Israel has a good lobby but unfortunately regular Americans do not. I equate this more with estate tax repeal and history of Black Americans. Once in the South, the majority of blacks were sharecroppers on land owned by whites many of whom were former plantation owners and state legislatures. Blacks farm these lands and would give tribute to these white owners in the form of a percentage of goods grown off the land and/or money made from it. It was small indeed, not enough to pay for the land which the sharecroppers wanted to own eventually. This went on and on until black sharecroppers saw opportunity to work in Northern cities which is called the 'Great Migration'. The same approach I see in this repeal, the current sharecropper (farmers) most of whom are white middle class are now given the boot due to changes in my opinion to upcoming estate tax repeal. This seems to be a primary indicator that the estate tax repeal will get majority vote. Now this may create a class of angry whites which I hope will not take out their anger on Jews, immigrants and blacks. Certainly Israel will not be on the hitlist but your neighboring Jew and black will be most likely. There will be no 'Great Migration' for whites as salvation in my opinion.

Even one of the richest businessman in America is acknowledging indirectly black American history (sharecropping) has a good lesson to be learned about the economic workings of America. And just like concerned black Americans over their future in this nation it falls on deaf ears.


America's Truth Deficit
By WILLIAM GREIDER

New York Times

DURING the cold war, as the Soviet economic system slowly unraveled, internal reform was impossible because highly placed officials who recognized the systemic disorders could not talk about them honestly. The United States is now in an equivalent predicament. Its weakening position in the global trading system is obvious and ominous, yet leaders in politics, business, finance and the news media are not willing to discuss candidly what is happening and why. Instead, they recycle the usual bromides about the benefits of free trade and assurances that everything will work out for the best.

Much like Soviet leaders, the American establishment is enthralled by utopian convictions - the market orthodoxy of free trade globalization. The United States is heading for yet another record trade deficit in 2005, possibly 25 percent larger than last year's. Our economy's international debt position - accumulated from many years of tolerating larger and larger trade deficits - began compounding ferociously in the last five years. Our net foreign indebtedness is now more than 25 percent of gross domestic product and at the current pace will reach 50 percent in four or five years .

For years, elite opinion dismissed the buildup of foreign indebtedness as a trivial issue. Now that it is too large to deny, they concede the trend is "unsustainable." That's an economist's euphemism which means: things cannot go on like this, not without ugly consequences for American living standards. But why alarm the public? The authorities assure us timely policy adjustments will fix the matter.

Reporters and editors typically take cues from the same influential sources and learned experts in business, finance and government. If the news media decided to cast these facts as the story of the world's only superpower losing ground in global competition and becoming financially dependent on strategic rivals like China, the public would take greater notice. But governing elites would regard such clarity as inflammatory. America's awesome trade problem is instead portrayed as something else - an esoteric technical dispute about currency values, the dollar versus the Chinese yuan. The context is guaranteed to baffle and benumb citizens.

The possibility that the United States can no longer afford globalization, at least not as it now functions, is what opinion leaders do not wish to discuss. A few brave dissenters have stated the matter plainly and called for significant policy shifts to stop the hemorrhaging. Warren Buffett, the legendary investor, says the United States is destined to become not an "ownership society," but a "sharecropper society." But his analysis, and others like it, are brushed aside.

An authentic debate might start by asking heretical questions: Why is the United States one of the few advanced economies that suffers from perennial trade deficits? Why do new trade agreements, despite official promises, always leave the United States with a deeper deficit hole, with another wave of jobs moving overseas? How do the authorities explain the 30-year stagnation of working-class wages that is peculiar to America? Are we supposed to believe that everyone else is simply more competitive or slyly breaking the rules? In the last three decades, American policymakers have succeeded in closing the trade gap with only one event - a recession.

