[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> next, warren buffett talks about his life and career. then chris matthews speaks at the gerald r. ford journalism awards dinner. after the commencement speeches by tim geithner error, michele bachmann, and others. -- tim geithner and michele bachmann and others. >> warren buffett was a featured guest. he talks about his life and career and briefly discussed the nation's debt and deficit problem. his remarks are about 45 minutes.

>> ok? thank you very much for coming this evening and honoring us. it is fair to say you are the most respected investor in the world. [applause] the most respected businessman in the world. not as because you have made a great deal of money but because you have done it with enormous integrity and ability and as people see tonight with enormous sense of humor. in addition to being a business person that everybody would aspire to be, he has in recent years become the largest oil and oppressed in the world --

thropist in thehopist i world. his net worth is a little bit higher than mine. $50 billion more or less. he has committed to give 99% of that away and is in the process of doing so. thank you on behalf of the country and everybody else for doing that. [applause] your background is well known but some people may not know that you actually spent much of your formative years in washington d.c. your father was elected to the congress. you moved here. he went to alice beal junior high school. all of c's and d's. then you went to woodrow wilson high school. of '17 i might

add. you were delivering papers in the morning and the evening. my question once again is that many people grew up in washington, love living here and they want to stay here so they hope to aspire to be the head of the lobbying firm some day or to have a congressional staff or something. do you have very regrets that you might make something of yourself that you stay here? >> i'm still young. i may come back. i went back to alice beale today and i met the principal. i went to wilson also today. i tried to get my record expunged but had no luck. >> you told me earlier today that you lived in spring valley. >> i lived on 49th street. >> so today, with the camera for your knocked on the door of the person living in the house. what did that person say? >> we had a good time.

she was a wonderful woman. as a house for 30 years. we get along a very well. then we retraced my paper route. >> when you were growing up in washington you were a business person. >> i thought so. i did not have any public recognition as such. >> you filed your first tax return when you were 14 years old debts >. >> yes. i was 13 and the file that at 14. >> do you think tax rates were too high then? >> it hurt more in those days. i did deduct my bicycle and my watch as business expenses. i had never used my bicycle for pleasure. i never looked at my watch. >> after you graduated from woodrow wilson, you went to the university of pennsylvania for a

year and a half an you transferred back to the university of nebraska. why did you leave penn? >> i felt i would -- i quit after one year. my father talked me into going to college in the first place. then he talked me into. the second year. he said if i want to go a second year i can drop out. then i went to nebraska. i got out of college in three years. i planned to live in nebraska. >> when you graduated from the university of nebraska, you applied to harvard business school and were rejected. >> that is true. >> has hard ever announced they regretted that decision? >> the development officer is kind of unhappy -- has harvard ever announced they regretted that decision? the development officer at this kind of unhappy. >> it met the man who idolize ben graham.

when you took his class, which he has great as he thought he would be? >> he taught one semester, one clause. he came up in wall street and taught this class. that was the reason i went to columbia. see, i had already read all the books. it was inspirational to be around him. it made a difference in my life. >> when you graduated, you wanted to work for him. rejected you for an interesting reason. if you work -- there were jewish firms and non-jewish firms and you were not jewish so he said because you were not jewish he did not harder you. >> that is true. i was ready to convert, believe me. ithin think that would of thougi was one at the time. it was true. there were very few firms and that wall street that would hire jews and they only employ five

or six people. but he told me that to the extent there were able to employ those people, he felt that they could not get most jobs in wall street and that would employ only jews. his real name was? >> ben grossman. ben.on is named after >> you moved back for a while to nebraska but then he he changed his mind and you went to work for him? >> i made a pest of my soul. >> in those years, what did you aspire to do? a very wealthy person, buying stocks of companies? >> i loved analyzing securities. hours and hours. i kept turning the pages of moody's. we had no internet or anything else. you had two sources of information -- moody's and standard and poor's.

