Washington News

The nonpartisan Committee for a Responsible Federal Budget in cooperation with former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles has created a "Campaign to Fix the Debt."

Bowles and Simpson were co-chairs of the National Commission on Fiscal Responsibility and Reform. They proposed a bipartisan budget solution at the request of President Barack Obama.

On October 25, over 100 CEOs gathered at the New York Stock Exchange to support a comprehensive budget solution similar to that proposed by the Bowles-Simpson Commission. One of the commission members was Honeywell Chairman and CEO David Cote. He stated, "The U.S. has an opportunity to not only fix our debt issue and have an economic recovery, but we can also be a model for the world and how to deal with debt. What it really comes down to is if we still have the political will to be a great country."

Cote continued to emphasize that it is important to develop a comprehensive solution. This solution will include "higher revenue, reduced entitlement spending, reduced discretionary spending, and investment in infrastructure and math and science."

Congressional leaders from both parties responded to this public proclamation by leaders of many of America's largest corporations. The Senate Democratic leadership indicated that it believes a part of the solution involves tax increases on individuals with higher incomes. House Republican leaders continue to oppose these tax increases.

Sen. Bernie Sanders (I-VT), observed that it is important for corporate leaders to pay their "fair share" of taxes. He commented, "Our Wall Street friends might also want to show some courage of their own by suggesting that the wealthiest people in this country, like them, start paying their fair share of taxes." Sanders noted that many large corporations use various tax provisions to reduce their taxes. In his view, this tax reduction has been a factor in the major deficit problems.

Maya MacGuineas, Chair of the Committee for a Responsible Federal Budget, supported this bipartisan effort by the 100 CEOs. She stated, "The collective voice of these business leaders has helped shine a light on the fact that the debt is already affecting Americans where they work and live. We have listened to the CEO Council and heard the consequences of inaction - businesses aren't investing in an uncertain economy and are slowing job growth to protect their employees. With the CEOs' backing and the support of the over 280,000 person Grassroots Network, we believe we can successfully push for a comprehensive debt reduction deal."

Editor's Note: It is unusual for a bipartisan group of business leaders to be so public in support of both a budget solution and higher taxes. This willingness to place both spending and tax increases on the table is significant.

Charitable Giving Coalition Supports Deductions

On October 25 the Charitable Giving Coalition published a letter to both President Barack Obama and Governor Mitt Romney. The coalition emphasized the importance of maintaining charitable gift deductions in any future tax reform.

The coalition letter stated, "Any proposed cap would have long-lasting negative consequences on the charitable organizations upon which millions of Americans rely for vital programs and services."

Both the President and the Presidential Nominee have proposed caps on itemized deductions that would impact charitable giving. President Obama proposed limiting the deduction benefit to 28% for individuals with higher incomes. This would reduce the tax savings for charitable gifts by major donors.

Governor Romney has discussed the possibility of a cap on itemized deductions at $17,000, $25,000 or $50,000. Charitable gifts above any cap would not be deductible.

The letter is published in the midst of a huge growth in the need for nonprofit services. The nonprofit Finance Fund reports that 85% of nonprofits had a higher level of requests for their services in 2011. According to Giving USA, donors gave $300 billion in 2011 to support charitable organizations. The future gift level may be significantly limited if there are caps on deductions. The Charitable Giving Coalition fears a "devastating impact on charities and nonprofits."

The coalition notes that the charitable deduction is actually saving substantial governmental funds. One dollar in tax relief produces approximately $3 in public benefits. It is the most effective deduction because the services provided by nonprofits reduce potential expenditures by governmental organizations.

In 2011, nonprofits provided 13.5 million jobs and 9% of total wages. Many nonprofits are providing education, relief and medical research services. These nonprofits provide comprehensive support to those in need throughout America.

On December 4 & 5, staff of many nonprofits will gather in Washington, D.C. for "Protect Giving-D.C. Days." Leaders of nonprofits throughout the nation will meet with members of Congress and support continuation of charitable deductions.