Public Policy and Governance – Page 13

Non-Profit Doesn’t Necessarily Mean “Do-Gooder”

I was intrigued to come across an essay by John Dilulio, Jr. in a publication I had previously not encountered: American Purpose.

I have been familiar with Dilulio–a political scientist currently at the University of Pennsylvania–since his work on George W. Bush’s “Faith-Based Initiative.” (Thanks to a generous Ford Foundation grant, I helmed a three-year, three state study of that initiative.) In the 1990’s, Dilulio was best known in criminal justice circles for his hostile analysis of young criminals and his condemnation of violent juveniles as ”superpredators,” a position from which he later–and properly–retreated.

The essay in American Purpose addressed a very different issue: the nonprofit status of American organizations, a status that entitles such organizations to various types of tax avoidance. The “nonprofit sector,” he tells us, consists of organizations

that enjoy one or more of four types of tax exemptions, subsidies, or supports: tax-free property owned by the organizations; tax-deductible donations to the organizations; taxpayer-funded grants, contracts, or fees to the organizations; and taxpayer-funded payments to individuals for purchasing goods or services from the organizations.

Intriguing indeed. But, you ask, why do we need any such “nonprofit sector?” What criteria should be used to determine which existing or new organizations receive some, all, or none of those four tax privileges? Who is supposed to benefit from their existence, and by what measures? And, last but not least, how might we mitigate the moral hazard when some of these organizations inevitably use their tax privileges for private gains or to evade public accountability, or behave in ways that are both deceptive and self-dealing?

The essay began with the good news: something like 92 percent of all nonprofits are small, community-based, and serve local needs. Fewer than 3 percent lobby for government grants or contracts.

At the top of the nonprofit pyramid, however, are less publicly beneficial organizations–and those are especially prevalent in health care.

At its very top, the tax-privileged sector is dominated by the ten nonprofit health systems that in 2021 each collected $14.5 billion or more in annual revenues, and by a dozen nonprofit universities that are among the most well-endowed universities in America. Is enough being done to ensure that these tax-privileged titans’ board members, CEOs, presidents, and other leaders are using their respective tax privileges in the public interest while refraining from individual or institutional self-dealing?

Dilulio cites a 2023 article in which Rice University economists Derek Jenkins and Vivian Ho wrote that, “Nonprofit hospitals, which currently comprise approximately 58 percent of U.S. hospitals, have been repeatedly criticized by scholars and policymakers for failing to live up to a poorly articulated standard of ‘charity care’ and benevolence,” and for failing to justify their tens of billions of dollars a year in federal, state, and local tax breaks. He also cited a 2022 report by the Economic Research Institute, which found that, while nonprofit hospital CEOs are paid, on average, $600,000 a year, the ten highest-paid nonprofit health systems executives made $7 million a year or more; the CEO of Kaiser Permanente was paid nearly $18 million in 2018.

Back when I was a practicing lawyer, I saw how this worked. If a corporation being formed could credibly point to some charitable purpose, and could successfully argue for nonprofit status, monetary gains that would otherwise constitute–and be taxed as– profit could be diverted/mischaracterized as “overhead costs.” These “nonprofits” could divert what would otherwise be profit into generous salaries and lots of perks for management. (Does a health organization executive really need a luxury car supplied by the nonprofit entity? What about that corporate jet?)

The essay has much more information, and offers suggestions for legislative interventions. If you are interested in the various ways in which nonprofit status can be–and has been– gamed, it’s well worth the time to click through and read in its entirety.

My own first reaction was that this situation–the culture of “game-playing” that has allowed greed to infect and distort significant elements of a system originally intended to serve the public good–has become widespread. It isn’t limited to health care and a handful of elite universities.

Assuming we emerge from the November election with American democracy still largely intact, we need to address a multitude of structural distortions, and not just those affecting the electoral system. The misuse of nonprofit status is one of them.

