LIU: A millionaire's tax?
BUFFETT: No, but it's not a millionaire's tax. It's a tax of ultra-rich income.
LIU: Right, that's yours.
BUFFETT: With low rates.
LIU: That's yours.
BUFFETT: But President Obama's version is is taxing those who make a million or more. But Governor Perry says this, quote, "Warren Buffett doesn't know what's going on in the places where job creation is at zero."
What do you say to that?
BUFFETT: Well, I think it's a real problem of society. But it will not be heard (ph) in the least by taking people that are making the top 400 taxpayers in 2009 average $227 million of income per person.
They pay 21 percent rates on average. Now, some of them pay 35 percent rates but that's mean a lot on who paid 15 percent or less. The economy will not be hurt at all by taxing those who paid very low rates a higher rate.
Creating jobs - you know, we have billions of cash at Berkshire that we're looking to put out to satisfy demands of customers. And that creates jobs. Cathy has added a few jobs.
Not very many but her business has expanded. So jobs are created by demand. And the capital to supports demand is huge. There is a trillion-plus at the Federal Reserve left by banks earning a 41 (ph) percent.
They don't want to leave it there. They want to push it out into businesses that need it. But right now, well, there has been some increase in need. But it isn't galloping.
LIU: Cathy, I mean, in terms of demand, you know, obviously, you know, you would agree with Warren Buffett is saying, but what are you seeing through your businesses and (ph) also when you talk to other Berkshire managers within default (ph)?
BARON TAMRAZ: In terms of demand for adding jobs?
LIU: Yes.
BARON TAMRAZ: You know, I think it depends what industry you're in. Certain industries are adding jobs. There are industries that are suffering - housing, et cetera.
They're not going to be adding so quick - no products behind that. but a business like ours, you know, we're on a global expansion.
We're going to be adding jobs.
LIU: Well, where are you going to put your capital work exactly?
BARON TAMRAZ: My capital gets put to work in R&D. And then we create those products and then we expand our markets and then we, you know, expand people power, women power.
LIU: And talking about putting capital to work, Warren, you know, we, of course, had that news out earlier this week about the share buyback program.
BUFFETT: Right.
LIU: The first in, what, 40 years for - I mean, in fact, you've never even had a share buyback program at all at Berkshire.
BUFFETT: Well, we announced one...
LIU: In 2000 (ph)...
BUFFETT: ...and then the stock moved up immediately. So we didn't get to implement that. But we've always felt it's wise for a company.
Once it's fulfilled the needs of its business, if their stock is selling below its intrinsic goods and its value to repurchase shares, most of the time - and we think it ought to be very clear that they're selling cheap.
Our board has come to that conclusion which I agree with wholeheartedly. And if the stock is cheap, we will buy it in. If it isn't cheap, we won't buy it in.
It won't keep us from investing billions and billions and billions in plant equipment, in new acquisitions. We just announced an acquisition yesterday - Princeton Insurance (ph) for $400 million.
LIU: Right.
BUFFETT: We're ready to buy lots of things. And we've bought $4 billion net of common stocks in the third quarter, not counting BofA.
LIU: Well, but they suggested, though, that elephant acquisition you talked about in your shareholder's letter is not really out there right now.
BUFFETT: Well, they're very seldom out there. I mean, you know, we get lucky every now and then to make a really big acquisition. It could come tomorrow.
It could come three years from now. It will come at some time. But if an elephant comes along, we're ready.
LIU: Well, because what we're trying to get into your mind, right, I mean, even in your most recent shareholder's letter, you had said, look, that you are proud of the track record at Berkshire Hathaway, that you've never used your capital for a dividend or a share buyback program.
And so, you know, I understand what you're saying about your shares being undervalued. But why now, though? What exactly is the catalyst for this?
BUFFETT: Because they're more undervalued now that they've been - I mean, it's a very simple price to value calculation. I buy stocks because I think they're cheap.
And when I think our own stocks are cheap, I will buy it. We're (ph) buying other stocks and we think they're cheap. But we've got a lot of money coming in.
And the very fact we bought $4 billion net of common equities in the third quarter or bought five billion of BofA preferred, does not preclude us doing something very big.
LIU: Do you get a sense or that you know, I mean, I know if there's going to be certain levels that have to be hit. But how much is this buyback program going to be?
Or how much would you spend out of the capital that you have for buying back shares?
BUFFETT: Well, we keep creating capital all the time. If the price is attractive, we could spend a lot of money. And as I say, no jokes on this program, OK.
