|Wealth and Want
|... because democracy alone is not enough to produce widely shared prosperity.
November 3, 2004 (post-election)
The Wall Street Journal's Aug. 15 article about me, based on an interview that I gave one of your reporters about my association with Arnold Schwarzenegger's campaign, was seriously misleading in a way that caused far-reaching reverberations. For reasons that I will explain, I could not write to you about this matter until now.
The article, featured on the Journal's front page, carried a headline and opened with paragraphs devoted entirely to California taxes. That's fair enough: taxes were certain to be a major issue in the campaign.
In talking with your reporter, Joe Hallinan, I began by asking him to record the interview. He replied that his taping equipment was not working. Therefore, in verifying with him that what I'm about to recount is correct, you will have to rely on his notes. I do not expect you to find discrepancies, given that he asked me several times to repeat the key figures that I presented.
What I said in respect to property taxes was very specific. I gave him an example of three houses, two in Laguna Beach and one in Omaha.
I pointed out to Joe that these figures mean that the tax rate on the second house -- same neighborhood, same owner, same ability to pay -- is roughly 10 times the rate on the first house.
I then referenced my house in Omaha, which I believe to be
worth about $500,000 (though it's assessed at $690,000). Taxes
on it were $14,401 in 2003 and $12,481 in 2002.
I was satisfied, based on our conversation, that Joe understood the two highly important but uncomplicated points my examples spoke to:
1. Residential property taxes in California are wildly capricious, tied as they are to the date of purchase rather than the value of the property or financial circumstances of the owner.
In the interview, I then said, as the story reported: "This property-tax illustration, that tells you, you can draw certain conclusions from that." Give me an F for syntax. Even so, this comment clearly applied to both observations regarding property taxes.
Yet there was no mention in the story of my second house in Laguna nor any mention of the tax inequities within California. Instead, the headline, the body of the story and quote made it appear as if I was only talking about the difference in taxes between Omaha and California.
It's difficult to understand this omission. Imagine that a reporter were to ask a candidate about a fiscal problem and received this reply: "Spending is up 10%, taxes are down 10% -- you can draw certain conclusions from that." If the reporter quoted only the tax change portion of the sentence, and followed it with "you can draw certain conclusions from that," readers would be seriously misled.
The severe failings in the article were compounded a few days later when the Journal's editorial page made the mistake of relying on the accuracy and completeness of the Journal's reporting. Though the editorial would have undoubtedly made many of the same points it did had the writer read a complete account of my views, its analysis would have had to be at least somewhat different if the editorial writer had been aware of both points I had made.
For example, the statement in the editorial's second paragraph that "no doubt the non-billionaires in Chico will appreciate Mr. Buffett's generosity with their cash flow" would make no sense if the writer had understood that I was criticizing the inequities within California. My sympathies are clearly with the "non-billionaire" family purchasing a $300,000 house in Chico today that faces real estate taxes materially higher than those borne by this non-resident billionaire on his $4 million house in Laguna. This family, because of Proposition 13, has been selected to subsidize me.
The Journal's editorial page was not the only medium that drew incorrect and incomplete inferences from the story. The Omaha-Laguna comparison rocketed around the world accompanied by commentary that I was suggesting raising property taxes in California, with no mention at all that I was arguing they needed to be made more equitable.
When I subsequently explained to the Journal's Kevin Helliker just how misleading the story had been, our office received an e-mail from Joe Hallinan suggesting that I "might be interested in doing another interview with us, expanding on some of his earlier points." It is ironic that the reporter mentioned "expanding" my views when he -- or his editor -- were the ones who had truncated my views in such a misleading and unfair manner.
Another interview, of course, would have compounded the problem, since -- short of the Journal forthrightly acknowledging its original error -- it would have appeared that I was scrambling to revise my statement to limit political damage to Arnold. This is the same point, of course, that has deterred me from writing you, or otherwise talking about the tax issue, until we reached a date when my doing that would not influence the election.
Because the Journal's mischaracterization of my views has achieved such widespread publicity, I am planning to post this letter for an extended period on the Berkshire Hathaway Web site.
