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Moving Towards Long-Term Action on Tax and Budget Issues

Moving Towards Long-Term Action on Tax and Budget Issues. A Presentation at the 2004 Grantmakers In Health Fall Forum Gary D. Bass November 5, 2004. PART I The Problem. As Baby Boomers Come of Age, the Deficit Explodes.

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Moving Towards Long-Term Action on Tax and Budget Issues

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  1. Moving Towards Long-Term Action on Tax and Budget Issues A Presentation at the 2004 Grantmakers In Health Fall ForumGary D. BassNovember 5, 2004

  2. PART IThe Problem

  3. As Baby Boomers Come of Age, the Deficit Explodes Source: Derived from Chart 12-5, OMB, 2005 Budget, Analytical Perspectives, page 194

  4. Lost Federal Revenue Compared to Philanthropic Giving Assuming charitable giving keeps pace with the growth in the economy, giving in 2009 will be $341.4 billion. Charity would need to increase 142% to replace the lost federal revenue, assuming it continues to fund existing activities. All figures in 2009 Dollars. Philanthropy source: American Association of Fundraising Counsel’s Trust in Philanthropy/Giving USA 2003.

  5. Breakdown of the Projected Deficit As a Percent of GDP Source: Henry Aaron estimates, based on CBO long-term projections and estimates by William Gale and Peter Orszag

  6. Closing a 10% GDP Deficit Gap ItemAction% of Gap Closed Income tax (8.5% GDP) Raise by one-third 28% Payroll tax (4.5%) Raise by one-third 15 Social Security (6.6%) Cut cost growth by half 11 Medicare (8.4%) Cut by one-fourth 21 Medicaid (2.8%) Cut by one-fourth 7 Rest Of Govt (8.0%)Cut by one-fourth20 Total of the above 102% Source: Henry Aaron, Brookings Institution

  7. Big Squeeze • Lower revenues due to tax cuts • Higher expenditures for national defense and homeland security • Demographic changes leading to more expenditure on Social Security and Medicare The RESULT…. • No money left for other priorities of nonprofits (education, child nutrition, research, etc. )

  8. The Long-Term Problem • It’s a Revenue Problem. The tax cuts since 2001 cause long-term structural problems. Additionally, there is a need to develop a fairer tax system with more revenue. • Hard Choices Await Us.Even with additional revenue, some hard choices about spending priorities may be necessary. For example, some note that current health care policies may not be sustainable over the long-term.

  9. How Did We Get Into This Problem? “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” Grover Norquist, Americans for Tax Reform June 25, 2003

  10. Proactive Policy Initiative • Not enough to be “defensive” – fighting short-term legislative battles • Must be proactive on broad tax and budget issues • Must look outside immediate issue areas • Must look at longer-range policy

  11. What Has OMB Watch Done? • Call to Action paper (December, 2003) • Internet Survey completed by over 700 respondents (Jan/Feb, 2004) • Helped to shape the set of issues examined in subsequent meetings • Regional Strategy Meetings: Chicago, IL; Columbia, SC; Philadelphia, PA; Phoenix, AZ; and Seattle, WA; • National Retreat: with 65 national, state and local nonprofit leaders • Interviewed hundreds of nonprofit leaders

  12. PART IIInternet Survey Results

  13. Strong Support for aTax & Budget Campaign 90% of respondents say it is time to launch a longer-term offensive campaign on federal tax and budget issues. Given limited time and resources and the fact that there are many other important issues, do you agree or disagree that it is time to launch a long-term offensive campaign around federal tax and budget issues? 90%

  14. Support for Tax & Budget Campaign by Primary Activity Those Primary Activities Listed by 20% of More of Respondents 93% 92% 91% 90% 90% 89% 88%

  15. What Should Be the Focus? 9 in 10 say the focus should be: 94% 93% 90% 90%

  16. “Redefine the definitions of "tax" as more than some kind of perverse theft of money. Tax must become redefined in a context of community-building, fairness, common ground and even patriotism.”

