Most Powerful Women

Warren Buffett at Fortune's Most Powerful Women Summit

October 4, 2011: 3:35 PM ET

Berkshire Hathaway's Warren Buffett sat down with longtime friend and Fortune senior editor-at-large Carol Loomis for a wide-ranging discussion about everything from George Bush to Rupert Murdoch. Below is an unedited transcript.

Warren Buffett

Carol Loomis and Warren Buffett

LLOYD BLANKFEIN:  Now, I have the privilege of introducing Warren Buffett, who will be interviewed by Carol Loomis, Fortune's senior editor at large.

Now, what can I say about Warren that hasn't already been said?  We all know about his uncanny timing, his brilliant sayings, his investing discipline, and his uncommonly common logic.

Do his disciples, he's a rock star.  Just head out to Omaha for his annual meeting to see for yourself, or hang our dinner table and watch all the pictures go off on all these cell phones.

To policy makers, he's a source of wise counsel.  They even like to name policy proposals after him.

To CEOs, he's either salvation, a once-in-a-lifetime opportunity, the most patient investor in the world, or all three.  To me, he's been a friend, a supporter, and a constant reminder of the value of not buying into the prevailing sentiment, no matter how positive or negative it gets.

Warren has principles, and they aren't hard to figure out.  The difference is he always lives by them.  I know the Buffett Rule is being talked and written about a lot these days, but I like to think there already was a Buffett Rule.  It says:  Stick to what you're good at, keep a lot of cash on hand, and answer the phone when it rings.  (Laughter.)  Warren, keep taking my calls.

Please join me in welcoming Warren Buffett and his good friend, Carol Loomis, to the stage.  (Applause.)

CAROL LOOMIS:   Good morning.  Warren, here we are for a fourth year in a row.  The first year was financial panic, the next year seemed to be apparent recovery.  The third year was political upheaval, and now we're in the state of uncertainty about the economy and really worrying about jobs.

Now, Berkshire Hathaway (BRKA) as a conglomerate is such a mirror of the economy.  Let me ask about it first.  You've got railroads, utilities, insurance, jewelry retailers, See's Candy, Dairy Queen, Business Wire, and then a whole slew of companies that are tied in one way or another to housing, Shaw Carpet, Acme Brick, Benjamin Moore Paints, Johns Manville, Clayton.

When you survey how these businesses are doing, what does the picture say to you about the economy?

WARREN BUFFETT:  As of today, our housing-related businesses are as bad as they've ever been during this period.  Everything else you name is up.  And our railroad carried 200,000 car loads last week, that's the highest total in three years.  That's stuff moving around the country, supplying merchants and doing all kinds of things.

If you take our five largest businesses, all of them will either set records for earnings or just about set records for earnings this year.  And in our retailing operations, we're seeing same-store gains just like before.

I really thought in August and September with all the turmoil in the markets, you'd see a falloff particularly in higher-priced items, but it hasn't happened yet.  Maybe it will, but as of today, the recovery is still underway.

CAROL LOOMIS:  Well, you've also, in addition to watching those developments, you've been wearing your newsmaker hat in more than one way.

WARREN BUFFETT:  You've noticed?  (Laughter.)  It's a boyhood dream, I wanted to have a tax named after me.  (Laughter.)

CAROL LOOMIS:  Well, I'll get to that one.  But, also, there was a more direct company connected new development last week.  You announced that Berkshire would stand ready to buy its own stock at a price of up to 10 percent above book value at any given moment.  Why did you come to that decision and how does this move square with your past criticisms of moves that other companies, sometimes other companies have made to buy their own stock?

WARREN BUFFETT:  Yeah, it was a terribly complicated decision involving thousands of variables.  It boiled down to the fact that we will buy our stock when we think it's selling for less than it's worth, surprise.  You know, I'll buy anybody else's stock when it's selling for less than it's worth, too.  (Laughter.)