The American predicament is shaped by operating dynamics grounded in the global system, singularly embraced by Washington because Washington originated most of them. At the outset, these practices were both virtuous and self-interested for the United States - encouraging industrialization in poor countries, binding cold war allies together with trade and investment, furthering the global advance of American business and finance. With its wide-open market, America played - and still plays - buyer of last resort for world exports. Its leading companies and banks gained access to developing new markets, often by sharing jobs, production and technology with others. American policymakers also got to run the world.

The utopian expectations behind this arrangement turned out to be wrong, judging by empirical evidence rather than theory. But why wrong? American political debate is enveloped by the ideology of free trade, but "free trade" does not actually describe the global economic system. A more accurate description would be "managed trade" - a dense web of bargaining and deal-making among governments and multinational corporations, all with self-interested objectives that the marketplace doesn't determine or deliver. Every sovereign nation, the United States included, uses its vast arsenal of policies to pursue its national interest.

But on the crucial question of how policy makers define "national interest," Washington stands alone. Western Europe, whatever its problems, manages economic policy to maintain modest trade surpluses. Japan manages to insure far larger surpluses in recessions (its export income subsidizes inefficient domestic employers). China strives to acquire a larger, more advanced industrial base at the expense of worker incomes and bank profits. Germany and Japan, despite vast differences, both manage to keep advanced manufacturing sectors anchored at home and to defend domestic wage levels and social guarantees. When they do disperse production and jobs overseas, as they must, they do so strategically.

By contrast, Washington defines "national interest" primarily in terms of advancing the global reach of our multinational enterprises. Elites are persuaded by the reigning orthodoxy that subsidiary domestic interests will ultimately benefit too. The distinctive power of America's globalized companies is reflected in trade patterns. Nearly half of American exports and imports are not traded in open markets - the price auction idealized by neoclassical economics - but within the companies themselves, moving materials and components back and forth among their far-flung factories. A trade deficit does not show on the company's balance sheet, only on the nation's. In recent years, much of the trade deficit has reflected the value-added production and jobs that companies moved elsewhere.

The United States is thus especially vulnerable to the downward pressures on working-class wages that exist on both ends of the global system. American producers are generally free - and even encouraged by Washington - to shift production to low-wage locations. Companies regularly use this cost-cutting technique as a competitive weapon without regard to the domestic consequences. The practice works for companies and investors, but not so well for a nation.

INDEED, the cumulative effects of retarding labor incomes worldwide repeatedly threatens stagnation or worse for the entire system. Workers, to put it crudely, cannot buy what the world can make. Too much capital leads to the speculative "bubbles" that bounce around the world, visiting financial crisis on rich and poor alike.

At a different moment in history, American leadership might have stepped up to these disorders and led the way to solutions. If globalization is to continue without encountering more crisis and random destruction, governments must together shift the balance of power so labor incomes can rise in step with rising productivity and profits. If the United States is to avert its own reckoning, it must take decisive action to draw firm limits on its exposure to trade deficits, that is, resign its position as the open-armed buyer of last resort. In effect, Washington would also reform its own national interest imperatives so that they more closely resemble what other nations already embrace. Ultimately, American remedial action may protect the global system from its own crisis - the moment when trading partners discover they have just lost their best customer.

But to describe plausible remedies is to explain why none are likely. The webs of mutual interests connecting government, corporate boardrooms and Wall Street are too deeply woven, as are habits of thought among policy makers and politicians. So I do not expect anything fundamental will be altered in time. We are going to find out if the dissenters are right.

William Greider, the national affairs columnist of The Nation, is the author of "One World, Ready or Not."

A snapshot of an interview in which he addresses what sharecropper means...

http://www.cnn.com/2005/US/05/10/buffett/

Man I missed this one. Lou Dobbs is always grilling business and economic people about what plans they have for Americans who are not rich. Everytime I see him, he looks like he is trying to tell his audience that he sees horror in store for us economically but does in a way that cleverly keeps him working and leaving the audience wanting more. This has got to be one of his best interviews this year.

