHDRAWING ACTUAL PHYSICAL OIL FROM THE SYSTEM. BUT IT'S NOT SPECULATION. IT'S SUPPLY AND DEMAND. AND THE SITUATION IS THAT IN MY ADULT LIFETIME, UP UNTIL THE LAST YEAR OR TWO, THERE'S ALWAYS BEEN A HUGE AMOUNT OF EXCESS SUPPLY AVAILABLE. THERE'S BEEN RESERVE CAPACITY. AND THAT GOES BACK 30 YEARS AGO. IN THIS COUNTRY WE PRODUCE WAY MORE OIL THAN WE NEEDED HERE. WE HAD THE TEXAS RAILROAD COMMISSION THAT SHUT DOWN WELLS. AS A MATTER OF FACT, THEY GOT NOW TO WHERE THEY ONLY ALLOW WELLS IN TEXAS OPERATE EIGHT DAYS. WE DON'T HAVE EXCESS CAPACITY IN THE WORLD ANYMORE. THAT'S WHY YOU'RE SEEING THE OIL PRICES.

QUICK: EXCEPT THAT YOU HAD A SERIES OF PEOPLE THAT CAME TO CAPITOL HILL TO CONGRESS ON MONDAY AND THEY SAID IF YOU CLAMP DOWN ON SPECULATION, YOU COULD CUT 50% OUT OF OIL PRICES IMMEDIATELY. IS THAT HOG WASH?

BUFFETT: I THINK IF THEY CLOSE THE OIL TRADING FUTURES. INCIDENTALLY, THE FIVE-YEAR OIL PRICE, YOU KNOW, YOU CAN BUY OIL FOR DELIVERY 2012 NOW OR 2013. THAT PRICE IS VERY CLOSE TO THIS PRICE. NOW IF ANYBODY NEEDS SOME SHORT TERM SPECULATION, WHY ARE THEY BUYING $130 A BARREL TO GO TO 2013?

QUICK: YOU'RE THE LARGEST SHARE HOLDER IN ANHEUSER-BUSCH. INBEV MADE A BID FOR BUD. AND THERE ARE A LOT OF PEOPLE TRYING TO FIGURE OUT IF YOU THINK THAT IS A GOOD OFFER. WHAT DO YOU THINK ABOUT IT?

BUFFETT: WHEN WE GET THROUGH THE INTERVIEW, A LOT OF PEOPLE WILL BE TRYING TO FIGURE THAT OUT. I'VE BEEN -- ALL THESE THINGS HAVE BEEN REPORTED. I HAVE NOT TALKED TO ANYBODY ABOUT IT.I'VE BEEN REPORTED TO IN ST. LOUIS. THERE IS ABSOLUTELY SOME DOUBLE OF ME RUNNING AROUND ON THERE. I CAN'T IMAGINE ANYONE LOOKING LIKE ME. BUT IF HE'S OUT THERE, HE'S PARENTALLY IN ST. LOUIS AND HE'S APPARENTLY OVERTALKING TO INBEV.

QUICK: SO YOU HAVEN'T TALKED TO ANHEUSER-BUSCH MANAGEMENT OR INBEV?

BUFFETT: I HAVE NOT TALKED TO ANYBODY.

QUICK: WHAT DO YOU THINK ABOUT THE DEAL?

BUFFETT: I THINK IT'S AN INTERESTING SPECTATOR SPORT AT THE MOMENT.

QUICK: SO YOU'RE NOT GOING TO WEIGH IN ON EITHER SIDE OF THIS?

BUFFETT: I CERTAINLY HAVEN'T SO FAR.

QUICK: AND YOU DON'T WANT TO RIGHT NOW?

BUFFETT: WE HAVE ALL THESE PEOPLE HERE. IF WE DIDN'T HAVE ALL THE PEOPLE WATCHING, I'D TALK.

QUICK: LET'S TALK ABOUT POLITICS, TOO. BARACK OBAMA HAS BEEN THE PERSON THAT YOU'RE SUPPORTING. THE FIRST TIME YOU'VE REALLY HAD A CHANCE TO TALK SINCE HILLARY CLINTON DROPPED OUT OF THE CAMPAIGN. BUT YOU'RE HOLDING A FUND-RAISER FOR HIM NEXT WEEK.

BUFFETT: YES. JULY 2ND.