I've never criticized -- in fact, I've recommended companies buy their stock when it's selling below what I call "intrinsic business value."  In our particular case, not true for most companies, practically all companies, but book value happens to be an understated measure of value, but one that, in a way, is a pretty good tracking device.  And I use this figure of 110 percent of book as being the limit because I know that that price is demonstrably less than the businesses are worth.

If I can buy dollar bills for 90 cents, I'll buy them.  I want to warn the people that are selling to me that I believe I am buying their dollar bills for 90 cents because they're our partner.  So, I give them notice first.  And then if they want to sell me dollar bills cheap -- any of you want to do it, I'm here.  (Laughter.)

CAROL LOOMIS:  Today.

WARREN BUFFETT:  And it will depend -- you always want to have ample resources for anything that comes along.  So, I limited -- I put in the announcement that we wouldn't do it if it took our consolidated cash below $20 billion, but we're comfortably above that, and I also said that it would depend if we find something else even cheaper, I may be doing that too.  But for the indefinite future, if we can buy our stock at something of a discount from its real value, we're going to do it.

CAROL LOOMIS:  Am I right that the times when you've criticized in the past, when you could not see that they were buying an undervalued stock at all, that their motives were really different?

WARREN BUFFETT:  Yeah.  I've seen it done.  I've been on boards, which will go unnamed, much to their gratitude, where basically they want to buy the stock, A, because it's fashionable, maybe, B, you know, because they want to tell the world they think their stock is cheap no matter what the price is.  In fact, I've seen very few that have tied it to any metric when they've announced a purchase.  And then sometimes they say they're buying it to cover stock options and other things like that.  Well, if it makes sense to buy in the stock,  you buy in the stock.  It doesn't make any difference whether you're issuing stock options or not, if it doesn't, it doesn't.

CAROL LOOMIS:  Well, getting to your really news-making declaration, you wrote a New York Times op-ed piece, said it was time to stop coddling the rich.  Millionaires like you, millionaires and up, people like you, and instead impose taxes upon them that would leave them bearing a fair share of the cost of government.

What's been your reaction to the storm of criticism, much of it -- some comment very good, but much of the comments critical, that followed your, once again, because you'd said this before, laying out this argument.

WARREN BUFFETT:  Yeah.  I first laid it out many years ago.

CAROL LOOMIS:  Right.

WARREN BUFFETT:  But the truth is that if you take -- you can go to the Internet and you can get this printout, I've even got it here, and it lists a lot of figures from the 400 highest incomes in the United States, and it goes back to 1992.

And since 1992, the average income of the 400 highest incomes has gone from 40-odd million to 220-odd million, fivefold.  During that time, their tax rate as a percentage of taxable income has fallen from 29 percent down to 21 percent.  That counts payroll taxes and income taxes.

And I took this survey in my office, I did it four years ago, and everybody in the office was over 30 percent combined payroll taxes and income taxes.  So, I would just like the people who average 220 million in this case to start paying taxes at a rate that's more or less comparable to what people pay in our office.

Now, that would not change many of the people at the top.  A lot of people are paying on ordinary income, and they are in the 30s.  But there are a lot of people like me that get most of their money from dividends and capital gains, and we're down around 15 or so.  In fact, there are a number of people that are below 15 that are making over a couple hundred million dollars a year, believe it or not.  I just say get those people up into the 30s.  (Applause.)

I'm not supposed to mention it here, but the Forbes 400 just came out.  (Laughter.)  And the aggregate wealth of the Forbes 400 this year was over $1.5 trillion.  That's up sevenfold in the last 25 years from 200 million roughly 25 years ago.  That is not what the American public has experienced.  So, the disparity has grown wider and wider in this country.  And we're going to talk about shared sacrifice.  We're going to go to the American public and say we've got a $1.2 trillion difference between receipts and expenditures, so we're going to ask something from all of you.  We're going to ask people to give up some promises that have been made to them in the past that are going to have to be modified in the future.  We're going to ask 300 million Americans, plus, to tighten their belts one way or another and help us get our fiscal house in order, and to ask them something like that when the super rich in many cases are paying 20 points less to taxes to the federal government I think is just plain wrong.

