Billionaire Democrat Buffett Joins Schwarzenegger Camp as Advisor
Arnold Schwarzenegger on Wednesday named billionaire investor Warren E. Buffett to be his senior economics advisor, in an apparent bid to add substance to a gubernatorial campaign that has been criticized for being all flash.
The surprise move will give the Republican Schwarzenegger the counsel of the world’s second-richest man, a Democrat from Omaha who has liberal views on taxes and many social issues.
But the breadth of the role Buffett is to play in the actor’s campaign wasn’t clear.
Some Schwarzenegger staffers said the 72-year-old Buffett would not have a high public profile. He is expected to be primarily involved, at least initially, in directly advising Schwarzenegger in assembling a larger group of business and economic leaders to help form policy.
Campaign staffers said Buffett had no plans to move to California, though he has long maintained a residence in Emerald Bay, near Laguna Beach, and counts Charles Munger, an L.A.-based attorney, as his closest investing partner.
Some conservatives immediately lashed out at Buffett’s presence on Schwarzenegger’s team, citing the investor’s liberal positions and his attacks on President Bush’s economic policy.
“If Warren Buffett is going to be in charge of helping Arnold develop tax and budget strategy, that would be a very poor choice,” said Stephen Moore, an influential conservative activist.
Buffett, whose net worth exceeds $30 billion, also has become a nemesis to Silicon Valley for his vehement opposition to generous executive pay packages and to the way many technology companies account for those costs on their books.
But analysts said the Schwarzenegger camp is betting that Buffett’s agreement to sign on will provide critical heft that has been missing from the candidate’s young campaign, particularly on economic issues.
“The major point is that a major financial figure is taking Schwarzenegger seriously,” said Jack Pitney, professor of government at Claremont McKenna College. He called the move a key step “in establishing Arnold Schwarzenegger as a legitimate political candidate.”
Considered one of the world’s savviest financial players of the last four decades, Buffett built his wealth by shrewd acquisitions of firms in businesses including newspapers, insurance, candy and furniture through his Omaha-based company, Berkshire Hathaway Inc.
He also has taken huge stakes in major firms such as Walt Disney Co. and Coca-Cola Co.
Buffett has become a cult figure for his no-nonsense approach to investing and for shunning many of the trappings of executive privilege despite his enormous fortune. His annual letters to Berkshire shareholders, laced with often biting wit, have become must reads for many investors, large and small.
Buffett “will be a huge help to me as we work to strengthen California’s economy,” Schwarzenegger said in a statement. “Warren is helping me bring together a world-class team to assist me in addressing the problems and challenges facing businesses, investors and job creators in California.”
Also in a statement released by the campaign, Buffett said: “I have known Arnold for years and know he’ll be a great governor. It is critical to the rest of the nation that California’s economic crisis be solved, and I think Arnold will get that job done.”
Debbie Bosanek, Buffett’s assistant in Omaha, said he wouldn’t have further comment.
In recent years, Schwarzenegger and Buffett have mixed at gatherings including an annual meeting of media-industry titans in Sun Valley, Idaho.
Buffett’s direct involvement in politics has been limited. Since 1999 he has contributed a total of $10,000 to political candidates, according to the Center for Responsive Politics, which tracks campaign finance.
The recipients of Buffett’s donations include former Sen. Bob Kerrey of Nebraska, former Sen. Bill Bradley of New Jersey, and Sen. Hillary Rodham Clinton of New York, all Democrats.
Buffett’s father served as a Republican congressman from Omaha from 1942 to 1948, and was staunchly opposed to the New Deal policies of President Franklin D. Roosevelt.
Buffett, however, changed his party designation from Republican to Democrat in the 1960s, a switch he has said was motivated by his sense that the Democratic Party would do more to improve civil rights.
Buffett holds “a strong belief that government should work on behalf of society as a whole, rather than hand out goodies to its individual members,” Roger Lowenstein wrote in his 1995 biography, “Buffett: The Making of an American Capitalist.”
Lowenstein added: “For a billionaire, he was quite radical. His politician friends were Democrats, of course, but some of his ideas were far, far to the left of theirs.”
Once asked how he would rewrite the tax code, Buffett replied: “If I really could do it, it would shock you.” Among his ideas: sharply boosting taxes on personal consumption and imposing an “enormous” inheritance tax.
Buffett raised Republican hackles this year when he criticized President Bush’s proposal to cut tax rates on dividend income, saying it was a handout to the rich. Congress passed that measure in May.
On Wednesday, a spokesman for rival GOP gubernatorial candidate Bill Simon said the Buffett addition showed Schwarzenegger’s liberal leanings.
“This is more good news for Bill Simon as he emerges as the conservative alternative to Schwarzenegger,” said K.B. Forbes, Simon’s communications director. “The choice of a passionate Hillary Clinton supporter does not resonate well among the Republican base.”
Buffett’s personal life also could be a source of controversy. In terms of religion he has called himself an agnostic. He and his wife, Susan, maintain what they call a close relationship, though she lives in San Francisco. Buffett has for years lived openly in Omaha with Astrid Menks, a former maitre d’ at a French restaurant there.
Within California’s corporate ranks, Buffett is at odds with leading technology executives because he has criticized large pay packages and insisted that all companies should count stock-option grants as a formal expense on their books. Major Silicon Valley firms, including Intel Corp. and Cisco Systems Inc., oppose such expensing.
But some analysts said that Buffett, besides providing financial acumen, may help blunt criticism that Schwarzenegger has surrounded himself with former Republican Gov. Pete Wilson and many of his aides, a potential liability among voters still angered by Wilson’s support of Proposition 187, the anti-immigration initiative passed in 1994.
On Tuesday, Schwarzenegger shook up his campaign staff, elevating a number of former Wilson staffers to key positions.
Times staff writers Matea Gold, Michael Finnegan and Thomas S. Mulligan contributed to this report.
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Warren E. Buffett
Position: Chairman and CEO, Berkshire Hathaway Inc.
Born: Aug. 30, 1930, Omaha
Education: B.S., University of Nebraska; M.S., Columbia University
Family: Married, three children
Party affiliation: Democrat
Major holdings: Coca-Cola Co., Gillette Co., Washington Post Co., Geico Corp., General Re (all held through Berkshire)
Estimated worth: $30.5 billion
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The richest of the rich
Here are the 10 wealthiest people in the world, according to Forbes:
*--* Net worth Source of Name Age (billions) Country wealth Bill Gates 47 $40.7 United States Microsoft Warren Buffett 72 $30.5 United States investments Karl and Theo Albrecht NA $25.6 Germany retail Paul Allen 50 $20.1 United States Microsoft Saudi Prince Al Waleed 46 $17.7 Saudi Arabia investments Larry Ellison 58 $16.6 United States Oracle Alice Walton 54 $16.5 United States Wal-Mart Helen Walton 83 $16.5 United States Wal-Mart Jim Walton 55 $16.5 United States Wal-Mart John Walton 57 $16.5 United States Wal-Mart
For billionaires with wealth from publicly traded companies, net worths were calculated using share prices from Feb. 7, 2003
Sources: Standard & Poor’s, The Complete Marquis Who’s Who, Newsmakers, Forbes