we had these that were 8000 pages and 5 manuals. and i went to those page by page. >> that must of an exciting. >> it is a little strange. i went to amazon a few years ago and i found a 1951 moody's. i am ordering all the movies. i am a strange guy. >> when you are working in new york, you are attracted to one of the company's ben graham was attracted to which was geico. you just started talking with them. >> i was at the columbia university library and i looked p them on who's who in america. so i asked the library and how can i learn more about this? i had never taken any courses and insurance.

he said there is this big manual and you can read that. it was one page on employee surance. i went to the headquarters of what was then called government employees insurance. to my total surprise, the place was locked. people did not work there. people in washington did not work on saturday. i kept pounding on the door. finally a janitor came. i said, is there anybody i can talk to except you? he did not seem to get offended to that introduction. he said there is a follow on the sixth floor and he is the only one here. and davidson change my life. he was a wonderful, wonderful man. he talked with me for four hours on a saturday and gave me an education like i had never gotten in school. >> you like it so much about the company. >> it is one of those things. it took a few years. >> when you were starting your

investment partnership, you started in 1956, right? >> that is correct. >> if somebody put $10,000 in in 1956, and had stayed with you and kept the stock they could have gotten a new liquidity, that whould be worth $500 million that today? so those people are very grateful to you. >> i was grateful to them. they were betting on a 25-year- old who looked about 20 in active about 12. -- and acted about 12. they were mostly relatives. was my father-in-law and sister and her husband. >> your investment partnership, he started buying companies and buying stocks and one of the company's you bought was berkshire hathaway. your company is no very famous. that was not one of your best investments? >> it was really dumb.

it was what i call -- i'm buying cheap stocks that is not a good company. to use to call that cigar butts. it would be like walking on the street and finding a cigar butt with one puff left. it did not cost anything but it was kind of disgusting. i thought berkshire hathaway was that kind of a company. it wasn't much of a puff anyway. >> he sold the company many years ago. did you think of changing the name? >> no. i do not do that much of that. >> if you were buying stocks, you pick stocks, but then you started buying entire companies. was that a different skill set? >> when i buy 100 shares, i look at it as buying the entire company. so i always looked at buying stocks as by businesses. so it really was not a difference equation. i could not really sell it. if i owned the stock, i cannot

change management, but it was the same approach. i am a better investor because i am a business person and i am a better business person because i am an investor. >> today berkshire hathaway has how many different companies part of it? >> about 75 but some of them own more companies. >> 75 companies. you have about -- >> 270,000 employees. >> how many people do you have in your office? >> we are now over 24. we are on one floor. we are never going to leave one floor. if they want people sitting on her lap, go to it. >> you sit in your office every day looking at new idea for companies? >> i like to read a lot. i read newspapers and all kinds of financial information. and basically, i am looking for one a year. >> do people send you levels all

of that -- letters over the transom? do any of those ideas work? >> not very often. i do one a year. >> we have a couple companies we would like to sell. you don't pay high prices. in your office, the you have a computer? >> now in my office but other people in the office have them. >> i know you and are not a famous technology person, but do you have an ipad? >> no. i do and at things. i love the internet. the internet is fascinating to me -- i do internet things. it's affected my life almost as much as bill gates. when bill and i appear together we used a trick question of, aside from the bill, which one of us is on the computer more and the answer is me. >> because you play bridge. every night?

>> a couple of hours a night. >> are you a champion? >> i am not even close. i just have a good time. it's a interesting game. >> if people know they are playing with you? >> i use the name t-bone. it has gotten around. i used to put my age as 103. so when i did something dumb, people would say for 103, he's not bad. >> how did you first meet bill gates? >> met him on july 5, 1991. meg h adad a house in bainbridge island in seattle. she called me and said, i love seattle. meg, anybody that calls me and asks -- she wanted to show me her house in 1991.