The sharecropper society from Warren Buffet himself part is highlighted in bold in green.


Buffett: 'There are lots of loose nukes around the world'

By Lou Dobbs
CNN
Sunday, June 19, 2005; Posted: 12:32 a.m. EDT (04:32 GMT)
Buffett
Chairman and CEO of Berkshire Hathaway, Warren Buffett


(CNN) -- The legendary Warren Buffett and I sat down last week to talk about his views on the issues and challenges facing the United States and all Americans.

The insight the chairman and CEO of Berkshire Hathaway shares, reaches well beyond the world of business and economics, to politics and society itself. In my opinion, his every word is worth your time.

DOBBS: I would like to begin first with something that may surprise a lot of people about you, and that is your interest in biochemical nuclear terrorism and thwarting what you consider to be the gravest threat to the country, and to the world, in point of fact. How did you first decide to focus your energy on that?

BUFFETT: Well, back in 1945, I delivered a paper that told about Hiroshima. And I didn't know much about physics, but I learned. And there's no question in my mind that the number one problem with mankind is the spread of nuclear knowledge.

And, you know, thousands of years ago we had psychotics and we had religious fanatics and we had megalomaniacs. But about the most they could do was throw a stone at somebody if they wished evil on them.

Today, since 1945, the ability to inflict evil, or harm, on other people in huge numbers has grown exponentially. And right now there's the knowledge around to use nuclear material. And we've got to hope that the wrong people don't get their hands on it.

DOBBS: And to hope is one thing. But we have a government, and there are other governments around the world whose responsibility it is to protect all of us. Is the United States government doing enough, in your judgment, to thwart that threat?

BUFFETT: Well, it's doing more, but there are lots of loose nukes around the world. We've got multiple governments that have the capability. We have lots of chemical and biological agents that are ill guarded around the world and it should be at the top of the list for our government.

DOBBS: And, by saying it should be, it is obvious you think it is not. You have also seen fit to join the Nuclear Threat Initiative and to get into the movie-making business, effectively, with this new movie that's going to come out, "The Last Best Chance." Why did you decide to fund this?

BUFFETT: Well, Sam Nunn heads the Nuclear Threat Initiative. You couldn't have a better person in the world to be sounding the alarm to governments around the world of just what this threat is. And I have supported Sam in heading NTI, bringing out this movie, trying to make people be aware. If they go to LastBestChance.org, they can get a film about it. It's the number one problem of our time. There are people out there that would like to do a lot more than the World Trade Center or the Spanish trains or that sort of thing.

DOBBS: You say people. They are, specifically, radical Islamists. We talk about a war on terror, and I, frankly, have gotten crossways with the Bush administration in various capacities because I have criticized the idea we call it a war on terror. It is really far more than that. It is a war against a specific group, and a widening group, of radical Islamists. Is it your sense that this country, in addition to the nuclear biochemical threat, is doing enough -- period -- in terms of homeland security?

BUFFETT: Well, I don't think you could do enough. It's important to guard what comes into this country, to try to infiltrate at the source, people that may have evil intent toward the country. And it's important that no more countries get nuclear weapons. There are a lot of problems to attack on this.

DOBBS: Absolutely, and one of the things that we hear from people in business, in particular, and others, is that while it's important to secure our borders and it's important to secure our ports, we certainly don't want to interfere with commerce. I have to tell you there is, perhaps, a peevish part of me that says maybe we should interfere we have a trade deficit that is now approaching 6 percent of our gross domestic product, 29 consecutive years of trade deficits. Is this country consigned to be a debtor nation in perpetuity? Is there some reason that we simply cannot emerge from this huge debt, and these deficits, and say we're going to have balanced trade?

BUFFETT: Everyone says that what is going on can't go on forever. We had, you know, $618 billion trade deficit last year, and it's already grown a little bit this year. The standard line is, it can't go on forever, but no one seems to give an answer of what is going to be done about it. We exported $1.1 trillion last year, and we imported over $1.7 trillion. We are running up obligations to the rest of the word, and they are buying our assets at the rate of almost $2 billion a day. And that will have consequences.

