One would expect an economics professor from Harvard, and a president emeritus of the National Bureau of Economic Research at that, to know whereof they speak on matters of dollars and cents. Martin Feldstein argues that the Obama administration should withdraw its proposal to reduce the charitable tax deduction of higher income (over $250,00 for married couples) donors to 28% from the 33% or 35% benefit they now enjoy. He notes:
“A substantial body of economic research shows that, on average, each 10 percent reduction in the cost of giving raises the amount that a person gives by about 10 percent. ”
Without expressly claiming studies supporting the corollary, he goes on to illustrate that a 10% increase in cost will conversely lower donations. Ironically, his explanation better makes the case for adopting the Obama proposal rather than for defeating it. He points out that the effect of the change from 35% to 28% is a 10.8% increase in the cost of giving. Accordingly, he suggests a donor of $10,000 might reduce his donation to $9,000 or 10%. As a result, the giver would pay $980 more dollars in taxes but save the $1,000 in donation–leaving him ahead $20. He says that:
“This is a hypothetical example, but the responsiveness of giving and tax revenue reflects the evidence regarding how people respond to changes in tax rates.”
Seriously?! To someone who can afford to give $10,000 to charity, the person would short his favorite charity $1,000 so he can have an extra $20 in his pocket? While giving the government $980 instead? This is a slap upside the head duh moment in the sensibility of economic theory. Having made this abundantly clear, I think Martin Feldstein eloquently has affirmed President Obama’s conclusion that this proposal should have little effect on charitable donations and a positive effect on tax revenues. Without this explanation, there might have been some foolish people out there who were actually opposed to the proposal.
I come late to the party, honoring the 60th anniversary of the UN Declaration of Human Rights. I won’t waste space here reinventing what news and commentary you can find elsewhere. I do want to mention the sad irony of the recent report of the Senate Armed Services Committee on detainee abuse under the Bush administration. The senators blame Donald Rumsfeld and the White House for countenancing and actively encouraging the torture of high-level detainees. On this point, among others, John McCain and Barack Obama had no differences during the campaign. January 20th cannot come too soon, to right the wrongs of Abu Ghraib, Guantanamo, etc. By denying the humanity and denying the rights all humans should be afforded, we are no better than the criminals, the terrorists or other evildoers we mistreat. But we need to move well beyond self-reflection and correction to stop coddling China, ignoring Darfur, and generally speaking–acting not simply on the basis of our American economic self-interest but on the basis of recognizing and supporting human rights everywhere. As an elective democracy, it is important to remember that the American people are sovereign. Presidents, congressmen and senators are elected to do our bidding. At the same time, we are all equally citizens of the world, with the opportunity to express ourselves and communicate with our fellow human beings wherever they may live around the globe.
“Great events never have minor omens. When great evil occurs, great good follows.” So says Nichiren, founder of the largest sect of Buddhism practiced in the United States. While it would be an overstatement to characterize the entirety of the Bush administration years as great evil, there certainly has been plenty of it. Greed, lies, torture, imperialism, etc. At the same time, can there be any doubt that but for those evils (and the collapse of the economy, attributable in part to administration laissez faire policies), Barack Obama would not have been elected this year. Not sure about the “great good”? Consider the response to his election from ordinary citizens here and abroad. Consider the response from leaders around the world. Look at the faces among the thousands of supporters at rallies and celebrations. White, black, brown, yellow. Young, old, rich, poor, gay, straight. Compare those faces to the tiny crowds present at the McCain rallies. A diverse, large tent versus a tiny, exclusive tent. Which is the “real” America–the small-town, small-minded, “your bedroom is my business” members of the GOP (Grumbling Obnoxious Partisans?) or the hope-filled Democrats and Independents that are tolerant of differences, are tired of ideological polemic and are a mix of ethnicities?
I am getting impatient. I want the election to be over so I can stop watching Anderson Cooper, Rachel Maddow, Chris Matthews, Larry King, Nightline and local news. What else is there to blog about right now but the election? Plenty of stuff; the same stuff that I used to blog about. But I am consumed by the election. Watching Obama’s 30-minute infomercial reminded me how financially fortunate I am. I won’t brag or bore you with the details, other than to mention that my wife and I both were able to retire at 55 and do not have work or worry about income. That is not so for many people in America. I can understand, although not agree with, the choices of some voters to support a political party and candidates that want to dictate the sexual and reproductive habits of Americans. I find it more difficult to understand how the social conservatives, many of whom may not be as well off financially as me or the leaders of their party, can so readily buy the laissez-faire policies of socalled fiscal conservatism. I say socalled because while Republicans continually label Democrats as “tax and spend,” many (if not most) Republicans on the national and local levels spend as much or more than Democrats but they don’t tax–they spend at a deficit. Look at George Bush years as the paradigm. When Democrats brought fiscal order to Congress a number of years ago, it was through “pay as you go” budget programs. At the same time, while the socially conservative Republicans want to regulate what goes on in America’s bedrooms, they care little what goes on in America’s boardrooms. Look at the bailout for the results of that perspective. So I am looking forward to a new day and a new way on November 5th–or perhaps I should say on January 20th, 2009.
Obama will tell you it’s Bush and his buddy McCain that helped make the current money morass happen. He is not entirely wrong but he is not entirely right either. Congress facilitated the mess by repealing the Glass-Steagal Act that kept the insurance, investment and banking businesses firewalled from one another. Institutional investors, including the pension funds that hold our retirement funds, could have exercised more of their clout in the proxy battles and the board rooms to hold management’s feet to the fire and restrained the most egregious excesses–but they didn’t. From a Buddhist perspective, to determine the causes made in the past one has only to look at the effects received today. So if we are suffering financial harm today, what did we do in the past? Well, some of us were also greedy. Some of us have cheated on our taxes, padded our resumes, paid for term papers written by others, goofed off and gotten over at work, etc. OK, so some of us may appear blameless. Nonetheless, we are suffering now. Take it as an opportunity to make the future better and take comfort in knowing that cause effect will work it’s way into the lives of the executives and the politicians who helped create this mess. We may need to help that along–in terms of the November election and the choices we make in investing our money, borrowing, etc.
Hyperbole is a customary part of politics. But calling Bill Richardson a Judas for endorsing Obama is way over the top. Carville defends his commentary in an op ed today by asserting, essentially, that Richardson fails to show sufficient appreciation for the Clintons making him the man he is today. Firstly, it was Bill, not Hillary that appointed him as UN ambassador and later Energy Secretary during Bill’s tenure in the White House. More importantly, loyalty to country comes before loyalty to president–an important distinction apparently lost on Carville.
Continue reading Carville’s Misplaced Loyalty