Warren E. Buffett
URL for this article:
Hyperlinks in this Article:
Updated November 3, 2003 1:41 a.m.
Copyright 2003 Dow Jones & Company, Inc.
http://online.wsj.com/article/0,,SB106782034776718100,00.html Managing Editor Paul Steiger:
I respectfully disagree with Mr. Buffett. The article wasn't misleading. His central point to our reporter was the huge disparity in taxes on his home in Nebraska vs. those on his properties in California. Mr. Buffett described this disparity in the context of discussing with the reporter the troubled state of California's finances, strongly hinting that raising property taxes in California closer to levels in Nebraska might be one way of narrowing California's huge budget gap.In the interview, Mr. Buffett did make the other point that his letter emphasizes, that of the sharp disparity in tax rates between the levies on one California property that he had bought many years ago vs. those on a nearby property that he had bought more recently. This additional point was interesting and might well have been included in the story in detail. Instead, it was referred to only briefly. In the tight confines of a newspaper article we always have to choose which of an interviewee's many remarks to report. In this case, because of Mr. Buffett's overriding theme of the potential value to California's state and local governments of additional sources of revenue, it was hardly misleading to exclude it.
URL for this article: http://online.wsj.com/article/0,,SB106782034776718100,00.htmlCopyright 2003 Dow Jones & Company, Inc.
Hyperlinks in this Article:
(4) http://online.wsj.com/public/article/0,,SB10678179586477400,00.html <>
Updated November 3, 2003
http://online.wsj.com/public/article/0,,SB10656513006088500,00.html Schwarzenegger Adviser Buffett Hints Property Tax Is Too Low;Targeting State's Proposition 13 Is Unlikely Republican Stance
By JOSEPH T. HALLINAN, Staff Reporter of THE WALL STREET JOURNAL
Warren Buffett, the billionaire financial adviser to Arnold Schwarzenegger's campaign for California governor, strongly suggested in an interview that the state's property taxes need to be higher.
Mr. Buffett, the chairman of Berkshire Hathaway Inc., took on California's famous Proposition 13, which has limited property taxes there since 1978. As an example, he pointed out the difference between his own property-tax bills for homes he owns in California and Nebraska.
His home in Omaha, he said, is valued at roughly $500,000. His current yearly property tax bill on that home: $14,401.
In California, he owns a Laguna Beach home valued at $4 million, or eight times as much. The annual property taxes on that home are just $2,264 -- a fraction of what he pays in Omaha.
More to the point, said Mr. Buffett, the taxes on his Omaha home rose $1,920 this year, compared with $23 on the Laguna Beach home. Mr. Buffett attributed the scant jump in California to the restrictions of Proposition 13, which generally limits property-tax increases to 2% a year, no matter how much the value of a property appreciates.
Mr. Buffett stopped short of saying he would urge Mr. Schwarzenegger to seek a reversal of Proposition 13 to increase property taxes -- a move that would almost certainly be attacked by many of Mr. Schwarzenegger's fellow Republicans. But he left little doubt that that is where he is leaning.
"This property-tax illustration, that tells you, you can draw certain conclusions from that," said Mr. Buffett. Noting that tax assessments also vary widely, he said of the tax system, "In effect, it makes no sense."
"But you've got to look at everything," he added. "I took the job yesterday. And it's going to be his [Schwarzenegger's] policies. Any advice I give is going to be to him."
The state has been roiled by financial troubles tied to the economic downturn and the recent state energy crisis, factors fueling the effort to recall Gov. Gray Davis. Standard & Poor's Corp. has downgraded California bonds to a triple-B rating, the worst in the nation and two notches above junk-bond status.
Proposition 13 limits on property taxes aren't directly responsible for California's current fiscal problems, which had the state facing a deficit of $38 billion for the fiscal year that started July 1. But in general, the limitations on property taxes have forced state government to rely on other taxes, such as the personal income tax, and to engage in complicated maneuvers to reallocate the state's revenue and help entities that faced funding gaps, especially schools. Even with those constraints, state spending grew faster than inflation in the 1990s, but then leveled off and is down this year.