kay graham, wally evans and two others went out there. and then meg knew bill sr and mary gates and said i have the screw out here. can we drop by? mary called up bill and said warren buffett is coming down and we do like to come down? and he said, hell no. what do i have in common with that guy? he does not understand technology. mary was a very determined. then negotiated a while. they got to where he said he would come down for an hour 27 minutes. we hit it off and we were still talking 10 hours later and became good friends. >> he never convince you to buy microsoft stock or technology companies? >> he did not try to. he tried to get me to use the computer. >> did it work? >> eventually. when i learned i could play

bridge on it, i got into it. >> i thought he originally said i have the most beautiful woman working at microsoft. >> that is what he did. he was engaged to her. it didn't work. >> as you got to know bill better, did he influence your views on how to make investments philanthropy. >> we have a group of people that started getting together in 1968 and we meet every year. the buffett group. at those meetings we would talk about various subjects and philanthropy was a very important subject. i think it was in 1993, he was in ireland at the time, i brought along the gospel of well for everyone to read. our or thinking evolves

together. >> have you ever regretted not getting involved in giving away earlier in life? >> my wife -- we both agreed on giving away all the money. once we had everything we wanted. we have had everything we wanted. the surplus wealth i have has no utility to me. it has utility to the rest of the world. we agreed on that girl. she would like the idea of giving away more of that earlier, and i felt i was going to be a better compound machine than most places and there would be a lot more to give away later on. i told her, i will pilot up and you unpile it. [laughter] >> your fatherf was a conservative republican congressmen. you were a liberal democrat. is that fair? >> i was. but i was always very conservative about -- >> your conservative when he was alive and you later moved

further to the left. it is fair to say you are a liberal democrat now? >> i am not a card-carrying democrat. i support certain republicans. this year i gave money to a republican congressman. >> he became famous recently in washington for the buffett rule which says that people, tax rates should be at least as high as their secretaries. >> in terms of aggregate payroll and income tax. i could not get a disease named after me so i had to settle for a tax. >> have any of your friend suggested that you compensate your secretary and capital gains so she can pay a lower rate? >> people have been suggesting that lately. she's always on the phone with some tax adviser now. people speculated about how much money she made. the tax rate actually labeouf $106,000 for most people goes down. that there'll tax is the most

regressive of all. actually between 106 and 200, cases the rate would be done. >> we now have in our country $15.50 trillion of debt and the federal government. what would you do it if you were able to wave a wand and fix our debt problem? >> i think i would do what everybody in this room would do -- if you ask everybody here how much the federal government should be raising and early in aggregate over the next 10 years, the answers would come in somewhere between 18.5 and 19.5% which is close to what it has been since world war ii. if you ask for much the government should be spending, it should come in at 21%. you can have a few percentage point deficit relative to gdp

and the debt to gdp will not grow. in fact it will shrink. you could have a couple% deficit. i would take the plan that 90% of people would come up with to get to that 90% revenue. it can be simpson-bowles. no one can agree 100%. but i think we do agree that we should be raising 19% and spending 21%. and that means getting more from taxes and that means cutting expenditures. the problem is that the democrats turn out what to talk about what expenditures they would cut and republicans do not want to talk about increasing revenue. >> would you be in favor of increasing the capital gains tax? >> yeah. i would be in favor of that. but we can come to -- we are raising $2.50 trillion. we have to raise 300 or 400

billion more than that. that can be done i have argued all sorts of tax rates including 39.6% on capital gains. the country has grown under all these conditions. our country works. but somebody has to step up and said -- it will not -- just talking about reform does not solve anything. on the expenditure side or the revenue side. you have to get specific about. it. roombet if anybody in this designed a plan, i could sign on to 90% of it. >> the economy is growing 2.5% a year. do you think there is a chance of a recession is near term? >> i think it is very low, unless events in europe that develop in such a way that spill over here big time. incidently, if the economy grows 2% and population grows 1%, that means each generation is

slipping 20% better than the generation before. in this century, people are living three times as well. of gain has been dramatic. i was born in 1930, they are six times the real gdp per capita when i was born. we have a system that works. and it'll keep working. it may not work six time for the next 80 years but it will be 2.5 times. >> are you worried about the euro going away? >> that is the big question. a house divided cannot stand. we have a system where they are half in and half out. they are in on common currency -- that house will fall, but it does not have to.