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He’ll Have The Caviar…

One of the great benefits of this blog is the education I get from readers who share information with me–and a few days ago, I got a real eye-opener from a constituent of Indiana Representative Jim Banks.

I had heard of Congressional Leadership PACs, but I was unaware of what they are and how they differ from the SuperPacs and other anti-democratic entities organized following the Supreme Court’s decision in Citizens United v. FEC–a decision that vastly increased the role of money in politics.

It turns out that all PACs aren’t the same. Some put money into the politico’s campaign; others put it in his pocket.

According to the ethics group One Issue, Congressional Leadership PACs too often function as slush funds, allowing their beneficiaries to live a far more luxurious lifestyle than they could manage on a Congressperson’s salary.

I’d not previously heard of One Issue, a relatively new organization concerned with monitoring government ethics. It is described as the

leading crosspartisan political reform group in Washington, D.C. We unite Republicans, Democrats, and independents in the movement to fix our broken political system and build a democracy that works for everyone. We educate the public and work to pass legislation on Capitol Hill to increase transparency, strengthen ethics and accountability, reduce the corrosive influence of big money in politics, and bolster U.S. elections. Issue One’s ReFormers Caucus of more than 200 former members of Congress, governors, and Cabinet officials is the largest coalition of its kind ever assembled to advocate for political reform.

The report that was forwarded to me focused on the (mis)use of Leadership PACs/slush funds by current members of Congress. The PACs were established in 1978 as accounts that would be separate from the authorized campaign committees that candidates use to run for Congress. The money was intended for use by politicians wanting to assist political allies and like-minded candidates– vulnerable colleagues or candidates running in competitive House and Senate races. The FEC made it clear that leadership PAC funds weren’t to be used to pay for lawmakers’ own re-election campaign expenses.

Today, leadership PACs are not just used by those in leadership roles. Indeed, 92% of members of Congress have them. And while most members of Congress primarily use their leadership PACs to make political contributions, new research from Issue One and Campaign Legal Center shows that scores of lawmakers are not, in fact, using the bulk of the money they raise in their leadership PACs to assist other candidates, their parties, or other political groups.

Today, it turns out that many lawmakers don’t spend the money in these PACs to assist political allies or causes, as intended.

This report shines a light on the shocking reality that far too many politicians appear to be amassing money from special interests in their leadership PACs and then using that cash to enjoy perks of lavish living that are beyond the reach of most Americans — such as meals at fancy restaurants, trips to elite resorts, rounds of golf at premier courses, and more. While such spending is purportedly done for the purpose of political fundraising, this explanation rings hollow when just a fraction of the money raised goes toward political contributions. Instead, such spending patterns give the impression that some politicians are simply raising money at one posh location to pay for the next fundraiser at the next fancy destination — creating an endless fundraising cycle at luxurious restaurants and resorts, much of which is paid for by special interest money, with no cost to lawmakers’ own pocketbooks.

It turns out that leadership PACs are “underwriting lavish lifestyles for politicians.”

Issue One looked at the two-year period between January 0f 2019 and December of 2020, and focused on lawmakers who had spent inordinate amounts on tickets for sports events, dinners at expensive restaurants, country-club dues and similar “fundraising overhead.” The report meticulously listed what it had found for each Senator and Representative.

In Indiana, the report showed that Congressman Jim Banks had raised $4,287,776 from special interests for his “Leadership PAC” and that a mere 14% of his expenditures had gone for the ostensible political purposes of that PAC–far less than other Indiana lawmakers. (Even Mike Braun spent 79% of his slush fund on the activities for which such PACs were created, and other Indiana lawmakers exceeded Braun’s percentage.)

Nationally, that puts Banks among the top abusers of these slush funds.

Isn’t it interesting that politicians like Jim Banks who are single-mindedly focused on culture war issues–the pious pretenders who constantly point to their “Christian” values and attempt to impose their misogynistic views of “righteousness” on the rest of us–always seem to be the ones with their hands in various cookie-jars?