Mr. Schwarzenegger, like other candidates, has vowed to improve the state's fiscal picture. But suggestions that tax increases could be an answer could represent a problem for Republicans and the Bush White House, who have pursued tax cuts as the best way to improve the economy overall. Democrats are sure to leap at the contradiction, and the Buffett comments may likely to deepen the biggest fear of many national Republicans: that the moderate views of Mr. Schwarzenegger, for all his appeal as a candidate, could spark infighting within the party.
Sean Walsh, a spokesman for the campaign, said, "The proposals and courses [Mr. Schwarzenegger] chooses will be his own." The campaign announced late Thursday that Mr. Buffet and former Secretary of State George P. Shultz will co-head an "Economic Recovery Council" to advise the campaign, and he said that Mr. Buffet's voice would be one among its members. "The breadth of economic and financial views will be presented to Arnold," Mr. Walsh said.
In the interview, Mr. Buffett also said people approached Berkshire Hathaway and other financial firms a few months ago on behalf of the state of California, seeking to secure buyers for the state's bonds if necessary. "California was looking in the financial market for, in effect, a 'put,' or guarantee, by financial institutions that they would be able to come to market with bonds about nine months hence," said Mr. Buffett.
A spokesman for the California Treasurer said the department had "no knowledge of any state representative approaching Mr. Buffett." Steve Peace, California's director of finance, said investment bankers might have initiated such a discussion, but not with any official authorization by the state of California. He said the bond issue most likely involved -- a $10.7 billion limited sales tax bond -- has not yet been issued.
Mr. Buffett said that in the discussion with Berkshire Hathaway, the state was willing to pay 0.75 percentage point, or about $80 million, to firms such as Berkshire if they would agree to buy between $10 billion and $11 billion in bonds.
"That's a lot of money to pay for a put," said Mr. Buffett. "It's a couple bucks for every citizen of California." Just a year earlier, said Mr. Buffett, the fee for such a put was just 0.18 percentage point. "I thought about doing it," he said, but decided against it. Berkshire, he said, owns no California bonds.
Mr. Buffett's comments come a day after he startled many political observers by jumping into politics in the nation's biggest state, especially on the side of a Republican candidate. He is usually associated with Democratic causes. "I don't worry about that," he said. "I vote for far more Democrats than I vote for Republicans. But I vote for plenty of Republicans."
Among Mr. Schwarzenegger's competitors for the governor's seat is a longtime acquaintance of Mr. Buffett, former baseball commissioner Peter V. Ueberroth, who sits on the board of the Coca-Cola Co. with Mr. Buffett. Mr. Buffett said he hadn't known Mr. Ueberroth would be a candidate. Referring to Mr. Ueberroth and former Los Angeles Mayor Richard Riordan, another candidate, he said, "Peter is very able. Dick Riordan is very able. But Arnold, he's a very smart fellow. He has brains and muscle. Some of us have neither."
Through Berkshire, in which he controls about a third of the shares, Mr. Buffett has billions of dollars invested in the state of California. Those holdings include about $2.67 billion in stock of San Francisco based Wells Fargo & Co., along with other businesses, such as See's Candies and MidAmerican Energy Holdings Co., the nation's third-largest owner of natural gas pipelines. MidAmerican does substantial business in California. Its Kern River Gas Transmission Co. operates a 926-mile pipeline from Wyoming to the San Joaquin Valley near Bakersfield, Calif.
"The truth is California has got very serious financial problems," Mr. Buffett said. "It's an economy that's the size of France and there's no way the U.S. is going to have a healthy economy if California continues to have the problems it has . . . I've got a selfish interest in this country doing well, no doubt about that."
Mr. Buffett said his preliminary assessment of California showed that the state's budget had depended on billions of dollars collected in capital gains taxes, much of it generated by the bull market of the late 1990s. "In effect," he said, "they set their financial planning based on a financial bubble." Now that those gains are gone, California's budget must be balanced by money from elsewhere.
"You're going to have to get it in balance -- and get it in real balance. And it is not in balance now," said Mr. Buffett. "And they have to do whatever is necessary on spending or taxes to get it in balance.
--Gerald F. Seib and Scott Thurm contributed to this article.
Write to Joseph T. Hallinan at firstname.lastname@example.org
Updated August 15, 2003
Copyright © 2003 Dow Jones & Company, Inc.
