Every decade some politician proposes to cut back on the tax deduction for charitable giving. Previously it was Steve Forbes with his flat tax. Now the Obama administration is floating the idea. In the previous post, Vastine discussed the impact such a proposal would have on the arts. I will examine its impact on other areas of charitable giving.

Proponents seem to be driven by two motivations. First, it would allegedly generate revenue for the Federal government. Second, there is a desire to punish the rich in order to narrow the gap between the rich and the poor. Unfortunately, restricting charitable giving is a clumsy tool for accomplishing those purposes.

The treasury may benefit at first, but the government should weigh what it would lose when charitable giving is lowered. Private giving plays an enormous role in supporting various eleemosynary organizations in fields such as health education, and aid to the disadvantaged.

The walls of hospitals are plastered with the names of benefactors who contribute major support for the construction of ongoing capital improvements. Private funding has joined with government in seeking and finding ways to cure many diseases which were once deemed fatal or permanently disabling. Universities, even public universities, depend on private funds to support faculties, research, capital improvements, scholarships and even routine maintenance of their schools. In fact university giving for scholarships have allowed more and more universities proudly claim that any qualified applicant can earn a degree regardless of the level of their family income. United Way has been embraced by the business community and become an a dominant force in identifying and supporting the many social services in the local community.

As the world grows flat, so does the benevolent spirit. Multi billionaires such as Ted Turner and Bill Gates, have addressed the problems of world poverty. Rotary International joined with the World Health Organization and others to eradicate polio. The United Methodist Church founded Africa University in Zimbabwe, which has dramatically opened the doors of opportunity to young African that could not have been dreamed about a few decades ago. Doctors Without Borders are bringing the blessing of modern medicine to remote parts of the earth.

These and many other examples underline the fact that private giving has created a gigantic infrastructure which, if it did not exist, would drop into the lap of government agencies. Therefore, the effort to raise money for the government by reducing charitable giving deductions would contribute to new demands on the treasury in the long run.

Private is extremely effective in identifying causes meriting support. The donor tends to support the cause that is most important to him or her. Thus private support is spread in different directions. Many eyes looking at the needs of society should be preferred over leaving the decision making power over the use of available funds to handful of bureaucrats.

Moreover, much has been said about a trend toward a widening gap between the income of the rich and the poor. Assuming that the gap is growing, philanthropy tends to counterbalance that trend. After all, philanthropy involves giving by the rich to the poor.

Finally, charitable giving has the effect of lifting the human spirit. I submit that sharing our resources encourages us to be more understanding of each other. Monty and I had the privilege of participating in a mission trip to Panama, not long after our government had bombed Panama City. Each member of the group contributed money and labor toward the construction a community center in a small development that had been constructed by our denomination for families whose homes had been bombed out during the raid. When it was time to return home, one of our members removed his shoes and give them to a young Panamanian who had worked beside him that week. Reversing roles, my friend left Panama barefooted and the Panamanian said goodbye to him wearing shoes.

In the mean time, if you are ever in Birmingham, please come by our church, Highlands United Methodist Church. We try to do our part. We feed over a hundred homeless every day, give them clothing, wash their clothes, and obtain identification cards for those who need them to get jobs. We provide Santa Claus for children in one of our economically depressed areas. Some of our members participate in an annual medical mission to Central America. Our youth travel to Appalachia every year where they repair run down houses.

These programs are supported by our members— and their gifts are tax deductible.

Arts and the Charitable Deduction

Sorry about the delay. I blame technical difficulties with the computer. I recently received an E-mail from my son, Vastine, concerning funding for the Arts and the charitable tax deduction. It is worth reproducing here. I plan to follow up in a few days with another discussion concerning the charitable deduction. Here it is:

AMERICAN ARTS: STANDING IN THE WRONG LINE

Arts advocates like to point to the funding of the National Endowment for the Arts to demonstrate how poorly our government supports the arts. In the textbook I use in my introductory theatre class, the authors compare the funding for the NEA with the governmental support for the arts provided by other countries to demonstrate what they see as an indefensible lack of federal support.