DOBBS: Consequences, and not happy consequences, I think it's fair to say. You are, as a businessman, an investor, in point of fact, looking to a declining dollar as an opportunity for the company that you run. How long a window do you see to invest in what are dim prospects for the American dollar?

BUFFETT: Well, I don't know timing. I mean, this is a terrifically strong country. We have a lot of assets to trade, and people will take our IOUs. Right now our net position versus the rest of the world is they own $3 trillion more of us than we own of them, and that number grows every day, and at some point economists talk about a soft landing. Maybe there will be a soft landing, but you know, who knows? And right now Berkshire Hathaway has a portion of its assets in foreign exchange contracts.

DOBBS: You also have a portion in cash.

BUFFETT: That's true.

DOBBS: Forty billion, because you feel right now that not only are prices overvalued in the equities market, even some of your own assets you consider overpriced - $40 billion, an immense amount of money. How concerned are you about this market, this economy? I couldn't have you here, Warren, without talking about the market.

BUFFETT: I just don't find things that are undervalued. We like to get a lot for our money if we're buying marketable securities. So, I'm hoping to put that money out. We are going to announce an acquisition, costs a little less than $1 billion, but I'd rather have it cost $5 or $10 billion, and then we'll get an opportunity to put the money either into marketable securities. We bought junk bonds three years ago. We spent $7 billion in a short period of time. We'd like to buy businesses. So, I'm not happy with $40 billion, but, one way or another I think we'll manage to invest it.

DOBBS: The rest of us ... when Warren Buffett holds cash and says he doesn't see opportunity, it sets off alarm bells for everyone, as you well know. You well know that. The fact is you bought a small percentage of a Chinese oil company, for example.

BUFFETT: Right.

DOBBS: You're investing -- I think that's the correct way to put it -- in currencies, not the dollar. The fact of the matter is, you have described what is happening in this context: tremendous deficits, rising debts as a result of budget deficits, trade deficit, those mounting debts that this country is taking on.

You are talking about something you refer to as the sharecropper society and economy. What does that mean to you, because the rest of us, those are strong and powerful words for all of us but especially for those of us who are concerned about the middle class in this country, and who want this country to be all it is aspired to be.

BUFFETT: Well, if we keep doing what we're doing -- and we have shown no signs of slowing down -- the world will own a substantially greater percentage of this country or have our IOUs in the form of government bonds 10 years from now than now, and the cost of servicing the debt or the cost of paying dividends on the ownership will mean that we will send abroad a few percent of our GDP every year just to service debts that arose from the over-consumption that has taken place currently. So, our sons will pay for the sins of their fathers, to a degree. Now, we'll always have a rich country. This is the best country in the world.

DOBBS: Absolutely.

BUFFETT: But if the rest of the world has $10 trillion of our assets instead of $3 trillion, we will be shipping some of our product abroad every year merely to service the debt that we've run up.

DOBBS: And do you see this as an irremediable situation, a direction that cannot be avoided now?

BUFFETT: It can be addressed. We'll be taxable.

DOBBS: Warren, we're talking about fixes for the fix we're in. So much of what we discuss in our broadcast and report on, we hear from the, if you will, political elites, that there is just simply nothing that can be done. There's a lack of determinism, it seems to me, in this country. What would you do to fix, first, the trade deficits that are, as you say, mortgaging the future of our children?

BUFFETT: Well, I wrote an article 18 months ago in "Fortune" about import certificates. Just a change in the value of the dollar is probably not going to do much as we've seen in the last three years. I mean, the euro's gone from 85 cents to $1.29, and the dollar's fallen against many currencies, and the trade deficit keeps ballooning, so I think that we have to address it in some way that brings exports up and imports down and this import certificate idea would address that.