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Supreme Dysfunction

In a recent issue of The American Prospect, columnist Rick Perlstein dismissed concerns about recent polling and reminded readers that considerably more is at stake right now than the “horse race” that media disproportionately focuses on. As he says, that all-too-typical approach to political campaign coverage is increasingly irrelevant.

This year, hearing the political reporters on NPR every morning yammering on about stuff like that, it sounds like the drone of the adults in a Peanuts cartoon. It’s so far down the scale of factors determining how the world might go in 2025 that I cringe, tune out, and wait for the next story to start.

If that typical coverage is “down the scale,” what does Perlstein count as more weighty? He suggests that speculation about how many electoral votes each candidate will get is less significant than concerns about the number of people who might be willing to take up arms to “avenge” a Trump loss.

And then there’s the conventional coverage of the Trump trial. Perlstein points out that the attacks being made by Trump’s GOP sycophants–largely ignored or minimized by the media– are part of Repubicans’ ongoing assault on the rule of law. As he says, “what is actually on trial in New York? Trials themselves.”

Every time the man who once took an oath to faithfully execute America’s laws and may next year do so again acts in ways that would bring criminal sanction to any other defendant, by brazenly and deliberately intimidating witnesses in direct defiance of Judge Merchan’s orders, Donald Trump imparts a lesson to his millions of supplicants: One of the three allegedly coequal branches of constitutional governance in the United States is illegitimate, should its decisions not break Donald Trump’s way.

The attack on the rule of law has, of course, been aided and abetted by the current disaster that is the U.S. Supreme Court–a Court that has been intentionally packed with far-Right ideologues.

It is, of course, a crisis now long in the making. Six mortals with lifetime appointments, five of them named by Republican presidents who never won a popular majority, routinely abandoning even the pretense of intellectual coherence and procedural norms to press changes in how the nation is governed, so right-wing they could never stand democratic scrutiny.

For instance, by seeking to strip the power of nonpartisan experts to adjudicate highly technical regulatory questions. Or to control the split-second decisions of doctors in emergency rooms about how to keep women alive. Or to usurp judgement of municipalities and states to decide who can carry concealed weapons of war—reserving those rights instead to, in order, the 535 members of Congress, the nutjob Republican majority in the Idaho legislature, and the made-up fantasies about the beliefs of powder-wigged men from back before bullets had been invented.

Perlstein went on to describe the truly bizarre arguments that have been advanced for Presidential immunity–and the even more grotesque musings of Justice Alito– in what he called the “aptly named” case of Trump v. United States.

So here we are.

In a very real sense, it is Trump and his cult versus the United States–at least the United States envisioned by the nation’s Founders. Not only does the MAGA movement pose an unprecedented threat to America’s democratic norms, it does so at a time when the multiple threats posed by climate change promise (at best) enormous social upheavals.

Perlstein argues that the political situation in which we find ourselves was “seeded” in Bush v. Gore, and from a legal standpoint, he may be right. But historians tell us that there has always been a portion of the American public that rejected the philosophical underpinnings of America’s constituent documents–citizens who have resisted every expansion of the civic equality and individual liberty at the heart of those instruments. Today, that resistance is most obvious in the hysterical backlash against women’s rights, “woke-ness” and efforts at racial inclusion.

Reactionaries have always been with us, but for most of our history, they’ve been on the fringes of political life. What is new–and arguably unprecedented–is that they have captured one of America’s major political parties. They have a Supreme Court majority, including two Justices who repeatedly and flagrantly violate judicial ethics. They have made no bones about their plans for 2025 and beyond, should they win in November.

Perlstein is right: treating the upcoming election as a typical horse-race ignores reality. A very dangerous reality.

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And The Evidence Mounts….

Yesterday, I posted about the 2018 book How Democracies Die. My “take-aways” were twofold: first, the authors located the source of today’s efforts to install an autocracy in the racism that has long been identified as America’s “original sin,” and second, they identified warning signs of institutional and normative breakdown.

