Last month, the U.S. national debt surpassed a record $35 trillion for the first time, fueling economists’ fears that the country is heading toward an unsustainable budget deficit. JPMorgan Chase (JPM) CEO Jamie Dimon says he has a solution and is taking a cue from Warren Buffett. The bank executive recently told PBS it’s “doable” to increase spending and spur growth across the country while paying down debt. “I would spend the money that helped make (the U.S.) a better country, so some of it would go to infrastructure, earned income tax credits and military,” Dimon said during an Aug. 14 interview. “I would put in place a competitive international tax system and then maximize growth.”
Dimon has long reiterated his belief that increased spending is urgently needed in areas such as restructuring global supply chains, increasing military spending and transitioning to a green economy. Earned income tax credits that benefit low-income earners should be made more accessible so families can spend the funds “how they see fit, without government interference,” he told PBS.
To avoid a later deficit after such investments, Dimon suggests introducing a tax rule named after Buffett that would raise taxes on higher-income families. “You would maybe just raise taxes a little bit, like the Warren Buffett rule,” Dimon said.
What is the “Buffett Rule”?
The so-called “Buffett Rule” states that households with annual incomes of over $1 million should pay no less of their income in taxes than middle-class families. The tax rule first gained traction in 2011, when Buffett criticized his employees – including his secretary Debbie Bosanek – for paying higher taxes than himself, whose net worth is currently estimated at $139 billion. It was part of a 2011 tax bill that proposed a minimum tax rate of 30 percent for millionaires, but it failed to gain support in Congress.
Buffett’s comments drew widespread attention to the disproportionate tax burden on wage earners, who are subject to income, payroll and federal taxes, compared to the tax benefits afforded to the super-rich on capital gains.
It is not the first time Dimon has warned about the country’s growing debt problem. “I think Americans should be aware that we need to focus a little more on our budget deficits,” he told Britain’s Sky News in May, pointing out that debt could worsen inflation. “At some point there will be a problem, and why wait?”
Despite his cautionary messages, Dimon said he is largely optimistic about the country’s economic future – a sentiment he shares with Buffett. The duo often talk about their admiration for American cities, universities, businesses and governments, according to the CEO. “When Warren Buffett talks about the great resilience of America, I believe it,” he told PBS.
