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There’s a Hole in Uncle Sam’s Arm Where All the Money Goes

By November 28, 2023Commentary

With apologies to John Prine, a wonderful songwriter, this lyric precisely explains the current debt addiction of the US, and like Sam Stone, this addiction will end with an overdose.  Here is a great graph of from whence money flows into the US Government and where it goes.  Currently the out is running about $2 trillion a year more than the in, which requires no explication in regard to unsustainability.  A huge amount of the spending, that part under “health”, is actually Medicaid, and much of the rest is basically welfare payments, most going to people who have no intention of ever attempting to work.  We will have to come to grips with this reality.  Free health care, free housing, free food, free phones and on and on is not sustainable and feeds on itself by disincenting work.

Rich people really do dodge taxes in a huge amount, primarily through “private” foundations, which they use to spread their favorite ideological poison while avoiding tax.  Private foundation deductions need to be eliminated as a big head start on deficit reduction and the current assets need to be whacked with a one-time 50% tax, and a 10% annual one, until the assets are all gone.  People don’t understand that the real value of a flat tax, not in rate, but in income taxed, is to ensure that the wealthy pay taxes in the same manner as everyone else.  So we can have progressive rate structure, like 5%, 10%, top rate of 15% on all income of any form, with no deductions or exemptions other than for child dependents, and raise more revenue than we currently do while removing the bizarre set of economic incentives the current tax code creates.

Join the discussion 2 Comments

  • Mike Holman says:

    Agree – big tax approach difficult – maybe a better approach would be to restrict the permitted activities, e.g., pay for healthcare, specific types of research, scholarships in areas of critical need, and expand definition of permitted political activity, and limit the tax deduction – My research:

    Are donations to private foundations tax deductible?

    Yes, donations to private foundations are generally tax-deductible by the donor. The amount deductible is determined by the donor’s adjusted gross income and the nature of the property contributed. The amount deductible for cash contributions is limited to 30% of the donor’s adjusted gross income. Contributions of appreciated property, such as publicly traded securities, are deductible at fair market value up to 30% of the donor’s adjusted gross income. An excess deduction may be carried over to future years.

    Do private foundations pay tax?

    Private foundations are generally exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. However, they are subject to a number of excise taxes, including an annual excise tax on net investment income, a tax on excess business holdings, and a tax on taxable expenditures.

    What is the total wealth of private foundations?

    As of 2022, private foundations held an estimated $2.3 trillion in assets. This is more than double the amount held by public charities.

    How much income do private foundations earn a year?

    Private foundations earned an estimated $123.5 billion in income in 2021. This includes investment income, grants from other foundations, and contributions from donors.

    Are private foundations allowed to engage in political activity?

    Private foundations are generally prohibited from engaging in direct political activity. This means that they cannot endorse or oppose candidates for office, donate to political campaigns, or make expenditures that expressly advocate for or against legislation. However, they can engage in indirect political activity, such as conducting research on public policy issues or supporting voter education programs.

    What is defined as political activity?

    Political activity is defined as any activity that is intended to influence the outcome of an election or to influence the passage or defeat of legislation. This includes activities such as:

    Endorsing or opposing candidates for office
    Donating to political campaigns
    Making expenditures that expressly advocate for or against legislation
    Lobbying government officials
    Private foundations must carefully monitor their activities to ensure that they do not engage in any political activity that could jeopardize their tax-exempt status.

  • Mike Holman says:

    A little more research: I used Google Bard, and kept asking a few follow-up refining prompts. Here are the seven largest private foundations in the United States and a brief overview of how they spend their money by category:

    1. Bill & Melinda Gates Foundation

    Total assets: $50.2 billion
    Focus: Global health, education, and poverty alleviation
    Spending by category:
    Global health: 54%
    Education: 26%
    Poverty alleviation: 11%
    Other: 9%
    2. Howard Hughes Medical Institute

    Total assets: $27.1 billion
    Focus: Medical research
    Spending by category:
    Medical research: 95%
    Administration: 3%
    Other: 2%
    3. Wellcome Trust

    Total assets: $42.8 billion
    Focus: Health research
    Spending by category:
    Health research: 89%
    Public engagement: 5%
    Other: 6%
    4. Stichting INGKA Foundation

    Total assets: $37.3 billion
    Focus: Sustainable development and social entrepreneurship
    Spending by category:
    Sustainable development: 70%
    Social entrepreneurship: 20%
    Other: 10%
    5. Mastercard Foundation