It may be shocking to learn that the level of federal support for the arts in the United States is most likely the highest in the world. To understand why you need to know how non-profit arts are funded in the United States. Approximately 50% of the financial support for the arts comes from earned income and another 10 % comes from non-federal government support. The final 40% of arts funding comes from private donations. It is this 40% where the US government makes its true impact on the arts. Depending on the donor’s tax bracket, up to 35% of individual donations are funds diverted from the US Treasury to the arts through tax deductions. This amounts to a multi-billion dollar investment by the federal government each year. While many are unaware of the largess of Uncle Sam via these deductions, the fact has not escaped our current administration.

There is a proposal by the administration that is currently in committee that makes significant cuts to the tax credits given to the top income bracket for charitable donations. Currently, someone who is in the 35% tax bracket can deduct 35% of their donations to officially designated non-profits. In the current bill the most donors can deduct is 28%. This differential will make monumental changes to the giving patterns of our largest donors. As Bob Lynch, the President and CEO of Americans for the Arts, recently said on NPR, our system of arts giving is based on “incentives”. Lynch goes on to say that a little incentive would add a “massive additional blossoming of private donations…”

Note that these changes have no affect on the final take home pay of the top tax bracket. It only affects where the tax money goes. In fact, in a perfect arts world, the deduction rate would rise with the planned elevation of the top bracket to nearly 40%.

Now all of these numbers have asterisks and provisos so this is a very general explanation of the changes. On the web you can find a few news articles that go deeper into the mechanics of the changes. But the best way to demonstrate how much money the administration expects to raise with this change to the donation cap is to look at what it plans to do with this money. One of the centerpieces of the new administration’s legislative agenda is healthcare reform. It is an ambitious plan to restructure the American healthcare system while providing health coverage to the tens of millions of uninsured. Peter Orszag, director of the White House Office of Management and Budget, told CNN’s John King that the new health plan will be “budget neutral”. In other words, this massive new program will not add to the deficit. He said that there are two components to financing health reform. Part one will be eliminating waste in the current healthcare system. Orszag said the other part would come from the lowering of the deduction cap for charitable giving. Think about it, there will be enough money returned to the US Treasury from the reduction to charitable deductions to be one of only two components for financing healthcare reform.

I think the majority of Americans recognize the need for a healthcare reform that would provide for the uninsured. The problem is that this plan pits non-profits against healthcare. I believe this a tragically miscalculated approach. Already thousands of worthwhile groups are lining up to receive their allocation of the nearly trillion dollar budget non-neutral stimulus plan. At the same time, non-profit organizations have been lumped together with the oil companies, the healthcare industry and the rich are those responsible to pay for it. We need to get in the other line.

With the devastation to the funding capabilities of foundations caused by the halving of the stock market, the plummeting of the aggregate take-home pay of the American worker due to job cuts and the marked reduction in business income in this failing economy, the giving base in the United States is in the process of being decimated. When individuals face a diminishment of their giving capabilities they not only reduce donations but they also reassess their giving priorities. The arts have traditionally found themselves behind religious institutions, educationally focused charities and other worthy non-profits on the priority tree. Instead of cutting back the percentage of their giving to each of their favorite charities in equal proportions, many donors limit the number of groups they give to. The church and the alma mater beat out the little theatre on the corner almost every time.

We in the arts world permanently reside near the line between survival and failure. One of our greatest talents is the ability to make a lot out of a little. At the same time, a small loss in income can be catastrophic. There is no way around the fact that there will be major damage to the arts world during this economic crisis, it cannot be avoided, but if the changes in the tax code proposed by our government are enacted we could see an unimaginable devastation of the arts community.

So why have our arts leaders been so quiet? There is a genuine feeling among most in the arts world that the new Obama administration represents a needed new direction for our country. One of the first acts of the new administration was to increase the underfunded NEA budget by $50 million and there is a further $10 million in the Omnibus Bill. But that pales in comparison to the loss of billions. This is not a Republican or Democratic issue, this is an arts issue.

A. Vastine Stabler
andrewvs@hotmail.com

Gran Torino

Movies are so bad nowadays, it is hard to find one worth the price of the ticket. It was thus a welcome sight to learn that Clint Eastwood was coming to town with still another of his highly entertaining adventures.