And don't forget the state's steeply progressive tax code, a major cause of its current fiscal woes. The state is overly dependent on rich folk for tax revenues. In 2000, Californians paid $40 billion in income taxes, and 54% of that came from taxpayers who earned $300,000 or more. Almost 38% was paid by millionaires, who file less than one-third of 1% of tax returns. It's no surprise that when the stock bubble burst so did California's tax coffers.
In the percentage of income taken by state and local taxes, California was eighth highest in the nation this year at 10.6% (fourth highest if you calculate the interaction of state levies with federal taxes). The Tax Foundation ranked California second-worst in the nation (after Mississippi) in a May study of state business tax climates. Among other reasons, the report notes "multiple-rate corporate and individual tax codes that impose above-average tax rates" and "high overall state/local tax burdens that have grown faster than taxpayers' incomes." Mr. Davis and the liberal legislature used this to grow state government employment by 13.6% from 1997 to 2001, or twice as fast as state population growth.
All of these are ripe targets for a gubernatorial candidate who wants to run on revitalizing the state economy. Mr. Davis's inability to do this is already on the record. The most important Democrat bidding to replace him, Lieutenant Governor Cruz Bustamante, has been one of those leading the tax-and-regulate charge. As Mr. Davis falls in the polls, the same public-sector interests that brought him low are now swinging to Mr. Bustamante. They realize that as Governor he's likely to be Gray Davis without the backbone.
The two conservative Republicans in the race, businessman Bill Simon and state senator Tom McClintock, are putting the economy front and center. Mr. Simon is reprising his sound proposal from the last campaign to cut the state's capital gains tax to 5% from 9.3%. That would help both entrepreneurship and state revenue. Mr. McClintock has long fought to lower the state tax burden.
If Arnold wants to grow his army and become Governor, he's going to need proposals that give Republicans and independents in particular a reason to believe that he knows how to revive the economy of that once-great engine of American growth. Mr. Buffett's tax-hike musings aren't the ticket.
Updated August 18, 2003
Copyright © 2003 Dow Jones & Company, Inc.
http://online.wsj.com/public/article/0,,SB10678179586477400,00.html Schwarzenegger Says Higher Taxes Aren't the Answer for California
By JOHN R. EMSHWILLER and RHONDA L. RUNDLE, Staff Reporters of THE WALL STREET JOURNAL
LOS ANGELES -- Hollywood star-turned-gubernatorial candidate Arnold Schwarzenegger said he is against raising taxes and in favor of reducing government spending to reinvigorate the California economy, but he offered few specifics on what steps he will take if he becomes the Golden State's governor.
In his first appearance to discuss his economic views, Mr. Schwarzenegger said California needs to become a more business-friendly environment again. He said that as governor he would immediately tackle ways to reduce the state's workers-compensation insurance costs. However, he said he couldn't give many specifics about his broader approach because reliable information about the exact state of California's finances isn't available.Mr. Schwarzenegger said not even economic experts he talked with "could make heads or tails of the state's budget." He added: "You can't make sound decisions based on faulty information." As a result, he said, one of his first acts as governor would be to appoint an outside auditing group to report back to him within 60 days on the state's precise financial condition. He said some experts he consulted estimate that the next governor could inherit a budget shortfall of as much as $20 billion -- but didn't say how that estimate had been reached.
Mr. Schwarzenegger, a 56-year-old Republican, is one of more than 130 people vying to succeed incumbent Democratic Gov. Gray Davis, who faces a recall election on Oct. 7. If a majority of voters choose to oust Mr. Davis, a new governor will be chosen from the names listed on the second part of the ballot. Whoever gets the most votes from the crowded field will win the office.
While several California political veterans are in the race, Mr. Schwarzenegger is by far the highest-profile figure, and his celebrity status has helped attract a star-studded array of supporters and advisers, some of whom were on display at Wednesday's gathering.
