Monday, March 25, 2013

Quasi-Government Function -- Really? Why?

A recent piece in the Wall Street Journal addressing the distinction in tax consequences between tax credits and charitable deductions in tax reform initiatives got me thinking about the whole nature and logic of civil society.  According to the writer, distinguishing between proposed limitations on deductions and the charitable-deduction is important because expenditures controlled by the government clearly benefit all taxpayers by supporting the "quasi-government function" performed by legitimate charities and educational institutions.

What is going on in this discussion, and in a press conference held by House Minority Leader Nancy Pelosi, is that all tax cuts, all exemptions from taxable income, and deductions authorized for business and charitable purposes are in fact government expenditures.  As Pelosi sees it, these are involve spending money on tax breaks, and should be included in any deficit reduction negotiations.

The context of this particular discussion in The Wall Street Journal was an opinion piece written by Harvard University professor, Martin Feldstein, the former Chairman of the Council of Economic Advisors under President Ronald Reagan.  He started his column, writing:
Putting a cap on tax expenditures -- those features of the tax code that are a substitute for direct government spending -- can break the current physical impasse and prevent the dangerous explosion of the national debts.  If a cap is combined with entitlement reforms, the government will also be able to reduce tax rates and increase some spending to accelerate the economic recovery.
* * *
Yet the distinction between spending cuts and revenue increases breaks down if one considers tax expenditures.  Here are some examples.  If I buy a solar panel for my house, a hybrid car, or an energy-efficient refrigerator, the government pays me.  But, instead of sending me a check, it gives me a tax credit or a tax deduction. . . . .
To be sure, the largest tax expenditures are the deductions that individuals can take on their tax returns for mortgage interest, state-income and local-property taxes paid, and also the exclusions from taxable income from municipal bond interest, and for employer-provided health insurance.  Any attempt to limit such deductions and exclusions would generate fierce opposition.  That is why an overall cap would be more feasible.  [The idea here is to limit the tax savings from all deductions and the two major exclusions to 2 percent cap of the individual's adjusted gross income.]
Professor Feldstein does concede that under his proposal, the 2 percent cap could be modified to retain the existing deduction for all charitable contributions.  According to Professor Feldstein, the existing charitable deduction deserves to be maintained because unlike other deductions and exclusions, it does not benefit the taxpayer directly but provides important private support for universities, religious and cultural institutions, and hospitals.  Since under present tax law, the charitable deduction is not limited only to universities, religious and cultural institutions, and hospitals, I am assuming that the professor is not limiting his discussion of exempting charitable deductions from his overall 2 percent cap proposal to those institutions alone.

But, what caught my eye in the follow-on discussion was the idea that the "charitable-deduction tax benefits" included in Feldstein's proposal, which are according to both Feldstein and the responder, "expenditures [that] clearly benefit all taxpayers by supporting the quasi-government function performed by legitimate charities and education institutions."   Is this really what is going on here, and if so, how does one define a government function, and distinguish between that and a quasi-government function, and one which really has no relationship at all with the purpose or nature of government?

A society conscious of its place in history is seldom content to note changes in circumstances with no attempt to understand or evaluate their meaning.  We make these evaluations because we are not content with mere descriptions of events or recitations of facts and statistics.  We want to understand their meaning or significance, but we cannot do that without having an idea about end toward which those events and trends are leading.  If these teleological visions are the collections of values, often having a strong emotional force even if we are not conscious of them or their components, it at least behooves us to understand what these visions might be and how their emotional forces drive a society in certain directions.

This raises some interesting questions about an analytical framework for thinking about some of these things.  If Arnold Toynbee was right that "the crucial questions confronting Western Man were all religious," because of the inevitable dependence of a society's actions on its beliefs, then why does any emphasis on ideas and beliefs find skeptical criticism in so many circles.  As Os Guinness once wrote, we do not see the environment because we see with it.  We are so influenced by ideas that we do not notice that we are not aware of their affect on us.

