The Dot-Org Crash

The Dot-Org Crash August 16, 2004

How President Bush is defunding the "armies of compassion"

The Congressional Budget Office was in the news last week for confirming the already known: most of the benefits of President Bush's tax cuts have been enjoyed by the wealthy and the super-wealthy.

It was at least the second official pronouncement of the obvious this month by the CBO. A pair of earlier studies examined the repeal of the estate tax and the impact of that repeal on the national treasury and on charitable giving. OMB Watch summarizes:

Two new studies by the Congressional Budget Office find that a permanent repeal of the federal estate tax would greatly reduce charitable giving. The CBO estimated that overall charitable giving would decline between 6 and 12 percent, and the decline in charitable bequests would range from 20 to 30 percent, if the estate tax were fully repealed.

"The CBO studies confirm results from independent analysts, and show that estate tax repeal would cause charities to lose between $12 and $24 billion in giving per year," said John Irons, Senior Economic Policy Analyst at OMB Watch, a Washington, D.C.-based government watchdog group. Total charitable giving in the United States reached $201 billion in 2003.

"Not only would repeal of the estate tax clearly devastate our nation's charities," commented Lee Farris, Senior Tax Policy Organizer at Responsible Wealth in Boston, a group that monitors economic inequality. "Repeal would cost the U.S. Treasury $1 trillion over the next two decades. At a time of record deficits, we as a nation cannot afford this double drain, on revenue as well as on philanthropic funding."

The estate tax is currently slated to be eliminated for one year in 2010, and then return in 2011. Congress is expected to take up the debate on whether to permanently repeal the tax in September.

The nonprofit world of "our nation's charities" is vast and vastly important. It ranges from the wine-and-cheese charities of the high society to the frontline charities of the streets. It includes operas, ballet companies, museums, orchestras, theaters and arts academies. But it also includes universities, medical research societies, hospitals, health clinics, land preserves, disaster relief agencies, international relief groups, libraries, local churches, "faith-based" agencies, denominations, senior centers, veterans groups, after-school programs, child-care centers, women's shelters, homeless shelters, orphanages, soup kitches, food pantries and countless other organizations helping people and enriching us all.

President Bush has just hit them all with a 6-percent to 12-percent across-the-board budget cut.

This affects health care. Hospitals will have fewer beds and fewer resources available to aid the indigent and the uninsured. Fewer staff will mean poorer care all around.

It affects education at every level, from preschool to grad school. It will surely mean less money available for scholarships and fewer nonwealthy kids able to pursue their dreams by going to college.

It means fewer books on library shelves — fewer library shelves, in fact, as branches will inevitably be closed and staff and programs reduced. (Note to Laura Bush: Aren't you proud of your husband?)

And on the front lines, at street level, the impact of Bush's repeal will be devastating and deadly. Conservatives love to talk about charity as a "hand up instead of a hand out," but that kind of approach takes time, staff and resources. Without those, the frontline charities are forced into a kind of desperate triage. They are too busy acting like an ER to offer long-term rehabilitation.

President Bush talks about the "armies of compassion" — the faith-based nonprofit agencies that work hard to improve the lives of their neighbors all across the country. In recognition of the work they do and the way they benefit society, Bush wants to allow them to apply for millions in federal contracts. John DiIulio, the first director of Bush's "faith-based" program, pointed out that the benefits of this new revenue for such charities wouldn't even begin to make up for the revenue they would lose due to a repeal of the estate tax. He quit his job rather than take part in a charade that trumpeted the giving of nickels with one hand while taking away billions of dollars with the other.

So there it is. The repeal of the estate tax will add $1 trillion to America's national debt over the next 20 years, while devastating the nonprofit sector and degrading America's health care, education, safety net and the arts.

In exchange for this we get what? What, exactly, is the purported upside of this repeal?

Its advocates claim that it will help family businesses and family farms. This is as dishonest as their sloganeering insistence on referring to the estate tax as the "death tax." The estate tax threshhold for farms and businesses is already so high that only the tiniest fraction of these owes any estate tax at all. If these were really the proponents concern, they should advocate — and explain the need for — further increasing this threshhold. Instead, they advocate a total repeal.

The repeal of the estate tax is a policy without a purpose. It is, literally, indefensible.


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