Does Warren Buffett Have the Right Ideas to Fix America’s Economy?

Investing legend Warren Buffett makes headlines whenever he comments on the intersection of business, politics, and the economy. The billionaire mastermind behind Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) raised some eyebrows on Monday when he called for a minimum tax rate on America’s super wealthy, and just as critics began reacting, the Wizard of Omaha plugged JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon as a candidate for the Secretary of the U.S. Treasury.

“I think Jamie Dimon actually would be, I think he’d be terrific, because if we did run into problems in the markets, I think he would actually be the best person you could have,” Buffett said in an interview on PBS’s “Charlie Rose,” according to Politico. “And I think the world leaders would have faith in him.”

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Timothy Geithner, the current Treasury Secretary, is expected to leave his post toward the beginning of President Barack Obama’s second term. Dimon, for his part, is on the record against any possible political career, but the idea of one of the world’s best bankers taking one of Washington’s top offices is ripe for speculation.

Dimon’s appointment to the position looks particularly attractive given the daunting challenges associated with the fiscal cliff. Dimon has a long history as brilliant manager of risk, navigating JPMorgan through the financial crisis like Walter Payton through defenders.

Speculation aside, Buffett’s article in The New York Times on Monday has made the rounds and critics have begun to respond to his propositions. To recap, on top of the so-called Buffett Rule, which would set a minimum tax rate of 30 percent for those earning over $1 million per year, he proposes a 35 percent minimum tax rate on income earned after $10 million. Buffett also suggests that the government should have a goal of bringing in revenues equal to 18.5 percent of GDP while spending 21 percent of GDP.

Buffett’s proposed tax rate hike on the super wealthy is aimed at plugging some revenue gaps that many see as necessary to fund the reduction of America’s deficit. The minimum tax he proposes would solve problems of inequity that stem from the fact that many of America’s super wealthy pay an effective tax rate lower than middle-class Americans…

Buffett points out that in 2009, the average tax rate for members of Forbes list of the 400 highest income earners was just 19.9 percent. “It’s nice to have friends in high places,” he wrote. “We need to get rid of arrangements like ‘carried interest’ that enable income from labor to be magically converted into capital gains.”Warren Buffett

Understandably, some people took issue with Buffett’s plan to fix a few loose nuts with America’s economy. Matt Miller, a senior research fellow at the Center for American Progress, wrote an opinion piece for The Washington Post  suggesting that Buffett’s proposed tax and spending targets miss the mark.

“What we need is an agenda for national renewal,” he wrote. “And we need it at a time when our population is aging expensively. We can’t do renewal at 21 percent of GDP.” America’s expenses can be expected to skyrocket in the coming years, and the type of government spending that is necessary for innovation and growth — research and infrastructure — can not afford to be cut.

Whether or not a minimum tax rate for America’s top earners can plug revenue gaps will continue to be a hot topic in Washington as policymakers continue to search for a solution to the fiscal cliff and associated underlying problems.

As Buffett wrote in his article, “All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path. Nothing less is acceptable.”

Looking at the current revenue environment and concerned that Buffett’s proposed spending target won’t be enough to bring America back on track, Miller concludes his article, “Craft a plan, run the numbers, and see if you don’t agree that if we’re serious about America’s future, 21 percent of GDP will be a fatal straitjacket in an aging America.”

Don’t Miss: Warren Buffett: Here’s How to Solve the Fiscal Cliff.