Theft at the Public Till
dollars in stocks, bonds, and other investments. And instead of relying on donations, they charge for their services, just like any other business, or are reimbursed by the government. Often they provide little or no charity. The non-profits get their way. The politicians get their way. But what about the people the non-profits were supposed to take care of? Are they seeing the benefits of the tax give-away? Private foundations have become great warehouses of untaxed wealth. Most foundations give away only the minimum required by law, 5 percent of their assets each year, while earning much more on investments. With $163 billion in assets, they are operated like private banks, with elite, self-perpetuating boards of directors. Where they invest their money and how they vote their stock give these boards great economic power. Power to serve themselves and their political allies. Power that is rarely used to benefit the citizenry. As taxpayers we pay for the localities’ largess and the non-profits’ non-charity. Yet we have forgotten that each give-away is supposed to be in return for social benefits. This in an outgrowth of our loss of a sense of consequence to our public lives. Living in places where nothing is connected properly, we have forgotten that connections are important. There is a solution to the municipal bond mess - return to its original purpose. Forget about tax-exemption. This form of subsidy is inefficient, costly to the Federal government, and too easily corrupted. Instead the governors of each state should be authorized to endorse local borrowings with the endorsement bringing a 2% direct subsidy in interest cost from the Federal government. Because the governors will have to sign off, there will be some high level, but local, check on the ability of localities to abuse the system and on the ability of bankers to talk localities into doing so. If the subsidy amounts were pledged collectively to bondholders (that is if one entity has a payment shortfall all the entities in the state will contribute from their federal subsidies),the credit quality of these endorsed local bor- rowings would be raised to nearly the highest grade and borrowing costs would be lower. Of course such a system would eliminate the opportunities for hanky-panky that I and so many others on Wall Street presently profit from... oh well, it was a nice life, if unfair.
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