You Will Be Mine You Will Be Mine, All Mine

Matt Welch | October 27, 2008

George Will last week detailed how a ever-hungrier political class is rooting out sources of private money like truffle pigs in a mushroom forest:

Sen. Charles Grassley, R-Iowa, and Rep. Peter Welch, D-Vt., recently convened a discussion of how colleges and universities should be spending their endowments. Grassley, who says more than 135 institutions each have endowments of more than $500 million, says perhaps they should be required to spend 5 percent of their endowments each year. Welch has introduced legislation to require that percentage be spent to reduce tuition and other student expenses.

This government reach for control of private resources comes even though last year colleges and universities spent, on average, 4.6 percent of their endowments. [...]

Some Massachusetts state legislators, committing two of the seven deadly sins, are angry because tax revenues do not match their ambitions, and envious of Harvard. They suggest raising more than $1 billion annually with a 2.5 percent assessment on the nine colleges and universities in the state that have endowments of more than $1 billion.

California legislators, disguising a third sin, avarice, as concern for "diversity," want to require large California foundations to report the race, gender and sexual orientation of their trustees, staff and grant recipients. Other state legislatures will emulate this step toward government control of the flow of philanthropy.

That last California spasm in particular is a worrying trend about the direction America is poised to go during the coming Obamaverse. You might think that the Fannie/Freddie debacle would forever sear the eyeballs of those dreamers who aim to improve society by forcing private or semi-private companies to redirect their activities away from the bottom line and toward the desires of various interest groups, but then you'd be hopelessly naive. Mortgages and endowments ain't the half of it  Everywhere you see government contracting you see a fantastical variety of social engineering projects. There are any number of colossal pension funds being tweaked as we speak to fit the political goals of people whose track record with managing money has been, shall we say, suboptimal. In the ongoing financial-market crisis, such politically correct investing may contribute to an awful lot of carnage.

Comments

SIV|10.27.08 @ 10:12AM|#

If the government is going to seize and redistribute private wealth I'll refrain from speaking up until they are done with University endowments. Ditto on the pension funds.

|10.27.08 @ 10:16AM|#

Good on them. It's nice to see legislators who are putting Main St. before University Blvd.

That Dude|10.27.08 @ 10:18AM|#

"You might think that the Fannie/Freddie debacle would forever sear the eyeballs of those dreamers who aim to improve society by forcing private or semi-private companies to redirect their activities away from the bottom line and toward the desires of various interest groups...."

Hahahahahahahahahahaha! Oh, Mr. Welch! Your naivete is adorable!

The problem with Fannie and Freddie is they needed much much more federal direction. Duh.

|10.27.08 @ 10:20AM|#

Next stop for "private money"...retirement savings (401K and IRA). Nothing will remain untouchable. The leviathan is hungrier than ever. Let us all be watchful of incursions into our liberty.

|10.27.08 @ 10:38AM|#

Some universities seem to have realigned their business model into one in which the "education" operations are a merely a sideline of the money-grubbing panhandling fund-raising operation which their real reason for existence.
And if the suckers are dumb enough to fall for it....

|10.27.08 @ 10:38AM|#

Politicans are like leaches and they will literally bleed you dry if you let them.

Jiff
www.anonymity.cz.tc

|10.27.08 @ 10:42AM|#

Are these the end times?

|10.27.08 @ 10:43AM|#

oops

"...fund-raising operation*s* which *now are* their real reason for existence."

|10.27.08 @ 10:44AM|#

This doesn't really bother me that much. Private foundations have to disperse 5% of their assets every year to maintain their tax exemption. I would have a problem with them being forced to use it for specific purposes, but as long as the money is being used for reasons related to their mission, I have no issue with leveling the playing field.

|10.27.08 @ 10:56AM|#

Yeah but they are only going to borrow the money from your 401 and IRA. They'll give you Treasuries in return or at least an IOU entry in the Social Security trust fund lockbox.

|10.27.08 @ 11:01AM|#

as long as the money is being used for reasons related to their mission, I have no issue with leveling the playing field.

*grinds teeth, bangs head on desk*

Derrick|10.27.08 @ 11:12AM|#

Let us all be watchful of incursions into our liberty.

Um, yeah. I'm being watchful, and our country is turning into USSR v2.0 in the space of a month. Any suggestions on particular actions we could take? I mean, other than moving to another country.

|10.27.08 @ 11:41AM|#

Our 401Ks are being ogled in the halls of congress as well.

Gosh, Jsub, why don't you want the government to solve problems, like they did so well with the banking/foreclosure crisis and disability/retirement insurance?*

* OK. I admit it. I made up that quote.

|10.27.08 @ 11:52AM|#

"I would have a problem with them being forced to use it for specific purposes, but as long as the money is being used for reasons related to their mission, I have no issue with leveling the playing field."

Because it is not like it is their money or anything. We all know the government owns everything and lets you use their property out of the charity of their hearts. If you believe in private property, you ought to have a real problem with it.

