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Warren Buffett: I could end the deficit in 5 minutes.

434 points by pitdesi 15y ago

mmcconnell1618 15y ago
The only problem is that the sitting congress would need to pass the law making themselves ineligible for re-election.
- hugh3 15y ago
  I assume it'd need to be a constitutional change rather than a legislative one, otherwise they could just rescind the law anyway. Which reminds me of one of my biggest objections to the US constitution: constitutional amendments are done simply by getting a bunch of legislatures to agree to 'em, rather than by holding a referendum as in Australia.
  - sigzero 15y ago
    I much prefer the US way.
    - capnrefsmmat 15y ago
      Why?
      - ams6110 15y ago
        Changing the constitution should not be something that can happen based on a (perhaps very temporary) swell of public sentiment
        skimbrel 15y ago
        Agreed! My state, like a few others in the US, has voter initiatives that become constitutional amendments. The last one that made the news was the one that made it illegal for me to get married. Another initiative from a few decades ago is a major part of why California can't raise enough money to fund itself now. So yeah, I'm not a huge fan of ballot initiatives.
        jcarreiro 15y ago
        The Economist had a very interesting report on democracy in California recently: http://www.economist.com/node/18563638?story_id=18563638 http://www.economist.com/node/18563638?story_id=18563638
        gavinballard 15y ago
        In Australia's history, of 44 constitutional referendums held, only 8 have passed (3 of them in the same ballot). It's very difficult (some would say, too difficult) to amend the Australian constitution, and definitely not something that tends to happen with a "swell of public sentiment". Compare that to 11 amendments to the US Constitution over the same period (1901 onwards) - two of which I'd point out dealt with the introduction and repeal of Prohibition (which I'd say qualified as a "swell of public sentiment").
  - learc83 15y ago
    Well, we could have a constitutional convention.
    - protomyth 15y ago
      no, hell no - not with 24hr news, pundits, and political correctness.
hnsmurf 15y ago
That wouldn't end the deficit, that would just ensure the deficit was 0 the day before elections. Also there's a slippery slope. This same logic, if we allow it to be applied to the deficit, could be applied to other things. No congressmen could be reelected if gay marriage is legal, etc.
- seabee 15y ago
  That's a specious argument. Something like gay marriage is the result of writing a law; the deficit is an accumulation of many public spending programmes enacted under the law more often than by its creation. This is basically a method of legislating a budget cap. Your 'slippery slope' argument in its correct analogy is no more than passing a law that outlaws gay marriage in the first place.
- barrybe 15y ago
  > That wouldn't end the deficit, that would just ensure the deficit was 0 the day before elections. I think that's the point. Short-term borrowing is sometimes a smart idea, as long as there's a real plan to pay it off. The idea would be to only discourage irresponsible borrowing. > This same logic, if we allow it to be applied to the deficit, could be applied to other things. I think it's fairly uncontroversial that having unpaid debt is bad and should be avoided.. so it's not too similar to issues that are actually controversial.
- praptak 15y ago
  "This same logic, if we allow it to be applied to the deficit, could be applied to other things." There are legitimate reasons to discern between the deficit and those other things. Most law systems are based on a small set of core values which are deliberately made hard to change, i.e. made part of the supreme law. I believe that the (preventing of) deficit has the characteristics shared by those core values: there is a consensus that it is bad (especially in the long term) and yet there's strong temptation to create it for the short term benefits (buying votes.)
  - hnsmurf 15y ago
    I don't disagree with you, but a lot of people feel the same about marriage. A lot of people (not me, btw) feel that this is a Christian country and it's antithetical to our founders' beliefs for gays to marry and yadda yadda. The point I'm making is that everyone has a different idea of what those core values are.
Robin_Message 15y ago
Would Warren Buffett fire the entire management of any company he owned that borrowed more than 10% of earnings in one year, regardless of circumstances? Because that is what his suggestion amounts to.
- sc68cal 15y ago
  Firstly - I wouldn't put it past him to do something like that if he thought that would maximize his investment. The market doesn't view a debt of +10% of earnings to be that big of a deal however, has priced that risk accordingly, and Buffet has never been put in that situation. Secondly - there is always a problem with equating governments to corporations, since governments are formed for public good and corporations are formed to maximize shareholder value. Their roles and motivations are quite different.
  - coconutrandom 15y ago
    Is it naive to suggest that citizens are shareholders? and to extend the metaphor, that other countries are customers/clients?
    - sc68cal 15y ago
      You could make that case with some examples, but even then, the metaphor overwrites the reason why governments are formed - for the public good (and the protection of personal property, if you are a fan of John Locke). Thus, governments in your metaphor lose their actual purpose. This ultimately typecasts actions that a government does, into business actions. Even though some of them would make absolutely no business sense. For example, why would a country raise tariffs or raise trade barriers? This would demonstrate weakpoints in the metaphor that other countries are clients. A more extreme example would be where a country starts to kill people, by going to war with another country, or killing it's own people due to political upheaval. The metaphor really breaks down in that case. Businesses by and large, don't go and kill people intentionally. Obviously there are some historical and modern examples (Chiquita comes to mind) but I don't think that "Killing People" is in anyone's charter.
nhaehnle 15y ago
