Posts tagged ‘President Barack Obama’

January 9, 2015

Are You Ready for the Coming Storm?

A storm is coming. It will affect the entire US economy. It will likely affect the global economy.

The nonprofit sector will not escape the impact. You need to prepare now.

Koyasan Umbrellas 3 by Andrea Williams via FlickrAs 2014 began to wind down, the US National Debt surpassed the $18 trillion mark! That’s over $154,000 of Federal government debt per taxpayer or more than $56,000 per citizen. During the six years of the Obama Administration, the US National Debt increased by nearly $7 trillion, representing 67 percent growth. And it’s still growing.

As if that’s not bad enough, the US Unfunded Liabilities total more than $92.5 trillion dollars, or more than $789,000 per taxpayer! It, too, continues to grow.

President Barack Obama, former-President George W. Bush, and the US Congress are all responsible for the rapid growth in the US National Debt since 2009 as well as the growth in the Unfunded Liabilities. So, I’m not going to engage in specific finger pointing, policy debates, or politics.

Instead, I want to focus on what this means for the charity sector looking forward.

The rapid growth of national debt is not sustainable. We should no longer ignore it. Here are some of the reasons why:

• While our enormous national debt is not significantly affecting the nonprofit sector at the moment, the day is coming when it will. Prudent organizations will prepare for the storm before it hits.

• At some point, failure to address the massive debt issue will lead to a downgrade in America’s credit rating. Think it can’t happen? It already has. In 2011, Standard and Poor’s cut the US credit rating to AA+ because the government “fell short” of taming the nation’s debt. In 2012, Egan-Jones cut America’s credit rating to AA for the same reason. While these downgrades have had a mostly symbolic effect, they foreshadow what is likely to happen unless the government brings the national debt under control.

• Eventually, future credit rating downgrades will make it more expensive for the government to borrow money. Interest rates will rise. That will take more money out of the economy.

• In addition to becoming increasingly costly to borrow, lending sources will be harder to find. Some of those lenders might also use the lender-debtor relationship to force US policy changes. We’ve already seen this with the China relationship. By the way, China, no longer the US, is the world’s largest economy in “real” terms of goods and services produced.

• To deal with the debt, the federal government has four possible courses of action (or some combination of these): 1) pay more to borrow more which will add to the debt and take more money out of the economy, 2) print more money which would be inflationary, 3) cut spending which would likely mean less money for the social safety net and nonprofit organizations, and 4) raise taxes which will reduce individual disposable income. So, even if the government does address the debt situation, it could have a short-term negative impact on the nonprofit sector before it has a positive effect.

• A massive, growing national debt will make it more difficult for the US economy to experience strong growth in Gross Domestic Product. Philanthropy correlates closely with GDP; it’s been about two percent of GDP for decades. If the economy doesn’t grow rapidly, philanthropy is not likely to do so. If the economy truly falters, we might even see a drop in year-to-year philanthropy as we did during the Great Recession.

We’re already beginning to see some of the effects I’ve described above. If nothing is done to tame the national debt, these effects will be magnified and could eventually become catastrophic.

There are some things that nonprofits can do to prepare:

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December 21, 2012

What Do Obama, a Rapper & a Hospital Have in Common?

US President Barack Obama, South Korean rapper Psy, and Washington, DC-based Children’s National Medical Center have all found themselves involved in the same controversy this month. While much media attention has been focused on the situation, little attention has been directed at Children’s National.

So, let’s look more closely.

South Korean rapper Psy.

South Korean rapper Psy.

On December 9, 2012, the TNT television network taped Christmas in Washington for broadcast on December 21. This is the 31st year for the program. The event, held at the National Building Museum, was hosted by Conan O’Brien and featured an array of stars including Psy.

The South Korean rapper is known for his mega-hit “Gangnam Style,” which, in just four months, broke the record for most watched YouTube video in history. Traditionally, sitting US Presidents attend the event. This year, as in the past, First Lady Michelle Obama selected Children’s National as the beneficiary of the event, and the organization’s website has leveraged this with requests for donations.

So, what could go wrong?

Well, shortly before the event, a tape surfaced of Psy performing a rap number in 2004. The lyrics are not for the faint-hearted:

Kill those f**king Yankees who have been torturing Iraqi captives

Kill those f**king Yankees who ordered them to torture

Kill their daughters, mothers, daughters-in-law, and fathers

Kill them all slowly and painfully”

Some in the media questioned whether it would be appropriate for the nation’s Commander-in-Chief to attend the performance of someone holding such anti-US-military and anti-American views. The White House responded by pointing out that it had nothing to do with the planning of the event or the booking of the acts. Obama and his family planned on attending despite the controversy.

Then, days before the event, Psy issued a public apology (click here for the full text):

While I’m grateful for the freedom to express one’s self I’ve learned there are limits to what language is appropriate and I’m deeply sorry for how these lyrics could be interpreted. I will forever be sorry for any pain I have caused anyone by those words.”

Sometimes, publicity can be good even when the news is bad. So, I was curious if the publicity had a negative impact on event-related donations to Children’s National, a positive impact, or no impact at all. I contacted Children’s National.

After initially agreeing to answer my questions about Christmas in Washington, the organization abruptly declined to respond stating:

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