Tag Archives: Warren Buffett email

The Clueless Petitioner (Yet again, the Buffett Deficit “Fix”)

Just got a totally clueless comment on a prior post. In that post I debunked the widely distributed chain-letter email claiming that Warren Buffett endorses a fix to the federal deficit that would make members of Congress ineligible for re-election whenever the deficit rises above 3% of GDP.

In the first place, Buffett was joking, and he never endorsed the chain-letter email. Secondly, if enacted, the proposal would seriously hurt the economy. It would, in effect, put the U.S. in a bind like the one that euro-zone nations have been in during the last five years.  Lacking authority over their own currency, they have been answerable to a central bank insisting on economic austerity at a time when government spending is the best—in fact, pretty much the only—means of lifting their economies out of stagnation and high unemployment.

The comment comes in the form of a request for me to sign a petition offered to the new White House We the People program, an effort by the Obama administration to make it easy for ordinary citizens to offer petitions to the government about their concerns. At best, the program has had mixed results, largely because of petitions like this one.

The commenter uses the same language as the phony chain-letter email:

Please sign my petition to End the deficit! If the US deficit exceeds 3% of GDP, all sitting members of Congress become ineligible for re-election

Warren Buffett, in a recent interview with CNBC, offers one of the best quotes about the debt ceiling: “I could end the deficit in 5 minutes,” he told CNBC…. [and so on, exactly the same as the chain-letter email].

You’d think a commenter would actually read my post before offering a comment and asking me to sign his petition. But, evidently, that’s not how it’s done these days.

Warren Buffett Fixes Congress! (Part 2: Republicans Win the National Debt Derby)

In 2011,  when Warren Buffett jokes about ending the federal deficit in five minutes, he mentions the immediate post-WW2 deficit. At 23% of GDP, it was the worst we’ve experienced in the last sixty-five years, but it disappears quickly (Figure 1). Then come three decades of controlled deficit spending, 1950 to 1980, with the federal government countering recessions by stepping in to provide support and boost demand. That was true of both Republican and Democrat administrations. After 1980, deficits go out of control, with the exception of the Clinton surplus in the late 1990s.

Federal budget/surplus, 1930-2011

Figure 1

Notice the 3% deficit boundary (red dashed line). If Buffett’s joke became law, members of Congress would be barred from re-election most of the time after 1980. (Vertical gray bars indicate recessions.)

Then, when Buffett mentions a national debt at over 120% of GDP, he’s talking about 1946, and the debt falls steadily from then to about 1980 (Figure 2). This is gross national debt: it includes debt owed to the public plus debt owed to federal trust funds (social security, medicare, unemployment, military retirement, federal civilian employee retirement, and so forth).

National debt, 1940-2011

Figure 2

Something happens after 1980. That’s when gross national debt as a percentage of GDP begins rising to its current level. In the 31 years from 1980 to 2011 the debt rises from 33.4% of GDP to 98.7%. That’s a rise of 65 percentage points, with 43 points scored by Republicans, 22 by Democrats.

So, from 1980 to the present, Republicans outdo Democrats at adding to the national debt by almost 2 to 1, with Ronald Reagan as all-time champ (Figure 3).

Nation debt growth, Republican & Democrat

Figure 3

By the way, recent news out of California (here and here) has it that the state Republican party is on life support, with membership down to 30% of eligible voters and party funds in the red. Maybe California will play its traditional role again as national bell-weather for cultural change. Who knows? Sometimes good things happen.

Warren Buffett Fixes Congress! (Part 1: Ending the Deficit in 5 Minutes)

Another email chain-letter landed in my inbox today, just like the one I got in July. Back then, I was too busy to post anything about it. But, now, with “fiscal-cliff” disinformation running high, it’s a good time to comment.

The email quotes Warren Buffett as recommending a law that would make all sitting members of Congress ineligible for re-election whenever the federal deficit tops 3% of GDP. Then it quotes a proposed Congressional Reform Act of 2012. Or is it a proposed constitutional amendment? It’s not clear. Finally, it says Buffett is asking everyone to forward the email to twenty people on their mailing list.

Of course, with the endorsement of Warren “Oracle of Omaha” Buffett, who could object?

But an almost identical email has been circulating since 2009, pushing the same legislation labeled each year as the reform act of 2009, 2010, and so on. None of these earlier versions even mentions Warren Buffett. Buffett had nothing to do with the current email and certainly did not say you should pass it on. This much of the story is well documented (e.g., here and here).

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