Gran Torino, however, was a surprise. It far exceeds the boundaries of merely escapist entertainment. It has a simple story line that resonates into multiple layers of meaning.

The first layer is an entertaining Clint Eastwood story of personal courage when one man takes on the corrupt establishment, much like the westerns and detective stories that have made Eastwood so popular. Walt Kowalski is a retired, widowed automobile worker in bad health living in a changing neighborhood. What was once dominated by a mainly caucasian working class is now occupied by Asian and African Americans. The new establishment appears to be gangs that roam the street clashing for control of their territories. Walt is a tough guy, sort of a Dirty Harry after retirement. A marine war hero, he had killed at least thirteen “kooks” in the Korean War. He exudes toughness in his exterior, but he has never let go from the torment he suffered during his war experiences. The story focuses on how this tough and savvy warrior responds to the violence and intimidation visited upon him in his neighborhood. It is deftly told with a combination of suspense and humor that provides good entertainment.

A second story kicks in involving Walt’s fractured relationship with his children and grandchildren. We are spared the details of how that family had grown so distant. The children try to be good children, but they do not know how, because they do not know their father any more. The relationship is so deteriorated that we do not know where the fault lies. There is so much water over the dam that all generations are both the victims and the perpetrators of their broken relationships. I found myself profoundly sorry for every one involved. Thus the story becomes a good parable on the consequences of a breakdown of the nuclear family.

The third layer, however, makes the movie something special. Gran Torino is, in the final analysis, a morality tale. Walt is lonely, though he can not bring himself to admit it. His closest neighbors are Vietnamese who he consistently abuses with genuine bitterness. A young girl in the Vietnamese woman reaches out to him, and he finally melts. He becomes involved with her, her brother, her family and ultimately the entire Vietnamese community. In so doing, he learns that they are in danger of succumbing to destructive forces which can destroy their dreams.

I have to leave the story at this point. I hope that I have not spoiled it for you, because I did not realize until the movie was almost over that I had been sucked into a morality tale, and now you know. Suffice it to say that he had to reach into his own soul to save this family, and in so doing he came to understand the essence of life abundant.

The viewer must tolerate a bucket load of bad language. I am weary of gratuitous vulgarities, but the language in this case serves to fill out the landscape of the world Walt lives in. Moreover, I the swearing and vulgarity is a dramatic sign of Walt’s separation from God.

One final note. Clint Eastwood is amazing. This man is seventy eight years old with the grit and muscle to convince you that if chooses to take on a teenage thug, it would be no contest.

By the way, the Gran Torino is pretty nifty, too.

Economic Sanctions Against Cuba

Eugene Robinson of the Washington Post wrote an article last week, that I have been waiting to see for fifty years.

Robinson writes about Cuban-U.S. relations after fifty years of Castro rule. He complains about the “wrongheaded policies that have unwittingly helped shield Castro’s revolution from historical trends which long ago should have forced the regime to give way or at least compelled it to evolve.”

The policies to which he refers are laws and regulations forbidding trade and travel between the U.S. and Cuba. It is clear that these policies have failed. Instead of either bringing down the Castro regime or forcing them to see the error of their ways, these sanctions have induced a despotic government to become more isolated and oppressive. He contrasts our Cuban policy with the rest of the communist world which “was always to push for more contact and exchange on the theory of exposure to the Western ideas, freedoms and prosperity would hasten communism’s demise. It worked.”

It will not be easy to reverse course. The primary reason for retaining the policy is to mollify the disillusioned and angry exiles living here who have an understandable hatred of the Cuban government. Ironically they were probably exiled in this country in part because of our policies that gave comfort to the hard liners of Cuba, who had a convenient scapegoat in the US to blame for whatever failures have surfaced in the Cuban economy.