One way to look at this is that idolatry may be one way to understand what is going on.  People are by nature worshipping and may worship nature, money, mankind, power, history, social and political systems and anything that might take them away from the Creator.  So, people can place anything or anyone at the top of his or her pyramid of values, and that is what he or she ultimately serves.  So, my argument is that this concept and framework is a good framework to understand our societies, and the forces that may drive us to think about the relationship between government and civil society, as well as other instruments of control, such as family and the market.

To be sure, there is a plethora of charities in the United States, and it is the most open and democratic society in the world.  According to a report in The Chronicle of Philanthropy on 24 February 2013:
This open system has benefits: It allows for new idea, new blood, new causes, and new hope.  But it also extracts a significant cost: The torrent of new and old charities creates confusion in the marketplace and stretches limited funds over too many organizations. As a result, even the most effective charities struggle to expand their services and tackle large-scale social problems with large-scale resources.
Of course, the question maybe should be: Should they attempt to tackle large-scale social problems with large-scale resources?  Maybe it is at this point the the confusion occurs, not just in the marketplace, but also as to the relationship between government functions and those functions performed by charity or civil society.

One of the things that is going on here in the US in political discussions, especially those about the roles of government, mainly the central government, and the financial and debt crisis, is how the government can balance its budget by increasing "revenues" through limiting deductions.

But, it does seem to me that there are some more fundamental issues that are more important than simply the revenues issue.  These are important because they bear on the question of what kind of society a people should desire and what policies are necessary to inform the development of that society.

Divine revelation teaches us four major foundational principles with public policy implications, each consistent with the meaning of, and advancement of, a life of caritas, interestingly enough, the name of a prominent and internationally recognized faith-based charity.

If we are to understand the foundations of political society, it would be well to begin with the Christian understanding of the person, "the beginning, the subject, and the object of every social organization," as Gaudium et Spes tells us and as the wisest among the ancient Romans taught.  We find four core principles in the opening pages of the book of Genesis: the dignity of human life; the dignity of marriage and family; the dignity of what we call today, religious freedom; and the dignity of implacement.

We find first the declaration that God made man in His image and likeness.  This has been interpreted by Thomas Aquinas and others to refer to our spiritual powers, our freedom, our intellect and will, our powers of moral deliberation, judgment, and choice.  We are not mere atoms in a zero-sum struggle to survive, as Hobbesian individualism supposes.  Nor are we mere means to some social ends, as collectivist ideologies hold.  Rather, we are social beings, equal in dignity, who are personal and social beings fulfilled as persons in relationship with other persons.

The second fundamental principle is the dignity of the most basic social unit, the foundation of the family.  The core of marriage and family is not determined by human law or conventions, although they can recognize and support it, or can obscure it.

The third fundamental principle is the human right to exercise freedom, especially in moral and religious matters.  Religious freedom is not simply a matter of revealed truth unknowable by rational reflection.  It is established by reason.  Here, it is not simply the freedom to believe and practice in private what one believes.  If it is freedom at all, it is freedom to be open about ones beliefs and to seek to persuade others to share in those beliefs.  Otherwise, it really is not freedom of religion at all.  And, indeed, is not freedom at all.

The fourth fundamental principle is the principle of implacement...  "Fremd bin ich eingezogen, fremd zieh ich wieder aus."  "A stranger came I hither, a stranger go I forth."  One of the characteristics of being human is being implaced.  To exist at all is to have a place.  Since to be human is to be placed, it follows that place results from the human interaction of human beings and their particular locations. This means that place has a cultural context or dimension.  Although "space" and "place" are inseparable, "place" is distinguished from "space" because place is part of our lived experience, whereas "space is theoretical concept and as such is an abstraction from the lived experience of "place."

In our late modern cultural age, we have lost the very human sense of place amidst the time-space compression characteristic of postmodernity and globalization.  Place becomes something we move through, often at great speeds, and virtual reality is not replacement for place.