  17. Other Supported Campaign Themes 87% 75% 70%

  18. A Majority Oppose Cutting Spending to Reduce the Deficit 56% %

  19. Participation May Be a Challenge 90% of respondents say it is time to launch a campaign BUT 49% say they are unlikely to participate. NEGATIVE POSITIVE

  20. Even Though 49% say They Might Not Participate in a Campaign…61% Say They Will Help Redistribute Information About the Campaign

  21. Other Ways Groups Say They Would Participate

  22. Top Challenges to Confront It’s an Organizing Issue 76% 72%

  23. Other Challenges to Confront Relationships between National, State and Local Groups 67% say that national groups do not listen to state and local groups and are out of touch with their concerns “National organizations often fail to form the partnership and show little respect for the amount of work being done on the local level. In addition, national organizations are often very ‘abusive’ partners.”

  24. Other Challenges to Confront Top Down Nature of Federal Budget & Tax Policy 69% say the top down nature makes state and local groups feel irrelevant. “Convincing local organizations to carve out time for working on ‘bigger picture’ issues when the day-to-day running of an organization are often overwhelming.”

  25. The Role of Foundations 81% 76% 75% 74% 56% With respect to tax and budget issues, how important is it for foundations to…

  26. Foundations vs. Other Respondents Difference between Important and Not Important

  27. PART IIIRegional Strategy Session Results

  28. Hosts of Strategy Sessions • Columbia, South Carolina (March 12) • South Carolina Association of Nonprofit Organizations • Chicago, Illinois (March 22) • Voices for Illinois Children • Seattle, Washington (March 23) • Civic Engagement Project/Univ. of Washington, Institute for Washington’s Future, & United for a Fair Economy • Phoenix, Arizona (March 24) • Arizona Community Foundation • Philadelphia, Pennsylvania (April 28) • Center for Responsible Funding, African American United Fund, AIDS Fund and WOMEN’S WAY.

  29. Five Objectives Identified by Nonprofits • Develop a Vision. • Develop Progressive Tax Policies & Principles. • Change the Language We Use. • Address the Attacks on Role of Government. • Strengthen Civic Responsibility.

  30. Five Objectives of an Initiative • Develop a Vision. We need the equivalent of a new social compact. Some talked about the “American dream;” others about “healthy communities.” All wanted a positive vision which serves as the basis for why we need a vibrant government with adequate funding.

  31. Five Objectives of an Initiative 2 Develop Progressive Tax Policies & Principles. The focus of a campaign should not be about taxes, but about pursuing the vision. To adequately support the vision we need a plan that insures a fair way of raising the resources to meet the vision.

  32. Five Objectives of an Initiative 3 Change the Language We Use. More than an ad campaign, there is a need to reframe the debate and to use values-based language that the public understands and that will resonate with them. Developing these new frames and language should be a key objective of a long-term initiative.

  33. Five Objectives of an Initiative 4 Address the Attacks on Role of Government. It is essential to not only stop the conservative attacks on government, but also to demonstrate the importance of government. The public no longer realizes how important a role government plays in everyday life. Simultaneously, we must address issues about government inefficiencies.

  34. Five Objectives of an Initiative 5 Strengthen Civic Responsibility. Unless we engage the electorate in a more effective manner, we will fail. We will need to increase nonprofit advocacy on tax and budget issues, hold elected officials accountable, deal with mobilizing the electorate, and wrestle with the role of money in politics.

  35. PART IVNext Steps

  36. Proposed Next Steps • Mapping of what organizations are doing and creation of a resource center; • Framing and Messaging – coordination and dissemination of frames; • Creating “Intellectual Space” for longer-range thinking; • Promoting civic engagement and public “literacy” around federal tax/budget issues; • Developing the governance and operations of the Initiative/Network, including addressing resource needs of groups involved.

  37. Steps GIH May Want to Consider • Help develop a vision of what we want our society to look like in 10 years • Find ways to educate trustees, executives, and program staff about these budget and tax issues • Convene meetings to discuss longer-range, proactive thinking • Assist grantees in thinking beyond just their issue area • Fund work in this area

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