after reconcile some of these things. it cannot be half slave, half free. >> you and best most of your money in the united states. have you -- you invest most of your money in the united states. are you as comfortable investing in emerging markets? >> i am comfortable any business i understand the business well and the rules that operate at. so we will buy a business in any one of 40 countries to market it is the right kind of business. but most businesses i hear about art in the united states. we think of berkshire hathaway -- we are on the radar screen. >> i understand somebody from israel sent to a letter and you bought that company for $4 billion. >> we bought 80% of it. he wanted me to go and see it. i said i will not go and sit -- i do not go to iowa. plant liker seen a

it. i love your business, i will give a $4 billion note but i will not go if i have to cross oceans. he said if you buy the business, will you come? so we bought the business and i went to israel and it is everything he said. it was very pleased. i said if i had seen this thing, i would have paid to more running. that's why i do not go visit businesses. >> what about china? do you go to china? >> i was sitting in 2003 reading a report about china. it was fortunate it was in english. i put $500 million in to pressure chetro china. the government owned more. between the two of us, we owned the company. we made a lot of money on that.

the company was selling for $35 billion in the market and that was ridiculous. >> one of your most famous investments is coca-cola. you bought relatively cheaply. >> it's very good. i don't care what you drink it, just pour it. >> when you were done bore you were addicted to pepsi. how did you switch to coke? >> when i was a kid pepsi was 12 ounces for a nickel. if you have an insight into my personality, you know what i bought her a >> of the investments he made over the years, which one would use it was the single best investor or when you are the most product? >> the one i am probably the most emotionally attached to this geico because of a bunch of reasons but it goes back to the

day in january 1951. a saturday. what davidson did for me change my life. he did not have to do it. hours nspent four educating me and became a friend for life. subsequent people -- it's just been a wonderful association whether we made any money or not. we have done pretty well on the investment. beyond that, it has special meaning to me. >> are the investments you wish you had never done? what is your worst investment? >> i made a lot of terrible deals. the worst -- probably the worst deal with the one i make in the future. i bought a company, and incidently, i did it. we do not have power point or people explaining it to me. i got into them. we bought a company called dexter shoes.

we paid $400 million for it, which went to zero. million inpaid $400 stock. the stock was worth $3 billion or $4 billion today. whenever berkshire hathaway closed down, i feel better about this deal. >> you famously passed on intel. >> i knew bob pretty well. we bought the conversion -- and they were private. because of bob. it went from $8 million to $1 billion in 12-14 years. in the end, i don't worry about things i do not understand. no austin sernionior said, i'm spots. but i'm smart in

knowing your circle of competence is a very important. there are all sorts of things i cannot do and there are plenty of companies i cannot analyze but i do not have to worry about that. >> of all the companies you thought, maybe the one that brought you the most trouble was salomon. you had to go and run the company. was that the most difficult experience your head? >> that probably was. i was there ceo for nine months and four days 20 years ago. i remember every day of the record >> when you have all of these managers running your 75 companies, do they call you every day instead of this or that problem? >> if they need to call me, they are in trouble. we by businesses were the managers come with them. there are some managers i do not talk to once a year and there is one i talked to almost every day. after the one i talked to almost

every day, the next highest frequency would be once a week but they always call me. i do not call them. >> when you want to make an investment, you have a board of directors. the you ever ask them? i've heard it will buy or railroad for $20 billion and not tell your board of directors. >> i told a few of them. that was an exception -- that i told them. able towhy we're make deals is because we can act fast. they know we have the money. they know we will do the deal. we close on october 6, 2008, on a $6.5 million investment in wrigley. and they knew we would have the $6.5 million. people were not closing on anything. it is a real advantage to be able to pull the trigger. and if we have to go through