There is a dehumanizing effect of urban sprawl.  While the city provides "the gift of anonymity and mobility," people suffer not so much from anomie or lack of purpose or sense of rootlessness, which they clearly do, new technological developments in communications threaten to make the city redundant.  People lead detached and uprooted lives of endless choice and no commitment.  There is a human hunger for a sense of place that urban promise cannot satisfy.  There is no meaning apart form roots.

To know who you are is to be oriented in moral space, a space in which questions arise about what is good or bad, what is worth doing and what is not, what has meaning and is important to you, and what is trivial and secondary.

It is where we learn about anger, anxiety, love, and move toward wholeness through experiencing these objects for us "in some common space," which is shared by a defining community.  By common experience of our place, and by common care for it, we build up also our sense of belonging to one another.

There is a significant gap between society and the state, so it is possible to be free at the Constitutional level in the terms of the structures of liberty, and become, subservient and servile at the citizens' level in terms of the spirit of liberty.

All this got me thinking again about various understandings of civil society, and specifically, about the nature and role of civil society.  If government is so omnipresent, omniscient, and omnipotent, and caring for the welfare of the people, then why do we even need charities, NGOs, or CSOs?

There are certain assumptions behind these proposals and discussion that are often overlooked.

The first assumption is that the government is, indeed, omnipresent, omniscient, and omnipotent.   As a result, when disaster strikes, only government has the presence, expertise and wisdom, and power to know what needs to be done to provide for its people.  But, this is not limited only to disasters, whether natural or made by humans, such as war, but includes the ability to know what is best for society, to provide for the welfare of society, as well as protect society from outside harm. 

But, what is the source of this authority and power claimed by governments to be all things to all people?  One theory in modern political thought as to the source of this authority and power, is "social contract theory," which is the method for justifying political principles and arrangements by appeal to the agreement that would have been made among suitably situated rational, free, and equal persons.  How English philosopher Thomas Hobbes would define that would be different than how American philosopher John Rawls might define it.

But the basic question is: What holds society together?  Modern assumptions about the relationship between the individual and society, private property and ownership, rationality, economics, and the market, and the rights and responsibilities of citizenship have all been shaped by social contract theory.

The basic idea involved in the quest was to discover rational principles for the construction of a civil polity that would not be subject to destruction from within.  Because virtually any government would be better than civil war, according to Hobbes's analysis, all but absolute governments are systematically prone to dissolution into civil war.  People ought, therefore, to submit themselves to an absolute political authority.  Stability requires that they also refrain from the sorts of action that might undermine a regime.

So, when people mutually covenant with each other and others in the community to obey a common authority, they have established what Hobbes calls "sovereignty by institution."  The social covenant is implied by the presence and participation in the community.

Most theorists are driven by two basic questions: The first, by what right or need are people driven to form "states?"  The second, what is the best form a "state" can take?  These fundamental questions involve a conceptual distinction between the concepts of "state" and "government."  Whereas "state" refers to the set of enduring institutions through which power would be distributed and its use justified, "government" refers to a specific group of people who occupy institutions of state, create laws and ordinances by which people would be bound, and enforce and interpret such laws and ordinances.

So, how does this assumption work in the context of the competence and capability of government as the omnipresent, omniscient, and omnipotent and caring agent for the welfare of the state?

There was a column in the Washington Post recently, that commented on a story in the local Washington area news.  Joshua Welch, a 7 year-old boy was suspended from second grade in his elementary school.  While eating a Pop-Tart, a sweet, fruit-filled breakfast pastry children like, he was biting it to form the shape of a mountain.  As he was eating away at the Pop-Tart, he realized it looked more like a gun than a mountain, and pointing it at a friend, he said, "Bang, bang." Quite natural, it seems, for 7 year-old boys.  The school administrator, in addition to suspending the young boy from school, sent a letter home to his parents urging them to use the "incident" as a teaching moment with their children, "in a manner you deem appropriate.

