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James C. Roumell Headshot

Jesus, Food Stamps and Carried Interest

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Jesus loved the poor, embraced them and repeatedly instructed his disciples to stop holding them back when they approached him. He was regularly dismissed by elites who saw this inclination as evidence that he was not Lord because this interest in powerless people didn't seem in keeping with royal status. In fact, the poor seem to be a very specific concern of Jesus.' The Bible contains no fewer than 300 references to the poor and social justice.

Our members of Congress -- even those claiming to embrace Christian values -- do not seem to have embraced Jesus's teachings. How can Congress allow the SNAP benefits put in place in the 2009 Recovery Act expire while doing nothing to eliminate the carried-interest boondoggle that allows wealthy private equity and hedge fund managers to pay less than half the tax-rate of wage labor? How can this be? In his famous Sermon on the Mount, Jesus said, "Blessed are you who are poor, for the kingdom of God is yours" and "But woe to you who are rich...woe to you who are filled now, for you will be hungry." As a traditional investment manager, I receive a management fee (instead of a percentage of gains) and pay a normal tax-rate on those earnings, like most Americans. Carried-interest is essentially a tax-subsidized fee for managing other peoples' money. Eliminating the carried-interest entitlement would generate between $10 and $15 billion annually while the November 1st food stamp cuts are estimated to generate $5 billion in annual savings. The reduction in food assistance will reduce per meal assistance to $1.40. Over 20 million children will be affected by these cuts, roughly half of them living in "deep poverty" wherein household income is less than half of the poverty line.

Why don't we have a bill to eliminate the entitlement of carried-interest enjoyed by a select group of the wealthy, i.e. those that move money around as opposed to doctors, inventors and engineers? Why do we so often associate entitlements for the poor with contempt but hardly take notice of the myriad of entitlements for the more well-off? To wit, if Jesus showed such affection and interest in the poor, how can a country built on Judeo/Christian values choose maintaining the carried-interest entitlement over food stamps?

John Kasich, the Republican governor of Ohio, should be applauded for his recent admonition to fellow party members when he said, "I'm concerned about the fact there seems to be a war on the poor," Kasich told the New York Times. "That if you're poor, somehow you're shiftless and lazy." In fact, both parties have failed miserably in eliminating the carried-interest entitlement choosing industry contributions over basic fairness.

The dismissal, and often downright dislike of the poor, seems to flow from a view that at day's end it's their fault, they're lazy and need to live with the consequences of their misguided decisions. But if the poor suffer primarily from a character deficit, why does the unemployment rate dramatically drop when the economy is strong and growing? Isn't there far more evidence that when presented opportunities, people embrace work and all of the social and psychological benefits it imbues? And why didn't Jesus blame the poor? Couldn't he have just as easily have lectured them about their choices and their refusal to take responsibility for their actions? Admittedly, we need to balance support payments with the recognition that such payments can be a perverse incentive and food stamps should not provide script for soda and snacks despite the intense lobbying efforts of those industries. There are thoughtful ways to address legitimate concerns and encouraging personal responsibility as a cornerstone of American life.

Of course, the food stamp program is part of a bigger roaring debate on the proper size of government. Clearly, Christianity does not have much to say on the proper size of government. However, if addressing the poor is a Christian value, then it is worth noting what has worked around the globe. Americans would be well served by a basic understanding of the size of our government (federal, state and local), as a percentage of GDP, versus our peers of other wealthy nations. The average among OECD nations is roughly 46%; the United States is now at 42% and in the lower third of 34 countries. More specifically, the amount of our public budget dedicated to "social protection" places us in next to last place among reporting OECD nations.

In fact, the wealthiest nations on earth are all characterized by economies with a dynamic and robust public private partnership. There are key functions for government including investment (education, infrastructure, R&D), civil justice, public safety, public health, national security, and safety nets. Many people do not realize the value of these functions until they lose their own benefits. Most of the countries that we think of as pleasant places to live in have strong public sectors. A material drop of government as a percentage of the economy below the 40% range seems unrealistic and frankly undesirable. To be clear, growing the economy is the best social program to uplift the poor and everyone else. On that front, the conservative Cato Institute estimates that simply passing immigration reform will add .8% to annual GDP growth ($1.5 trillion over ten years). A bipartisan immigration bill passed in the Senate remains stymied in the House.

We do have choices to make as a nation about spending and taxing. But as a Catholic, animated by the teachings of Jesus, I cannot for the life of me see how we can target food stamps going to the "least among us" while leaving private equity and hedge fund managers' favored tax rates untouched. Perhaps Catholic members of Congress ought to take note that Pope Francis has changed the Church's emphasis. Like Jesus, he's instructing us to focus on the poor, "How I would like a Church that is poor, and for the poor." Maybe Francis is the trigger to ignite a reimagining of people fighting for their lives daily, most often heroically, and to more deeply connect us to the dictates of our faith delivered in the Gospels 2,000 years ago.

Jim Roumell is an Executive Committee Board Member of Transitional Housing Corporation, THC and founder of Roumell Asset Management, LLC.

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