Several things have changed since 2018, of course, and some of those changes have been positive. Biden’s victory in 2020–a resounding popular victory despite the desperate efforts of Trump and MAGA voters to de-legitimize it–and the failure of the much-anticipated “Red wave” in 2022 come immediately to mind. But other signs are more ominous–especially the pathetic acquiescence of elected Republicans to Trump’s and the far-Right’s increasingly public racism, and the unprecedented and blatantly-partisan behavior of members of the judiciary.

Two examples from just the past week.

The Governor of Texas, Greg Abbott, pardoned Daniel Perry, who had been convicted of murder for fatally shooting a demonstrator during a Black Lives Matter protest. Perry had been sentenced to 25 years in prison for killing Garrett Foster in downtown Austin in July 2020. Abbott’s hand-picked Board of Pardons and Paroles voted unanimously in favor of the pardon.

Witnesses at the trial had testified that the man Perry shot had never raised his weapon, and according to court records, in the weeks leading up to the protests, Perry had sent multiple racist messages about protesters, shared white supremacist memes and talked about how he “might have to kill a few people” who were demonstrating. In one, he compared the Black Lives Matter movement to “a zoo full of monkeys that are freaking out flinging their shit.”

Abbot’s pardon sends a strong–and horrifying–message: in Texas, elected officials will protect racists. Even murderous ones.

Then there’s the even more horrifying disclosure that–in the wake of the January 6th insurrection– a “Stop the Steal” symbol flew on Justice Samuel Alito’s lawn.

You need not be a lawyer to share Robert Hubbell’s reaction:

As a Supreme Court justice, Alito has been unapologetic in his efforts to defend Trump’s lawlessness. He has risen to Trump’s defense with gleeful spite and unveiled resentment against those seeking to hold Trump accountable under the Constitution.

On Thursday, the New York Times revealed that Alito’s home displayed an upside-down US flag during the fraught days after the January 6 insurrection. At the time, flying the US flag upside down was a symbol calling to “Stop the Steal” of the 2020 election from Trump. It was a call to insurrection—proudly displayed by a US Supreme Court justice sworn to defend and protect the Constitution. See New York Times, At Justice Alito’s House, a ‘Stop the Steal’ Symbol on Display.

In response to an inquiry from the Times, Alito said, I had no involvement whatsoever in the flying of the flag.
Notably, Alito did not deny the veracity of the photograph of the flag flying upside down on his lawn. He did not deny the symbolism of the upside-down flag. He did not deny that he was aware of its continued presence in front of his house. Instead, he blamed his wife, whom he claimed flew the “Stop the Steal” banner in response to anti-Trump signs in the neighborhood.

Alito’s response to the Times is a lie. He owns the flag. He owns the flagpole. He owns the property on which the flag was displayed. He permitted it to remain on display on his property. He, therefore, did have “involvement” in “flying the flag.” It does not matter that it was his wife who physically raised the “Stop the Steal” banner on the flagpole. Alito’s hair-splitting denial is misleading and incomplete—and therefore false.

As Hubbell notes, this leaves us with a second Supreme Court Justice whose spouse actively supported an effort to prevent the peaceful transfer of power.

Those justices—Alito and Thomas—are currently considering Trump’s presidential immunity defense to the indictment alleging that Trump attempted to subvert the election. Under any reasonable reading of Code of Conduct that applies to Supreme Court justices, Alito and Thomas should have recused themselves long ago (under Canons 2 and 3).

In a very real sense, Americans are still fighting the Civil War. Today’s Confederates are more geographically scattered, and the incidents of bloodshed and violence are being perpetrated by individual MAGA racists rather than by an organized Rebel army, but the White Supremacy beliefs motivating the combatants haven’t changed. More worrisome still, years of partisan efforts to subvert racial and religious equality and the rule of law have led to utterly scandalous, unethical, and judicially-unforgivable behaviors by two Justices of the highest court in the land–a profoundly dangerous institutional breakdown.

