According to Forbes, Microsoft Chairman, Bill Gates is the second-wealthiest man in the world and Warren Buffett, the Berkshire Hathaway chairman, is the third-wealthiest man in the world. Recently, Buffett and Gates asked the wealthiest billionaires in America to donate half of their fortunes to philanthropic causes either during their life or upon death. Forbes estimates the fortunes of America's 400 richest people at $1.2 trillion. This means that if the proposal of Gates and Buffett is accepted, America's billionaires would donate $600 billion dollars. (For more, see Millionaires Who Gave It All Away.)
Let's take a look at a few of the things that could be paid for by the country's wealthiest people.
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BP Oil Spill
The disaster in the Gulf could easily be paid for with the fortunes of America's richest people. Analysts estimate that the BP oil spill has a projected cost of anywhere from $17 billion to $60 billion dollars. The highest liability projection I've seen is $75 billion dollars. Of that estimate, $20 billion would be used to compensate claimants by way of a government fund. The other $55 billion is estimated to pay for Gulf clean up and damage claims. At 12.5% of half their wealth, $75 billion is just a drop in the bucket compared to the combined fortunes of the wealthy.
Paying Down the National Debt
The United States national debt is now over $13 trillion dollars. While $600 billion dollars cannot eliminate the national debt, it is enough to make a dent in it. A $600 billion dollar payment would cover the share of over 14 million U.S. families. It would also buy our economy roughly five months (at the current rate) without a national debt increase. That would be a big help since our national debt is increasing by $4.1 billion dollars a day. (Learn more about national debt, read Government Debt: From Billions To Trillions.)
Remember those incredibly unpopular bank bailouts in September 2008 known as the Troubled Asset Relief Program (TARP)? The TARP was a $700 billion dollar taxpayer funded bailout for the biggest banks in the country. Instead of taxpayers footing the bill for these bailouts, they could have been covered almost entirely by half of the net worth of the country's richest people. If the TARP was funded by America's billionaires, the federal government would have only had to raise $100 billion dollars instead of issuing billions in new government debt. (Learn more in Bailout Acronyms 101.)
Half of the wealth of America's elite could have been used to jumpstart the U.S. economy from one of the worst recessions in a nation's history. Remember the economic stimulus bill passed in 2009? The spending portion of the entire American Recovery and Reinvestment Act could have been paid for with the philanthropic donations of America's billionaires. The entire bill totaled $787 billion dollars, of which $275 billion dollars was set aside for tax cuts. That's over $500 billion dollars applied to spending. The country's superrich could have footed the entire stimulus bill and still had billions left over!
Could the wealth of America's billionaires permanently end world hunger? No, but it could eliminate world hunger until 2030. According to the United Nations, it only costs $30 billion dollars a year to eliminate world hunger. That much money could feed over 862 million impoverished individuals a year worldwide. The charitable philanthropy of billionaires could end world hunger for the next 20 years.
The Bottom Line
As you can clearly see, the wealth of America's richest people could finance many of the economic and social problems of the country. However, it would decrease the net worth of some very prominent people and turn some billionaires into mere multimillionaires. If they want to convince the ultra-rich to drop their social status to just rich, Buffett and Gates have a whole lot more talking to do. (For even more reasons to give, see Give To Charity; Slash Your Tax Payment.)
Catch up on the latest financial news; read Water Cooler Finance: More Spilled Oil, Fewer Jobs.