QUICK: WE WATCHED SOME OF THE NUMBERS COMING IN MAY. AND BARACK OBAMA'S FUND-RAISING ABILITY SLOWED DOWN IN MAY. MCCAIN'S PICKED UP. DO YOU THINK THAT WAS A TEMPORARY ONE-TIME BLIP OR ARE THEY GOING TO BE RUNNING NECK AND NECK WHEN IT COMES TO FUNDRAISING?

BUFFETT: I THINK BARACK OBAMA WILL HAVE PLENTY OF MONEY. I MEAN HE GAVE UP ON FEDERAL FINANCING. SO I DON'T THINK MONEY IS GOING TO BE A PROBLEM FOR EITHER CANDIDATE. THE AMERICAN PUBLIC, WHEN THEY GO TO THE VOTING BOOTH IN NOVEMBER IS GOING TO HAVE A VERY GOOD FIX ON BOTH CANDIDATES AND THE SHORTAGE OF MONEY WILL NOT IMPAIR THEM HAVING THAT FIX. SO I THINK MONEY IS GOING TO BE A NONISSUE IN THE CAMPAIGN.

QUICK: BARACK OBAMA DID GIVE UP ON PUBLIC FINANCING AFTER SAYING HE WOULD ACCEPT IT. WHAT DID YOU THINK OF THAT MOVE?

BUFFETT: I DON'T AGREE WITH THAT.

QUICK: YOU DON'T AGREE WITH HIM CHANGING HIS POSITION?

BUFFETT: I DON'T THINK HE SHOULD HAVE, NO.

QUICK: WHAT ABOUT THE IDEA OF SUPPORTING WIND FALL TAXES AGAINST THE OIL COMPANIES? THE CANDIDATE YOU SUPPORT BUT IF YOU START TALKING ABOUT TAKING WIND FALL TAXES OUT ON THE OIL COMPANIES, IS THAT SOMETHING YOU AGREE WITH?

BUFFETT: I THINK IT'S VERY HARD TO HAVE WIND FALL TAXES. STEEL DOUBLED IN PRICE. WIND FALL FOR THE STEEL PRODUCERS, SURE? CORN IS, YOU KNOW, $7 A BUSHEL. I DON'T THINK ANY CANDIDATE IN HIS RIGHT MIND WOULD SAY YOU OUGHT TO TAX FARMERS ESPECIALLY BECAUSE THEY'RE GETTING A WIND FALL. BUT THEY ARE GETTING A WINDFALL FROM COMMODITY PRICES. MAYBE THEY DESERVE IT. BUT TO PICK OUT ONE COMMODITY, COPPER $3.60 A POUND, YOU COULD SAY THAT THE COPPER PRODUCERS ARE GETTING A WINDFALL. YOU KNOW, THE NETWORKS ARE GETTING A WINDFALL BECAUSE OF THE OLYMPICS ARE BEING HELD. SO I DON'T THINK THAT TAKING ANYBODY THAT'S HAD A COMMODITY THAT INCREASED IN PRICE A LOT AND SAYING THERE OUGHT TO BE A SPECIAL TAX BECAUSE OF THAT MAKES A LOT OF SENSE.I THINK THE TAX CODE SHOULD BE CHANGED. I DON'T THINK THAT'S THE WAY TO DO IT.

QUICK: HOW DO YOU THINK THE TAX CODE SHOULD BE CHANGED?

BUFFETT: I THINK THE SUPER RICH SHOULD PAY MORE AND PEOPLE IN THE MIDDLE CLASS AND LOWER SHOULD PAY LESS.

QUICK: IF YOU START LOOKING AT THE PROPOSAL PUT FORTH WITH SOCIAL SECURITY TAXES WHICH INCLUDES STOPPING, STILL AT 102,000 FOR SOCIAL SECURITY AND PICKING UP THAT PAYROLL TAX AT $250,000. IS THAT YOUR IDEA OF A GOOD CHANGE?