    Total assets: $31.5 billion
    Focus: Financial inclusion and youth development
    Spending by category:
    Financial inclusion: 55%
    Youth development: 35%
    Other: 10%
    6. Ford Foundation

    Total assets: $16.1 billion
    Focus: Social justice and human rights
    Spending by category:
    Social justice: 40%
    Human rights: 35%
    Education: 15%
    Other: 10%
    7. Lilly Endowment

    Total assets: $12.8 billion
    Focus: Religion and education
    Spending by category:
    Religion: 50%
    Education: 40%
    Other: 10%

    Specific to Mastercard and Ford

    Here’s a breakdown of what financial inclusion and social justice mean, along with specific examples of how the Mastercard Foundation and Ford Foundation allocate their funds:

    Financial Inclusion

    Financial inclusion refers to the ability of individuals and businesses to access and use affordable, appropriate, and timely financial services. This includes access to banking, insurance, savings, loans, and other financial products and services. Mastercard Foundation’s commitment to financial inclusion is evident in its support of various initiatives, such as:

    Digital financial services: Mastercard Foundation promotes the development and adoption of digital financial services, such as mobile banking and payments, to reach underserved communities and provide them with convenient and secure access to financial services.

    Microfinance: Mastercard Foundation supports microfinance institutions that provide small loans to entrepreneurs, particularly women and marginalized groups, enabling them to start and grow their businesses.

    Financial literacy: Mastercard Foundation invests in financial literacy programs that educate individuals about financial management, budgeting, saving, and responsible borrowing, empowering them to make informed financial decisions.

    Social Justice

    Social justice encompasses the fair and equitable treatment of all individuals, regardless of their race, gender, ethnicity, sexual orientation, religion, or other personal characteristics. Ford Foundation’s commitment to social justice is reflected in its support of initiatives that address various social issues, such as:

    Racial and ethnic justice: Ford Foundation supports organizations that advocate for and promote racial and ethnic equality, addressing issues such as racial profiling, discrimination, and disparities in education, employment, and criminal justice.

    Gender equality: Ford Foundation supports programs that empower women and girls, promoting gender equality and addressing issues such as gender-based violence, access to education and healthcare, and economic opportunities.

    LGBTQ+ rights: Ford Foundation supports organizations that advocate for and protect the rights of LGBTQ+ individuals, addressing issues such as discrimination, hate crimes, and access to marriage and adoption.

    These examples demonstrate how Mastercard Foundation and Ford Foundation are working to advance financial inclusion and social justice, respectively, by supporting initiatives that address critical societal issues and empower individuals and communities.

    Specific to Ford Foundation and the transgender movement:

    Yes, the Ford Foundation has been a longtime supporter of the transgender movement. In recent years, the foundation has increased its commitment to transgender rights, pledging $10 million over five years to support transgender organizations and advocating for policies that protect transgender people.

    Here are some specific examples of how the Ford Foundation is supporting the transgender movement:

    Funding transgender organizations: The Ford Foundation provides grants to a variety of transgender organizations, including advocacy groups, legal aid clinics, and healthcare providers. These organizations provide critical services to transgender people, such as legal representation, hormone therapy, and mental health care.

    Supporting transgender research: The Ford Foundation funds research on transgender issues, such as the impact of discrimination on transgender people and the effectiveness of gender-affirming healthcare. This research helps to inform policymakers and service providers about the needs of transgender people.

    Advocating for transgender rights: The Ford Foundation advocates for policies that protect transgender people, such as non-discrimination laws, hate crime laws, and access to gender-affirming healthcare. The foundation also works to educate the public about transgender issues and to build support for transgender rights.

    The Ford Foundation’s support for the transgender movement is in line with its mission to “advance human dignity.” The foundation believes that all people, regardless of their gender identity, should have the opportunity to live full and meaningful lives.

    Here are some additional examples of the Ford Foundation’s work on transgender issues:

    In 2022, the Ford Foundation launched the Grantmakers United for Trans Communities (GUTC) Pledge, a call to action for philanthropic organizations to increase their support for transgender communities.

    The Ford Foundation has also supported the development of, a comprehensive online resource for transgender people and their allies.

    The Ford Foundation is a member of the Equality Federation, a coalition of foundations that support LGBTQ+ rights.

    The Ford Foundation’s commitment to transgender rights is making a real difference in the lives of transgender people. The foundation’s support is helping to build a more just and equitable world for all.

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