Buffett and Obama Talk Taxes

Posted by - Tuesday, August 23rd, 2011

Obama's prepping for a pep-talk after Labor Day. In his prep-work, he met with billionaire and economy-buff Warren Buffet. The two discussed how to restore investor confidence, how to reduce the deficit, and how to get the overall economy flowing again.

A big problem in this case is Republican opposition. Essentially, any move that means more government increases spending is probably a no-go.

That being said, there was one particularly interesting incentive that came up in conversation: the Georgia Works program.

Basically, such a program would allow workers on unemployment insurance train for jobs at NO cost to the business. This way, unemployed workers could receive unemployment while a new employer trains them, for up to eight weeks. After that trial period, the company can make the decision to keep the individual, or let him or her go -- risk free.

Another incentive focuses on the construction industry. Obama wants Congress to spend more on related projects and payroll-tax adjustments.

Comabting the employment issue is the biggest issue affecting the poor economy. Obama is using Buffett's words to defend his own policy proposals to deal with the problem. In doing so, Obama is hoping his critics will see Buffett as credible and respected expert on the matter.

The median forecast for unemployment during the fourth quarter of 2012 -- when Obama is up for re-election -- was 8.5 percent in a Bloomberg News survey of economists taken Aug. 2 through 12. That was up from a median forecast of 8.0 percent for the election-day quarter in a survey of the same economists taken a month earlier.

Obama is seeking to revive a version of the so-called grand bargain with congressional Republicans that would combine long- term U.S. deficit reduction through entitlement benefit cuts and tax increases with immediate steps to boost job growth. To offset the cost of the new initiatives, Obama will seek additional long-term deficit reduction.

...

During his bus tour last week through rural areas of Minnesota, Iowa and Illinois, Obama quoted from a New York Times opinion article in which Buffett wrote that the nation’s richest individuals have been “coddled long enough by a billionaire- friendly Congress.” Buffett argued for raising taxes for the “mega-rich” in the U.S.

While the immediate reaction to tax increases seem to gain a lot of disdain from the general public, Buffett's argument for taxing the "mega-rich" seems to be a more logical solution. The poor and middle class are relatively unaffected, and there is no real financial burden for the "mega-rich" in paying higher taxes; although the greedy side of human nature may suggest otherwise...

*Idented excerpts from Bloomberg.

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