Moreover, the policy has been costly to the U.S. economy, which has been denied the opportunity to participate in a potentially profitable relationship with a country a mere ninety miles away. The beauty of open trade is that both buyers and sellers profit from the bargain. Concomitantly, when trade is suspended, both countries suffer. Because of the embargo, we cannot buy Cuban cigars and they do not purchase our products ranging from tooth paste to automobiles to computers. The benefits from open markets is insidious and hard to see some times. We can immediately calculate costs resulting from a tax or a factory close down resulting from foreign competition. But the loss of jobs and profits cause by the closing of a market and the lost buying power obtained by the purchase of more expensive products is difficult to see. Therefore, the accumulated cost of the sanctions to our economy is staggering and unnoticed.

I do not follow Robinson enough to identify whether he has jumped into the free trade debate consistently. If so, he has plenty fodder to work with. What about Iran and Korea? We have shut down the availability of our markets to them, and I see no evidence that our policies have had the least positive effect on their conduct.

We are at a cross roads in Venezuela, which has the potential for the same meltdown in our response to at tin horn dictator who is, frankly, too big for his britches. Then there is Columbia. Obama has indicated that he opposes the treaty opening up the Columbia markets. Hopefully his opposition is only campaign rhetoric, because of union opposition to the treaty. If Columbia is cut back, they will continue to trade with us, but the primary product may well be cocaine smuggled into the country, and the primary beneficiaries will be the cartels and their criminal counterparts in this country.

Time and again, when our foreign policymakers choose what is euphemistically called a “diplomatic” option, they trot out the time disgraced economic sanctions. Maybe they should look at the Cuba experience before they jump into another morass.

The Legacy of W as President

It is time to reflect on the legacy of George W. Bush. He originally promised to reach across the aisle to all parties to work for the common good. If unity was to be the mantra of his administration, he failed miserably. The brief consensus after 9/11 was permanently erased by the Iraq war. Now his legacy will be defined by the ultimate consequences of the war he started.

W certainly made some monumental mistakes. His sabre rattling “axis of evil” State of the Union speech in January 2002 irretrievably placed the US in a hostile, almost warlike, stance against Iraq, Iran, and Korea. This country had neither the resources nor the political will take on those three regimes simultaneously in addition to much unfinished business in Afghanistan. In the end he chose to invade Iraq, which proved to be all this country was prepared to handle. Reagan’s strength was his ability to use power. Every one knew that when he made a threat, he was prepared to carry it out. Even the most powerful country in the world is weakened when it expends much of its energy and resources on a war that does not produce the expected results.

Second, he, or at least Cheney, claimed that the Iraqis would welcome the US in open arms because of the tyranny of Sadam. W should have talked to his father who made the same mistake in Somalia. The fact is that people fight with unrestrained determination on their own soil . I know of no example where a foreign power sought to dislodge a domestic government and did not meet the fierce resistance of the people. There may be some, but I cannot recall.

Third, he thought he could turn Iraq into a western style democracy, reversing thousands of years of nomadic culture which operate under paradigms quite opposed to democracy. Other colonial powers had tried and failed to westernize the Middle East. He thought he could do better, and he fought a war with an unrealistic goal.

All that being said, do we conclude that W was the worst president in American History, as Senator Harry Reed proudly declares? Not so fast. Opponents of the War blandly seem to assume that the Middle East would somehow have muddled along quite nicely without the American intervention. W should be measured by a comparison of where we are with where we would have been if the Iraq War had never happened. This involves a lot of speculation, but there are clues worth looking at.

In the first place, if America had known the day after 9/11 that there would be no further terrorist attacks on its soil for the next seven years, we would have been inclined to canonize W. Now that this has been accomplished, the feat is pooh poohed. With all the bumbling, W put the terrorists on the defensive, and at least they are trying to infiltrate Iraq rather than New Jersey.

Moreover, W has turned over to Obama a vastly improved military and intelligence community adept in combating terrorism. With all the talk about how W is disliked in Europe, I get the impression that the European military and intelligence communities work very closely with us to repel terrorist threats. and that the coordinated efforts of the western democracies is a formidable force that has been highly deterrent against the terrorists.


Furthermore, we can assume that Sadam would still be alive doing his thing. He obviously had imperialistic ambitions. He had already engaged in a bloody eight year war with Iran and invaded Kuwait. He had an aggressive missile development program, which evidenced a desire to dominate the Middle East militarily. His destabilization potential was immense.

