Two Americas Drifting Further Apart

"Former Vice Presidential candidate John Edwards has taken a job on Wall Street. He’s with a prestigious private investment firm on Wall Street. Remember him, John Edwards? He’s the guy always taking about two Americas? Well, I guess we know which America he picked."

–Jay Leno

I generally don’t post on items that aren’t related to investing but I read both these articles today and thought it was a stunning contrast.

The first from Fortune.com about Warren Buffett and Bill Gates playing poker and other nonsense – you’d think you would have more interesting things to talk about when you have the two richest men in the world in the same room.  The article is not worth reading but this point stood out, given the Washington Post article I read this morning –

Warren Buffett on the idea of a flat tax

I wouldn’t support it. We have, in my view, a taxation system that’s much too flat already. If you look at the payroll tax—which is over 12% now, and that applies on the first $80,000 or $90,000 of income—Bill and I pay practically none of that in relation to our income. For the people that work for us, their tax rate in many cases is the same or even higher than my own, since the rate on capital gains and dividends was cut to 15%. What has gone on in this country in recent years is a huge benefit to the very rich and not that much relief to people down below. Frankly, I think that Bill and I should have a higher tax rate on the income we get. We pay less than half the rate that I was paying 25 years ago when I was making a lot less money. They have really taken care of the rich.

And this morning I woke up to this story about Congress trying to fix the budget deficit. Well, their not starting with Warren Buffett —

House GOP Leaders Set to Cut Spending
Leadership Shake-Up Spurred Policy Shift

By Jonathan Weisman
Washington Post Staff Writer
Monday, October 17, 2005; Page A01

House Republican leaders have moved from balking at big cuts in Medicaid and other programs to embracing them, driven by pent-up anger from fiscal conservatives concerned about runaway spending and the leadership’s own weakening hold on power.

Beginning this week, the House GOP lawmakers will take steps to cut as much as $50 billion from the fiscal 2006 budget for health care for the poor, food stamps and farm supports, as well as considering across-the-board cuts in other programs. Only last month, then-House Majority Leader Tom DeLay (Tex.) and other GOP leaders quashed demands within their party for budget cuts to pay for the soaring cost of hurricane relief.

I’m all for low taxes but I don’t think we need to be cutting one of the only safety nets for the old and poor.  After the images from New Orleans, I can’t imagine that cutting Medicare will get much political traction.  I vote Republican but it’s truly stunning how quickly the Republicans have let power go to their heads and lost grips on reality.