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Transcript of ProceedingsCompassionate Welfare Reform: Empowering Charities and Private Citizensa conference sponsored by
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MR. FUND: Thank you.
We have two items of business. First of all, we are going to be moving to questions and there is now a microphone right in front of the podium which you should probably line up if you would like to address a question and that way we don't have to repeat it.
Second of all, after the conclusion of the questions, there will be a very short break which we're going to be setting up for lunch. In as much as you possibly can try not to leave the room. Please stay while everything is being set up. That will facilitate our getting started again and that means that Senator Coats and Congressman Kasich can speak as quickly and effectively after lunch as possible.
So, our first question.
MR. HARVEY: My name is Thomas Harvey and I feel like I'm the armadillo in the middle of the highway because I was National Director of Catholic Charities from 1982 to 1992. And, you know, I'm rather proud of my successor for having Catholic Charities used so frequently from the podium today.
What I really am disappointed in, and I know there's an awful lot of very bright people at that podium, but the lack of analysis on who's a big bureaucracy and who isn't. Catholic Charities, like the gentleman who runs the Neighborhood Enterprise group, or like Lou Nanni, are in 3,600 zip codes.
They are locally controlled. The National Catholic Charities is a dues paying organization. When I left at the end of 1992, we had 23 employees to serve that service system. I had one person working in public policy. We went from 1982 having 3 million clients to 1992 having 13 million not because we wanted to become a poverty industry but because there were changes in the economic sub-system that was dislodging people and we were put into the bread business and so on, that we thought we left in the 1930s. We did not make a deliberate choice in that area.
I just think if we're going to have these kind of discussions and try--because I happen to be for this tax credit--but we don't need straw enemies that have been breaking their butts trying to help people and are really going to get a lot of the money and it's not going to go into lobbying unless there's bad legislation that needs criticizing.
MR. FUND: Any response from the panel?
MR. RECTOR: Well, I think that basically--I would say one thing in terms of all of this--the model has been proposed here that what this tax credit is about is free, broad choice. It is not. People are not choosing between alternative modes of benevolence and alternative ideas of benevolence. The tax credit is very tightly defined and tightly defined structurally in terms of what I would call a failed redistributive model.
Let me give some examples of that. And I could go through hundreds of these but let me just give one. Under this credit, even setting aside what I've said about lobbying, under this credit if you have a schizophrenic you can give money to give food to the schizophrenic out on the street, but if someone else's mind of what benevolence is, is to give money for medical research to cure schizophrenia, no. You can't do that.
That's a very, very bad idea. Under this bill you can give money to advocate for food assistance for low-income working parents but you could not give money for various activities designed to raise the productivity and wage level in the United States which would make that food assistance unnecessary.
So, in a very certain, very fundamental structural sense, the whole idea here is sort of taking the basic premises of the war on poverty, which is the way to aid people is to treat them as a distinct class and to service them as a distinct class instead of servicing broader social concerns and replicating it. And when we do that what we're essentially going to do is replicate the failure.
I could go through item after item after item of all the choices that are, by definition, excluded here. What if someone feels that the best thing they can do with their charity activity is to give a donation to create additional prisons to lock up homicidal maniacs? Well, you can't do that here.
MR. FUND: Okay. I would simply add that perhaps the only way we can broaden people's minds to a larger perspective is to offer them alternatives even within an existing framework.
The next question?
MR. DEVINE: My name is Donald Devine and I was head of the Office of Personnel Management during Ronald Reagan's first term and had some direct experience with Mr. Rector's problem about limiting charities. I went to the Supreme Court of the United States to get the approval of the Supreme Court that you--by the way, one of the very few times I was supported by the Washington Post though, so, maybe Robert can continue to be suspicious of it--but we went to the Supreme Court and we got from the Supreme Court that the government can discriminate in favor of certain kinds of charitable work and against some others like advocacy.
So, we have the approval of the Supreme Court of the United States to limit some of those abuses. Secondly, the Coats bill has that kind of limit. Third, yes, it does discriminate in favor of those who directly deal with the poor but to me that's what the idea of charity is. And no matter how good your Wisconsins are going to be, there still is going to be that 20 or 10 or whatever the rest of it is left that has to be supported directly by individuals.
When Robert first brought his objection up to me, I must admit that I was brought up cold even though I wrote a book in 1978 supporting this concept.
MR. FUND: Don, do you have a question?
MR. DEVINE: My question is that there isn't a problem as long as you put the limits. That's an observation, not a question.
MR. FUND: Thank you.
We'll go on to the next question.
MR. WOODSON: I'm Bob Woodson and I'm not unbiased in this, I have to confess.
MR. FUND: Please have a question, Bob.
MR. WOODSON: All right. Two questions. First of all, where did the demand come for adding those provisions against lobbying? It wasn't a part of the grassroots deliberations, so, where did that come from?
Second question is you made a statement, rather glibly, that the so-called Woodson groups are limited. Do you have some research that supports that claim that the number of grassroots groups around the nation that we've identified are somehow limited and, therefore, it can be dismissed?