This does not address the question of whether a balanced budget is even desirable. Equating the budget of the currency issuer with the everyday experience of the budget of the currency user is a fallacy. Looking at the respective balances of the three sectors of government, domestic private, and external, it is obvious that flows are conserved. Given net imports (i.e. more money flowing into the external sector than out of it), a balanced government budget can only occur if the private sector is in deficit, i.e. more money flowing out of the private sector than flowing into it. Empirically, external balances change only very slowly, unless artificial trade barriers (tariffs etc.) are raised. So in the end, the political choice is between deficits in the private sector, and deficits in the government sector (and of course a range of choices in-between).
- kd0amg 15y ago
  it is obvious that flows are conserved Given that government can issue additional currency, conservation of flow doesn't seem particularly obvious to me.
  - nhaehnle 15y ago
    This is a flows vs. stock thing that I could have made clearer. The additional currency that is issued by the government does not disappear in a black hole (with the possible exception that, technically, dollar bills do get lost in the wash). Instead, it either ultimately flows back to government, or ends up in one of the other sectors. I think the relevant constraints are clear to everybody here, which is why I was not more explicit.
- jpadkins 15y ago
  What about the moral implications that deficit spending is inter-generational taxation? I think that is a clear case of taxation without representation.
  - wtvanhest 15y ago
    This will most likely be fixed with high inflation, but it is a concern.
johnnyg 15y ago
A republic or democracy presupposes that the majority of representatives will get it right eventually. However, we've seen in the Roman Circus and we see now that there is a weak spot to this thinking. Eventually the elected body will split into a faction that represents business interests and a faction that trades entitlements for votes. The latter faction eventually gains control to an extent that they bankrupt the whole. We are nearing that stage now. Few Republicans will oppose entitlements and both Mr. Bush and Mr. Obama are guilty of ramp ups in deficit spending. Buffett's proposal would patch this historically reoccurring weakness of representative forms of government. As hnsmurf points out, it would also create a slippery slope where no representative could be reelected if they vote for X, Y and Z policies that are not systemic threats. As our government is not responding to an issue which can literally ruin us all, it seems to me that Buffett's proposal is the lesser of two evils. Stability demands a solvent government.
- JoeAltmaier 15y ago
  Stability also requires a stable government. Throwing all the scoundrels out sounds good, but would probably happen (I think they are all too selfish and would play chicken down to/past the wire). Resulting in chaos at the next election - an entire elected body of unknowns with no experience.
  - rsbrown 15y ago
    ... no experience in the current system, that is. This proposal would change that system dramatically. Upending congress might be tumultuous, but compared to bankrupting the nation it still counts as the lesser of two evils.
  - DougWebb 15y ago
    That's the kind of revolution we're supposed to have when the government becomes corrupt. Also, it wouldn't be all at once; term overlaps ensure that there would be continuity.
    - moioci 15y ago
hop 15y ago
Buffett's father was a 4 term congressman and an almost Ron Paul-like libertarian, btw. http://en.wikipedia.org/wiki/Howard_Buffett http://en.wikipedia.org/wiki/Howard_Buffett
- pgsucksdick 15y ago
  And not a single fuck was given for your lack of insight.
- cheez 15y ago
  Warren Buffet made a tidy profit on the bailouts. He knew who was anointed to survive and who was not. Of course Warren loves the influence of government!
  - jhamburger 15y ago
    He lives in a modest home in Omaha and will probably give more money to charity than anyone in history when all is said and done. Do you really think his political views are driven by his own personal gain?
    - cheez 15y ago
      No, definitely not. I think he enjoys the game. I think Buffet likes to be comfortable. I don't think he has a need to show off. But that doesn't detract from the fact that he sees it as a game to be played and a competition. It could be for really expensive beans for all he cares.
    - anamax 15y ago
      > He lives in a modest home in Omaha and will probably give more money to charity than anyone in history when all is said and done. Do you really think his political views are driven by his own personal gain? Yes, because he's human and every human's political views are driven by their personal gain. Your mistake is in thinking that money is the only personal gain. It's not. It isn't even one of the most effective motivators. And, in Buffet's case, there's the difference between "money made" and "money spent". At some point, the latter becomes uninteresting but that tells us nothing about the former. And, interestingly enough, Buffet's "advice for the country" always seems to be aligned with his financial stake. (He never advocates increasing the taxes that he pays and he often advocates increasing taxes in ways that benefit him - the estate tax being a prime example.)
Brewer 15y ago
Warren Buffet for Secretary of the Treasury
- shmulkey18 15y ago
  No thanks. There is something intensely annoying about Buffett: his hypocrisy. He claims that rich Americans are not paying their fair share of taxes, but doesn't take the obvious step of voluntarily paying more taxes by sending a big check to the IRS. He supports the estate tax, supposedly because it is bad for America to have children receive inherited wealth. Of course, he has set up a foundation which his children will administer after his death. Naturally, they'll take a salary for this arduous assignment. And it just so happens that having an estate tax benefits the insurance companies in which he is heavily invested: 10% of insurance company revenue comes from the policies wealthy folks buy in order to avoid estate taxes. He's all for rigorous corporate government and the avoidance of self-dealing. Except when these standards are violated by his subordinate and Berkshire-Hathaway heir-apparent David Sokol, who -- with the full knowledge of Buffett -- personally invested in a company that Sokol was pitching to Berkshire-Hathaway. Buffett is clearly a shrewd investor. However, an economic holy man he is not.
  - Brewer 15y ago
    But he could end the deficit in five minutes.