It doesn't solve our budget problem.  What I suggest would probably raise about $20 billion annually from about 50,000 people.  But $20 billion is $1,000 each to 20 million families.  And if I've got a choice of getting $1,000 from 20 million families throughout this country that are already struggling, or getting $20 billion by asking people to pay taxes in the range of the 30s just like everybody else is in this country, I'd rather go to the ultra rich.

CAROL LOOMIS:  Well, one of the centers of criticism has been the Wall Street Journal's editorial page.

WARREN BUFFETT:  Oh, really?  (Laughter.)

CAROL LOOMIS:  And they've asked you to give them your income tax statement.

WARREN BUFFETT:  Yeah.

CAROL LOOMIS:  What do you think about that?

WARREN BUFFETT:  Well, I think it might be a terrific idea if they would just ask their boss, Rupert Murdoch, and he and I will meet at Fortune and we'll both give you our tax returns, and you can publish them.  (Applause.)

CAROL LOOMIS:  We like it.  We like it.  (Laughter.)

WARREN BUFFETT:  I'm ready tomorrow morning.

CAROL LOOMIS:  I'm sure there may be other questions about that later.  But let's talk for a moment about Europe.  Now, if I'm --

WARREN BUFFETT:  Is it still there?  (Laughter.)

CAROL LOOMIS:  As of yesterday.

WARREN BUFFETT:  Okay, good.  Glad you're up to date.

CAROL LOOMIS:  If I was called to the witness stand, I could testify that you were worried about this problem many months ago, well before it became topic A on the international scene.  And I don't think you've stopped worrying.  How do you gauge the depth of the problem now and its threat to the world and where do you see solutions if you do?

WARREN BUFFETT:  Well, it's a huge problem.  They have a structure right now that won't work, so then they have to adjust the structure in some way, and they need 17 countries to agree to an adjustment.

Now, if you'll remember three years ago when we were meeting here in California, we were having a terrible time getting one country with strong leaders, and Bernanke and Paulson and President Bush had signed on and everything.  We had a terrible time deciding to save ourselves.

Now, when you get 17 countries all in a different position and none with the ability right now to issue their own currency, which is a terrible mistake.  If any of you can ever issue your own currency, don't give it up.  (Laughter.)  If you have a printing press in your basement and it works, just keep -- don't let anybody take it away from you.

Well, they took away the printing press from 17 countries and those countries behaved in significantly different ways.  They were unified as to a currency, and they were disunified as to fiscal policy and culture and manufacturing costs and all kinds of things.  They need to either come closer together so that they become unified in more ways, or they need -- or it won't work.  They will have to go in some way in somewhat separate ways.  We will see whether 17 can do it.  I mean, if you've got the Finns having veto power on something or any one of the other 16 and you need strong, decisive action, which has been lacking, it can be a real problem.

What we had in the United States -- we were out on the edge of the abyss three years ago, but basically the government said through Bernanke and Paulson and Sheila Bair and Tim Geithner, and the President, they said "We're going to do what it takes."  Now, to do what it takes, it takes both the will and the ability.  And we know -- I believed at that time that our government had -- I knew it had the ability, and I believed it had the will.

In Europe, the ability will at some point depend on somebody having the ability to print some money and the will is sort of divided over 17 countries with different constituencies affecting their politicians.  So, it's a very difficult problem.  On the other hand, ten years from now, I will guarantee you, Europe will be living better than it is today.  There will be a better market for our goods, they'll be producing more goods for us.  They will get through it, but how promptly they get through it and how effectively they get through it in the next 12 months or so will depend on generating some kind of a unified structure at the top that is willing and able to act in a big, big way.

We were very lucky, actually, I never voted for President Bush, but he made the most profound statement in all of economics.  I mean, people heard about Adam Smith's invisible hand, and they've heard about animal spirits, and comparative advantage with Ricardo, but nobody topped George Bush when he stepped out there on the front lawn in September of 2008 and said the immortal ten words of economics.  He said, "If money doesn't loosen up, this sucker could go down."  (Laughter.)  That should be etched up there in the pantheon of great economists.

