Earlier this year, after Buffett announced the acquisition of Lubrizol (LZ), it was revealed that former Berkshire lieutenant David Sokol bought $10 million in stock of the chemical company after recommending it as a buyout target. Buffett initially defended Sokol but later called the insider dealing "inexplicable and inexcusable." Sokol's lawyer lobbied back, calling Buffett's reversal a "flip-flop and resort to transparent scapegoatism."
Most recently, Buffett said Standard & Poor's, a unit of McGraw-Hill (MHP), was wrong to cut the triple-A rating on U.S. debt. Instead, he said the U.S. deserved a quadruple-A rating, evidently forgetting that such a classification doesn't exist. Fitch Ratings on Tuesday reaffirmed the U.S.'s triple-A rating, but Moody's (MCO) could still cut its credit rating on U.S. debt.
In order to avoid another potential PR nightmare, it makes sense that Buffett would push congressional leaders to cut more and raise taxes in order to prevent further credit downgrades. After all, Buffett owns shares of Moody's. While he says he doesn't look at ratings when deciding on investments, Buffett could face some heat for owning shares of Moody's if it chooses to follow S&P and downgrade the U.S. credit rating.
For now, though, Buffett appears to be a champion for the middle class because he publicly said what many have been thinking for months. But here's a warning, Mr. Buffett: If those tax breaks are still the status quo come April 15, I'll be sending my W-2 form to you in Omaha for your charity. After all, paying more in taxes isn't that big of a deal, right?-- Written by Robert Holmes in Boston.
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