1. 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

2. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org PART I The Problem

3. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org As Baby Boomers Come of Age, the Deficit Explodes Source: Derived from Chart 12-5, OMB, 2005 Budget, Analytical Perspectives, page 194

4. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Source: Steuerle, Carasso, Bishop, based on data from Gale, Orszag, and the Tax Policy Center.

5. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Source: Steuerle, Carasso, Bishop, based on data from Gale, Orszag, and the Tax Policy Center.

6. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Lost Federal Revenue Compared to Philanthropic 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.

7. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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

8. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Closing a 10% GDP Deficit Gap Item Action % of Gap Closed Income tax (8.5% GDP) Raise by one-third28% Payroll tax (4.5%) Raise by one-third15 Social Security (6.6%) Cut cost growth by half11 Medicare (8.4%) Cut by one-fourth21 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

9. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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. )

10. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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.

11. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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

12. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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

13. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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

14. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org PART II Internet Survey Results

15. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Strong Support for a Tax & Budget Campaign 90% of respondents say it is time to launch a longer-term offensive campaign on federal tax and budget issues. 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?

16. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Support for Tax & Budget Campaign by Primary Activity Those Primary Activities Listed by 20% of More of Respondents 93% 92% 91% 90% 89% 88%

17. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org What Should Be the Focus? 94%93%90% 9 in 10 say the focus should be:

18. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org “ 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. ”

19. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Other Supported Campaign Themes 87% 75% 70%

20. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org A Majority Oppose Cutting Spending to Reduce the Deficit 56% %

21. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Participation May Be a Challenge POSITIVENEGATIVE 90% of respondents say it is time to launch a campaign BUT 49% say they are unlikely to participate.

22. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Even Though 49% say They Might Not Participate in a Campaign… 61% Say They Will Help Redistribute Information About the Campaign

23. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Other Ways Groups Say They Would Participate

24. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 76% 72% Top Challenges to Confront It’s an Organizing Issue

25. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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.”

26. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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.”

27. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org The Role of Foundations With respect to tax and budget issues, how important is it for foundations to… 81% 76% 75% 74% 56%

28. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Foundations vs. Other Respondents Difference betweenImportant and NotImportant

29. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org PART III Regional Strategy Session Results

30. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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.

31. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 1Develop a Vision. 2Develop Progressive Tax Policies & Principles. 3Change the Language We Use. 4Address the Attacks on Role of Government. 5Strengthen Civic Responsibility. Five Objectives Identified by Nonprofits

32. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org Five Objectives of an Initiative 1Develop 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.

33. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 2Develop 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. Five Objectives of an Initiative

34. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 3Change 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. Five Objectives of an Initiative

35. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 4Address 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. Five Objectives of an Initiative

36. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 5Strengthen 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. Five Objectives of an Initiative

37. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org PART IV Next Steps

38. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org  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

39. 1742 Connecticut Ave., N.W., Washington, D.C. 20009 (202) 234-8494 http://www.ombwatch.org 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