DOBBS: It's certainly one of the ideas. Fred Bergsten, one of the most well known free trade economists, has actually started calling for tariffs on China. I'm concerned about free trade. And I think it's a hollow mantra for failed policies, but I'm not ready to call for broad tariffs, are you?

BUFFETT: I wouldn't call for them on any specific country. The import certificate approach does not go after any industry, it does not go after any country, but it lets the market adjust in a way that brings our trade closer to balance. And I think at a higher level of exports than currently exist.

DOBBS: Are you surprised when you focus on the two deficits we just talked about, the trade deficit, and the budget deficit? The budget deficit is 3.6 percent of our GDP. The trade deficit is reaching just almost 6 percent of GDP. And the president is talking about reforming Social Security. Does that surprise you?

BUFFETT: Well, it's an interesting idea that a deficit of $100 billion a year, something, 20 years out, seems to terrify the administration. But the $400-plus billion dollars deficit currently does nothing but draw yawns. I mean the idea that this terrible specter room looms over us 20 years out which is a small fraction of the deficit we happily run now seems kind of interesting to me.

DOBBS: In point of fact, the Congressional Budget Office, which is considered to be the bipartisan objective standard of such things, has research that suggests that the deficit in Social Security would be only 0.4 percent of our GDP over 75 years as compared to the other large deficits percentages that associated with trade in the budget deficit. Do you have, we're talking about fixing the fixes we're in, a quick answer for Social Security?

BUFFETT: I personally would increase the taxable base above the present $90,000. I pay very little in the way of Social Security taxes because I make a lot more than $90,000. And the people in my office pay the full tax. We're already edging up the retirement age a bit. And I would means test ... I get a check for $1,700 or $1,900 or something every month. I'm 74. And I cash it. But I'll eat without it.

DOBBS: You will eat without it. So will literally more than a million other Americans, as well. Means testing, the idea of raising taxes, the payroll tax. In 1983, Alan Greenspan, the Fed chairman, he had a very simple idea: raise taxes. That's what you're saying here.

BUFFETT: Sure. But I wouldn't raise the 12-point and a fraction payroll tax, I would raise the taxable base to above $90,000.

DOBBS: That's a progressive idea. In other words, the rich people would pay more?

BUFFETT: Yeah. The rich people are doing so well in this country. I mean, we never had it so good.

DOBBS: What a radical idea.

BUFFETT: It's class warfare, my class is winning, but they shouldn't be.

DOBBS: Exactly. Your class, as you put it, is winning on estate taxes, which I know you are opposed to. I don't know how your son Howard feels about that. I know you are opposed to it.

At the same week the House passed the estate tax, Congress passed the bankruptcy legislation, which they had the temerity to call bankruptcy reform, Democrats and Republicans passing this legislation, which is onerous to the middle class. Half of the bankruptcies in this country take place, because people fall ill, serious illnesses result in bankruptcy. Nearly half of the people involved. How do you -- you have watched a lot of politics. What is going on in this country?

BUFFETT: The rich are winning. Just take the estate tax, less than 2 percent of all estates pay any tax. A couple million people die every year, 40,000 or so estates get taxed.

We raise, what, $30 billion from the estate tax. And, you know, I would like to hear the congressman say where they are going to get the $30 billion from if they don't get it from the estate tax. It's nice to say, you know, wipe out this tax, but we're running a huge deficit, so who does the $30 billion come from?

DOBBS: And it is, it's $300 billion in lost tax revenue over the course of the next decade if the estate tax goes through.

You say the rich are winning. The rich are winning in some cases, because they are cheating. The corporate corruption scandals, which burst full upon the country at the end of 2001, Sarbanes-Oxley, new regulations, new efforts to achieve transparency. Has enough been done? Or does more need to be done?

BUFFETT: I think the climate has been changed on that for the better, Lou. Mae West said, "I was Snow White but I drifted." Well, I think corporate America drifted some. But I literally think what has happened has changed the culture somewhat, and for the better. I think that's probably more important than the laws.