In another "incident," a 5 year-old girl was labeled a "terroristic threat," and suspended from her kindergarten class and ordered to undergo a psychological evaluation because she talked about shooting herself and others with her "Hello Kitty gun," a harmless plastic gun that blew water bubbles.

Both schools, with their caring concern for the safety of the young students, worried about "bullying" at their respective schools and about the enforcement of their zero tolerance for the guns and weapons on school property, even if only as chewed up Pop-Tarts, and bubble shooting plastic guns.  These episodes define for us as citizens what words or images or actions can interfere with an individual's ability "to participate in a safe and supportive learning environment," and the nature of the regulatory state that can be omnipresent, omniscient, and omnipotent.

When I was in China in December 2012, there was a new movie opening in the theaters about the famine in Henan Province in 1942.  The title of the movie was Back to 1942.  This has caused me to think a lot about whether there is no role for civil society where governments are presumed to provide all that is needed for a good society.  Then, just in the last few days, I had lunch with a friend who experienced this famine as a young boy.

Here is a summary of his story.  His grandfather, a twenty-six year old Cambridge University educated doctor, left behind his world of Europe and went to China to open up a hospital in Henan Province, at that time, China's most populous province, where the need for medicine was overwhelming.  In June 1900, the Empress Dowager issued a decree that all foreigners must be killed. By the time of the Boxer Rebellion was over, 250 missionaries and more than 32,000 Chinese Christians had been killed.

When the Rebellion broke out in the late 1880s his grandfather, with only three years experience in China, found himself in an old medieval capital, taking refuse in a loft infested with cockroaches and rats, with little or no food or drink.  Finally, he was able to escape and began the dangerous 1000 mile journey through Boxer-infested country to the coast and safety.

My friend's parents, also missionaries in China during the 1930s to the early 1950s, faced similar horrors, pursuit by bandits, the rising tide of Communist insurgents, the daily strategies to escape the assaults of Japanese bombers, and the horrors of the Japanese massacre of Nanjing.

But as my friend recounts his childhood in China, nothing had prepared his family for the unmitigated horror of the Henan famine in the winter of 1942-43, where according to some reports, five million people died in the space of three months.

"The devastation of the drought, aggravated by the ravages of war and the callousness and ineptitude of the distant, uncaring government of Chaing Kai-shek, made for a disaster beyond comprehension."  Food became the sole business of life and the one desperate obsession.  As reported in the movie, Back to 1942, and in the report of my friend, Time correspondent and author Theodore White, "parents sold their children for food, and rumors of cannabilism were rife.  Fundamentally, there was no idea that could embrace what was happening.  . . .  Compassion, kinship, customs, morals were swept away."

His mother, a surgeon, but without food and medicine was unable to bring medical help to the sick and dying.  His family, as isolated Westerners in an ocean of despair, were besieged with impossible requests and burdened with hopes that could not be fulfilled.  Babies were left on their doorsteps, beggars clung to them in the streets, and officials plead for food and medicine that his parents did not have even for themselves.  His two brothers died during this famine, and his family, with many others, began a long treck from Henan to India.

Os Guinness also tells the story of Prisoner 174517 in his book, Unriddling Our Times.  The story is well-known, but I think bears some repeating here as I think about the assumption, if I am right, about the alleged omnipresence, omniscience, and omnipotence of government.  Whereas, the Hunan famine represented either a a simple neglect, or more probably callous disregard on the part of three rivals to government, and perhaps the direct infliction of evil, in the case of the Auschwitz extermination camp, the direct evil actions of government are more clearly evident.

So, according to the report, Prisoner 174517 was thirsty.   Seeing a fat icicle hanging just outside his barracks in Auschwitz, he reached for it, broke it off to taste it to quench his thirst.  But, before he could get the icicle to his mouth, the guard snatched it out of his hand and threw it to the ground where it broke into pieces on the dirty ground.  "Why," the prisoner instinctively shouted out.  "Here there is no why," replied the guard with a tone of brutal finality.