And that message got through to the people that were working with him, and it finally got through to the U.S. Congress, and we came through it.  But Europe has not yet had anybody that can speak with that voice and that can cause the others to march behind them.

CAROL LOOMIS:  And in your timetable, you mentioned 12 months.  Do you sort of see it working itself out in the next few months?  What do you think?

WARREN BUFFETT:  Well, one way or another, it will happen.  Somebody's talking about kicking the can down the road, but there isn't any more road.  (Laughter.)

Markets are stronger than governments.  Markets, when the spread on Italian or Spanish bonds goes up to 300 and some basis points over Germany and you're talking about the same currency and you said all these things are equal, well, the market has told you that this isn't working, they aren't equal.  And it creates its own contagion problems and all of that.

So, markets, you can't stop them, and the only way you can stop them is with new policies.  So, there is not a lot of time.

CAROL LOOMIS:  Well, let me change --

WARREN BUFFETT:  Yeah, let's get a little bad news now.  (Laughter.)

CAROL LOOMIS:  Let me change to something important to this audience, women directors.  I can recall that when you become the emergency chairman of Salomon Brothers almost exactly 20 years ago, Salomon had a board of all men, and you didn't feel any great urgency to change that.

But today, Berkshire has two women directors --

WARREN BUFFETT:  There are probably -- they're certainly among our very best.

CAROL LOOMIS:  Well, that's what I wanted to ask you about, and just how you feel about the entire subject about -- you know, when you're thinking about a director, does it make any difference to you if it's a man or a woman or what is your approach?

WARREN BUFFETT:  Zero.  Zero.  I mean, we went -- one of the things that encourages me about our country, if you think about it, is we had all this marvelous progress in the time we became a country until today.  It's incredible what's happened.  And for over half of that period, we wasted half our talent.  I mean, we just said, you know, we'll park them over there.

And if we got to where we did by 1920 without using half the talent in the country, just think what we can do with all the talent.  So, I'm enormously encouraged about the country.  (Applause.)  And we want to use that talent at Berkshire.

Now, it's just crazy -- talent is too scarce.  You can't afford to be -- discard one able person after another.  Whenever you find some talented individual, they're going to go places.

I hired a young woman about a year and a half ago that actually had gotten experience -- I learned about her because she was one of these college students that come out to see me.  And you know, she's terrific.  I mean, she came from a farm in Kansas, but she's just -- she has a chance to do now what my sisters did not have a chance to do in the 1930s.  I mean, my sisters are as smart or smarter than I am, and my parents loved them with the same degree of intensity that they loved me, but they had different expectations about them, their teachers had different expectations about them.  And just think of the waste that occurred you know for decades and decades and decades.  But that day is largely over.  It's in transformation, but as you look around here, that transformation is coming along.

CAROL LOOMIS:  And on the other hand, this excellence that so much of it is now focused on business, it used to be that women only had two careers that were open to them, really, teachers and nurses.

WARREN BUFFETT:  Yeah.

CAROL LOOMIS:  And do you attribute any of our problems in education to the fact that so many of the really great women are not going into education?

WARREN BUFFETT:  Sure.  When I was in grade school, they might have been retail clerks too, or secretaries and nurses and teachers.  So, half the talent pool was being funneled into these relatively few occupations.  So, I had teachers that were way better than I deserved and that were getting paid way less than they deserved.  But it worked to my benefit at the time.  It was very unfair, but that is what happened.

Incidentally, I set up -- my wife and I, my first wife and I set up what we originally intended to be the largest -- well, the foundation that would get all of the Berkshire Hathaway stock that both of us had.  And that foundation then and now, and it's now I think the seventh or eighth largest foundation in the country, has a majority of its directors are women, and it will stay that way.

CAROL LOOMIS:  So you know --

WARREN BUFFETT:  Carol is one of them.  (Laughter.)

CAROL LOOMIS:  Well, this is the last question for me, and then we'll call for questions from the audience, so get ready.  Last year, Linda Addison asked you who you'd like to have play you when the movie was done.  And you modestly said, "George Clooney."