DOBBS: Yet we hear the Business Roundtable, the U.S. Chamber of Commerce, whining that it's so onerous, so difficult to obey the law and to meet these regulations. What's your reaction?

BUFFETT: Well, right now corporate profits as a percentage of GDP in this country are right at the high. Corporate taxes as a percentage of total taxes raised are very close to the low.

DOBBS: Historically we're talking about.

BUFFETT: Historically. So, you know, corporate America is not suffering, I'll put it that way.

DOBBS: Corporate America is not suffering. In point of fact, those same organizations that I just mentioned, the U.S. Chamber of Commerce and the Business Roundtable representing some of the largest companies are saying "You tax us, you are taxing our consumers, our customers." Do you think corporations in this country should be paying more? Taking some of that burden?

BUFFETT: I think that ... you have seen companies be able to repatriate earnings with a very small tax that were taxed at very low rates abroad. Corporations are doing better in the total tax picture than the people I'm going to walk by on the street when I leave here.

DOBBS: And some of the people you are going to meet are going to say, perhaps this evening and otherwise in business circles, are going to say, Warren, what are you talking about, raise our taxes.

BUFFETT: They are still friends of mine, Lou.

DOBBS: You are going to get along. I know you are going to get along.

BUFFETT: Is there anyone I have forgotten to offend?

DOBBS: Let's give you another opportunity. And I'm going to bring up General Re and the fact that today the FBI announced that it is entering the investigation into the insurance industry. General Re obviously under investigation. A broad number of investigations -- AIG.

BUFFETT: A couple dozen, all told.

DOBBS: Right. Formally run by Hank Greenberg, until a few weeks ago one of the most respected businessmen in the country. Do you think this widening investigation is appropriate? Do you think it's necessary? And are you concerned about what it will reveal?

BUFFETT: I think it's fine to be done. I mean, we'll find out what has taken place. And some things that were actually legal a few years ago will probably be found to be distasteful. There will be things that are found that were probably illegal. But there's nothing wrong with looking in the insurance industry just like the investment banking industry or some of the other things that have been looked at.

DOBBS: As you look over this society you know, I'm struck by the fact that your board averages right at 70 years.

BUFFETT: I bring up the average, too.

DOBBS: You do. But have you some colleagues who boost it more than you.

BUFFETT: Right.

DOBBS: Including Charlie Munger.

BUFFETT: Right.

DOBBS: But I was struck by the fact of the age of that board. And I know a lot of people would want to talk to you about succession and everything else. That's not my interest. My interest is we have 77 million Americans who are retiring. Do you think there's a crisis per se in retirement in this country? Or do you think that this is a healthy and perhaps important change where people are both living longer and contributing longer? And that we should look at this as positive rather than a negative?

BUFFETT: Well, it is a positive. But people age in different ways. I mean, we have three or four managers in the 80s, but we had a few other managers that we had to let go much earlier than that.

So, it's hard to generalize. The people we have on our board -- we don't have anyone on the board that doesn't have at least 4 million of stock. They bought it in the open market, they weren't given it by restricted stock or options. And they are owner oriented. They are business savvy. They are all-star crew.

DOBBS: I want to close with your thoughts about the future here. You said this is still the richest economy. Let me ask you straightforward: Are you optimistic about the prospects for a country that's been built on a middle class and those who have aspired to it? Do you see the same opportunity going forward? Are you heartened or concerned?

BUFFETT: I think it's a terrific country, Lou. You never want to go short on America. The nuclear, chemical and biological threat is real. And it's one we should attack. But this country -- our children and our grandchildren are going to live better than we do in this country. No question about it in my mind.

DOBBS: And that's a pretty good mind from which to hear that forecast. Warren Buffett, thanks for being here. Appreciate it.

BUFFETT: Thank you, Lou.