lots of presentations and everything, i have been on 19 corporate boards. every deal works on power point. so it's a show and tell type thing, and i do not participate in it. >> it came out in court a discussion that the insider- trading thing that is going on related to investment you had made in goldman, it came out you set the deal and told the investment banker this is the deal, but you said not call for a few hours because you're going to carry clean with their grandchildren? you did not want to be disturbed -- you were going to dairy queen. >> i told them what i would do. if they wanted to do it, fine. we do not negotiate at berkshire hathaway. i do not have enough time to spend the rest of my time negotiating. so i tell them what i will do. if it works, fine. >> famously, people wonder who

will be your successor and i wonder tonight if you want to give us any insights? >> i have left the directors of the wheat board. and i tried to keep in contact - with them- a ouija board. i do not want to disappoint you but you are not on the short list, david. [laughter] >> can i be on the long list? [laughter] shape forn perfect it. we have successors that are better than i. >> you expect berkshire hathaway to be, 4030 years. 20, 30 years. >> it has managers. we have an organization that would reject - -that culture. it is special and it can stay special. >> having achieved all you have

achieved, you have the admiration of everybody in the world for what you have done, what kind of motivates you to keep going? what are your aspirations over the next five years or so? >> i am having the time of my life. i get to do every day except in what i liked to do with people who i love and seem to like me pretty well. it does not get any better than that. i tell the students that come to -- i had 48 universities come out. take the job he would take if he did not need a job. and i got the job. away 99% ofving your wealth. you have three children, seven grandchildren and nine great- grandchildren. any of them ever say maybe you could leave some of? that to me? >> i'm leaving some of it to them. one of the things i do is - -whn i write a will, i give it to my

children first before i sign it. they read it. they are the executors'. and i want them -- what two things. i want them to understand exactly -- and i want them to agree with that. if they do not, we talk about now and figure it out what makes sense. so every five or six years, they read it. sometimes there is something that they do not understand in terms of what they're duitties might be. in terms of equating, i have a farm. i have a various ways of equating percentages and all of that. in the end, i think they feel very lucky in life. >> the average person who does not have your investment skills and they want to not lose their money, would you recommend that the play the stock market, by mutual funds? what do you recommend? >> playing the stock market.

playing is not a word i would choose. i would recommend that they put a a similar sum, so they would be earning more as they went along -- say something every month and put it in an index fund. they are not in a position to make judgments on stocks themselves. they are not in the game any more than i to prescribe medicine. the american economy has done wonderfully. if you take the 20th century, the dow jones started at 66 and ended at 11 the house. how could anybody did a bad results starting at 66 to 11,400? the average person could just consistently buy equities, which are the most attractive investment choice. they will do very well. >> you do not subscribe to the efficient market theory that says you cannot beat the stock

market. can you subscribe to that theory that you cannot? >> if i subscribe to that theory, i would still be delivering papers. i do not think there is any question that certain people who evaluate stocks as businesses can make intelligent decisions about businesses which will enable them to do very well in the securities, but i do not think somebody that is listening to a tv channel tell them what to do or something around the histrionics' or some salesperson who is getting paid more money for selling them something and getting a change tomorrow is the key to it. >> you gave away the bulk of your money to a foundation set up by other people. why did you choose not to have the money go to a foundation named after you that you would control? how to that idea come about? >> ar originally, -- originally,

my first wife would give away the money. it went to a foundation she ran. the idea was to get the money spent. it is run by other people, but if you set up a foundation, they are run by other people. it just means you do not know who they would be. they are going to be run by other people if they extend be on your lifetime. i pick people that i have an enormous, the in -the fact- enormous confidence. in the case of the gates foundation i get people that are putting up their own money big time, very able people, working full time and not charging me anything. and i have these foundations run by my children. it has been wonderful for them. they each have a separate foundation so they can follow their own interests.

