Warren Buffett introduced presidential nominee Hillary Clinton at a rally in Omaha, Nebraska on Monday.
Buffett, CEO of $360 billion company Berkshire Hathaway (BRK-A, BRK-B), endorsed Clinton in December. Why did he do this?
Buffett disagrees with Trump’s depiction of the economy
Throughout his campaign, Republican nominee Donald Trump has been painting a gloomy picture of the economy. His message crescendoed when he spoke at the Republican Convention.
Buffett, however, argues the candidates who have been framing the economic backdrop as dire are dead wrong.
“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve),” he wrote in his annual letter to Berkshire shareholders. “As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves to. That view is dead wrong: The babies being born in America today are the luckiest crop in history.”
American GDP per capita is now about $56,000—six times the amount in 1930 (the year Buffett was born) in real terms. “America’s economic magic remains alive and well,” Buffett wrote in his letter.
Berkshire Hathaway has not stopped betting on future growth in America. Most recently, it acquired aerospace company Precision Castparts, which is sensitive to economic cycles.
Buffett believes the wealthy should pay higher taxes
When he endorsed Clinton in December, Buffett emphasized the large gains that have been made by the wealthiest Americans—something that hasn’t been enjoyed by the broader population.
Buffett said that Clinton “will make sure that those people who are having to work two jobs to barely get by will not have that kind of world for themselves and their children moving forward.”
Clinton added, “I want to be the president for the struggling, the striving and the successful,” she said.
Buffett has advocated the richest Americans should pay higher taxes. He specifically cited that the top 400 wage earners saw their income increase sevenfold while their tax rate fell to 16.3%. “So they got a one-third tax cut as their income went up seven to one,” he said.
Clinton’s tax plan includes her support of the so-called Buffett Rule, which would set a minimum tax rate on individuals making over one million dollars a year. The Buffett Rule was named after Warren Buffett based on comments he made in 2011 when he argued it was wrong that rich people like himself could pay less in federal taxes as a portion of income than the middle class.
“The 400 of us pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%,” Buffett said while speaking at a political fundraiser for Hillary Clinton in 2007.