Flanked at the news conference by the co-chairmen of his "Economic Recovery Council" -- Berkshire Hathaway Co. Chairman Warren Buffett and George P. Shultz, a former secretary of both state and Treasury -- Mr. Schwarzenegger reiterated his attacks on the state's fiscal management. "The elephant in the room is the state's irresponsible operating deficit and massive debt," he said. He said his top priority as governor would be to create a more business-friendly environment, and claimed too many jobs are moving out of state because of high taxes and excessive regulation in California. "We want those jobs back!" he said. He also supported a constitutional cap on state spending.
Mr. Schwarzenegger said "skyrocketing" workers-compensation costs are driving businesses away, and promised "on the day I am sworn in" to call a special session of the legislature to correct the system. However, he didn't identify any specific plans to deal with one of the state's most persistent problems, which has been the subject of several past reform efforts.
While Mr. Schwarzenegger said he hopes to avoid additional taxes, he didn't entirely rule them out. He said Californians haven't been "undertaxed," but that "politicians have overspent." He acknowledged that circumstances might arise, such as a major natural disaster or terrorist attack, where tax increases might be necessary to fund recovery efforts. "You can never say never," he said.
Mr. Schwarzenegger was asked about recent remarks by Mr. Buffett, who said that California's property taxes, which were lowered a quarter-century ago by Proposition 13, might need to be raised. Politicians of all stripes have long been reluctant to criticize the popular measure, for fear of voter backlash. Mr. Schwarzenegger Wednesday reiterated his support for the measure despite the remarks of his senior adviser. "I told Warren that if he mentions Prop. 13 one more time, he'll have to do 500 sit-ups," he quipped.
Mr. Schwarzenegger avoided discussing specific policy issues when asked about them by reporters. One question concerned his stand on a recent state law that gives workers the right to take paid leave for family reasons. "I'm all for people to leave and take care of family members," he said, but added that it was "important not to keep going down that road." Mr. Schwarzenegger said that while he would "want to give away anything and everything," the question is: "Can we afford it?"
Separately, another major candidate, former Olympics organizer and Major League Baseball Commissioner Peter Ueberroth, unveiled his own economic plan for the state, which touched on many of the same issues as Mr. Schwarzenegger's presentation. However, he offered more specifics than his rival, calling for a 5% spending reduction from all state programs except education, renegotiating union contracts with state employees and selling off some state property assets.
Meanwhile, U.S. District Court Judge Stephen V. Wilson rejected an effort by the American Civil Liberties Union to delay the recall vote until March. The judge said he didn't want to rule against the will of the people. The civil-rights group, which said it will appeal the decision, wants the election delayed because of concerns that some counties won't be able to properly conduct balloting in such a short period of time.
Write to John R. Emshwiller at email@example.com and Rhonda L. Rundle at firstname.lastname@example.org
Updated August 21, 2003
Copyright © 2003 Dow Jones & Company, Inc.
Buffett and Prop. 13, the sequel
TIM RUTTEN | November 5, 2003
Footnotes are among those things over which humanity fundamentally divides. On the one side are those who regard them as little more than typographical underbrush, impedimenta to a good story's progress. In the other camp are those who find footnotes not just foundational, but fascinating — the kind of close reader who suspects there is no truth larger than the sum of its details.
This is a story for the latter group, an engrossing controversy touching on both the history of California's recent gubernatorial recall and the journalism it produced:
The protagonists are uber-investor Warren E. Buffett, chairman of Berkshire Hathaway, and the Wall Street Journal. On Aug. 14, then-candidate — now governor-elect — Arnold Schwarzenegger announced that the "Sage of Omaha" had joined his campaign as a financial advisor. The next day, the legendarily plain-spoken billionaire sent political analysts' jaws plunging when he attacked California's most sacred cow, Proposition 13, in an interview with the Journal's Joseph T. Hallinan.
Buffett, the Journal reported, had "strongly suggested … that the state's property taxes need to be higher…. As an example, he pointed out the difference between his own property tax bills for homes he owns in California and Nebraska.
"His home in Omaha, he said, is valued at roughly $500,000. His current yearly property tax bill on that home: $14,401.
"In California, he owns a Laguna Beach home valued at $4 million, or eight times as much. The annual property taxes on that home are just $2,264 — a fraction of what he pays in Omaha….
