In August, Berkshire Hathaway (NYSE:BRK.A) Chairman Warren Buffett described the advice he gave to then-California gubernatorial candidate Arnold Schwarzenegger in a Wall Street Journal interview. The resultant article, "Buffett Suggests Property Taxes Aren't High Enough in California," described the inequality he found between the low taxes he pays on a $4 million home in Laguna Beach, Calif., and the higher taxes he pays on his home in Omaha, Neb., which he believes is worth $500,000.
The message was clear: In order to fix California's fiscal mess, the state would have to raise taxes. Not a great election platform in a state that already has one of the most punishing tax burdens in the nation.
The outcry was immediate, and for a while it seemed that Buffett's words could harm Schwarzenegger's ultimately successful campaign. Buffett kept his mouth shut about the interview until after the campaign for fear of exacerbating the situation. After the election, however, he fired back, saying that the reporter had completely misunderstood what should have been a clear point: that the comparison he made was between two California properties that had vastly different tax burdens due to the year he purchased them.
Buffett called the article "seriously misleading," noting that it did not even bother to mention the second California home. WSJ Managing Editor Paul Steiger defended the article in response to Buffett's explanation. Following this exchange, letters came rolling in to the WSJ, most of them taking the newspaper to task for its position.
This past week, the Journal printed several of these letters, and Steiger noted that the majority of them sided with Buffett. His response? In part: "There's a reason he's a billionaire and I'm not," and "I think the lesson for us is when it comes to taxes, we can't write enough because people really care." For a second, I thought I was listening to one of those Washington "why losing the election was a good sign" speeches.
Mr. Steiger, the reason why you heard from so many people is not because they care about taxes, though they certainly might. They wrote because the Journal's piece misrepresented the opinions of Warren Buffett. Certainly (as we all know), there is a fanatical element that follows the man, but for heaven's sake, would it have been so hard to say "we didn't get it right"? It happens.
No newspaper in the history of mankind gets it right every time. Errors in reporting and interpretation are reality. Does it not seem possible that someone so closely watched would be extremely judicious in his choice of words and know full well exactly what he was trying to communicate? "The comparison we reported was not the one Mr. Buffett described" are the words of an editorial organization gaining credibility, not losing it.
I'm a rabid reader of The Wall Street Journal, but this episode is a little distressing. No, it wasn't that the writer missed what Buffett was talking about. It was the arrogant, self-righteous response, where most anything else would have been appropriate.
Bill Mann owns shares of Berkshire Hathaway. And on those occasions he's taken Buffett to task, he too has heard from the legion.