This is how democracies die.

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It’s All About Race

I’ve been working my way through the numerous books–both the physical ones and the ones on my Kindle–that have been piling up on my nightstand, and I’ve just finished How Democracies Die. It’s a book that has generated a lot of discussion, for obvious reasons. The two scholars who wrote it in 2018, Steven Levitsky and Daniel Zimblatt, have spent their academic careers focusing on the ups and downs of democratic governments around the globe. That focus has allowed them to draw conclusions about the normative elements that serve as guardrails protecting democratic institutions, and about the signs warning of democratic collapse.

There’s a lot to absorb from the book’s copious descriptions of democratic failures in a wide variety of countries–and the authors make no bones about the reality of the threat to American institutions posed by Donald Trump and the MAGA movement. It’s all pretty grim–and entirely persuasive.

That said, I was particularly struck by one of the book’s central observations–probably because it confirms my strong belief that support for Trump/MAGA is almost entirely rooted in racism.

About halfway through the book, the authors identified two democratic norms that are essential to a functioning democracy: mutual toleration and institutional forbearance. In other words, acknowledging the legitimacy of one’s political opponents, and “forbearing” to abuse or over-use institutional weapons like the filibuster or Mitch McConnell’s legal but shockingly undemocratic theft of a Supreme Court seat. Extreme polarization erodes those norms; as they write, when societies sort themselves into political camps whose world-views aren’t just different but mutually exclusive, toleration becomes harder to sustain.

When the authors analyzed what had allowed America’s politicians to sustain basic democratic norms for a period running roughly from the collapse of Reconstruction through the 1980s, they came to a very troubling conclusion–that during that time period, “The norms sustaining our political system rested, to a considerable degree, on racial exclusion.” To the extent that America operated with bipartisanship and experienced reduced polarization during that extended time period, those outcomes “came at the cost of keeping civil rights off the political agenda.”

In the final paragraph of Chapter Six, they write

America’s democratic norms, then, were born in a context of exclusion. As long as the political community was restricted largely to whites, Democrats and Republicans had much in common. Neither party was likely to view the other as an existential threat. The process of racial inclusion that began after World War II and culminated in the 1964 Civil Rights Act and 1965 Voting Rights Act would, at long last, fully democratize the United States. But it would also polarize it, posing the greatest challenge to established forms of mutual toleration and forbearance since Reconstruction.

That paragraph confirms what a growing body of research has verified–and what any semi-sentient observer can see. The election of Barack Obama unleashed the overt expression of formerly-suppressed hatreds. It seeded the growth of White Christian nationalism, the huge reaction against anything seen as “woke,” the efforts to de-legitimatize efforts at inclusion–and explains the utter inability of most reasonable, non-racist Americans to understand the animus and fury of the MAGA movement.

That paragraph explains so much–as does a sentence in the final chapter, in which the authors concede that it is “difficult to find examples of societies in which shrinking ethnic majorities give up their dominant status without a fight.”

Even a cursory look at the current crop of GOP nominees up and down the various state ballots shows them publicly expressing opinions that would have been met with horror not all that long ago. Anti-Black, anti-Semitic, homophobic…meanwhile, the numerous Republican campaigns expressing hostility to immigration from the south hardly bother to veil their racism.

It’s been a long time since the Civil War. It’s been a long time since the South was able to dismantle Reconstruction. These days, the country’s accelerating social and demographic changes are making it increasingly difficult to maintain the dominance of White Christians. It’s the recognition of–and hysterical reaction to– that reality that explains Trump and MAGA. How Democracies Die warns us of the way that movement threatens not just social peace/tolerance, but the continued operation of America’s democratic institutions.

I keep thinking about that slogan “The South will rise again.”

It did. It’s now called the Republican Party, and How Democracies Die documents a lesson we have yet to learn: the persistence of this country’s deep-seated racism poses an existential threat to human decency, civic equality and the continuation of American democracy.

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