WSJ: Schwarzenegger Enlists Buffett To Supply Financial Muscle
Whether the pun was intended or not (Ah-nold being a bit muscular himself) that headline likely spells a knock out punch for Davis.

Yesterday, Schwarzenegger scored an enormous coup landing longtime Dem Warren Buffet as his economic advisor. That turns what was going to be an electoral circus into a legitimate race; It likely spells a knock out punch for Gov. Davis. Buffett is not only one of the most respected investors of all time, he is something of a Deity to his followers. Down to Earth, straight-talking Buffet turns Schwarzenegger into a very credible candidate – who also happens to have the best name recognition in California.

Ironically, this weeks Barron’s cover, Buffett’s Last Chapter declared Warren’s focus would remain maximixing the firm for the rest of his days . . . Apparently, that pronouncement was a bit premature.

Buffett’s move has significant implications for the 2004 Presidential race. The WSJ noted:

Mr. Buffett is often identified with Democratic causes, however, and his campaign role may raise more questions than it answers for California Republicans. He has been a critic of GOP fiscal policy, denouncing President Bush’s dividend tax cut and leading the charge against favorable tax treatment for stock options. Though he has supported Republican candidates in his home state of Nebraska, he has contributed to the campaign of Sen. Hillary Rodham Clinton of New York and the presidential bid of Florida Sen. Bob Graham, both Democrats.

Buffett commands respect in the financial world, but his critique of the White House economic plan fell on mostly deaf legislative ears. He is potentially one of the most devastating critics of the present economic policies. In our opinion, Buffet’s joining Schwarzenegger has less to do with California politics, and everything to do with ascending to a national political platform. The lack of traction his economic observations received in the political world had to be part of his motivation for joining the California circus.

Buffet’s unbelievably success has been about making the difficult calls. Buffet is all about postponing fun, and taking your medicine now. He has a very, very long time horizon. We can expect to hear about Buffett’s own economic agenda of value, moderation, anti-tax giveaways over the next 12 months. That likely means spending cuts, tax hikes and service cut backs for California. And because he’s Buffett, he may very well get a free pass on them. If Warren says we need a tax increase, well then, Hell, we must need a tax increase. California may not realize it yet, but they are staring down the barrell of some bad tasting fiscal medicine. Don’t expect Warren to sugar coat the nasty stuff (They’ll be healthier for it in the long run),

California just got religon, and I’ll betcha they don’t even know it yet.

This makes Schwarzenegger a key pivot in the rhetorical arguments leading to the 2004 Presidential race. Yesterday, the WSJ discussed the Dems tactic of charging political “Mulligan.” I still don’t know how that plays out in he centrist hearland. But the California races now has national implications. The WSJ’s Gerald Seib (deputy chief of WSJ Wash D.C. bureau) notes:

How the two parties handle popular anger at California’s big budget deficit, and the question of whether taxes need to be raised to deal with it, may shape the national debate over the similarly burgeoning federal deficit. -In the California Recall Mess, Democrats See National Message, WSJ.

With Warren involved, that’s even truer today than it was yesterday. Stay tuned . . .

Category: Finance, Politics

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4 Responses to “The Legitimator!”

  1. CalPundit says:

    Arnold Update

    ARNOLD UDPATE….A few miscellaneous musings about the Arnold campaign: Hugh Hewitt claims that “some Sacramento whispers have AS’s internal polls approaching 60%.” That sounds like a big stretch to me, but I thought I’d pass it along anyway. Armed Lib…

  2. section321 says:

    Acutally, Buffet came out last night and said that Calfornia’s property tax system needs to be reformed, and he wasn’t talking about tax cuts.

    This will put Republicans in a very difficult spot. If Arnold’s top economics guy is advocating tax increases that wrecks the position of ever other Repub in California. Bill Simon and Tom McClintock are competing to see who can say the words “tax cut” more frequently. Tax cuts are the nationwide rallying cry for Repubs.

    If Buffet comes in and saves California by saving taxes Repubs will will be a weird spot. They’re usual reaction in the position is the get nasty.

    This could be very interesting. Also, not too happy that George Schultz is joining the Conan campaing.

  3. Not Geniuses says:

    Why I might vote for Arnold

    It’s a strange day when I start leaning towards the Republican candidate…and an even stranger one when he’s the utterly loathsome Arnold Schwarzenegger (could his name be any harder to spell?). But today is that day. Let me elaborate. We…

  4. Good point. I’m in the middle of addressing this here:

    Bad Medicine, part I
    http://bigpicture.typepad.com/comments/2003/08/bad_medicine_pa.html