Hunter  Lewis

There is a common saying on Capitol Hill that those who do not come to the table will become the lunch. This refers to those who fail to hire sufficiently well connected lobbyists or make large campaign contributions. Even those who do come to the table may get carved up. When President Obama called the parties making money from medicine into the White House to discuss what would become of Obamacare, most of the special interests tried to make a deal. With the Democrats controlling Congress and the White House, they knew that defiance would likely backfire.

The major insurance companies were not sure, and bought a few attack ads, but they were immediately threatened, and got in line. The only parties that did not “buy in” were the medical equipment manufacturers, and as a result the bill included a major tax increase on them, a tax increase big enough to wipe out the entire profit of some of them.

A group that does come to the table, but lacks much clout, is the nonprofit sector. There are some exceptions. Planned Parenthood is effective in Washington and receives federal funding, despite its controversial abortion services. Between 2003–2008, the organization received more than $2 billion in federal funds, of which the Government Accounting Office could only account for $657 million. But in general the nonprofit sector is not seen as a lobbying powerhouse, if only because charities cannot legally make campaign contributions or participate in elections.

This may be why President Obama on several occasions after his election proposed to eliminate charitable gift tax deductions for high earners and why, toward the end of the 2012 presidential election and shortly thereafter, Mitt Romney and other Republicans appeared to join him. The Republicans were vague. But they spoke of preventing income tax rate increases by removing deductions, and the charitable deduction was one of the deductions on the chopping block.

Critics of this assault on charitable deductions for high earners noted that Presidents Bush and Obama had chosen to bail out auto companies and Wall Street. Why tear down the whole charitable sector? That sector represented about 11% of the economy. It employed 13.5 million people, about 10% of the workforce.


Hunter Lewis

Hunter Lewis is co-founder of AgainstCronyCapitalism.org.