MR. RECTOR: Where that came from was from another meeting of groups that were going to support this credit and the first question that came up was well, can this credit be used for donations to Legal Services Corporation for litigation? And everyone sort of said, well, that's not really what we want here. And then we sort of expanded the notion of what it is that, what could be done with this money that is counterproductive?
It would simply be my assessment, Bob, that when this money goes out most of the money will go basically by name recognition. You know, I know that the groups that you--I think it would be great to benefit them, but the bulk of the money is going to go by name recognition to Catholic Charities, United Way and so forth.
Within United Way, their definition of charity is, in fact, to come up here and lobby Congressman Kasich and Congressman Coats to expand the public sector and so forth. I think that is just a reality that we have to deal with.
People have said here, we need to put controls on this. Peter made a good comment. He said I haven't read the recent bills. I have. I'm going to be, of all the people in this room, I'm going to read the next 100 versions of this bill. And as these controls get whittled away, nobody else is going to be here. And these controls will be whittled away, I can assure you.
MR. FUND: Bob, the reason you're going to be a good watchdog is you're going to raise the alarm and Peter wants to make a comment.
MR. FERRARA: You know, I love this, Bob. We have this advocate of the Heritage Foundation, a free market conservative who says that if we let taxpayers decide which groups get the money, they won't have a clue as to what they're doing.
Bob has all the answers. And they should just come to him and that's the same debate we had last year on welfare reform is if you let the states do it, they don't know what they're doing.
My friend here has all the answers and they should just be put in the federal bill and told what to do. And I think that's not my philosophy. I know Bob's entitled to his own opinion but that's not my philosophy. I think if we let the taxpayers make the choice they will allocate these monies to groups that are most effective.
Moreover, the other key fallacy I think in your argument, Bob, is that you are not recognizing these private groups are more effective than the Federal Government in assisting low-income people. They provide assistance faster to people who are in need, they limit it more carefully. They throw people off more rapidly. They do not send people a check for 15, 20 years while they continue to have more children.
And they are able to impose requirements on people as a condition of their assistance that government bureaucracies never will do. Many of these religious groups, for example, are very effective in changing the moral concepts of these people and their moral attitudes.
That's the kind of thing we need to bring into this system.
MR. FUND: Peter, I'm going to change the concept of this panel and make the comments from all the participants a little shorter. But next is David.
DR. TUERCK: The Federal Trade Commission had a particularly preposterous project in the 1970s when they were terrified that name recognition was going to be an obstacle to competition and we had to beat up on certain companies because their names were too well recognized.
Well, the way to deal with the name recognition problem is to introduce competition. And that's exactly what this is going to do. With thousands of charities like Lou Nanni's going into the competition with the giants like Catholic Charities which may very well, by the way, continue to draw a large amount of money because of their efficiency.
But with these thousands of new charities coming into play the problem of name recognition being an obstacle to competition I think will simply fade away.
MR. FUND: Merrill had another comment.
MR. MATTHEWS: I agree with David. The most active groups out there at the local level trying to take care of welfare is largely the Christian groups. Some Catholic, some Protestant, but they're usually very conservative groups out there creating--the Dallas Life Foundation, Milwaukee, various number of these I know of are Christian groups that are conservative and what you're going to find is that these groups will come up--create types of programs to help in welfare and help the poor. They will be having direct access to people through the church membership in their local communities.
So, my guess is that in the very near future with the charitable tax credit, you will have people overwhelmed with options out there rather than having them basically thinking about just two or three that they know of very well, they will be overwhelmed with options.
MR. RECTOR: If I could clarify my basic point again, since we don't--
MR. FUND: Very briefly.
MR. RECTOR: --Very briefly, it's not that I believe that people shouldn't have choices but that the choice in this bill is already restrictively defined and defined in a way that discriminates against conservative philosophy and that's a very, very bad idea.
If we're going to use tax credits to strengthen civil society, we need to broaden the concept of benevolence and make it fair and flat not oriented toward the old concepts of the war on poverty.
MR. FUND: We move to the next question.
MR. EGGERS: Yes. Bill Eggers from the Reason Foundation. I had a few implementation questions. I just wanted to also note that I am a little distressed that the responses to some of Robert's arguments seem fairly simplistic and ideological as opposed to dealing with the real implementation questions. A couple of the ones that have come up in an NCPA study and others that were just simply not answered yet. I wish you could deal with them.
Do we really want an army of IRS agents who are going around and monitoring the different charities? Then there is the geographic question, how do we--if people really do give locally, then how do we make sure that we don't see fine art and soup kitchens in Beverly Hills and very little money going into Watts?
What evidence is there really that people are going to fund effective charities over ineffective charities? It's a nice notion but none of the studies have been able to document any evidence along those lines. If you could deal with some of the more tricky nuance implementation questions that would be nice.
MR. FUND: Anyone like to handle those?
Merrill first and then Peter.