" 'This property-tax illustration, that tells you, you can draw certain conclusions from that,' said Buffett. Noting that tax assessments also vary widely, he said of the tax system, 'In effect, it makes no sense.' "
The interview's contents were widely reported and Buffett was widely assailed, including on the Journal's editorial page, which dryly observed that "no doubt the non-billionaires in Chico will appreciate Mr. Buffett's generosity with their cash flow." Schwarzenegger made a televised show of taking his advisor gently to the woodshed, and it seems likely that the incident played at least some role in the resolute no-new-taxes rhetoric he adopted for the balance of the campaign.
There matters stood until Monday, when the Journal took the extraordinary step of printing unedited a long letter to the editor in which Buffett attacked Hallinan's story as "seriously misleading in a way that caused far-reaching reverberations." Buffett wrote that he had refrained from expressing his objections "until we reached a date when my doing that would not influence the election."
The core of Buffett's criticism is that his examples involved not two, but three houses, two in Laguna Beach and one in Omaha: "The first Laguna Beach house is a property that I bought in the early 1970s. It has a current market value of about $4 million and, because of the limitations embodied in Proposition 13, carried taxes of only $2,264 in 2003 vs. $2,241 in 2002. The second house, located just in back of the first, is one that I purchased in the mid-1990s. It has a market value of about $2 million and, simply because I bought it later than the first, carried taxes of $12,002 in 2003 vs. $11,877 in 2002. I pointed out to Joe that these figures mean that the tax rate on the second house — same neighborhood, same owner, same ability to pay — is roughly 10 times the rate on the first house.
"I then referenced my house in Omaha."
These examples, Buffett wrote to the Journal, were intended to convey "two highly important but uncomplicated points":
"1. Residential property taxes in California are wildly capricious….
"2. In the case of properties that a homeowner has held for a long time, residential property rates in Omaha are far higher than in California."
By omitting any reference to his second, more recently purchased, Laguna house, Buffett argued, the Journal had seriously distorted his views. Borrowing the hypothetical case proposed by the paper's follow-up editorial, Buffett wrote, "My sympathies clearly are with the 'non-billionaire' family purchasing a $300,000 house in Chico today that faces real estate taxes materially higher than those borne by this non-resident billionaire on his $4 million house in Laguna. This family, because of Proposition 13, has been selected to subsidize me."
The length and detail of Buffett's letter were unusual enough, but his remarks were followed in the Journal's letters column by a lengthy signed response from Paul Steiger, the paper's managing editor, who wrote: "The article wasn't misleading. His central point to our reporter was the huge disparity in taxes on his home in Nebraska vs. those on his properties in California….
"In the interview, Mr. Buffett did make the other point that his letter emphasizes, that of the sharp disparity in the tax rates between the levies on one California property that he had bought many years ago vs. those on a nearby property that he had bought more recently." Steiger went on to call the point "interesting" and wrote that it "might well have been included in the story in detail. Instead, it was referred to only briefly. In the tight confines of a newspaper article we always have to choose which of an interviewee's many remarks to report."
These days, much of the discussion surrounding America's news media involves stuffing and then knocking around the straw man of political bias. Yet bias is far less often a significant factor in mainstream journalism than the talk-show brawlers would have us believe. Judgment, on the other hand, is indispensable. Serious-minded people will differ over its application — even by conscientious editors and reporters, like those at the Journal.
Buffett could not be reached for comment. In an interview, Steiger declined to go beyond his published response, but did say, "Journalism is, as the famous saying goes, the first draft of history. As such, it is subject to enhancement, clarification and revision. We just don't feel one is required here."
Copyright 2003 Los Angeles Times
Buffett's Prop. 13 comments cause stir
by Mark Simon, Chronicle Political Writer | Saturday, August 16, 2003
The smoothly running political machine of actor Arnold Schwarzenegger hit its first speed bump Friday when a top adviser to his campaign for governor suggested overturning California's landmark property-tax initiative, Proposition 13.
Warren Buffett, named earlier this week as an adviser to Schwarzenegger's campaign in a move widely touted as giving the movie star credibility on economic issues, may have nullified his own value when he told the Wall Street Journal that property taxes in California are too low and suggested that Prop. 13 ought to be undone.
