Buffett Offers a Recipe for What Makes America GreatBuffett Offers a Recipe for What Makes America Great
Paying taxes is patriotic. Investing is all-American (but beware of scoundrels). And a stable dollar is essential.
February 24, 2025
(Bloomberg Opinion) -- Berkshire Hathaway Inc. released its latest shareholder letter Saturday, and the content is — by and large — the usual timeless Warren Buffett fare. The Oracle of Omaha touches on the importance of corporate transparency; his faith in his designated successor Greg Abel; and the company’s extraordinary $47.4 billion of operating earnings in 2024. But at a time of wild policy upheaval, it’s hard not to also see crumbs of advice for President Donald Trump.
Here are a few ideas that stand out.
Paying Taxes Is Patriotic
Buffett’s latest letter comes at a time when Trump is backing a House plan to extend individual and business tax breaks enacted in 2017 that are set to expire at the end of this year. That and other items included in the proposal would amount to $4.5 trillion of tax cuts over a decade. So it was notable that Buffett used part of his letter to celebrate Berkshire’s record-setting tax payment in 2024, which he held out as a sort of trophy — a sign of success and prudent management:
...[Berkshire] paid far more in corporate income tax than the US government had ever received from any company — even the American tech titans that commanded market values in the trillions. To be precise, Berkshire last year made four payments to the IRS that totaled $26.8 billion. That’s about 5% of what all of corporate America paid.
He continues farther down:
Someday your nieces and nephews at Berkshire hope to send [the US government] even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better.
That’s an important message for a government that’s pairing tax relief for the wealthy with efforts by Elon Musk and his Department of Government Efficiency to slash spending on a seemingly indiscriminate basis.
Saving Is All-American
Tied up in his discussion of taxes are a series of classic Buffett observations on the importance of saving. In Buffett’s telling, America became a great nation because patriotic capitalists saved their money and deployed it wisely.
True, our country in its infancy sometimes borrowed abroad to supplement our own savings. But, concurrently, we needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy the capital thus made available. If America had consumed all that it produced, the country would have been spinning its wheels.
That’s a powerful message for a country that now pays more in interest expense than it spends on its military and has amassed national debt that’s greater than the entirety of its gross domestic product. Trump is paying lip-service to addressing the problem and letting Musk playact as a belt-tightener, but he’s been wholly unwilling to make the hard choices required to really do something — including, for starters, forgoing tax cuts.
Buffett also discusses saving in the context of Berkshire itself. He comes back to an old hobbyhorse of his — his disdain for dividends — which he’s been harping on since at least his famous 1984 letter. In his latest reflection, he says that “Berkshire shareholders have participated in the American miracle by foregoing dividends, thereby electing to reinvest rather than consume.” Investing, he says, is what made America great, and he holds out the stewardship of Americans’ investments as a sacred responsibility.
Here’s the quote (emphasis mine):
The American process has not always been pretty — our country has forever had many scoundrels and promoters who seek to take advantage of those who mistakenly trust them with their savings. But even with such malfeasance — which remains in full force today — and also much deployment of capital that eventually floundered because of brutal competition or disruptive innovation, the savings of Americans has delivered a quantity and quality of output beyond the dreams of any colonist.
(This is pure speculation, but something tells me that Buffett — who has described Bitcoin as “probably rat poison squared” — isn’t a fan of $Trump, the “official” Trump memecoin released last month, which you can use to engage in reckless speculation and transact in Trump-branded sneakers, watches and fragrances.)
Protect the Dollar
Lastly, Buffett used his annual reflection to underscore the importance of a stable currency.
...never forget that we need [the government] to maintain a stable currency and that result requires both wisdom and vigilance on your part.
Currency policy has come into focus in the first month of the Trump presidency, though it’s hard to know exactly what the president wants. On the one hand, he says the dollar should keep its role in global trade and has threatened anyone who would pursue a substitute. On the other hand, several Trump advisers — including Stephen Miran, Trump’s nominee to chair his Council of Economic Advisers — have lamented the ways in which the strong dollar has disadvantaged US exporters. There may even be tentative consideration of ways to weaken it — an experiment that could lead to capital flight and have disastrous economic consequences.
Of course, Buffett has written about currency stability several times over the years, and he often seems to be talking about the way in which inflation erodes the purchasing power of the dollar for domestic consumers. In his 2011 shareholder letter, Buffett memorably penned this zinger: “‘In God We Trust’ may be imprinted on our currency, but the hand that activates our government’s printing press has been all too human.”
On the inflation front, Trump is acting like a malicious kid with a box of matches. At a moment in which Americans are still off-balance from the inflation of the past four years, Trump is levying tariffs and launching trade skirmishes around the world — developments that promise to push up consumer prices and de-anchor household inflation expectations. His tax-cut plans and efforts to limit or even curb the number of immigrant workers in the economy probably won’t help either.
Here’s hoping that Trump finds some of the “wisdom and vigilance” Buffett talks about and rethinks that recipe for resurgent inflation. Meanwhile, as the debate between tax cuts and the government’s duty to vulnerable Americans rages on, Berkshire’s singular success and $26.8 billion in tax payments is testament to what shared prosperity could look like.
More From Bloomberg Opinion:
Buffett’s $325 Billion Cash Hoard Is Early Warning: Nir Kaissar
Buffett Reminds Us of Munger's Greatest Advice: Jonathan Levin
Buffett’s Life Advice Is as Good as His Investing: Beth Kowitt
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Jonathan Levin at [email protected]
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