Joseph Mason is the Moyse/LBA Chair of Banking at the Ourso School of Business at Louisiana State University and a senior fellow at the Wharton School of the University of Pennsylvania.
While the administration continues to push on the "Buffett Rule," it is important to remember that there are several Buffett Rules emerging from the executive office.
Of course, the most recognized is the one relating to income taxes. It is apparent that the rule will affect Warren Buffett himself only marginally for two primary reasons. First, his income is primarily in the form of capital gains rather than wage income. Second, recall that he gave away the preponderance of his wealth to charity some time ago.
Of course, such moves are typical of the "0.001 percent-ers," as distinguished from the "1 percent-ers," who are often still working their way up the ladder. The term for those on the lesser rungs, as famously distinguished by Chris Rock, is that while they may make what seems like a lot of money, they are not "wealthy." The more precise demographic term is HENRY (High Earner Not Rich—much less wealthy—Yet). In other words, the position of those on the lesser rungs of the ladder is just as tenuous as that of most other wage earners. Without having socked away retirement savings, those individuals are just as susceptible to a downturn as you and me.
The gap between Warren Buffett and the rest of America (even the rest of the "1 percenters") is wide, indeed. But wider than many people can even fathom.
Warren Buffett has direct access to the White House. As I discussed previously, the announcement of the "Buffett Rule" as a plank in the Obama campaign was accompanied by the worst week on markets in 2012, to date.
In January 2012, Warren Buffett joined the White House in publicly opposing the Keystone XL pipeline, which would bring oil produced in regions ranging from South Dakota to Canada to the major U.S. distribution hub in Oklahoma. While many might like to think he was acting out of environmental altruism, Mr. Buffett's Berkshire Hathaway Inc. owns Burlington Northern Santa Fe LLC, which transports oil out of those regions in lieu of the pipeline.
Just doing some simple math, the pipeline was planned to transport 700,000 barrels per day from the region, which at a price differential of about $3 per barrel between rail and pipeline transport, using prices for freight on board in North Dakota, amounts to a potential additional revenue of $2.1 million per day due to the lack of energy market infrastructure. By the Chris Rock definition, opposing the Keystone XL pipeline is the savvy move of a "wealthy" man.
But there's more. Last week it was revealed that NetJets, another Berkshire Hathaway subsidiary, has spent over $1 million lobbying Congress over the past three years to exempt it from an airport user fee, the 7.5 percent tax that you and I pay when we buy a ticket on a flight. The money funds the air traffic control system, which is horrendously underfunded and outmoded. Oh, and NetJets is suing the IRS to recoup fees it paid in the past, as well. The exemption is estimated to benefit NetJets' and other fractional jet ownership customers some $83 million a year.
Now, I don't want to be partisan in this debate. The Republicans do this as much as the Democrats. What I oppose is the "in your face" attitude of it all. Such dealings have gone on under the table for decades, if not centuries. But when an administration puts the dealings in the headlines and gets positive publicity, and Warren Buffett trumpets his moves in a tone of high-mindedness and good intentions, and the voting public just nods in acquiescence and hands over the money, I have to wonder what our country is made of. It is those members of society that worship the wealth, and the wealthy, that create society's problems. Not wealth—or even income—per se.