I do not believe that history will fully excuse W from some of his mistakes. Nevertheless, there is a good possibility that when future generations will that his administration responded well to the changes in military goals and strategies needed to counteract terrorism. If so, many of his miscues will not loom as large as being characterized by his contemporary critics.

President-Elect Obama

Welcome aboard. We have been preparing ourselves over the last month and a half for the fact that our new president is going to be Barack Obama. Now that we have him, what have we got?

Mr. Obama is now enjoying the euphoria and optimistic anticipation which normally ensues after the election of a new president. The small Democratic majority in the Senate and House gives him room to work. I remind you, however, the President Carter had a substantial majority in the Senate and Congress, and the Democrats proved that they could squabble among themselves as effectively as with the Republicans. There are differences, however. The Republican party has successfully taken over seats in Congress and the Senate that had previously been held by conservative Democrats. The Democrats may not be as fractured as before when conservative Democrats were a larger part of their caucus.

The question I want to pose, is what should we expect of our new President? Here are some thoughts:

- The experience issue is vastly overrated. In 1860 the country elected a president who had been a one term congressman and a member of the Illinois legislature. He turned out all right. The fact is that there is very little a person can do to be "qualified" for the presidency other than actually do the job. There is none other like it. Obama is extremely bright. Do you understand how capable and brilliant a person must be to be elected Editor in Chief of the Harvard Law Review? His language is measured and reflective. I believe he has the raw material to be a good president.

- Do not be overly concerned about campaign rhetoric. My father used the say that when a politician gets on the train, he gets off the platform. Most presidencies are marked by issues and events that have little to do with the issues that dominate the campaign. Obama himself has been quoted as saying that presidencies are controlled by ninety per cent circumstances and ten per cent agenda. The job takes the man to strange places. Examples: Who would have expected that a China baiting, Communist hating senator from California would ultimately open the door for stronger economic and political relations between the United States and China (and we are still feeling many positive effects of that dramatic move). Who would expect that a Texas senator who filibustered against Civil Rights legislation on several occasions would bring about a sea change in racial relations when he became president our country? And then what about 9/11? Nobody contemplated the event or the way its has changed our country or the presidency of W. Obama has already been confronted with an economic crisis of epic proportions. We do not know what Mr. Obama will be called upon to do. We must hope that Obama he has the character, wisdom and ability to do the job.
- I hope that he will not succumb to the tendency of the Democrats towards protectionism. We are living in a world economy. Tom Friedman eloquently made the point when he coined the phrase that the world is flat. Our borders are becoming less and less important. We cannot afford to back off from our position as the world leader in that flat economy.
If you have a wish list for our new President Elect, let me hear from you. Have a Merry Christmas!

A New Testment Psalm (Mumbai)

Our minister recently challenged each member of a small study group to write our own Psalm. I was consumed with the Mumbai tragedy at the time, as revealed in the previous posting. Here is my Psalm:

Blessed are those who delight in the Lord; for they shall find the Kingdom of God.

The Lord loves all his creatures and not just the righteous, not just the faithful.

The Lord loves the forlorn, the forgotten, as well as those who do not know the Lord.

The Lord loves those who see through a broken glass or who profess to know the Lord when they see nothing.

The Lord weeps when we fight and kill each other in the name of the Lord.

The righteous love the Lord, and know that the Lord asks them, even commands them, to love one another, that is, to love the good and the bad people, to love the people who know God and those who do not.

Then where are the righteous? Why do the Lord’s children kill and terrorize their brothers and sisters, all in the name of the Lord, in Mumbai, in Zimbabwe, in the Middle East?

Why do the people of Gaza pray to Allah with a bomb in their hand?

Who mourns over the Mother’s loss of her baby in the West Bank, when the fatal bullet was shot in the name of Yahweh?

We who are blessed, the Lord will teach us to be righteous?

We who are righteous, the Lord will teach us to be loving?

We who are loving, the Lord will teach us to know how to love.

Blessed are those who delight in the Lord, for they shall learn how to love.