As Os writes, that, for Primo Levi, the Italian Jewish scientist and writer was the essence of the death camps.  While it centers here on the evil perpetrated during the war and period leading to the war, it also represents the unchallenged arbitrary authority of the state.

Although Primo Levi survived, at least physically and outwardly, the experiences of the death camp at Auschwitz, he could not bear the burden of witnessing to that experience, and more than 40 years lady, he died as he plunged down a staircase to his death in suicide.  In doing so, feeling the burden of witnessing, the guilt of surviving, the horror of revisionist denials, the dimming of memory, and the depression from all of this, he joined the list of those who were victims of the Nazi death camps and either died in them or took their own lives after the liberation of the camps.

But, of course, these may be extreme examples today, although not totally foreign to what happens in some places in the world even today.  There are still ways in which governments show their omnipresence, omniscience, and omnipotence in ways that may suppress or depress freedoms.

More common is the intrusive nature of an omnipresent, omniscient, and omnipotent state into everyday life.  One example that represents this nature in all facets of human life and with many direct adverse effects on the work of civil society and charitable organizations is the statutory and regulatory scheme implementing the Patient Protection and Affordable Care Act of 2010, also known as ObamaCare, in the United States.

Historically, healthcare in hospitals in the United States has been provided by the nonprofit  and charity sector.  Indeed, today, approximately 60 percent of all hospitals in the United States are nonprofit, while approximately 25 percent are government owned.  The remaining hospitals, fewer than 1,000 are for profit.  Religious groups, especially Catholic orders, and Protestant denominational groups opened many of these facilities as charitable institutions.

For example, before the birth of modern medicine, hospitals were poorhouses where indigents went to die.  With the advent of modern medicine, and especially medicines, such as, antibiotics, and the revolution in medical schools, healthcare became much more effective but expensive.  By the late 1920s, hospitals noticed that their beds were often empty because people did not go into hospitals unless they were deathly ill.  An official at Baylor University Hospital in Dallas, Texas noticed that people were spending more for cosmetics than for medical care.  So, Baylor Hospital started offering a deal to a group of public school teachers in Dallas in which the teachers would pay 50 cents each month into a plan in exchange for Baylor Hospital picking up the tab on hospital visits.  When the Great Depression hit the United States, hospitals around the county saw the patient load disappear. The Baylor plan and idea became hugely popular and eventually got the name, Blue Cross.  World War II became the catalyst for spreading the idea.

In 1943, the Internal Revenue Service, IRS, ruled that employer-based health care should be tax free. In 1954, further law made this plan even more attractive.  During the post-war infrastructure boom, the federal government offered subsidies to cities that wanted hospitals.  But, obtaining this subsidy required nonprofit status and a promise to provide a "community public benefit."  The IRS originally defined community benefit to mean that three percent of the operating revenue was to be used for taking care of patients who could not afford to pay for the service.  Tax-exempt status became a good deal if one considered the avoidance of sales tax, property tax, and income tax.  The various states had different standards for the amount of money that must be spent on charity in order to stay nonprofit.

Thus, the employer-based insurance which started with Blue Cross selling coverage to teachers in Dallas and spread because of government price controls and tax breaks, became the natural system through which people with good jobs got their health care through work, while those without looked to the government.

While a good deal of attention has been given to the effect of ObamaCare on individuals of various classifications and on the potential role of the states in implementing the exchanges, less has been said about the effect that the law will have on hospitals and health systems.