WARREN BUFFETT:  Yeah.  (Laughter.)  He didn't feel he could carry me off.  (Laughter.)

CAROL LOOMIS:  So then within a year, the movie Too Big To Fail came along and the man who played you was Ed Asner.

WARREN BUFFETT:  I noticed that.  (Laughter.)

CAROL LOOMIS:  Well, do you have anything more to say about that?

WARREN BUFFETT:  Well, I think he did a magnificent job.  He may be watching here, I don't know.  He was not number two.  I'll put it that way.  (Laughter.)

CAROL LOOMIS:  Would you like to say who was?

WARREN BUFFETT:  No, it was a long list.  (Laughter.)

CAROL LOOMIS:  Now, I'll have my usual problem of looking into the audience and trying to see questions.

(Break for direction.)

SALLY JEWELL:  Hi there, I'm Sally Jewell with REI.  Quick question for you, Mr. Buffett:  Seems like when we went with capital gains to a shorter period of time, it sort of fueled the overall inclination to Wall Street and so on to push on quarter-to-quarter profits as opposed to a longer-term view.  And it fueled what you're talking about in terms of the unfairness in the tax rate between the rich and the ordinary, I'll call them.  I'm curious if that is sort of one potentially simple solution, which is lengthening the amount of time it takes before a capital gains can be taxed at a capital gain rate, as opposed to ordinary income that would help address what you're talking about and apply it a little more broadly than just those very, very top people that you referenced and maybe make it more fair for the rest of the country.

WARREN BUFFETT:  Yeah.  Where I would probably do it, like I said, this would only affect 50,000 people in the country.  I would have a minimum tax, something in the 30s, which is what everybody's paying in my office already, but something in the 30s.  I would have a minimum tax on all returns of a million dollars of income or above.  And I might have another simple small break point in that minimum tax at ten million or above.

Like I say, that would not hit a bunch of people.  I mean, some baseball player making 3 million or 15 million gets all his income ordinary income, he would not have a change in his tax rate.  A CEO that's getting it all by salary and bonus would not be hit by that.  But you're right, incentives affect behavior enormously.  And lengthening out the holding period and having a differential rate would change behavior, it just does.

Right now, if you buy a stock -- a Standard & Poor's index future and you hold it for ten seconds and you have a profit, 60 percent of that is called long-term capital gain.  Now, that is not a tribute to logic, that's a tribute to lobbying.  And many of you probably don't even know about that.  Believe me, the people who are getting the 60-percent long-term gain for holding it for ten seconds know about it.  And that kind of distortion is why people are, like me, are able to have very, very low tax payments relative to income compared to the average individual.

And, frankly, you know, we really have a huge revenue and expense problem in this country.  We've got to take expenses, which are 25 percent of GDP down to around 21 or 20.5.  We have to take revenues which are 15 up to 18 or 18.5.  We're going to include everybody in the country in that, virtually, and to exclude a few of the super rich who can contribute maybe $20 billion a year extra I think is a terrible, terrible mistake.  You could do something along changing the differential on when you get long-term gain treatment.

One of the questions I ask managers when I visit a CEO of a company, and it's a public company, I say, "How would you run this company differently if it were private?"  And some of them give me a fairly long answer.  Now, that means they are running it on a less-than-optimal basis because the optimal basis would be if they owned it all themselves.  I get kind of giddy when I talk about owning something all myself, so you'll have to excuse me.  (Laughter.)

But I can truthfully say at Berkshire, the answer would be it would be identical to how we run it.  But that is not the case with most companies.  They run it based on the incentives that they think that either do exist in the market or that they think exist in the market, and they run them less than optimally because of that.

CAROL LOOMIS:  Right over here?

(Break for direction.)

MARY CRANSTON:  Thank you, Mary Cranston.  I appreciate your perspective that things are transforming for women, and I think that is absolutely true.  But one statistic that is very stable, unfortunately, is the number of women directors in the Fortune 1000.  It's been at about 14 percent for ten years.  So, I just wondered if you had any perspectives about that and what you would suggest might be a solution here.