BUFFETT: THE PAYROLL TAX IS A THIRD OF ALL TAXES RAISED. OVER $900 BILLION.SO PAYROLL TAX IS TERRIBLY IMPORTANT. IT QUITS AT $100,000 FOR A GUY LIKE ME. I PAY PRACTICALLY NO PAYROLL TAX IN RELATION TO MY INCOME. MOST OF THE PEOPLE THAT ARE GOING TO BE -- PEOPLE ARE GOING TO BE SERVING US STEAK IN THIS RESTAURANT ARE PAYING -- THEY'RE PAYING 15.3% OR SO. I AM PAYING A TINY FRACTION OF 1% OF PAYROLL TAXES. I THINK THERE SHOULD BE A MAJOR OVERHAUL OF THE PAYROLL TAX. I THINK GUYS LIKE ME SHOULD PAY MORE.

QUICK: THERE ARE PEOPLE WHO HAVE SAID, UNDER THIS NEW PROPOSAL THAT IS PUT OUT, IT WOULD END UP MEANING THAT SOMEONE LIKE AN ENTREPRENEUR GOES BACK TO A TAX RATE OF 50%. AND THAT IS EVEN BEFORE YOU INCLUDE SOME OF THE STATE AND LOCAL TAXES. DO YOU WORRY THAT IF ENTREPRENEURS AND OTHER PEOPLE ARE TAXED AT 50% TO 60%, DEPENDING ON WHERE THEY LIVE AND HOW MUCH THEY MAKE, THAT IT WILL STOP INNOVATION? IT WILL HARM THE INNOVATION?

BUFFETT: I I WORRY ABOUT MY CLEANING LADY PAYING 15% ON PAYROLL TAX WHEN I PAY ON MY TOTAL INCOME TAX 15%. SHE IS PAYING A HIGHER TAX RATE THAN I AM. THE UNITED STATES GOVERNMENT RAISES ABOUT -- SPENDS ABOUT 20% OF THE GDP. NOBODY WANTS TO PAY THEIR SHARE. THAT'S HUMAN NATURE. BUT THE CONGRESS HAS THE JOB OF SAYING WE'RE GOING TO GET 20% OF GDP FROM THE AMERICAN GOVERNMENT BECAUSE THE AMERICAN PEOPLE DEMAND THESE SERVICES AND SO ON. AND THE QUESTION IS THEY GET IT FROM ANYBODY THAT PAYS IT, THEY'RE NOT GOING TO LIKE IT. YOU HAVE TO FIGURE OUT ON A BASIS OF YOUR OWN IDEA OF SOCIAL JUSTICE AND MAKING SURE THAT THE GOLDEN GOOSE KEEPS LAYING GOLDEN EGGS. WHAT IS THE BEST SYSTEM? I THINK THE ANSWER IS TO TAX THE RICH MORE.

QUICK: YOU ARE HAVING LUNCH WITH PEOPLE THAT PAID $600,000 TO HAVE LUNCH WITH YOU HAVE YOU SPOKEN TO THEM AT THIS POINT?

BUFFETT: I HAD SOME CORRESPONDENCE WITH THEM. I'M LOOKING FORWARD TO SPEAKING WITH THEM.

QUICK: WHAT DO YOU THINK YOU'LL BE TALKING ABOUT? I KNOW THEY BROUGHT THEIR CHILDREN AND WIVES ALONG. WHAT IS YOUR PLAN?

BUFFETT: WE'RE TALKING ABOUT ANYTHING THEY'RE INTERESTED IN WE'LL TALK AS LONG AS THEY WANT TO TALK AND THE SUBJECTS THEY WANT TO TALK ABOUT. IF YOU WANT TO PAY $660,000, WE'LL TALK ABOUT ANYTHING YOU WANT TO TALK ABOUT, BECKY. MAYBE EVEN THE ANHEISER DEAL.

QUICK: GREAT. ONE MORE QUESTION FOR YOU. THERE HAVE BEEN PEOPLE WHO HAVE BEEN SAYING JUST TAKING A LOOK AT POLITICS AND SOME OF THE THINGS OUT THERE THAT MAYBE YOU WOULD BE INTERESTED IN GETTING ON A TICKET AT SOME POINT. IS THERE ANY TRUTH TO THAT?

BUFFETT: NO -- I WILL GO ONE BETTER, WHATEVER HE SAID.

QUICK: OKAY. MR. BUFFET, THANK YOU VERY MUCH FOR YOUR TIME. WE APPRECIATE IT.

BUFFETT: THANK YOU.

QUICK: WARREN BUFFETT. HE IS IT SITTING DOWN FOR LUNCH IN A FEW MINUTES. WE SEND IT BACK OVER YOU TO.



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