Warren Buffet Chain Letter

Jun 2, 2005
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#1
http://blogs.wsj.com/totalreturn/2011/10/28/the-warren-buffett-chain-letter/

There’s a good chance your email inbox or Facebook news feed has recently been spammed with a chain letter that contains a novel idea attributed to Berkshire Hathaway billionaire Warren Buffett to eliminate the deficit.

To wit: Make a Constitutional amendment that would make all members of Congress ineligible for re-election if the deficit exceeds 3% of gross domestic product. That way, the argument goes, congressmen would have a strong incentive to make compromises and balance the budget.

Part of the quote is real. In July, he told CNBC’s Becky Quick:

BUFFETT: I can— I can— I can end the deficit in five minutes.

QUICK: How?

BUFFETT: You just pass a law that says that anytime there’s a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. Yeah. Yeah. Now you’ve got the incentives in the right place, right?

In an email, a Berkshire spokeswoman said that the company has heard from quite a few people who have received the chain letter, but that (and this is a shocker) Buffett had never suggested someone start one. In fact, the spokeswoman wrote that he never even meant it as a serious proposal and just wanted to emphasize the importance of proper incentives.

Buffett’s CNBC quote was apparently tacked onto an earlier chain letter that had been circulating since January.

Putting aside the Buffett connection, would setting up such an extreme incentive be a good plan?

I’ve spoken to economists several times who have (jokingly) proposed radical incentives to encourage good behavior. Want everybody to obey the speed limit? Impose the death penalty for being caught.

In fact, perversely extreme incentives were the subject of an episode of “Star Trek: The Next Generation” a couple decades ago. A young Wesley Crusher falls into a flower bed on a foreign planet and is sentenced to death by the natives. The race that lives on the planet explains that imposing the death penalty for every law they have ensures that no one ever breaks them.

Making sitting congressmen ineligible to run might be akin to an electoral death penalty. But if voters really care so much about deficits, why not just vote them out at the next election? Do you think there has to be a Constitutional amendment to make it happen?

Here’s the text of the chain letter. It lists several other proposed changes too.

Warren Buffett, “I could end the deficit in 5 minutes,” he told CNBC. “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 re-election. The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971…before computers, e-mail, cell phones, etc. Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land…all because of public pressure.

Warren Buffet [sic] is asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise. In three days, most people in The United States of America will have the message. This is one idea that really should be passed around.

*Congressional Reform Act of 2011*

1. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.

2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term’s [sic], then go home and back to work.

If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Maybe it is time.

THIS IS HOW YOU FIX CONGRESS!!!!! If you agree with the above, pass it on.
A guy just posted it on Facebook so I looked it up. It's actually not a bad idea, whoever put the whole thing together.

Idealistic and slim to no chance of success? Sure, but I love the concept.
 

Motor Head

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#2
Of course the adoption of these new rules will be voted down in Congress. The gravy train has biscuit wheels and nobody wants to get off that.
 

Josh_R

Registered User
Jan 29, 2005
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#3
Many of these new rules are in response to fallacies or really old practices.


1. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.

2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term’s [sic], then go home and back to work.
1. There is not "tenure" in Congress, they have to be reelected to come back, no matter how long they have served. Congress has a pension program just like most other federal employees. It isn't really fair that if a Congressman serves faithfully and is reelected by his constituents for 20 years, to tell him that he cannot retire and that he has to pack up his shit and leave with nothing; unless you are willing to tell every other federal employee (including the military) the same thing.

2. Congress has contributed to Social Security since 1984.This rule would also be highly unfair. To take all the funds from the congressional retirement fund and give them to Social Security would be like telling you that you have to dump your 401k and the ONLY retirement funds you can have are those from Social Security (which would either bankrupt the country or leave shitloads of people in poverty). http://www.snopes.com/politics/socialsecurity/pensions.asp

3. What's the difference in allowing Congress to "purchase their own retirement" out of their own paycheck and allowing Congressmen to pay into a group Congressional Retirement Fund? See rule 2 which does away with the congressional retirement fund.

4. Congressional pay has actually only risen by an average of $3800 per year in the last 30 years, which is already pretty close to 3% per year ($3800/ $114000 = .0333 * 100 = 3%) http://www.thecapitol.net/FAQ/payandperqs.htm

5. This rule is also pretty much nonsense. Most Americans receive their health insurance from their employers and they pay a portion of the premium every month. We are Congress' employers and Congress pays a portion of their own health insurance costs as well (about 15%). http://www.factcheck.org/2009/08/health-care-for-members-of-congress/

6. I don't know what all these laws are that Congress imposes on the American people that they are exempt from. Since the passage of the Congressional Accountability Act of 1995, Congress really isn't exempt from any laws.