Kolohe|10.27.08 @ 11:55AM|#

Our 401Ks are being ogled in the halls of congress as well

I haven't heard of this. I have heard of some talk of socializing private pension funds (which are not the same thing; I think they were talking about stuff existing defined benefit plans or possibly stuff like what's in CALPERS and TIAA/CREF).

That said, my biggest long term worry about the Roth is someone in 2040 is going to go after these "windfall tax free profits"

jtuf|10.27.08 @ 12:06PM|#

Universities advertise themselves as nonprofits, so there is good cause to demand that they produce measurable good with most of their endowment growth. However, it's up to the private donors, not the government, to judge whether or not any given University is doing that.

Nigel Watt|10.27.08 @ 12:38PM|#

Is it time yet to just cheer for the shit to hit the fan?

Mike Laursen|10.27.08 @ 1:00PM|#

It's nice to see legislators who are putting Main St. before University Blvd.

Jesus Christ! You're right, of course. Pundits are going to assign every fucking interest group in our society a clever street name, aren't they?

The immaturity of politics|10.27.08 @ 1:15PM|#

My special interest group is better than your special interest group. My special interest group is smarter than your special interest group. My special interest group is kinder than your special interest group. My special interest group is friendlier than your special interest group.

Of course nothing will change.

Russ 2000|10.27.08 @ 1:21PM|#

Wouldn't a better course of action be to simply stop giving such egregious property tax breaks to schools? One can't travel the streets of Cambridge and Boston (and most other large US cities) without seeing the huge tracts of land being gobbled up by such non-profits. But the amount of infrastructure and public servicing for those properties is unchanged. Which puts more tax burden on the for-profit residents.

|10.27.08 @ 1:30PM|#

as long as the money is being used for reasons related to their mission, I have no issue with leveling the playing field.

*grinds teeth, bangs head on desk*

So do you think there should be different rules for sitting on their assets between different types of non-profit foundations? My point was merely that private foundations that have tax-exempt status have to disperse 5% of their assets annually. why shouldn't universities do it? It's up to them to determine how to use it, but it needs to be related to their mission (the one that grants them non-profit status).

Because it is not like it is their money or anything. We all know the government owns everything and lets you use their property out of the charity of their hearts. If you believe in private property, you ought to have a real problem with it.

That money has grown tax-free. If you don't think being tax-exempt has oodles of string attached to it, you're strongly mistaken. It has nothing to do with private vs. public, it has to do with what the rules are for being a non-profit.

|10.27.08 @ 1:49PM|#

Re: My 401K comment at 11:41am

A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. She testified last week before Miller's Education and Labor Committee on her proposal.

At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.

Under Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

"I want to stop the federal subsidy of 401(k)s," Ghilarducci said in an interview. "401(k)s can continue to exist, but they won't have the benefit of the subsidy of the tax break."

Doesn't having a "professor of economic-policy analysis at the New School for Social Research in New York" as an expert witness just give you a warm and fuzzy feeling?

I'm glad the GOP is getting its ass kicked soundly. I also fear the excesses that a Dem majority may likely will bring. The hubris of politicians always scares me.

Kolohe|10.27.08 @ 2:34PM|#

Re: My 401K comment at 11:41am

This excerpt is a little different than what I remembered and is troubling.

Furthermore, the median worker makes around 30K, so we looking at the median working being rced to put about $1500 per year away. Considering that not nearly enough put away money with current incentives, this would be pretty tough medicine. Heck, the median worker doesn't put nearly enough in regular savings and is pleased* by receiving a $300 stimulus check

*don't get me wrong, I like to receive 300 buck checks as well. But it's not something I need to plan on.

Russ 2000|10.27.08 @ 2:36PM|#

why shouldn't universities do it?

Becuase they aren't foundations.

Mike Laursen|10.27.08 @ 2:57PM|#

My special interest group is better than your special interest group.

That's so Park Avenue.

|10.27.08 @ 3:47PM|#

I will be your knight in shining armour...
Riding across the des-ert
On a fine Arab char-ger

alan|10.27.08 @ 4:03PM|#

The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

The key word here is special , as in bonds that are used to float in the market, gain a profit that is kicked back to publicly funded radical groups who'll use that money to harass the public. What, you think she is talking municipal bonds for infrastructure? Ha! If she meant that she would have said that instead of the obscurant phrase that she did use.

|10.27.08 @ 8:17PM|#

"I'm glad the GOP is getting its ass kicked soundly. I also fear the excesses that a Dem majority may likely will bring. The hubris of politicians always scares me."

Too fucking bad J Sub D. If the Dems do get in, I hope they get the whole government and shove it up people's asses as far as it will go and then some. Let people understand what Democratic government really means. The last people I want to hear complain about it are all the "lets show the GOP a lesson crowd." Well you showed them a lesson, I hope Obama's dick isn't too big and he is gentle with you, but I doubt he will be.

|10.27.08 @ 8:30PM|#

Becuase they aren't foundations.

Their endowments sure look like they are.