    - shmulkey18 15y ago
      No, he couldn't. His remark is a flip one that is totally impractical. Had Ross Perot (another rich guy who likes to pop off) made this suggestion we'd all be laughing at him.
      - Brewer 15y ago
        I should have added /sarcasm to the end of my last reply.
davetufts 15y ago
What about laws that state only Congress can declare war or the rules of the War Powers Resolution? These don't stop the executive branch from engaging in war. Similarly, Buffet's simplistic solution wouldn't stop future deficits, because the ruling party could so easily redefine what a deficit is or what the GDP numbers are.
maxxxxx 15y ago
I don't think it would stop the deficits. Instead we would get a new Congress every 2 years with crazier and crazier representatives.
- bdunbar 15y ago
  We've already _got_ a pack of thieves, idiots, never-do-wells and politicians (but I repeat myself) in Congress. It can't get much worse.
  - maxxxxx 15y ago
    It can get much worse.
  - weavejester 15y ago
    Actually, it could get a lot worse. There may be a lot wrong with the US government, but as governments go there are not many in the world that are considerably better, and a large amount of governments that are much, much worse.
  - pnathan 15y ago
    No, actually, we have some fairly functional people in Congress. They are heinously self-interested and often vote pork and lobbyist groups, of course, but we do the same thing with our own little domains (hacking, free music, code, entrepreneurship). Very people have the ability to have the grand vision, and fewer have the ability to put that view in effect. But we could have much worse. Much, much worse. A brief survey of world history in the 1910s, 1920s, and 1930s should serve to illustrate the meaning of "worse".
sajid 15y ago
I think people are missing the point, his suggestion is not meant to be taken literally. What he's trying to say is that reducing the budget deficit is more a question of political will than economics.
- lmkg 15y ago
  Very much this. If you want to predict behavior, look at incentives. For example, the California state budget. There's a constitutional requirement that it be on time, but every year we were setting a new record for how late it was. Then, we pass a law saying that if it's not on time the legislators don't get paid. Mirabile dictu, the budget is now on time. Granted, the requirements for passing the budget were also lowered, but aside from that the Democrats were generally displeased with the budget they passed and I nearly certain that they would have waited around and tried to swing another 4 Republican votes rather than pass what they did. At the federal level, there's nothing pushing the politicians to balance the budget, except for people who vote on that issue. But it's a rather abstract issue and not a lot of people vote on it compared to, say, abortion. No voting pressure, no lobbying dollars, and no legal repercussions means the problem won't get addressed. Buffet is suggesting changing the last of those three, although any of them would be enough.
- dsmithn 15y ago
  Definitely. He keeps going back to the point that the debt was at 120% and nothing terrible happened, but now we have these politicians threatening to figuratively play Russian Roulette with our debt rating just to get the results they want. The point is they shouldn't be threatening us - we should be threatening them for not getting it done.
goombastic 15y ago
I ask this here because this is a hacker forum. Why is it that in this day and age that we still implicitly entrust another person to make decisions on our behalf? What do you think would be the kind of systems we need to build to make democracy more participative? What do you think would be the pitfalls we should avoid with such a system?
- ceejayoz 15y ago
  > Why is it that in this day and age that we still implicitly entrust another person to make decisions on our behalf? We don't. Congressional approval is always horrendously low. The alternative just sucks more.
- Klinky 15y ago
  At some point you're going to have to trust someone(e.g. whoever made the libraries you're using in your program did it properly or that the person making your sandwich washed their hands first), but I'd agree it'd be nice if we could make the system less of a popularity contest that's full of hyperbole & 5-second or less sound bites. I think we need more political parties & vast limitations on campaign financing. I'd also love if we could test reading comprehension & basic logic skills before allowing people to run for office.
- cjg 15y ago
  http://www.jadeleaf.co.uk/voting-is-bad http://www.jadeleaf.co.uk/voting-is-bad
lucasjung 15y ago
One big problem I see with this: in time of war, it is often not only necessary but desireable to run a deficit. Imagine if we had been forced to run a balanced budget during WWII! I would imagine that in such dire need, members of congress would "take one for the team" and run a deficit in order to sustain the war effort, but then you have the classic "changing horses mid-stream" problem when you turn over literally the entire legislature in the middle of a war. I think that a much more practical constitutional amendment would be to simply prohibit congress from appropriating funds in excess of revenues unless a war has been declared. There is a risk of congress declaring needless wars for the sole purpose of justifying deficits, but that would require the cooperation of both parties, and I would bet that the opposition party would see more potential gain in opposing the war and demagouging its supportors than in letting the majority party have their war of convenience.
- deleted 15y ago
  [deleted]
- rsbrown 15y ago
  The war argument for deficit spending has completely lost credibility with me. It may have been true for WWII, but this argument has been sorely abused in order to justify out of control spending during the various armed conflicts since then. Leaving war as a loophole for runaway deficit spending is a slippery slope, and one that congress clearly has no reluctance sliding down.
- code_duck 15y ago
  When have we not been 'at war' in the past 40 years?
  - WalterSear 15y ago
    We have not been at war with Eurasia for the past 40 years. We have always not been at war with Eurasia.
- pgsucksdick 15y ago
  As much as you might like to think differently war is always negatively productive. There might be some corner cases where the destroyed wealth is replaced by more efficient use, but they have yet to demonstrate themselves.
AdamN 15y ago