WARREN BUFFETT:  Yeah.  Well, I think it's changing very slowly.  It's going to change at Berkshire.  You know, but it is interesting.  I do get calls.  I won't name any -- I get plenty of calls from -- not plenty, but I've received a number of calls from CEOs who say we need a woman director, you know, and do you have any suggestions.  And what they're really asking me, to some extent, is do you have a woman whose name is quite recognizable that will reflect credit on us and who really won't cause us to do much different than what we're doing now?  (Laughter.)  But I've suggested a few that really don't fit in that category, but they won't find out until they put them on their board.  (Laughter.)

Carol can't do it because she's in media.  I mean, I would have put Carol on the board 40 years ago.  There would be nobody that would be a better director.  I know one or two other in the media field, and they're now allowed to do it.

But nobody knows more about business than Carol does.  And I'll tell you one other thing about her, too, since she's up here and can't hide.  She is smarter at the end of every day than she is at the start of the day.  Now, I don't know of any men I can say that about.  (Laughter.)

But I've known her for over 40 years, and literally, partly because she listens and asks questions and all that, and then she's got a very good mind to process the information she gets.  But she would be invaluable on a board.  And if she were to leave Fortune, which would be a terrible mistake for Fortune, the next day, she would get a call from me to ask her to be on the board.  And there are a couple of others like that too.

Women are still an under-utilized resource.  Nothing like it used to be, but there's just no question about it.  I was lucky -- when I was born in 1930, I won the ovarian lottery.  You know, I was born in the United States.  The odds were 30 or 40 to one against that.  I was born white.  If I had been born black, my life would have been different.  I was born male.  My life would have been vastly different if I had been born female.

So, I had all kinds of lucky things.  But that day I was born, you know, 50 percent of the babies, almost 50 -- a few more boys than girls were born -- 49 percent of the people born in the United States on that day were born with one or two strikes against them.  We don't want a world like that.

I will say this for this country:  We've moved in the right direction over time.  I mean, we started saying that blacks were three-fifths of a person, all these things.  We had all these great aspirations in the Declaration of Independence, but it took us a while to live up to them, and we still haven't fully lived up to them.

CAROL LOOMIS:  Thank you out there for asking that question.  Right here?

QUESTION:  Last year when you spoke to the group, I recall that unemployment was hovering around 8.6 or -7.  A year later, I believe we're around 9.1.  Mr. Buffett, do you have any insights on how we can spur more job creation in our country?

WARREN BUFFETT:  I do, but it won't be very satisfying.  The business has gotten better and better, straight since the summer of 2009, every quarter, and we see it in our business.  You know, our railroad will have record earnings this year, our energy business will have record earnings this year, Marmon, our big diversified operation will have record earnings this year.  We just bought a company, Lubrizol, which will be at or have record earnings.  Iscar, our tool manufacturer in Israel, very big business, will have record earnings.

So, business has come back.  What has not come back, and should not have come back, but needs to come back, is residential housing.  And we were creating two million households -- we were creating two million housing units five or six years ago, and we were creating a million or something like that households.  There are only two factors in that supply and demand equation:  Houses and households.  We kept producing too many houses relative to the number of households.

Now we're down to 500,000 housing units, and we're still creating maybe a million households.  You can't get precise figures on that.  But now we are sopping up the problems -- solving the problems that were created five or six years ago.  But when you produce two million houses and you create a million households, that's not a problem that will go away in a day.  I mean, you cannot solve that in a day or a week or a month.  And the one thing you do not want to do is have a million houses created right today.  You have to sop up that excess inventory.