The most common thinking is that ObamaCare reform will cause consolidation of hospitals and health providers.  But, the effect on hospitals, especially those within the nonprofit sector may be even more radical.  Although many hospitals are able to maintain the public or community benefit status percentages for uncompensated care, when 30 million more people projected to obtain health insurance as a result of ObamaCare, the numbers of uninsured and nonpaying patients will fall and hospitals' tax-exempt status could be threatened.  Moreover, although many hospitals suffer financial losses as a result of services provided to Medicaid patients, those losses do not count as charity under current rules.

Assuming that the number of uninsured and nonpaying patient load decreases in 2014 when ObamaCare goes into full effect, nonprofit hospitals will face two options.  The first is to convert themselves into for-profit enterprises.  Indeed, this is already happening in places like Detroit, Boston, Scranton, and Miami where for profit chains are taking over old Roman Catholic and Protestant systems, as well as other nonprofit healthcare systems.  Many people committed to the mission of charitable hospital care would prefer this option because they like the mission of caring for their community.

The other option would be for the hospitals, or hospital associations, and governments to agree on a new community benefit standard which unlike the old would not depend on taking uninsured and nonpaying patients for free.

The ObamaCare statute, which is approximately 2,500 pages long, is now implemented by proposed regulations that are approximately 20,000 pages long.  The application for ObamaCare is 15 pages long, and if government subsidy is sought, the application is 60 pages.  The applications are more complicated than a complex tax return.  The applications appeared online without warning or notice.  Most of the information sought is irrelevant to the issue of any request for subsidized health care support.

At the time of enactment, the statute was considered too long for the legislators to have read it before voting on it.  We can presume that the everyone effected by this law, including the hospitals, doctors, patients, insurance companies, and bureaucrats enforcing the law and regulation will have read and understood the regulation.
While medical care provided by charitable institutions, particularly those with religious foundations may have seemed to be much simpler and charitable, it is not difficult to imagine such charitable institutions performing quasi-government services now that they are being prescribed by the Affordable Care Act of 2010 with all of the new and additional government agencies involved, and the expanded government agencies at activities as depicted in this chart.  Moreover, with all the information required by the new application forms, most of which is financial, health care becomes little more than a series of financial transactions rather that what it was originally intended to be.  As this chart shows, the government is indeed omnipresent!

Perhaps the idea of the work of charities and civil society organizations performing "quasi-government functions," justifies a highly regulated environment, especially if charities are granted a tax-exempt status and contributors to charities are entitled to a deduction on their tax returns for contributions made to charities.

Government grows because well-meaning people like you and me believe it should do certain things that seem beyond controversy -- find a cure for cancer, stop air and water pollution, keep violence off television, hold back some aggressor in some hot spot in the world -- something that everyone seems to agree should be done.  Whatever, the goal, it is easy to imagine that a single-minded government could achieve it.

The basic idea behind this first assumption is the view of power as an idol.  The most characteristic feature of modern life and one which impinges on virtually every area of human life has been the development of the nation-state.  The state will provide for us whatever prosperity could not.  The paternal state not only feeds its children, but nurtures, educates, conforts, and disciplines them, providing for all they need  for their security.  Our whole lives are their business.  The paternalism of the state is that of a the bad parent who wants his children to be dependent upon him for ever.  The great crime is that it transforms the state from being a gift of God to protect us against violence, into an idol we worship and on which we depend for all of our needs.

If the source of authority is what is called "social contract theory," as political philosophers suggest, at what point does the authority of government depend upon the consent of the people and at what point is freedom important in a governed society?

So, reasonable questions might include: Where are we, and how did we get here?  What kind of people do others think we are? What kind of people do we think we are?  Do we love freedom, and if so, how do we sustain it?

While thinkers, and indeed we as a people, may understand democracy in different ways, a second assumption is that freedom and democracy are important and cherished values among all humans.  But sometimes, freedom may only be understand as a grant of the state.

