Thursday, December 27, 2012

This is the Season of Generosity and Good Will

For those of the Christian faith, Christmas is the raison d'ĂȘtre for their religion, the fulfilling of God’s promise to send His Son to Earth more than 2,000 years ago. Christmas now is celebrated around the world by both Christians and non-Christians through the tradition of gift-giving.  In America, we not only exchange gifts, but also freely give of our time and money to help those less fortunate or who are in trouble during this time of the year.

In every community there are organizations that provide tangible benefits to the public and help others in need through volunteering for service projects and monetary and other contributions. Civic clubs and religious organizations raise and give thousands of dollars in assistance every year for medical care, food pantries, weatherization and home heating in the winter, building and repairing homes for less fortunate people and families, student tutoring and scholarships, animal welfare and spay/neuter programs, arts and cultural programs, assisting disabled persons, assisting police and fire fighters to purchase needed equipment, among other forms of aid.

Americans are regarded as the most generous people in the world. We give unselfishly to religious and civic organizations that support our charitable interests to help people both at home and across the globe.

In 2010 Americans donated more than $290 billion to their favorite causes, and four out of every five dollars donated came from individuals and bequests. The breakdown of charitable giving is: individuals, $211.8 billion; foundations, $41 billion; bequests, $22.8 billion; and corporations, $15.3 billion.

Americans donated $23.7 billion in corporate stock; $7.6 billion in clothing, and land valued at $4 billion. Leading the list of recipients of this generosity by a wide margin were churches and religious organizations at $100.6 billion, followed by educational entities, $41.7 billion; foundations, $33 billion; human services, $26.5 billion; organizations benefiting public and societal needs, $24.2 billion; health organizations, $22.8 billion; international affairs, $15.8 billion; arts, culture and humanities, $13.3 billion; and environmental issues and animal welfare, $6.7 billion.

And when disaster strikes anywhere in the world, we respond. We stepped up when the tsunami struck Japan, when an earthquake rocked Haiti. At here at home when Hurricane Katrina struck the Gulf Coast in 2006, more than $4 billion was raised to assist victims. We are still giving to victims since super storm Sandy struck in October.

However, as generous as the American people are, the economic crisis has significantly affected charitable giving, which remains $12 billion less today than when the recession began in 2008, and is predicted not to improve anytime soon. That is a real problem for the country: The nonprofit sector generates nearly 6 percent of U.S. gross domestic product, and pays $668 billion in wages and benefits to its 13.5 million employees.

The fiscal cliff further threatens charitable giving, as lawmakers on Capitol Hill consider capping or eliminating deductions, and a change to the charitable deduction could severely damage non-profits and the charitable work that generates enormous goodwill locally and globally.

A 2009 study by the Center on Philanthropy showed that the proposal to raise the marginal tax rate to 39.6 percent on those earning $250,000 or more and cap the charitable tax deduction at 28 percent would precipitate a 2.1 percent decline in giving, which works out to a $5 billion decrease.

However, a proposal by the Bipartisan Policy Center’s Debt Reduction Task Force would be far worse. It proposes to eliminate the charitable deduction altogether and replace it with a credit like the one used in the United Kingdom. Applying this practice to the U.S. level of charitable giving would cost $260 billion, devastating charities across America.

The Charitable Giving Coalition urged both President Obama and House Speaker John Boehner to protect the charitable tax deduction as they deal with the fiscal cliff facing America. The charitable deduction encourages individuals to give to those in need, and to give more than they would otherwise give by allowing them to offset some of their tax obligation with charitable contributions. Data suggests that every dollar a donor claims in tax relief for charitable donations produces three dollars of public benefit.

The significance of the charitable work of American non-profits is one thing that sets us apart from less charitable nations. It is a reflection of the generous heart of America, and the charitable tax deduction helps to fuel that generosity. That is why it must be protected. If we fail to stop this thoughtless process, Americans will be substantially hampered in their financial support of people in need, and we will all be the worse for it.

To the extent that government continues replacing the work of charitable organizations with taxpayer funded government programs, or impedes the charitable impulses of the American people with short-sighted tax policies, those of us who give to charity lose the ability to decide which projects and causes receive our financial support.

