Current Article

Must-Read Economic News for NoQuarter’s First Responders

By LisaB on March 29, 2009 at 6:45 AM in American Consumers, Charitable Contributions, Depression, Economic Stimulus, Economy, European Union, International Monetary Fund, Judd Gregg, President Barack Obama, Tax stimulus package

Below, from end-of-the-week economy must-reads: The U.S. Is Not Strong Enough (!) for E.U. Membership … Obama Spouts Pablum (Drivel) … The Atlantic and Real Clear Politics Write Exposés on the State of Our Economy, With the Naked Truth About Who Controls Our Country

1) At BriefingRoom.TheHill.com, Judd Gregg says the U.S. couldn’t even join the E.U. because of the U.S.’s debt levels.

“We won’t even be able to get into the E.U. if we wanted to,” Gregg said this morning on MSNBC, “because our government is so large and so huge.”

The European Union’s Stability and Growth Pact (SGP) adopted in 1997 requires a budget deficit to be less than three percent, and requires a national debt beneath 60 percent of Gross Domestic Product (GDP).

“We’ve been lectured by France on the fact that we’re not fiscally responsible right now,” Gregg, the would-be commerce secretary, noted with incredulity.

That hurts.

2) The Weeklystandard.com notes that Obama’s been indulging in “just words.”

Some of what Obama says is just pablum and isn’t supposed to be taken as serious economic thought. At least I hope not. Rather, it might be called economic morale-boosting. Nothing wrong with that, unless he actually believes what he’s saying.
———-
Nor is Obama up to speed on tax incentives. He dismissed the fear of charities that a proposed reduction in the tax deductibility of donations by upper middle class and wealthy Americans would curb giving. “If it’s really a charitable contribution, I’m assuming that that shouldn’t be a determining factor as to whether you’re giving that $100 to the homeless shelter down the street.”

That’s easy for him to say. Every charity from museums and arts groups to hospitals is terrified by the proposed tax change. And it’s a fair assumption that they know a tax disincentive when they see one. The question is whether Obama does. Perhaps not.

Perhaps charities better front load all they can get from donors now. Obama seems to think a tax deduction doesn’t matter AT ALL. Maybe not for him. Last I heard, his tax returns showed very little charitable giving.

3) The Atlantic has a stunning piece about the financial mess. Here’s the summary:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

I’ve often wondered if oligarchy isn’t the right term for what and/or who is driving U.S. policy.

4) Realclearpolitics has an interesting piece about the current economy and the lessons learned from the 30s.

Anybody who wants to pontificate about the economy, or the budget, or the deficit right now should think about three questions:

1. What changed the Depression from an ordinary recession into a worldwide catastrophe? (And how bad was it, anyway?)

2. Is this crisis the same or different?

3. If there’s risk of another depression, how do we stop it?

Interesting stuff.

daisyjane

Of course he says that about charities.

This family has never donated one dime to anyone that they weren’t forced to give to, given political implications. They did not make charitable donations of significance until he was running. Ditto Mr. Biden.

Every study ever done has revealed the following: the further left the candidate, the less they contribute to charity, but the more they press for tax increases, which are INVOLUNTARY.
stewie

You mean to tell me, the philanthropic activities in the USA may be severely effected by lowering the amount one can claim as a deduction?…..next thing you are going to tell me is….many of these not for profit organisations,spend as much as 90% on adminastrative and “other” expenditures…..say it isn’t so.

It is high time some of these tax loop holes are closed. I don’t believe Obama has gone far enough. I give, because I want to help, not help myself to a tax break.

You may rail against the great orator for many actions he has overtaken in the last four months, ths is not one of them.
blogforce one

So … Stewie…. Since you are in favor of closing the tax “loopholes” of charity giving this must mean you are in favor of the “government” doing all of the charity . If you have a problem with charitable orgs. budgets, join some of their boards and HELP OUT! If you think we can tax our way out of this you are sadly mistaken.
daisyjane

stewie,

You’ll find no disagreement with me. Like you, I give because I want to, not out of any consequences. I file the short form; I’ve never in my life filed a tax return detailing deductions.

That said, his plan is an odious one. While perhaps people like me and you give from the heart, expecting nothing in return, there are those whose “gifts” are enhanced by the favorable tax treatments given to such gifts.

I may be exception to the rule, but I can’t fire up enough indignation over their motives. I view it as a bit of a two-fer…they get to donate, reduce their taxes and get to hang with the big boys.

What bothers this Catholic lady so much more, is how in the world can a Madoff cheat so many Jewish charities out of so much? Nothing about this has dumbfounded me more. When the video shows the hardship these charities are enduring, it’s hard not to tear up, seriously. I tell ya, it makes you want to bang your head on a wall.

I must say, it bothers me a great deal that our current president never found the joy of charity until only recently. And only in a limited way.

You will disagree with me, I’m sure. But I find this individual in the WH; shallow, unprepared, specious, and intellectually dishonest (either that, or he never took an economics class). And scary, besides.

If we manage, somehow, to last four years, you won’t know a more shocked human being than I, my friend.
Ferd Berfle

One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.

Hmm. Sounds like we’ve become the world’s largest Banana Republic, of sorts, in the space of a few short years.
devildog666

many of these not for profit organisations,spend as much as 90% on adminastrative and “other” expenditures…

Yeah, we can really count on the government to be efficient, but that’s OK. Let’s just make all non government charities illegal that should solve the problem.