MR. MATTHEWS: Let me take just a couple of those things. Under the charitable tax credit right now those organizations that can receive tax deductible dollars already come under a 501(c)(3) designation. This would create a 501(c)(3) plus was what the idea initially was. But they already have IRS oversight.
Now, a fair criticism is, is the IRS going to have to oversee this even more because if you go to a tax credit you have a much greater, there's much greater reason for people to try to commit fraud here because they have a greater access to money and that is a fair question. But the IRS oversight is already out there.
How would this affect people who are in Watts or other lower income areas? Remember if you go to a charity tax credit it's going to be people who are working who are producing some income that would have access that would be able to transfer their welfare dollars. In high income areas they may or may not. They may want to choose their charities that they're familiar with in their area but you're going to have a lot of people in areas close to poverty-stricken areas that are going to be making an income. They will have, in fact, better knowledge of those charities in their areas that would be able to benefit people because many people working live in lower income areas. They're going to have access to use these welfare dollars also.
MR. FUND: I would just add to that that in all of the foundations that I've seen very few of them restrict their giving locally. There is one example of a foundation in California that restricted all of its giving to the needy to Marin County which, as you know, is perhaps a very prosperous county. That was eventually overturned by the board of that foundation. And I think that the concern is perhaps over placed because, again, the symphonies are not going to be the beneficiaries of that. They are the current beneficiaries of the charitable structure that we have.
Peter?
MR. FERRARA: Well, Merrill gave very good answers to that. I mean, first of all, they do already have IRS oversight and secondly, the questioner's concern that if we let the taxpayers have these choices, actually is very similar in outlook to Bob that he thinks that the taxpayers will foolishly give their money to soup kitchens in Beverly Hills rather than Watts.
And I don't think that's going to happen. I have to admit that that is my philosophy and ideology, I don't think that's going to happen. I don't think you need a lot of empirical studies to indicate that people in the private sector make better choices than centralized government bureaucrats. I think that the history of modern civilization proves that.
And if you don't think so, that's fine. Go do your own empirical studies.
MR. FUND: Next question.
DR. TUERCK: Well, I just wanted to add a reminder that we are not proceeding toward this idea on the basis of a neutral tax system. The tax system already offers a tax incentive for certain kinds of contributions which is particularly strong for high-income taxpayers who happen to be itemizing.
We are not beginning with a blank slate here, we're beginning with an existing system which arguably favors the high-income giver over the low-income giver. It's against that background that we ought to be analyzing this proposal not against some theoretically pristine tax system that's neutral toward giving in the first place.
MR. FUND: We'll take the next question.
MR. FORTER: My name is Sean Forter. My question is more along the lines with what I've been hearing from the different panel members where we're talking a lot about competition and putting a lot of these different private organizations against each other and even government.
The latest welfare legislation that I'm aware of actually forces a lot of agencies to rely on each other and cooperate with each other as far as information sharing and that kind of thing. We can see right now, even I think the moderator here had even mentioned, where the Washington Post had said that there were a group of clericals, people, ministers and that kind of thing, that had rejected the notion of welfare reform because they thought it put too much weight on the private churches and organizations.
My question is, what about this? Will it foster an atmosphere of cooperation between government agencies and these private groups? Because there's no way we can have effective welfare reform change without everybody seeming to pull together to me. If you could answer that?
MR. FUND: Any brief response?
DR. TUERCK: There would almost certainly be, no, indeed, there would be cooperation between private charities in delivering services because these charities, in many instances, complement each other. We're not looking for cooperation between government and these charities because government's going to get out of the business and the charities are going to pick up from government. But just as we have cooperation in the delivery of all kinds of private services between private sector institutions, we would also have cooperation, where it was called for, where it was economically efficient and where it was effective here.
MR. FUND: Peter, just a brief comment.
MR. FERRARA: In the private sector, private economy you've got competition. Competition reigns. Now, if you look carefully you'll see more cooperation there than anything else. Firms are always cooperating with each other. Suppliers, you know, sellers, whatever, vendors, that's where all the cooperation goes on because the competition leads people to cooperate when that's what's necessary and most effective and that's what you will get with a true competitive system.
MR. FUND: One last question.
QUESTION: One very short question.
An innocent question. Is there anything in the legislation that raises the standard of disclosure? And what I'm thinking about is the standard or the example of Securities and Exchange Commission in the financial markets. If you can increase the level of disclosure on outcomes-- you're talking about IRS agents auditing people to make sure they qualify--but is there any emphasis on disclosing the outcomes of these programs, making this disclosure more readily accessible to the public and, therefore, raising the public's confidence in the charitable sector in general.
MR. FERRARA: Well, I think there ought to be, first of all, in the bill a detailed, a clear requirement that they have to detail how they're spending the money. So, that is key to making sure to try and respond to some of Robert Rector's concerns. In this way if they're spending the money on non-qualifying activities like coming to Washington to talk to Congressman Kasich, then the IRS can go after them.
MR. FUND: I also think that Senator Coats and Congressman Kasich may address that as well. I would like to thank the panelists for a very spirited discussion.
[Applause.]
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