And as the failure to control profligate government spending continues to be ignored in favor of political considerations, the likelihood increases that charitable deductions will be targeted to help raise revenue to feed the government’s spending addiction.

Tuesday, December 18, 2012

Going Rogue, Part IX: Expanding Power and Control over the People

It’s been nearly six months since the antics of the Environmental Protection Agency (EPA) have received attention, but in the last several days two instances have sneaked past the mainstream media filter and become public knowledge, even though only a limited number of people will have seen the reports.

In the first example, a couple seeking to have a retirement home in New Mexico purchased 20 acres of land near Sante Fe. Over the years, the unused land had accumulated quite a lot of trash which the couple intended to clean up to make their property a suitable place for them to spend their remaining years. But no, cleaning up their own property for their own use will not be possible because the dedicated public servants at the EPA have cited the Clean Water Act and prohibited the clean-up saying it might harm the Rio Grande River.

Now, who among us would not want to prevent activities that pollute the nation’s waterways? However, it is difficult to understand how cleaning up tin cans, broken glass and other such trash could actually harm a river, unless the trash ended up being dumped in the river or on its banks, which the couple did not intend to do.

The EPA’s decree at first glance seems intrusive and absurd. Actually, it is much worse than it appears: the Rio Grande about which the EPA folks were so concerned is 25 miles away from the couple’s property.

This outrageous interference has driven property owners Peter and Francoise Smith to court to seek justice against this mindless government over-reach.  The case is being brought by the Pacific Legal Foundation on the Smith’s behalf, and the organization alleges that the land does not contain any relatively permanent, standing or continuous body of water that can be regulated by the Clean Water Act.

We’ll have to wait to see how this plays out in court.

In order to further expand its cancerous growth of power and control over the American people, the EPA stretches definitions to the breaking point, asserting that mud puddles that form after rain are “wetlands,” as illustrated in the second example.

The EPA now seeks to gain control over land alongside ditches, gullies and other spots where water may temporarily accumulate from rains or melting snow, claiming they are part of navigable waterways. Seriously.

They are not waterways or wetlands, of course, and they are certainly not navigable, but these temporary “waters” often interfere with how private property owners want to use their own property, to perhaps construct an out building, grow crops, raise livestock and conduct other activities in which private landowners may choose to indulge. But the EPA proposes to tell these landowners just how they may use their property.

“Never in the history of the Clean Water Act has federal regulation defined ditches and other upland features as ‘waters of the United States,’” said Rep. John Mica (R-Fla.), chairman of the House Transportation and Infrastructure Committee, Rep. Nick Rahall (D-W.Va.), the ranking committee member, and Rep. Bob Gibbs (R-Ohio), chairman of the Subcommittee on Water Resources and Environment.

In a related event, the EPA notified Virginia last December that it would have to take steps to reduce the amount of highway runoff from rain that eventually ends up in a particular stream in Fairfax County. The EPA considers this a no-no because the runoff contains sediment that collects in streams. The rub comes in how the agency has twisted reality to assume control over runoff: it treats rain as a pollutant.

Virginia’s Republican Attorney General Ken Cuccinelli and the Democrat Fairfax County Board of Supervisors claim that the EPA’s position is illegal and say further that if the Commonwealth is forced to comply it would cost the Virginia Department of Transportation (VDOT) and Fairfax County hundreds of millions of dollars to comply with storm water regulations just for the one creek the EPA cited. To control the rain “pollution” VDOT would have to seize private land, evict persons living on it, tear down homes, businesses and other structures on the land, and plant grass that would absorb the runoff.

Reasonable people consider such radical steps as an idiotic solution for a problem with such a tiny effect on the whole of the Commonwealth.

The EPA is likely the most out-of-control federal agency, although it is not without challengers for that dubious distinction. It believes it has authority to do virtually anything it imagines will promote better environmental conditions, no matter how insignificant the perceived problem may be in reality.

It makes no difference to these public servants how many people are affected, how many jobs are lost or how much money is spent; no legal, moral or practical concern is sufficient enough to deter them from regulating themselves into power-induced ecstasy.