It would take more than a law to block reelection for sitting legislators - it would take a Constitutional amendment. I'd like to see Buffet get that done in 5 minutes.
rnernento 15y ago
What's sad about this is we shouldn't need to pass a law, voters could easily enforce this. There is a massive problem right now with a lack of accountability, not just for the debt but for all the horrible decisions congress makes.
wunderfool 15y ago
of course, take away the need to satisfy the public and any fool can simply close off debate by fiat
MarkMc 15y ago
I thought the more interesting part of the interview was when he said that social security payments should have higher priority than bond interest payments. That sounds it would result in a worse credit rating and much larger pain in the long term...
sethg 15y ago
Budget deficits shouldn’t be any more of an automatic trigger for re-election than the unemployment rate, the inflation rate, the number of body bags coming back from a foreign war, or any other undesirable thing.
WalterSear 15y ago
That wouldn't end the deficit: it would give us a permanent deficit of 2.99%. Still, an improvement.
naughtysriram 15y ago
cool... :)
ck2 15y ago
Right, they'll do that right after they give up their gold-plated healthcare and instead take the government offering for the uninsured. Gabrielle Giffords would be permanently disabled and disfigured, unable to ever speak or move because of lack of therapy if she was an average citizen standing in that crowd, with the average american insurance or lack thereof. I love how the topic is constantly steered off healthcare. Remember the mosque in NYC? Remember how all that noise suddenly disappeared?
cafard 15y ago
You can fix failing schools in 10 minutes: establish that teachers can be fired if the test scores aren't OK. This has the disadvantage that it's a hell of a lot easier to go back and tweak the tests handed in (see Atlanta; see some DC schools) than it is to educate the kids. But the test scores look great.
- brown9-2 15y ago
  Isn't this already the case with NCLB? Higher test scores on their own don't "fix" the problems with education.
yaix 15y ago
Why does this populist nonsense get so many votes? Typical generalized politicians bashing. If you feel that you rep. is so evil, than just don't elect them. Better still, stand yourself and do a better job. Or at least help the guy you think will be doing a better job. It's all about the participation of the Demos, that's why they call it democracy.
- MarkPNeyer 15y ago
  when congress' approval rates are in the single digits but reelection rates are 80%, its clear that something is broken.
  - yaix 15y ago
    What do you mean with "something"? The brains of the voters?
jws 15y ago
One possibility is that the job of congressman becomes a 2 year job and you have to dole out enough goodies in two years to get a secure post-congress position.
- PotatoEngineer 15y ago
  Ouch. Accurate, but ouch. Bonus points: Eternal September in Congress, as we're always getting a new crowd of inexperienced people.
Androsynth 15y ago
Wouldn't the unintended consequence be that the parties become even more powerful than they are now? All the long-standing politicians would move out of official govt capacity and into essentially the same position in their parties, while unknown pawns get elected to the official positions.
shareme 15y ago
Better idea... Vice Presidents who still hold shares in companies that still hold gov contracts despite censure..Impeachment as the whole 3.4ths of current deficit was by start of wrong wars Iraq especially..
gavanwoolery 15y ago
<TROLL> Nice, but I can end it in 4 minutes: STOP. SPENDING. MORE. MONEY. THAN. YOU. HAVE. </TROLL>
T_S_ 15y ago
I liked the preface to the comments section below the video: Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
- Bluth53 15y ago
  I had the same reaction. While somewhat pessimistic and possibly offensive toward some visitors, it distills the times found around the web in an eloquent, satirical manner. While I prefer offensive and rotten humor, many would argue this type of remark defies all sorts of social media "how-to"s and guidelines for positive engagement yada yada.
greyfade 15y ago
Or, you know, he could pay his taxes.
gojomo 15y ago
What if instead of a stick – no reeslection for you! – we used a carrot? What if the sitting lawmakers who voted for a balanced budget eventually get a giant financial bonus? (To minimize monkeybusiness, we could require it to have been balanced in retrospect, say via assessment 2-10 years later.) People – even Congresspeople! – respond to incentives. Let's assume that the goal – the fiscal stability of a balanced budget – would be a noticeable boost to our $14-trillion-plus economy. Then the incentive could be quite huge – perhaps a million dollars per congressperson per year in balance – and still pay for itself, many times over. Other interests are making millions per year from the legislative 'generosity' that results in a perpetually out-of-balance budget. Why not pay directly for the alternative result we prefer?
jasonmoo 15y ago
my god cnbc is obnoxious. 9 logos on the same screen. breaking headlines of the interview currently in progress. 5 different bars all blocking the view with equally unimportant text. and the swoush sound effects... seriously you guys. seriously.
JohnLBevan 15y ago
Spending more than you earn? Idiots in charge. Cut back on essentials, keep the things that make you happy, still get re-elected. Hmm, anyone else see a minor flaw?
vorg 15y ago
> I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection. Incentives matter, but this incentive would attract candidates who don't want re-election, perhaps old and sick people who expect to die or retire. Also, how do you measure GDP? Whenever someone drinks a pint of whiskey at the bar, then drives home and kills other motorists, the whiskey sold, car fix-up costs, ambulance and hospital fees, insurance and re-insurance premiums, prison costs, and court settlements all contribute to "GDP", even though real quality of life has gone way down. And of course any law passed can be repealed by the same margin.
skybrian 15y ago
Some people will play to lose.
Troll_Whisperer 15y ago
>“I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.” I understand his line of thinking, but the question is could he pass that law? He has a substantial amount of money that could be spent on lobbying, media, etc. But how do you get people who have spent a career chasing power to sign a law that will strip them of that power?