There are many charities that are very efficient, like the Salvation Army.
betty

Charitable giving is tax deductible so giving is a way to spend your money as you want instead of letting the government take it for its own use, ie: attracting bribes, paying off friends, setting up family members, …

We should all learn how to redirect our tax money. Maybe we could raise the number of dependants to 20, then figure out our taxes in November and donate that amount to anyplace but NPR.
Sassy

Very good response from daisyjane!
Like her, we always filed the short form, and never took receipts for our donations.
Those with more wealth may prefer to fund a women’s shelter, food bank, or literacy program, as opposed to buying more military hardware!
Once the government collects our taxes, we have lost any input to their use!
Sassy

I recently watched a portion of the Senate budget mark-up on C-Span.
The Republicans on at least four occasions tried to bring up “points of order” on provisions in this run-away spending.
They were summarily defeated, so the Democrats own the store now, or robbed it!
oowawa

You may rail against the great orator

The “great orator”? Wasn’t there somebody else who was called by that presumptuous title? I would prefer something a little more accurate and down-to-earth, like “The Great Teleprompter Reader.”
oowawa

Yes Ferd, quite an accomplishment! Only problem is, we don’t produce hardly any bananas, so we will have a hard time even competing in the “Banana Republic” category. In fact, we could accurately replace our National Anthem with the ancient pop jingle:

Yes! We have no bananas,
We have no bananas today!!!
Elizabeth

Thanks for these postings, LisaB. The Atlantic read will be particularly sobering and prescient if these financial conglomerates are not re-regulated while they are down, as a condition of being fed at the govt trough, instead of fattening them up and then attempting to impose controls.

If banks and other financial institutions are not shrunk and cleaned up to the point they can resume normal credit, the small but steady rises in other indicators of consumer confidence, spending, manufacturing orders, home sales etc over the last couple months aren not going to amount to a damned thing except to divert Americans attention yet again so they can be robbed at the other end.
Ellis

What any group that relies on contributions can tell you is: upper-income people donate a smaller percentage of their income/wealth to charities than do lower-income/lower-wealth individuals. The dollar amount from high-income people is larger but the relative impact on their income is lower. An interesting fact that ties into the relatively low donations from 0bama. See below. I’ve tried to properly credit the author. Apologies if I’ve failed.

By RACHEL EMMA SILVERMAN
Staff Reporter of THE WALL STREET JOURNAL
April 22, 2004; Page D2
The rich are different. They don’t give as much to charity as the less well-off, at least by
one measurement.
Many wealthy taxpayers gave a smaller percentage of their investment assets to charity
than those in lower wealth groups, according to a study released today by the NewTithing
Group, a nonprofit philanthropy research group based in San Francisco.
People have long measured their giving as a percentage of income, rather than assets.
Religious groups, for example, often encourage members to earmark a percentage of their
income to charity. However, many wealthy people hold far more in their investment
portfolios than they earn in income, so wealth might be a better measure of giving for
them, according to NewTithing.
According to the report, which is based on 2001 data, well-heeled taxpayers who earn
adjusted gross incomes between $200,000 and $10 million, with average investment
assets ranging from $1.7 million to $46 million, aren’t as charitable as those in lower
income groups when donations are measured as a percentage of investment assets.
However, those at the top of the wealth pyramid — with incomes greater than $10 million
– gave a higher percentage of their assets to charity compared with almost all other
income brackets. This implies that the super-rich take their total estates into account
when making gifts to charity.
Tax-return filers who earned between $200,000 and $10 million gave only 0.48% of their
investment assets to charity in 2001. By contrast, less affluent taxpayers who earned
$25,000 to $200,000 in income, and who held average investment assets from $83,000 to
$490,000, gave about 1.01% of their wealth to charity.
Wealthier groups appear more generous when their giving is measured as a percentage of
income, rather than assets. Filers with adjusted gross incomes of $200,000 to $10 million
donated about 3.1% of their incomes to charity, compared with only 2.8% of income for
filers with incomes of $25,000 to $200,000.
I’m a Linda too

Excellent post LisaB
bayareavoter

We take the charitable deduction. Why not? And with our savings disappearing it’s likely we will have less to give, so why take away the deduction at this time?

THIS IS BIGGER THAN THIS ONE DEDUCTION: Couple the elimination of the donation deduction with his threat to eliminate the mortgage deduction and to tax those health benefits you receive from your job and this is a HUGE TAX INCREASE on the middle and upper middle class.

So now people who continue to pay their mortgages and to be fortunate enough to still have jobs with benefits will pay more taxes for staying the course with a mortgage they could afford and a job they must keep.

Great.
bayareavoter

We take the deduction for charitable donations. Why not? And as people watch their savings disappear they will have less to give–why take away the deduction now?

More important — couple this with the threat to eliminate the mortgage deduction and to tax health benefits and this is a huge tax increase on the upper and middle class.

Why do they want to penalize those who have managed to keep their jobs and have paid a mortgage they could afford?

Typical 0Zero thinking. So depressing.
LisaB

Indeed. Just wait for a more in depth piece about that article later from another writer.

You called it right. Banana Republic.
http://noquarter foxyladi14

i have always supported the charities as much as i could still do.got an envelope sitting here now to go out in the mail tomorrow.
i also never claim that on my tax returns
http://hot-news.dreamhosters.com/monica-conyers Hot News » Monica Conyers

[...] GO HOME! | Angry White Dude…nancynall.com » Blog Archive » Literary criticism….Must-Read Economic News for NoQuarter’s First Responders : NO QUARTER…Detroit City Council President Has History Of Combative Behavior « Quipster…Martha Reeves: [...]
http://www.noquarterusa.net/blog/2010/05/04/13-bankers-and-an-american-oligarchy/ 13 Bankers and an American Oligarchy : NO QUARTER

[...] article also caught my eye when I did a financial round-up, but without the detail Linda brought to [...]