7. This is basically just saying that all retired Congressmen would lose their health insurance and pensions. No one in their right mind would insist that some old ass congressman that served his country honorable should just lose his retirement and health insurance.

This list is mostly a response to a bunch of fallacies and straw men. This isn't a third world country where law makers never follow the law and give themselves ridiculously lavish benefits.
 
Jun 2, 2005
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#4
I think the idea is more about making congressional service a service rather than the reward at the end of a career. Let's face it, most congressmen and senators live pretty lavish lives off the tax-payers, and they're usually career politicians who don't know shit about shit except how to get elected.
 
Jun 2, 2005
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Dallas
#5
But yeah, I didn't fact check it or really even give a shit about the rules themselves. I was more posting it as an interesting thing that's going around.
 

CousinDave

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Dec 11, 2007
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#6
I think the idea is more about making congressional service a service rather than the reward at the end of a career. Let's face it, most congressmen and senators live pretty lavish lives off the tax-payers, and they're usually career politicians who don't know shit about shit except how to get elected.

The ones who are already rich do, but for the ones who don't come from money they live a rather modest life, especially if they have a family. Maintaining two households with one being in one of the most expensive real estate markets in the country is very difficult on $175k a year and if you want to send you kids to a decent school in the DC area, better hope the wife makes a decent amount of money.

This is why there are so many millionaires in the Congress, nobody else can really afford the job, but at the same time they can't cry about $175k a year as that's more than 2X what most people make, of course most people don't have to pay beltway cost of living.



I think in this day and age members of Congress don't need to be in DC, they can vote electronically, committee meetings can be held online, etc...

That would sure make lobbying a lot more difficult - 535 members of Congress spread out over the entire country vs. all of them in one place at the same time.
 

Don the Radio Guy

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#7
I can only imagine the level of corruption that would stem from electronic voting.
 

Josh_R

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Jan 29, 2005
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#8
I think the idea is more about making congressional service a service rather than the reward at the end of a career. Let's face it, most congressmen and senators live pretty lavish lives off the tax-payers, and they're usually career politicians who don't know shit about shit except how to get elected.
And all you have to do is vote them out...
I am actually related to my Congressional Rep by marriage. I can't say that I actually know her, but from what I know of her, she is a normal local girl. She did not come from money and she just worked her way up from local government up to U.S. Congress. I also saw her doing her own grocery shopping at the local Giant Eagle supermarket. I think the idea that most reps and senators live lavishly off the taxpayer is somewhat exaggerated. Of course you have some like Pelosi who use Air Force jets to fly home all the time and run up huge tabs. I would imagine that most of the representatives that we consider to be rich were already that way before they came to congress, and those that get rich in office are probably capitalizing on their fame more than they are receiving money from us.
 

Norm Stansfield

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Mar 17, 2009
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#9
First off, the "deficit of 3% of GDP" is not a number he came up with. It's the deficit limit used by Euro Zone countries. And it's not working, because 3% of GDP every year adds up like a motherfucker.

Second, government doesn't work the way the market does. Most politicians are not in it for their fucking salary. They're in it for the power, which is worth much more than their salaries and pensions. So that incentive wouldn't work. A constitutional amendment on the other hand would.
 

Motor Head

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#10
How many years to get a Congressional pension? 20-30 years?

Nope, 6 years. The civil servant in me envies anybody that can get a nice fat pension after putting 6 whole years in. Sorry, but I have to work 3 times that long to qualify for a 50% pension and a shitty health plan. I do agree with Josh though, throw the bums out if they are apart of the problem and not the solution. Ah what do I know, just another hamhead state employee.
 

NuttyJim

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Feb 18, 2006
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#11
How many years to get a Congressional pension? 20-30 years?

Nope, 6 years. The civil servant in me envies anybody that can get a nice fat pension after putting 6 whole years in. Sorry, but I have to work 3 times that long to qualify for a 50% pension and a shitty health plan. I do agree with Josh though, throw the bums out if they are apart of the problem and not the solution. Ah what do I know, just another hamhead state employee.
You get to be a complete piece of shit for 2 terms and get all that. A Junior Senator makes in the neighborhood of $120,000+ a year w/o benefits. Definitely need term limits. And if you wanna work for and represent the people so badly, then take a salary and benefit cut.