The fact that Democrat Congressman Nick Rahall joined with Republican chairmen of two House committees, and that the Democrat Fairfax County Board of Supervisors joined with Republican Attorney General Ken Cuccinelli in protest, illustrates the degree to which officials now believe the EPA is out of control.

Let’s hope changes are on the way.

Tuesday, December 11, 2012

Looking at the United States of America by the numbers

 As the end of 2012 draws near, here are some interesting and revealing statistics about our country.

The Gross Domestic Product Growth Rate has been anemic all year, but had its biggest increase in the 3rd quarter, rising 2.7 percent. That was double the 2nd quarter’s 1.3 percent, and beat the 1st quarter’s 1.9 percent. From 1947 until 2012, the United States GDP Growth Rate averaged 3.2 percent.

* * *

In 2011 the population of the U.S. was 313.8 million and 153.6 million Americans were in the labor force. The nation produced total GDP of $15.1 trillion, roughly $49,000 in per capita GDP.

The U.S. Treasury collected tax revenue of a little more than $2.3 trillion and as a percent of GDP the economy is taxed at slightly more than 15 percent. However, the federal government spent about $3.8 trillion, creating a budget deficit of more than $1.3 trillion, or 8.63 percent of GDP. Each man woman and child citizen’s share of the cost of government is more than $12,000.

Currently, the national debt is roughly $16.3 trillion, which works out to about $51,000 per man, woman and child. This year’s federal budget deficit adds $3,500 or so of additional debt per citizen.

* * *

The November jobs report listed 146,000 new jobs and a U-3 Unemployment Rate of 7.7 percent, two-tenths lower than the October figure. Unfortunately, this news is not as good as it appears. To have a truly meaningful effect on unemployment, more than 300,000 new jobs must be created each month. The Labor Department revised downward new job numbers in October from 171,000 to 138,000, and from September in 148,000 to 132,000.

The drop in the unemployment rate resulted not from lots of people going back to work, but because 350,000 people dropped out of the workforce.

The Labor Force Participation Rate dropped from 63.8 percent to 63.6 percent. The 146,000 new jobs have a much greater effect on a smaller labor force than on a larger labor force. If the labor force remained the same as it was in January 2009, U-3 unemployment would be 10.7 percent. The more accurate U-6 Unemployment Rate, which includes not only those working and those looking for work, but also those who have become discouraged and given up looking for jobs, is 14.6 percent for November.

* * *

In June, a total of 142,415,000 people were employed in the U.S, according to the Bureau of Labor Statistics, including 19,938,000 who were employed by federal, state and local governments. By November, the total number of people employed had climbed to 143,262,000, an overall increase of 847,000 in the six months since June. In the same six-month period the number of people employed by government increased by 621,000 to 20,559,000. These 621,000 new government jobs equal 73.3 percent of the 847,000 new jobs created overall.

* * *

Back in July of 2008 candidate Barack Obama said this about the $4 trillion in debt that we incurred under the Bush administration: “The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents – #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.”

According to the U.S. Treasury, on July 2, 2001, the national debt was approximately $5.7 trillion. On inauguration day 2009, the national debt stood at $10.6 trillion. Last Thursday, it stood at $16.3 trillion. That means the debt has increased $5.7 trillion during Mr. Obama’s first four years, and that is more than all presidents through Bill Clinton, and the first five months of George W. Bush’s tenure. In the name of U.S. taxpayers Mr. Obama has borrowed more than $49,500 per man, woman and child.

* * *

Inflation in October was 2.2 percent, up from September at 2.0 percent, August at 1.7 percent and July at 1.4 percent. The highest level of inflation since 2000 was 5.6 percent in July of 2008.

* * *

Are we drowning in regulations? Ayn Rand’s classic Atlas Shrugged in paperback has 1,088 pages. The 2011 Federal Register totals 82,419 pages, nearly 76 times more than Ms. Rand’s book. A popular estimate of the cost of regulations on the economy is $1.75 trillion annually, which is nearly 76 percent of total amount of tax revenue collected last year.

