1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 Moving Towards Long- Term Action...

1742 Connecticut Ave., N.W., Washington, D.C. 20009

(202) 234-8494 http://www.ombwatch.org

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 IThe Problem



As Baby Boomers Come of Age, the Deficit Explodes

Source: Derived from Chart 12-5, OMB, 2005 Budget, Analytical Perspectives, page 194



Lost Federal Revenue Compared to Philanthropic

Giving

485.2

260.3

38.1 25.7 17.30

50

100

150

200

250

300

350

400

450

500

$ in

Bill

ion

s

LostRevenue

IndividualGiving

Foundations Bequests Corp Giving

All figures in 2009 Dollars. Philanthropy source: American Association of Fundraising Counsel’s Trust in Philanthropy/Giving USA 2003.

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.



Breakdown of the Projected DeficitAs a Percent of GDP

YearSocial

Security Medicare Medicaid

Rest of

Govt Interest Total Revenue GAP

2004 4.3 2.7 1.5 10.3 1.8 20.6 15.8 4.82010 4.3 3.7 1.5 9.0 2.5 21.0 17.2 3.82015 4.7 4.2 1.8 8.3 2.5 21.5 17.4 4.12020 5.3 5.1 2.0 8.0 2.5 22.9 18.4 4.5

2040 6.5 8.4 2.8 8.0 6.1 31.8 18.4 13.32050 6.5 10.9 3.5 8.0 11.0 39.9 18.4 21.5

Source: Henry Aaron estimates, based on CBO long-term projections and estimates by William Gale and Peter Orszag



Closing a 10% GDP Deficit Gap

Item Action % of Gap ClosedIncome tax (8.5% GDP) Raise by one-third 28%

Payroll tax (4.5%) Raise by one-third 15Social 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-fourth 20

Total Total of the aboveof the above 102% 102%

Source: Henry Aaron, Brookings Institution



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. )



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.



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 ReformJune 25, 2003



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



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



PART IIInternet Survey Results



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.

34 56

0 20 40 60 80 100

%

Somewhat Agree Strongly Agree

90%

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?



37 51

40 49

34 56

38 52

35 56

36 56

34 59

0 20 40 60 80 100

%

Disability

NP Sector

Education

Health

Emplymt

Child, Youth, Families

Housing

Somewhat Agree Strongly Agree

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%



77

17

60

33

61

29

61

29

0

10

20

30

40

50

60

70

80

90

100

%

ProgressiveTaxes w/

Adequate $

Econ Growth &Jobs

Funding FedMandates

HighlightDomestic

Needs

Very Important Somewhat Important

What Should Be the Focus?

94% 93% 90%90%

9 in 10 say the focus should be:



“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.”



63

24

45

30

39

31

0

10

20

30

40

50

60

70

80

90

%

Cut RegressiveTaxes

Promote Need forGovt

Revenue forUnmet Needs

Very Important Somewhat Important

Other Supported Campaign Themes87%

75%70%



19 37

0 20 40 60

Cut Deficit w/Spending

Cuts

Not Important Somewhat Unimportant

A Majority Oppose Cutting Spending to Reduce the Deficit

56%

%



Participation May Be a Challenge

2821 31 16

53

34 56

-50 0 50 100

%

LaunchCampaign

Participate

Somewhat Disagree/Unlikely Disagree/NoSomewhat Agree/Likely Strongly Agree/Very Likely

POSITIVENEGATIVE

90% of respondents say it is time to launch a campaign BUT 49% say they are unlikely to participate.



Even Though 49% say They Might Not Participate in a

Campaign…

61% Say They Will Help Redistribute Information

About the Campaign



Other Ways Groups Say They Would Participate

40 38

25 24

0

5

10

15

20

25

30

35

40

%

Town HallMeetings

LobbyActivities

EditorialBoard

Meetings

Be Part ofLeadership



35

41

32

40

0

20

40

60

80

%

Lack ofCoordination

Limited Leadership& Org Structure

Somewhat Challenge Major Challenge

76% 72%

Top Challenges to ConfrontIt’s an Organizing Issue



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.”



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.”



The Role of Foundations

34

47

33

43

28

47

38

36

29

27

0

20

40

60

80

100

%

EducateTrustees onTax/Budget

PublicEducation

Projects onTax/Budget

AdvocacyCapacity

Bldg

PilotProjects for

GovtReplication

Programs toReplace

Govt

Somewhat Important Very Important

With respect to tax and budget issues, how important is it for foundations to…

81%76% 75% 74%

56%



Foundations vs. Other Respondents

64 6355 52 52 57

49 43

13 80

10

20

30

40

50

60

70

EducateTrustees onTax/Budget

Public EducProjects onTax/Budget

AdvocacyCapacity Bldg

Pilot Projectsfor Govt

Replication

Fund Projectsto Replace

Govt

All Respondents Funders

Dif

fere

nce

bet

wee

n

Imp

ort

ant

and

No

t Im

po

rtan

t



PART IIIRegional Strategy Session Results



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.



1 Develop a Vision.

2 Develop Progressive Tax Policies &

Principles.

3 Change the Language We Use.

4 Address the Attacks on Role of

Government.

5 Strengthen Civic Responsibility.

Five Objectives Identified by Nonprofits



Five Objectives of an Initiative

1 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.



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.




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.




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.




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.




PART IVNext 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.

Proposed Next Steps



• 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

Steps GIH May Want to Consider

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