Officials with Schwarzenegger's campaign scurried to distance the candidate from Buffett's attack on Prop. 13 while opponents wasted no time assailing the front-running Republican for the words of his adviser.
"We're flabbergasted someone is so out of touch with California that he would suggest a tripling of the property tax," said John Feliz, spokesman for state Sen. Tom McClintock. "We think maybe he needs to fire Warren."
Citing the inequity of the property taxes he pays on his homes in Omaha, Neb., and Laguna Beach, Buffett said the California cap on property taxes imposed by Prop. 13 "makes no sense."
Prop. 13 passed 25 years ago with 65 percent of the vote, and an entire generation of Californians believe that voting for the measure is the best single vote they've ever cast. The proposition rolled back property taxes and limited their annual increase to 2 percent.
"Warren's right," said Bruce Cain, director of the Institute of Governmental Studies at UC Berkeley. "It's an unequal system. But all the polling indicators I've seen show the appetite for changing the system is very low."
For Republicans, Prop. 13 is sacred text -- the benchmark by which most candidates are evaluated by key donors, top party leaders and many of the party's most loyal voters.
"I'm sure Arnold was mortified when he read (Buffett's comments)," said Frank Schubert, a longtime Republican political consultant who has run 16 statewide campaigns.
As recently as 2000, a ballot initiative attempting to make it easier to raise property taxes failed overwhelmingly, said Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association, predicting that anyone who attempts to roll back Prop. 13 today would face similar voter wrath.
"It's political suicide for a California Republican to propose overturning Prop. 13," said Darry Sragow, a longtime Democratic political consultant. "A Republican is going to get his head caved in for this."
Schwarzenegger didn't propose overturning Prop. 13 himself -- in fact, his political strategists reacted as though a hand grenade had been thrown into their midst.
"Arnold Schwarzenegger has supported Prop. 13 for 25 years," said campaign spokesman Rob Stutzman, adding that the actor was the keynote speaker earlier this summer at an event honoring the silver anniversary of the passage of the property tax initiative credited with launching a national anti-tax revolution.
"Arnold is an admirer of Howard Jarvis (the late co-author of Prop. 13) and has referred to him as the original tax terminator," Stutzman said. "He will be a fierce protector of Proposition 13."
Schwarzenegger spent the day campaigning at Southern California schools and did not comment on Buffett's statements.
But Schwarzenegger spokesmen spent the day asserting that Buffett is only an adviser to the candidate and that he'll make his own policy decisions.
"Warren Buffett is speaking about his own philosophical position," Stutzman said. "The two of them are not going to agree on every single issue."
The flap over Buffett's comments only enhance the suspicions among conservative Republicans that Schwarzenegger is not a true California-style Republican committed to the no-tax, cut-spending philosophy that has been the mainstay of the state's GOP.
The suspicions already were roused by the prominent presence in Schwarzenegger's campaign of former advisers to Gov. Pete Wilson, who, as a candidate for governor on the same 1978 ballot on which Prop. 13 appeared, opposed the property tax rollback.
Early in the day, businessman Bill Simon called upon Schwarzenegger to disavow Buffett's statements.
"It's time for Arnold to come out from behind the curtain," Simon said at the opening of his Sacramento campaign headquarters. "I'd like to see where Arnold stands on these issues."
Later in the day, when Schwarzenegger officials began backpedaling from Buffett's comments, Simon spokesman K.B. Forbes said, "We're happy that the Schwarzenegger campaign listened to Bill Simon's advice of distancing himself. However, we want Arnold Schwarzenegger to make a pledge, as Bill Simon has, that he will not raise taxes. Is he going to be a tax-and-spend governor, or is he going to have the courage to take the pledge?"
Even Davis, making a campaign appearance at a heavily Hispanic school in Los Angeles, weighed in on Buffett's comments, telling reporters, "I could not disagree more. I'm very proud that property taxes in California are lower than the rest of the country. Prop 13 is principally responsible for that."
Chronicle staff writers Christian Berthelsen, Lynda Gledhill, Carolyn Lochhead and Mark Martin contributed to this report. / E-mail Mark Simon at email@example.com.
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper