Reuters/Mario Anzuoni
- Warren Buffett slammed critics of stock buybacks as economically "illiterate" in his annual letter.
- His pushback seemed aimed at opponents like President Biden, who backs a 4% tax on share repurchases.
- But a White House official said Biden isn't anti-repurchases, he just wants to encourage smart spending.
The White House has a message for Warren Buffett: You've got it wrong if you think President Joe Biden sees all stock buybacks as bad.
The 92-year-old billionaire investor — who has touted the value of stock buybacks for decades — slammed opponents of stock buybacks in his annual letter to Berkshire Hathaway shareholders.
His pointed comments on Saturday were seen as aimed in part at Biden, after the US government imposed a 1% tax on buybacks last year and the president came out in support of raising it to 4%.
But Biden isn't an opponent of share repurchases — he just wants to encourage smart spending, a National Economic Council official told MarketWatch.
"It's important to look at what Mr. Buffett said there, which is that anybody who says all stock buybacks are bad is being misleading. That's not the president's position," Bharat Ramamurti said Wednesday.
The NEC deputy director said Biden isn't publicly proposing to ban all share repurchases, and he's been clear about that.
Companies reduce the number of shares available in the market when they repurchase them, and they tend to tout the move as creating value for investors.
Berkshire has been one of the US's leaders in stock buybacks, spending nearly $8 billion on its own shares in 2022. Buffett and his team laid out a record $27 billion in 2021, and about $25 billion the year before that.
"When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive)," Buffet said in the shareholder letter.
But Ramamurti stressed Biden's policy agenda isn't about clamping down on all share buybacks, but on giving companies an incentive to invest the cash they would spend elsewhere.
He suggested they could put more of their money into research and development, better wages for workers, and growing their US production.
In his State of the Union address in January, Biden put forward a plan to quadruple the 1% surcharge on stock repurchases that was brought in as part of the Inflation Reduction Act last month.
The higher rate should give companies an incentive for reinvesting in their own growth and productivity, rather than "paying out corporate executives or funneling tax-preferred profits to foreign shareholders," the White House said at the time.