* * *

In 1913 the U.S. tax code was 400 pages. Today, it’s more than 73,000 pages, which means we added on average 730 new pages each year. It is estimated that U.S. taxpayers pay $431.1 billion annually, or 19 percent of total tax revenue collected last year, just to comply with and administer the U.S. tax system.

Tuesday, December 04, 2012

Tax-and-spend policies have not and cannot solve America’s problems

British millionaires are looking for greener pastures. As reported in The Telegraph of London, “In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs,” but that “number fell to just 6,000 after Gordon Brown introduced the new 50 [percent] top rate of income tax shortly before the last general election.” The story goes on to say that it “is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.” Consequently, the increase in tax revenues Prime Minister Brown had anticipated turned into a nearly £7 billion loss.

This should serve as a cautionary tale for America’s tax-and-spenders in the White House and Congress, who want to raise taxes on “the wealthy,” but it likely will float past them un-heeded. When you consider the details of the first post-election offer from the White House, it is clear that the administration does not comprehend such economic realities. The proposal: $1.6 trillion in higher taxes over 10 years, $180 billion in new spending and vague promises to cut only the growth of entitlement spending at an indeterminate future date, all while giving the president the power to unilaterally raise the debt ceiling.

The proposal calls for double the pre-election tax amount, additional spending and no specific amount of spending cuts or dates certain for them to take effect. And, there’s that last item, which gets immediately crossed-off: it’s unconstitutional.

As idiotic as that proposal is, understand that President Barack Obama appears serious about it.

Big government liberals live on entitlement spending, and many would die without it. The president’s proposal includes allowing the Bush tax cuts to expire for those making $250,000 a year or more, raising the top rate to nearly 40 percent, which he supposes will raise $80 billion annually. That’s enough to run the federal government for only 8.5 days. If America’s high earners follow the lead of the Brits and reduce taxable income or shift it into 2012, it will be even less than that relatively small amount.

But what is worse, when you understand that half of those affected by this rate increase are small businesses, it makes no sense to raise taxes on them with unemployment still more than 50 percent above normal levels nearly 42 months after the recession ended.

The tax-and-spenders need to get past their resentment of high earners and their appetite for their earnings, and get serious about fiscal reform. Out-of-control spending for entitlements, a bloated and inefficient government, a tax code that plays favorites, and other factors combine to produce huge annual deficits and 16 trillion in crushing debt, and it’s time to fix that.

Americans for Tax Reform has focused for years on getting newly elected U.S. Representatives and Senators to take a pledge against raising taxes, understanding that our problem is that we spend far too much, not that anyone needs higher tax rates. Grover Norquist, its president, is now a target of the tax-and-spenders for his organization’s efforts at controlling taxation. However, those Senators and Representatives didn’t make the pledge to Mr. Norquist, they pledged to their constituents they would vote against tax increases.

The problem we have today is not a new one. A Cary Orr political cartoon from 1934, in the midst of The Great Depression, shows a wagon filled with drunken people drinking from a “Power” bottle and shoveling bags of money out onto the road. On the back of the wagon is a sign reading, “Depleting the resources of the soundest government in the world.” And there’s a man on the side of the road painting a sign which says:

Plan of Action for U.S.
Spend! Spend! Spend!
Under the guise of recovery
Bust the government
Blame the capitalists for the failure
Junk the Constitution and declare a dictatorship

Other comments jotted around the scene say, “How red the sunrise is getting” near an ominous looking man labeled “Stalin,” and, “It worked in Russia.”

That is how Cary Orr saw what the government was doing then. And what is unsettling about this cartoon is the striking similarity to what is happening now.

He believed government’s actions were communistic. What our government is doing today may not be socialistic or communistic under the strict definition of those terms But an interesting coincidence is that the Communist Party USA is now organizing teleconferences and rallies supporting the plans to raise taxes and encouraging continued over-spending on entitlement programs.

We should recognize that no nation on Earth has ever achieved success that even approaches the level of success the United States of America achieved before it began changing from the capitalistic model that built it to a model that has produced mediocrity and fiscal peril worldwide.

We should heed the lessons of wrong-headed government policies that extended the Great Depression for years longer than it should have lasted, and try something different, like the economic principles of capitalism that built America.