We took housing ownership up to 69 percent in this country artificially, and now it's coming down somewhat, and it's a necessary correction, but it is not a correction that's over in a day or a week or a month.  It will be over, there's no question about it.  The number of jobs affected by that is enormous.  If we get back to a million housing units, and we will, and that's sustainable, we will -- the unemployment rate will fall a long, long way, because it isn't just construction jobs that are affected.  We have the largest broadloom carpet business in the country, Shaw Carpet.  We are going to be down 8,000 employees on a base of 31,500.  They're not called construction workers, but they tie in with construction.  Our brick manufacturing operation in the southwest, Acme Brick, we were producing a billion bricks a year, we're down to 300 million, half our brick plants are shuttered at the moment.  Nobody buys brick to give gifts at Christmas or anything like that.  (Laughter.)  You've got to build -- unless you get gifts from me.  I mean, I get them wholesale.  (Laughter.)

When housing comes back, we will be employing a lot more people at Acme Brick.  We'll be employing more people at Johns Manville.  So, you will see at a million housing units, you will see a lot of the unemployment disappear.  And I don't think you'll see a lot of it until we get there.

Now, like I say, every day we're moving in that direction.  Today, we're better off on housing than we were yesterday because there were more households created today than there were houses.  That has to go on for a while.  I don't know exactly when it will end.  I thought we would start to see the end by the end of this year, and I may well be wrong, looks like I'm going to be wrong.  But I'm not wrong about what's going to happen.  And when that happens, unemployment will fall a lot, but it won't fall until that happens.  That's a big segment of the American economic pie.  It's a very big segment that is really in depression conditions today.  Not recession conditions, depression conditions.  The rest of the country is doing pretty darn well.  You know, whether it's our candy sales, our jewelry sales, our furniture sales, or whether little drilling bits or electronic components or Dilly bars or you name it, sales are up.  And they're up right to this day.

CAROL LOOMIS:  Now, I think this has to be the last question.  Is there anyone over here?

QUESTION:  First, Carol, I want to commend you for getting your tax rates probably going up, because you probably just got five new job offers, so congratulations.  (Laughter.)

Warren, you've talked about the Buffett Rule for taxes.  I want to know if you have a Buffett Rule for expenses.  And here's the setup for the question:  I love what you said about -- and the clarification of taking the tax rate from 15 percent to 30 percent for a certain group of folks.  Let's say your tax rate does go from 15 to 30 percent, how do you feel about where the money is going?  And if you had to look at the expenses and what you're investing in in America, how would you think about maybe a Buffett Rule for expenses?

WARREN BUFFETT:  Well, we have to cut expenses.  We have to bring them down from 25 percent of GDP down to 21 or 20.5.  Incidentally, you know, we had the Simpson-Bowles Report that talked about that problem, and it got bipartisan support, got 11 out of 18 votes, and it got totally ignored.

The bigger problem is that the 25 -- because of promises we've made, the trajectory is upward.  And so we not only have to have this correction of the upwards trajectory, but then we have to hack away at it in a very big way.  And that's going to affect the American public, all 310 million of us.

In terms of where the money is going, you know, the bigger businesses get -- I see a lot of waste in big businesses.  You know, and there's no question that we could sit here and pick apart all kinds of things in the budget, but we basically have to hire representatives to do that for us, and in the end, they're going to have to decide whatever the GDP of this country is, they're going to have to say what -- we'll take 21 percent of it, and we're going to try and do the most good for the most people while protecting the country and taking care of the people who get the short straws in life and taking care of our infrastructure, taking care of programs to wean us away from dependency on energy.  All kinds of things.  That's a decision we do quit claim to an administration, and to our representatives.

And however it's done, you and I won't like it, but you know, we waste some money at Berkshire, you know?  And I just kind of shut my eyes -- we don't waste it at headquarters, but it's just the nature of large organizations that they get almost always they get less efficient as they get much, much larger.  That's why I try to sort of atomize Berkshire.  I want a bunch of moderate-sized companies operating because they won't get as silly as a huge monolith.

You will not like how they're spending the 21 percent, but you should be electing people that you can count on to use their best judgment to try and figure out if they spend 21 percent of $15 trillion, that they do a reasonably decent job of it.

CAROL LOOMIS:  Well, I'm afraid that's it.  Warren, as always, it's been a privilege to have you here.

WARREN BUFFETT:  Thank you, thank you.  (Applause.)

For more transcripts from the Most Powerful Women summit, click here.

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