Daniel Patrick Moynihan was no libertarian. He famously opposed the welfare reform bill of 1996 and predicted it could throw a million poor persons into the streets. But he was no statist, either, as one sees from an earlier prediction he made at the inaugural meeting of the Independent Sector, an umbrella group of both the fund-raising and fund-giving sides of the tax-exempt world:
this wonderfully creative civilization which we have produced in North America and Western Europe is going to come to an end . . . through the slow but steady conquest of the private sector by the public sector.
No better evidence for this threat exists, Moynihan added, than the way “the non-government enterprises of public concern” who sat before him were being “squeezed out of existence or slowly absorbed” by government.
This forgotten speech was delivered in 1980 and has recently been posted by our friends at the Philanthropy Roundtable in the Philanthropic Freedom section of their revamped website. The timeliness of this three-decade-old talk is sobering.
For instance, Moynihan explained he had never “fully understood the depth of the animosity which the state” has toward the “very existence” of charitable institutions until he and Sen. Bob Packwood tried in 1977 to “provide a measure of tax aid to persons who send their children to non-governmental schools.” In 1964, Moynihan observed, when the Independent Sector’s founder, John Gardner, was U.S. Secretary of Health, Education, and Welfare, “the Democratic platform called for this kind of assistance,” with the result that Congress enacted the first major program of federal aid to elementary and secondary schools.
But – surprise – the Democratic platform’s claim that all schools deserved aid was cast aside, and federal funds went only to government schools, who quickly demanded not only far more aid for themselves but less aid to others, so that “people of the most gentle miens and benevolent dispositions set out to destroy these competitors because they did not control them.”
In 1980-81, as Moynihan spoke, the feds sent 9.8 billion tax dollars to government-controlled primary and secondary schools; by 2007-8, that figure rose to $47.7 billion. That's a nominal spending increase of 387 percent, which occurred as enrollment in those schools rose a mere 17 percent. Inflation rose too, but federal K-12 spending outpaced it by about three to one. Test scores, of course, flat-lined.
Charitable Tax Deductions
Moynihan also passionately insisted on the need to have broadly available tax deductions for charitable giving. He argued that it’s not enough to have corporations and the “upper five percent” contribute to nonprofits; America’s flourishing requires that “a large portion of the American public” continue to provide private support for charities. But he warned his Washington, D.C. audience that “there are institutions in this city” that will “do everything they can” to “oppose” and “destroy” tax deductibility for private giving.
For the latest on Washingtonians who oppose the charitable tax deduction, see the Alliance for Charitable Reform’s Charitable Deduction Central, and read the December 15 letter to the Senate Finance Committee signed by the Alliance, the Independent Sector's current head, and numerous other nonprofits. (A former Council on Foundations’ board chair recently denounced efforts to trim charitable deductions; my analysis is here.)
Charities Dependent upon Government
“Private institutions really aren’t private anymore,” Moynihan complained, because “many are primarily supplied by government funds.” He pleaded with his nonprofit audience to “think of your own institutions and how much money you now get from public sources,” and he bemoaned the fact that Catholic Charities had just tipped into majority funding by government. “In time, there cannot be any outcome to that encroachment save governmental control.”
Alas, this trend has only worsened. At the diocesan level, Catholic Charities now often receive as much as 80 percent of their funding from government. The counter-example of the Tulsa diocese, which eschews government money, recently made the news. Brian Anderson has painted the history of Catholic Charities’ declining independence in City Journal.
“Have you all heard,” Moynihan asked, “of the idea of tax expenditures? Do you know you’re a tax expenditure?” He deplored the way this term presumes that “the government owns your income and permits you to retain a certain amount.”
Moynihan’s response to this claim forms the climax of his speech, which lays down a challenge to the entire sector:
Well, if you’re allowed to keep it, then it wasn’t yours in the first place, was it? It belongs to the state. The state will consume it if you don’t fight back. . . . Something of the most profound concern to American society is at issue, and that is our tradition of a plural, democratic society. It would be the final irony if, in the name of good purposes, government ended up destroying liberty in the society. But that can happen, and that is what seems to me is your job: to make certain it does not happen.
FOOTNOTE: On Moynihan’s erroneous prediction for welfare reform, see his fellow liberal Larry DeWitt’s essay on how they were both wrong. A sociologist has dissected the Urban Institute study on which Moynihan based his prediction, noting that the Senate's "leading expert on welfare issues," relying on "the most authoritative social science estimate available," still ended up wrong -- a lesson for us all on the limits of social science. For a brief essay on the man who coined the term “independent sector” and anticipated many of Moynihan’s arguments, go here.