Posts from — March 2008

George Will authored a piece in the Minneapolis – St. Paul StarTribune comparing the behavior of self-identified liberals and conservatives with regard to charitable contributions as reported on their Federal tax returns.

Common wisdom would suggest that folks who profess such concern for their fellow man that they plaster their cars with bumper stickers proclaiming their cause d’jour would also drop a few bucks in the collection jar.  You might think that, but you’d be wrong.

The folks proudly proclaiming “Better a Bleeding Heart Than None at All,” “Practice Random Acts of Kindness and Senseless Beauty,” “The Moral High Ground Is Built on Compassion,” “Arms Are For Hugging,” ”God Wants Spiritual Fruits, Not Religious Nuts,” “The Road to Hell Is Paved With Republicans,” “Republicans Are People Too — Mean, Selfish, Greedy People”  seem to be a little less involved when the funds for such largess come from their personal wealth.

Arthur C. Brooks,  a professor at Syracuse University and author of “Who Really Cares: The Surprising Truth About Compassionate Conservatism.” discovered that liberals are markedly less charitable than the much derided “compassionate conservatives” — by about two to one! 

Professor Brooks data indicates:

•Families identifying themselves as liberal have incomes on average 6 percent higher than those of conservative families. However, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household.

•Charitable contributions from residents in states that voted for John Kerry in 2004 where smaller as a percentage of income than did residents of states that voted for George W. Bush.

•Of the 25 states where charitable contributions exceeded the national average, Bush carried 24 of them.

•In the 10 reddest states (favoring Bush by at least 60%) , the average percentage of personal income donated to charity was 3.5. Residents of the bluest (favoring Kerry) states, donated just 1.9 percent.  (The national average is 1.4%)

•People who do not believe that government should reduce income inequality give an average of four times more than people who believe government should use tax policy to transfer wealth from the “rich” to lower income groups.

And in stunning irony and what can only be described as a “huh?” moment, Al Gore, champion of the underdog and savior of the planet, contributed a mere 0.2% of his 2000 income to charity.

Listening to the current crop of Presidential candidates, it would appear compassionate feeling is now considered equivalent to compassionate action.

The phrase “I feel your pain” is a mockery of true compassion when voiced by a government as it pilfers your wallet.

Perhaps a reduction in taxes would increase charitable giving and accomplish privately what big government has no business attempting.

But that would empower folks, making them less dependent on government handouts and the politicians who procure them.

A piece in the New York Times on Friday 28 March 2008, relates how the treasury department will propose ” broad new authority” allowing the Fed to “send SWAT teams into any corner” of the financial industry.  The financial cavalry riding over the hill in the nick of time.

Whew! Am I glad they’re on top of this mess.  Really, the market has been in a state of flux these past several weeks due, in part, to a perception that no one is minding the store.  The proposal describes a sweeping blueprint to overhaul the hodgepodge of financial regulations and regulatory agencies which failed to prevent the excesses that led to the worst financial crisis in decades.

But looking deeper, we see …….. smoke and mirrors.

The proposal would not:

• regulate Wall Street investment firms but merely oversee their operations
• not outlaw risky practices like packaging risky sub-prime mortgages into highly rated securities
• increase regulation of the risk sharing, hedge fund or credit default swap market

It would however:

• reduce oversight of stock exchanges allowing for greater self-regulation
• streamline approval of new financial products
• allow for automatic approval of financial products traded in foreign markets

Conclusion:

The FED will not be cracking down on any of the practices which got the country into the mess from which we are trying to extricate ourselves. Mortgage brokers will still be able to offer “No-Doc” loans to folks who can’t afford them.  Banks will buy these mortgages, package them into securities which ratings firms will swear on their Grandmother’s life are AAA rated investments.  Go-Go brokerages will buy this financial toxic waste to foist on an uneducated public who will merrily go on their way collecting their double digit annual returns.

And on a balmy spring morning, after the current crop of politicians and policy wonks has shuffled off the stage clutching their golden parachutes, another financial Love Canal will be unearthed. Initially hidden on page 23 of some obscure financial journal, the news will flash around the globe once again as a “too big to fail” bank goes begging hat-in-hand …

“Hey buddy, can ya spare a guy a few billion?”