The Buffett Disaster

If Arnold Schwarzenegger doesn’t move swiftly to repair his blunder in making Warren Buffett his chief economic adviser, he is likely to have one of the briefest political careers in American history.

Buffett, of course, is the second-richest man in the country and a brilliant investor. He is also a liberal and a registered Democrat, famous for his belief that taxation should be used to redistribute wealth in America.

Despite this, conservative California Republicans were inclined to cut Schwarzenegger some slack when he picked Buffett to advise him on economics. The actor himself is reputed to be a moderate Republican, but so far his only response to questions on policy matters has been “I’ll get to that later”-suggesting that his positions are likely to be carefully chosen and designed not to offend his core Republican constituency too much. If he wants to decorate his kitchen cabinet with a spectacular business success like Warren Buffett, well, what harm was there in that?

But Buffett hadn’t been in the job a week before he called in a Wall Street Journal reporter and told him he thinks property taxes in California are much too low. As an example, he cited a lavish house he owns in Laguna Beach, the tax on which is about half of what he has to pay on his modest home in Omaha, Neb.

Buffett stopped just short of saying that he thinks Proposition 13, the cap on real estate taxes that California voters enacted by referendum in 1978, ought to be repealed.

He might just as well have gone looking for a gas leak with a lighted match.

Prop. 13 is still hugely popular with California voters, and conservative Republicans, in particular, regard it as Holy Writ. If Schwarzenegger were to come out for repealing it, he would have about as much chance of winning the recall election as smut peddler Larry Flynt.

Schwarzenegger’s other advisers quickly showed that they realized the danger of Buffett’s remark by moving to put a lot of distance between it and the muscular candidate.

Buffett is too large a figure to be relegated to a corner like a naughty boy. If he is indeed going to be Schwarzenegger’s chief economic adviser, and is going to be spiking the candidate’s beer with poison like that, an awful lot of California conservatives are going to get off the train. The only way to insure that Schwarzenegger is not fatally damaged by Buffett’s blunder is to arrange, tactfully, for Buffett to withdraw (as if it were his idea) from his position with the campaign.

At first blush it may seem incredible that a man as astute as Buffett could fail to realize the political dynamite involved in repudiating Prop. 13, or imagine that somehow his own position on the subject could be carefully distinguished from Schwarzenegger’s. But, as Voltaire pointed out, “The law sharpens a man’s mind by narrowing it,” and a lifetime of specializing in picking shrewd business investments may leave a person as naive as a newborn babe on politics or other matters.

With seven weeks to go, Arnold Schwarzenegger is-for all practical purposes-a blank slate on which he and his advisors can write any message they wish. But if they don’t repudiate Buffett’s attitude toward Prop. 13-clearly, forcefully and fast-whatever else they write there isn’t likely to matter much.