worked outll perfectly. >> what was bill gates reaction? you called him and said i am giving you $50 billion. >> he said, what? i do not remember exactly what he said. i think he was surprised. >> did he suggest you put your name on the foundation as well? >> i do not want my name on anything. and there are all kinds of people that want their names on them. if you can sell it to cut some other guy, why would you give it to me? >> i understand. as you go forward now, are there certain things that you would like to accomplish beyond what you have accomplished? are there certain social problems he would like to see solve their economic problems? or is your goal mostly to keep her company doing well and give away the money? >> personally, sure. i want berkshire, that is my painting in life. i have been painting at all my life and i want to keep painting

and have become even more of what it already is. that is what i love. anything that works positively for berkshire hathaway and terms of getting better businesses, having wonderful managers and it makes them be in a position to give their full potential from their companies, i love. i like the idea that the fruits of that will be used by some very intelligent people to improve the lot of a bunch of people who did not get a lucky straw and life like i did could >> how old were you when you realize you were much better than other people in picking stocks? did you realize that as a young person or did it take much longer before you realized you were better than anybody else? >> it sounds obnoxious but i thought i would be pretty hot. i went to woodrow wilson, where i was bad at alice beale.

i had these teachers that i caused some trouble to but they did not think i knew a lot about stocks. in those days, teachers put their money in at&t. that was the ultimate safe investment. i was feeling particularly obnoxious, i shorted at&t. i showed it to the teachers and made them worry a little. anything as love much as i love investments. i read every book about investment by the time was 11. my dad was in congress. i said, get everything, i want to read it. there was one company in washington you did not mention that you bought-- geico. you made a very famous investment in "the washington post" many years ago. what attracted you and how long have you held that investment? >> i love the business. when i bought "the washington millionhey had $4.4.8

shares outstanding. the stock back down to 16. thanks to the nixon challenge and the tv stations, the stock cascades down from 37. when we bought it, the valuation was $100 million. if he were to ask a reporter to do a story on what the "the washington post" company constituent business could be -- a it would say $500 million. you were buying a wonderful business run by wonderful people at 20 cents on the dollar. it's almost a classic investment. if you ask any of the people selling their stock to us what "the washington post" was worth, they would've said three or four times what it is selling for. they sold it because they thought it would go down the next day. they were right for a while. >> you have owned that now for -- >> 39 years. >> you are an optimist about the

future of our country? >> we have not lost the secret sauce. when i was born in 1930, i was born on a saturday. friday was 252. it was going down to 42. there is no connection to this, folks. my dad was going to lose his job and he worked in a bank and he had all his money in the bank and a close any had no money to pay his mortgage anything. that was going to happen within a year. you'd seen that, you would say go back. it would be like a woody allen movie. do not even come out. look at what has happened since that time. we went through a terrible war , a depression, 25% unemployment, thousands of banks closing. we are not smarter than the people in 1930. we do not work hard. with a system that works. it has been work in c

since 1776. >> any regrets? >> not really. >> today, you are close to the president. did he ask you -- if he asked you to serve as an adviser, would you do that? >> it will not happen. if we wants to ask me anything, i will be glad to help. but that would be true of any president under any circumstances. berkshire hathaway, is that a buy? what i would like to do on behalf of everybody here is to thank you for an extraordinary tour de force of your explanations of things and think you very much for coming this evening and i think everybody had an enjoyable evening. i certainly did. i want to thank you on behalf of everybody here and in america for what you have done and for your confidence in america.

on behalf of the washington economic club and everybody here i will give you a few gifts. >> you may get on the short list eventually. [applause] [laughter] >> this is a woodrow wilson jacket we had made up for you. [applause] >> go, tigers. >> and we have here a copy of the original map of the district of columbia we would like to give to you. i'd like to give you a copy of the declaration of independence. we talked about this appearance,

your at the archives and you said you had not been there before. >> it was marvelous. >> you said your not sure what you agreed to and you agree to do this. i thank you for honoring a commitment to come. it says, "warren buffett, a rare modern man with the essential traits of our founding fathers, great wisdom, courage and leadership and also great wealth." >> thank you very much. appreciate it. >> thank you. [applause] >> ladies and gentlemen, please join the after dinner reception -- >> next, chris matthews speaking at gerald r. ford journalism awards dinner. after that, commencement speeches by the treasury secretary, michele bachmann, and others. others.