434 points by pitdesi 15y ago

mmcconnell1618 15y ago

The only problem is that the sitting congress would need to pass the law making themselves ineligible for re-election.

hugh3 15y ago
I assume it'd need to be a constitutional change rather than a legislative one, otherwise they could just rescind the law anyway. Which reminds me of one of my biggest objections to the US constitution: constitutional amendments are done simply by getting a bunch of legislatures to agree to 'em, rather than by holding a referendum as in Australia.
- sigzero 15y ago
  I much prefer the US way.
  - capnrefsmmat 15y ago
    Why?
    - ams6110 15y ago
      Changing the constitution should not be something that can happen based on a (perhaps very temporary) swell of public sentiment
      - skimbrel 15y ago
        Agreed! My state, like a few others in the US, has voter initiatives that become constitutional amendments. The last one that made the news was the one that made it illegal for me to get married. Another initiative from a few decades ago is a major part of why California can't raise enough money to fund itself now. So yeah, I'm not a huge fan of ballot initiatives.
        jcarreiro 15y ago
        The Economist had a very interesting report on democracy in California recently: http://www.economist.com/node/18563638?story_id=18563638 http://www.economist.com/node/18563638?story_id=18563638
      - gavinballard 15y ago
        In Australia's history, of 44 constitutional referendums held, only 8 have passed (3 of them in the same ballot). It's very difficult (some would say, too difficult) to amend the Australian constitution, and definitely not something that tends to happen with a "swell of public sentiment". Compare that to 11 amendments to the US Constitution over the same period (1901 onwards) - two of which I'd point out dealt with the introduction and repeal of Prohibition (which I'd say qualified as a "swell of public sentiment").
- learc83 15y ago
  Well, we could have a constitutional convention.
  - protomyth 15y ago
    no, hell no - not with 24hr news, pundits, and political correctness.

hnsmurf 15y ago

That wouldn't end the deficit, that would just ensure the deficit was 0 the day before elections. Also there's a slippery slope. This same logic, if we allow it to be applied to the deficit, could be applied to other things. No congressmen could be reelected if gay marriage is legal, etc.

seabee 15y ago
That's a specious argument. Something like gay marriage is the result of writing a law; the deficit is an accumulation of many public spending programmes enacted under the law more often than by its creation. This is basically a method of legislating a budget cap. Your 'slippery slope' argument in its correct analogy is no more than passing a law that outlaws gay marriage in the first place.
barrybe 15y ago
> That wouldn't end the deficit, that would just ensure the deficit was 0 the day before elections. I think that's the point. Short-term borrowing is sometimes a smart idea, as long as there's a real plan to pay it off. The idea would be to only discourage irresponsible borrowing. > This same logic, if we allow it to be applied to the deficit, could be applied to other things. I think it's fairly uncontroversial that having unpaid debt is bad and should be avoided.. so it's not too similar to issues that are actually controversial.
praptak 15y ago
"This same logic, if we allow it to be applied to the deficit, could be applied to other things." There are legitimate reasons to discern between the deficit and those other things. Most law systems are based on a small set of core values which are deliberately made hard to change, i.e. made part of the supreme law. I believe that the (preventing of) deficit has the characteristics shared by those core values: there is a consensus that it is bad (especially in the long term) and yet there's strong temptation to create it for the short term benefits (buying votes.)
- hnsmurf 15y ago
  I don't disagree with you, but a lot of people feel the same about marriage. A lot of people (not me, btw) feel that this is a Christian country and it's antithetical to our founders' beliefs for gays to marry and yadda yadda. The point I'm making is that everyone has a different idea of what those core values are.

Robin_Message 15y ago

Would Warren Buffett fire the entire management of any company he owned that borrowed more than 10% of earnings in one year, regardless of circumstances? Because that is what his suggestion amounts to.

sc68cal 15y ago
Firstly - I wouldn't put it past him to do something like that if he thought that would maximize his investment. The market doesn't view a debt of +10% of earnings to be that big of a deal however, has priced that risk accordingly, and Buffet has never been put in that situation. Secondly - there is always a problem with equating governments to corporations, since governments are formed for public good and corporations are formed to maximize shareholder value. Their roles and motivations are quite different.
- coconutrandom 15y ago
  Is it naive to suggest that citizens are shareholders? and to extend the metaphor, that other countries are customers/clients?
  - sc68cal 15y ago
    You could make that case with some examples, but even then, the metaphor overwrites the reason why governments are formed - for the public good (and the protection of personal property, if you are a fan of John Locke). Thus, governments in your metaphor lose their actual purpose. This ultimately typecasts actions that a government does, into business actions. Even though some of them would make absolutely no business sense. For example, why would a country raise tariffs or raise trade barriers? This would demonstrate weakpoints in the metaphor that other countries are clients. A more extreme example would be where a country starts to kill people, by going to war with another country, or killing it's own people due to political upheaval. The metaphor really breaks down in that case. Businesses by and large, don't go and kill people intentionally. Obviously there are some historical and modern examples (Chiquita comes to mind) but I don't think that "Killing People" is in anyone's charter.

nhaehnle 15y ago

This does not address the question of whether a balanced budget is even desirable. Equating the budget of the currency issuer with the everyday experience of the budget of the currency user is a fallacy. Looking at the respective balances of the three sectors of government, domestic private, and external, it is obvious that flows are conserved. Given net imports (i.e. more money flowing into the external sector than out of it), a balanced government budget can only occur if the private sector is in deficit, i.e. more money flowing out of the private sector than flowing into it. Empirically, external balances change only very slowly, unless artificial trade barriers (tariffs etc.) are raised. So in the end, the political choice is between deficits in the private sector, and deficits in the government sector (and of course a range of choices in-between).

kd0amg 15y ago
it is obvious that flows are conserved Given that government can issue additional currency, conservation of flow doesn't seem particularly obvious to me.
- nhaehnle 15y ago
  This is a flows vs. stock thing that I could have made clearer. The additional currency that is issued by the government does not disappear in a black hole (with the possible exception that, technically, dollar bills do get lost in the wash). Instead, it either ultimately flows back to government, or ends up in one of the other sectors. I think the relevant constraints are clear to everybody here, which is why I was not more explicit.
jpadkins 15y ago
What about the moral implications that deficit spending is inter-generational taxation? I think that is a clear case of taxation without representation.
- wtvanhest 15y ago
  This will most likely be fixed with high inflation, but it is a concern.

johnnyg 15y ago

A republic or democracy presupposes that the majority of representatives will get it right eventually. However, we've seen in the Roman Circus and we see now that there is a weak spot to this thinking. Eventually the elected body will split into a faction that represents business interests and a faction that trades entitlements for votes. The latter faction eventually gains control to an extent that they bankrupt the whole. We are nearing that stage now. Few Republicans will oppose entitlements and both Mr. Bush and Mr. Obama are guilty of ramp ups in deficit spending. Buffett's proposal would patch this historically reoccurring weakness of representative forms of government. As hnsmurf points out, it would also create a slippery slope where no representative could be reelected if they vote for X, Y and Z policies that are not systemic threats. As our government is not responding to an issue which can literally ruin us all, it seems to me that Buffett's proposal is the lesser of two evils. Stability demands a solvent government.

JoeAltmaier 15y ago
Stability also requires a stable government. Throwing all the scoundrels out sounds good, but would probably happen (I think they are all too selfish and would play chicken down to/past the wire). Resulting in chaos at the next election - an entire elected body of unknowns with no experience.
- rsbrown 15y ago
  ... no experience in the current system, that is. This proposal would change that system dramatically. Upending congress might be tumultuous, but compared to bankrupting the nation it still counts as the lesser of two evils.
- DougWebb 15y ago
  That's the kind of revolution we're supposed to have when the government becomes corrupt. Also, it wouldn't be all at once; term overlaps ensure that there would be continuity.
  - moioci 15y ago

hop 15y ago

Buffett's father was a 4 term congressman and an almost Ron Paul-like libertarian, btw. http://en.wikipedia.org/wiki/Howard_Buffett http://en.wikipedia.org/wiki/Howard_Buffett

pgsucksdick 15y ago
And not a single fuck was given for your lack of insight.
cheez 15y ago
Warren Buffet made a tidy profit on the bailouts. He knew who was anointed to survive and who was not. Of course Warren loves the influence of government!
- jhamburger 15y ago
  He lives in a modest home in Omaha and will probably give more money to charity than anyone in history when all is said and done. Do you really think his political views are driven by his own personal gain?
  - cheez 15y ago
    No, definitely not. I think he enjoys the game. I think Buffet likes to be comfortable. I don't think he has a need to show off. But that doesn't detract from the fact that he sees it as a game to be played and a competition. It could be for really expensive beans for all he cares.
  - anamax 15y ago
    > He lives in a modest home in Omaha and will probably give more money to charity than anyone in history when all is said and done. Do you really think his political views are driven by his own personal gain? Yes, because he's human and every human's political views are driven by their personal gain. Your mistake is in thinking that money is the only personal gain. It's not. It isn't even one of the most effective motivators. And, in Buffet's case, there's the difference between "money made" and "money spent". At some point, the latter becomes uninteresting but that tells us nothing about the former. And, interestingly enough, Buffet's "advice for the country" always seems to be aligned with his financial stake. (He never advocates increasing the taxes that he pays and he often advocates increasing taxes in ways that benefit him - the estate tax being a prime example.)

Brewer 15y ago

Warren Buffet for Secretary of the Treasury

shmulkey18 15y ago
No thanks. There is something intensely annoying about Buffett: his hypocrisy. He claims that rich Americans are not paying their fair share of taxes, but doesn't take the obvious step of voluntarily paying more taxes by sending a big check to the IRS. He supports the estate tax, supposedly because it is bad for America to have children receive inherited wealth. Of course, he has set up a foundation which his children will administer after his death. Naturally, they'll take a salary for this arduous assignment. And it just so happens that having an estate tax benefits the insurance companies in which he is heavily invested: 10% of insurance company revenue comes from the policies wealthy folks buy in order to avoid estate taxes. He's all for rigorous corporate government and the avoidance of self-dealing. Except when these standards are violated by his subordinate and Berkshire-Hathaway heir-apparent David Sokol, who -- with the full knowledge of Buffett -- personally invested in a company that Sokol was pitching to Berkshire-Hathaway. Buffett is clearly a shrewd investor. However, an economic holy man he is not.
- Brewer 15y ago
  But he could end the deficit in five minutes.
  - shmulkey18 15y ago
    No, he couldn't. His remark is a flip one that is totally impractical. Had Ross Perot (another rich guy who likes to pop off) made this suggestion we'd all be laughing at him.
    - Brewer 15y ago
      I should have added /sarcasm to the end of my last reply.

davetufts 15y ago

What about laws that state only Congress can declare war or the rules of the War Powers Resolution? These don't stop the executive branch from engaging in war. Similarly, Buffet's simplistic solution wouldn't stop future deficits, because the ruling party could so easily redefine what a deficit is or what the GDP numbers are.

maxxxxx 15y ago

I don't think it would stop the deficits. Instead we would get a new Congress every 2 years with crazier and crazier representatives.

bdunbar 15y ago
We've already _got_ a pack of thieves, idiots, never-do-wells and politicians (but I repeat myself) in Congress. It can't get much worse.
- maxxxxx 15y ago
  It can get much worse.
- weavejester 15y ago
  Actually, it could get a lot worse. There may be a lot wrong with the US government, but as governments go there are not many in the world that are considerably better, and a large amount of governments that are much, much worse.
- pnathan 15y ago
  No, actually, we have some fairly functional people in Congress. They are heinously self-interested and often vote pork and lobbyist groups, of course, but we do the same thing with our own little domains (hacking, free music, code, entrepreneurship). Very people have the ability to have the grand vision, and fewer have the ability to put that view in effect. But we could have much worse. Much, much worse. A brief survey of world history in the 1910s, 1920s, and 1930s should serve to illustrate the meaning of "worse".

sajid 15y ago

I think people are missing the point, his suggestion is not meant to be taken literally. What he's trying to say is that reducing the budget deficit is more a question of political will than economics.

lmkg 15y ago
Very much this. If you want to predict behavior, look at incentives. For example, the California state budget. There's a constitutional requirement that it be on time, but every year we were setting a new record for how late it was. Then, we pass a law saying that if it's not on time the legislators don't get paid. Mirabile dictu, the budget is now on time. Granted, the requirements for passing the budget were also lowered, but aside from that the Democrats were generally displeased with the budget they passed and I nearly certain that they would have waited around and tried to swing another 4 Republican votes rather than pass what they did. At the federal level, there's nothing pushing the politicians to balance the budget, except for people who vote on that issue. But it's a rather abstract issue and not a lot of people vote on it compared to, say, abortion. No voting pressure, no lobbying dollars, and no legal repercussions means the problem won't get addressed. Buffet is suggesting changing the last of those three, although any of them would be enough.
dsmithn 15y ago
Definitely. He keeps going back to the point that the debt was at 120% and nothing terrible happened, but now we have these politicians threatening to figuratively play Russian Roulette with our debt rating just to get the results they want. The point is they shouldn't be threatening us - we should be threatening them for not getting it done.

goombastic 15y ago

I ask this here because this is a hacker forum. Why is it that in this day and age that we still implicitly entrust another person to make decisions on our behalf? What do you think would be the kind of systems we need to build to make democracy more participative? What do you think would be the pitfalls we should avoid with such a system?

ceejayoz 15y ago
> Why is it that in this day and age that we still implicitly entrust another person to make decisions on our behalf? We don't. Congressional approval is always horrendously low. The alternative just sucks more.
Klinky 15y ago
At some point you're going to have to trust someone(e.g. whoever made the libraries you're using in your program did it properly or that the person making your sandwich washed their hands first), but I'd agree it'd be nice if we could make the system less of a popularity contest that's full of hyperbole & 5-second or less sound bites. I think we need more political parties & vast limitations on campaign financing. I'd also love if we could test reading comprehension & basic logic skills before allowing people to run for office.
cjg 15y ago
http://www.jadeleaf.co.uk/voting-is-bad http://www.jadeleaf.co.uk/voting-is-bad

lucasjung 15y ago

One big problem I see with this: in time of war, it is often not only necessary but desireable to run a deficit. Imagine if we had been forced to run a balanced budget during WWII! I would imagine that in such dire need, members of congress would "take one for the team" and run a deficit in order to sustain the war effort, but then you have the classic "changing horses mid-stream" problem when you turn over literally the entire legislature in the middle of a war. I think that a much more practical constitutional amendment would be to simply prohibit congress from appropriating funds in excess of revenues unless a war has been declared. There is a risk of congress declaring needless wars for the sole purpose of justifying deficits, but that would require the cooperation of both parties, and I would bet that the opposition party would see more potential gain in opposing the war and demagouging its supportors than in letting the majority party have their war of convenience.

deleted 15y ago
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rsbrown 15y ago
The war argument for deficit spending has completely lost credibility with me. It may have been true for WWII, but this argument has been sorely abused in order to justify out of control spending during the various armed conflicts since then. Leaving war as a loophole for runaway deficit spending is a slippery slope, and one that congress clearly has no reluctance sliding down.
code_duck 15y ago
When have we not been 'at war' in the past 40 years?
- WalterSear 15y ago
  We have not been at war with Eurasia for the past 40 years. We have always not been at war with Eurasia.
pgsucksdick 15y ago
As much as you might like to think differently war is always negatively productive. There might be some corner cases where the destroyed wealth is replaced by more efficient use, but they have yet to demonstrate themselves.

AdamN 15y ago

It would take more than a law to block reelection for sitting legislators - it would take a Constitutional amendment. I'd like to see Buffet get that done in 5 minutes.

rnernento 15y ago

What's sad about this is we shouldn't need to pass a law, voters could easily enforce this. There is a massive problem right now with a lack of accountability, not just for the debt but for all the horrible decisions congress makes.

wunderfool 15y ago

of course, take away the need to satisfy the public and any fool can simply close off debate by fiat

MarkMc 15y ago

I thought the more interesting part of the interview was when he said that social security payments should have higher priority than bond interest payments. That sounds it would result in a worse credit rating and much larger pain in the long term...

sethg 15y ago

Budget deficits shouldn’t be any more of an automatic trigger for re-election than the unemployment rate, the inflation rate, the number of body bags coming back from a foreign war, or any other undesirable thing.

WalterSear 15y ago

That wouldn't end the deficit: it would give us a permanent deficit of 2.99%. Still, an improvement.

naughtysriram 15y ago

cool... :)

ck2 15y ago

Right, they'll do that right after they give up their gold-plated healthcare and instead take the government offering for the uninsured. Gabrielle Giffords would be permanently disabled and disfigured, unable to ever speak or move because of lack of therapy if she was an average citizen standing in that crowd, with the average american insurance or lack thereof. I love how the topic is constantly steered off healthcare. Remember the mosque in NYC? Remember how all that noise suddenly disappeared?

cafard 15y ago

You can fix failing schools in 10 minutes: establish that teachers can be fired if the test scores aren't OK. This has the disadvantage that it's a hell of a lot easier to go back and tweak the tests handed in (see Atlanta; see some DC schools) than it is to educate the kids. But the test scores look great.

brown9-2 15y ago
Isn't this already the case with NCLB? Higher test scores on their own don't "fix" the problems with education.

yaix 15y ago

Why does this populist nonsense get so many votes? Typical generalized politicians bashing. If you feel that you rep. is so evil, than just don't elect them. Better still, stand yourself and do a better job. Or at least help the guy you think will be doing a better job. It's all about the participation of the Demos, that's why they call it democracy.

MarkPNeyer 15y ago
when congress' approval rates are in the single digits but reelection rates are 80%, its clear that something is broken.
- yaix 15y ago
  What do you mean with "something"? The brains of the voters?

jws 15y ago

One possibility is that the job of congressman becomes a 2 year job and you have to dole out enough goodies in two years to get a secure post-congress position.

PotatoEngineer 15y ago
Ouch. Accurate, but ouch. Bonus points: Eternal September in Congress, as we're always getting a new crowd of inexperienced people.

Androsynth 15y ago

Wouldn't the unintended consequence be that the parties become even more powerful than they are now? All the long-standing politicians would move out of official govt capacity and into essentially the same position in their parties, while unknown pawns get elected to the official positions.

shareme 15y ago

Better idea... Vice Presidents who still hold shares in companies that still hold gov contracts despite censure..Impeachment as the whole 3.4ths of current deficit was by start of wrong wars Iraq especially..

gavanwoolery 15y ago

<TROLL> Nice, but I can end it in 4 minutes: STOP. SPENDING. MORE. MONEY. THAN. YOU. HAVE. </TROLL>

T_S_ 15y ago

I liked the preface to the comments section below the video: Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

Bluth53 15y ago
I had the same reaction. While somewhat pessimistic and possibly offensive toward some visitors, it distills the times found around the web in an eloquent, satirical manner. While I prefer offensive and rotten humor, many would argue this type of remark defies all sorts of social media "how-to"s and guidelines for positive engagement yada yada.

greyfade 15y ago

Or, you know, he could pay his taxes.

gojomo 15y ago

What if instead of a stick – no reeslection for you! – we used a carrot? What if the sitting lawmakers who voted for a balanced budget eventually get a giant financial bonus? (To minimize monkeybusiness, we could require it to have been balanced in retrospect, say via assessment 2-10 years later.) People – even Congresspeople! – respond to incentives. Let's assume that the goal – the fiscal stability of a balanced budget – would be a noticeable boost to our $14-trillion-plus economy. Then the incentive could be quite huge – perhaps a million dollars per congressperson per year in balance – and still pay for itself, many times over. Other interests are making millions per year from the legislative 'generosity' that results in a perpetually out-of-balance budget. Why not pay directly for the alternative result we prefer?

jasonmoo 15y ago

my god cnbc is obnoxious. 9 logos on the same screen. breaking headlines of the interview currently in progress. 5 different bars all blocking the view with equally unimportant text. and the swoush sound effects... seriously you guys. seriously.

JohnLBevan 15y ago

Spending more than you earn? Idiots in charge. Cut back on essentials, keep the things that make you happy, still get re-elected. Hmm, anyone else see a minor flaw?

vorg 15y ago

> I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection. Incentives matter, but this incentive would attract candidates who don't want re-election, perhaps old and sick people who expect to die or retire. Also, how do you measure GDP? Whenever someone drinks a pint of whiskey at the bar, then drives home and kills other motorists, the whiskey sold, car fix-up costs, ambulance and hospital fees, insurance and re-insurance premiums, prison costs, and court settlements all contribute to "GDP", even though real quality of life has gone way down. And of course any law passed can be repealed by the same margin.

skybrian 15y ago

Some people will play to lose.

Troll_Whisperer 15y ago

>“I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.” I understand his line of thinking, but the question is could he pass that law? He has a substantial amount of money that could be spent on lobbying, media, etc. But how do you get people who have spent a career chasing power to sign a law that will strip them of that power?