Warren Buffett’s Deficit Reduction Plan
By Randall Holcombe • Friday July 22, 2011 2:57 PM PDT • 16 Comments
Warren Buffet says, “I could end the deficit in five 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.”
On the one hand, I’m fairly confident Buffett is correct that if such a law were passed, the deficit would shrink to below 3% of GDP. On the other hand, I’m presuming Congress would have to pass that law. How likely is that?
The Republicans are talking about a balanced budget amendment to the Constitution. They also seem to like the idea of term limits (that is, until they’ve actually been elected). Buffet’s plan combines the two ideas. I’d love to see Buffett’s idea go viral, pushing Congress to enact it... but I don’t foresee that happening.
Tags: Budget and Tax Policy, Economics 
Why 3% of GDP? Why not 0%?
Steve Hogan | Jul 22, 2011 | Reply
Deficit will immediately fall to just under 3% of GDP and most likely stay close to 3%. Laws like this will give the impression that deficits at that level are okay, or, sometimes, even necessary. While a deficit at 3% of GDP may be sustainable in the long run, it may not be desirable for our liberties, and our economy.
Subhi Andrews | Jul 22, 2011 | Reply
In actuality, Buffet is a representative of the problem
ralph | Jul 23, 2011 | Reply
Ralph, would you like to elaborate on your statement -> “In actuality, Buffet is a representative of the problem”
Freda | Jul 25, 2011 | Reply
Why is Buffett an representative of the problem?
Jeff | Jul 25, 2011 | Reply
if you are going to make a statement here back it up-everyone on this website is not the kool aid drinking type!!!
michele | Jul 25, 2011 | Reply
Buffet backs the system that Ron Paul is fighting. He does not address the problems associated with a central bank, in fact he is a central player in the scam. He would have us all work harder and longer rather than returning to a commodity backed currency as our constitution demands. I am an FORMER admirer of Buffett. I now scorn him.
John | Jul 26, 2011 | Reply
Buffet made the tour with ” I.O.U.S.A ” , a shameful group of globalist and ex-”federal reserve” ( not capitalized ) puppets. It was a a true wake up call for me that our system is corrupt to the core.
John | Jul 26, 2011 | Reply
Buffet is part of the problem because he supported Obama, legitimizing him to the business community. What is so hard to understand about that?
Bob | Aug 5, 2011 | Reply
I’ve followed the comments on this post with interest. Most are ad hominem attacks on Mr. Buffet, rather than a comment on his idea. Isn’t it possible that regardless of what you think of the man, he might have a good idea or two?
Randall Holcombe | Aug 5, 2011 | Reply
How exactly is stating a correct fact (that Buffett was an early supporter of Obama) an ad hominem attack?
Bob | Aug 5, 2011 | Reply
It has nothing to do with his deficit reduction plan. It’s possible that someone who was an early supporter of Obama could still have a good idea for reducing the deficit. It is ad hominem because it is aimed at the man who offered the idea rather than saying anything about the idea.
Randall Holcombe | Aug 5, 2011 | Reply
Sorry, but that dog don’t hunt. The observation that he supported Obama is unquestionably factually correct, and further it is aimed directly and exclusively at what Buffett actually did, and not any characteristic peculiar to him as a person. It is his actions, and not his person (the “hominem” in “ad hominem”) that are being criticized. Moreover, the very action being criticized (supporting Obama) is the answer to the exact question that was posed earlier in the thread, to wit: “Why is Buffett a representative of the problem?”.
If I were to call you a dolt, that would be an ad hominem attack. Pointing out that what you are saying is wrong, is not. Under your definition, free speech is consumed by political correctness, which, sadly, is the outcome that such an approach is destined, if not designed to produce, and more often than not regrettably does.
Finally, your constant refrain that because Buffett may (or may not) now have a good idea about how to solve a particular problem is a classic non-sequitur when considering the question of whether his prior conduct may have contributed to the very problem he now may (or may not) have a good idea about solving. One is entirely irrelevant to the other. I cannot fathom why that concept is so difficulty to comprehend – especially in fact scenario as stark and simple as we have here, unless you are engaged in an outcome-driven analysis without regard to the full panoply of logical fallacies you must embrace in order to get to the predetermined outcome you desire.
Out here in the real world we are growing quite weary of the tired old bromide that any criticism of what a man has done equates to an ad hominem attack. It rarely actually does, did not do so here, and you calling it so does not make it so.
Bob | Aug 5, 2011 | Reply
OK, Bob. But setting aside the fact that he supported Obama, what do you think of his idea?
Randall Holcombe | Aug 5, 2011 | Reply
Randall:
I don’t think that much of it, to be honest. It violates the maxim that no congress may bind a future congress. More important is that it is utterly unconstitutional in that it changes the qualifications for elective federal offices which are set forth with specificity in the Constitution.
I don’t think that Buffet was intending to be literal, but rather was attempting to make the points that Congress has within its power all the power it needs to do the right thing, it just lacks the requisite “incentive” to muster the “courage” do so. In his scenario, of course, it was nothing more than just naked political survival which would drive the reduction in government spending. In the case of the Tea Party, on the other hand, that same pressure would be applied via a Balanced Budget Amendment. In both cases, please note that it would take something other than just doing the right thing for the sake of doing the right thing for Congress to actually do the right thing.
I believe that Buffet’s enforcement mechanism (or rather the need for one) was his point, not his formula. I don’t know how his numbers add up, and there are a million different formulas that will all get us to where we need to be, but since each and every one of them has some component that involves a drastic reduction in government spending, it is the will and not the way that is missing.
Bob
Bob | Aug 5, 2011 | Reply
a 3 percent gdp is unrealistic even in a surplus of funds. our gdp is still less than france. france has a high gdp because of healthcare. if we focus on healthcare and healthcare wastes we can lower the gdp of us.
Jay | Mar 9, 2012 | Reply