Augustine argued that the best way to define a people is by their loved thing held in common.  While Os Guinness would say that, "Freedom is unquestionably what Americans love supremely, and love of freedom is what makes Americans the people they are," I suspect many people in other lands would wish for such freedom, or maybe love the freedoms that they have.  And as Guinness points out, "freedom is at the very heart and soul of the modern world, especially in its Western forms." How else would we explain the asserted claims of freedom of religion, free-speech, free-choice, free vote, free-markets, if freedom is not today's highest virtue?  Freedom is the dream of ever-expanding emancipation movements and liberation movements?  It is this high idea of human dignity and independence for which free societies strive.  But, why?

If there is any merit to the "social contract theory" of political science as the explanation for justifying political principles and arrangements by appeal to the agreement that would have been made among suitably situated rational, free, and equal persons, and the theory of consent of the governed, then freedom depends constantly on both the character of the nation's leaders and on the character of its citizens.  The principle of the consent of the governed is at the heart of democracy and is crucial to both freedom and to the legitimacy of the state and heart of democracy.

Moreover, free societies must always maintain freedom on two levels at once, namely, at the level of the state's constitution and legal structures, and secondly, at the level of the citizens' convictions, if in fact, freedom is freedom is the highest virtue and the dream of all people and based on human dignity and independence.  The latter level is the informed spirit of liberty, or what has sometimes been called "habits of the heart."

As a result, I do see some validity in this second assumption.  However, freedom always faces a moral challenge.  Freedom requires order and restraint, and yet, the only restraint that does not contradict freedom is self-restraint.  As Guinness says, "Neither law alone nor virtue alone can sustain freedom, because freedom always generated an abuse of power that endangers freedom."  "So law alone will override freedom by its very lack of self-restraint and by its inherent drive to compensate by replacing virtue with regulations."

A recent example of this is the regulatory implementation of the Affordable Healthcare Act of 2010 in the United States, popularly known as ObamaCare.  See my earlier post on this subject:  Although the Department of Health and Human Services proposed regulation governing the so-called contraception mandate has received attention with respect to its implications for harmful effects on freedom of religion issues, and most specifically the teachings of the Roman Catholic Church, as I wrote earlier, the implications for the civil society sector are profound.

This raises the question: What is government anyway?  It dominates our lives.  It is in the center of most news and public discussion.  What distinguishes government from major corporations, such as IBM, General Motors, Ford, Toyota, Siemens, or civil society organizations, such as the Red Cross, Oxfam, Amnesty International, Care International, Caritas Internationalis, CIVICUS World Alliance for Citizen Participation, Greenpeace International, Plan International, World Vision, and the like? What is it about government that enables it to do what other organizations cannot do?  Is government the only institution that considers the well-being of all citizens?

No institution can do that, and certainly not government.  Anything government gives to one group must be taken away from others.  So, government necessarily plays favorites, which divides people into opposing camps.

The distinctive feature of government is coercion.  It is the use of force and the threat of force to win obedience.  This is how government differs from every other agency in society.  The others persuade; government compels.  When someone wants to help flood victims, or victims from an earthquake, that person is saying that he wants to force people to pay for the relief.  Otherwise, he would be happy to have the Red Cross or some other humanitarian organization, and its supporters handle the problem.

Nothing involving the government is voluntary, as it would be if a private company or private civil society organization does something.  There is simply an element of compulsion in every government activity.
    Being able to force people to do what you want can be an attractive prospect -- especially if you don't have to admit, even to yourself, how you are getting what you want.
    If you want to feed the homeless, you don't have to persuade hundreds of people to donate money.  The government can force millions of people to contribute. 
The constant exhortations to allow the state to relieve us of our difficulties run counter to older injunctions to beware of the power of the state because it robs us of our liberties.  The new dependence on the state reveals a dramatic change in the entire moral fabric of society.  British historian, E. H. Carr embraces this change and identifies it as one of realism belonging to the tradition of Hegel and Marx.  According to Carr, a realist, "makes morality a function of politics" and "cannot logically accept any standard of value save that of fact."

Helping those who cannot help themselves, is a paraphrase of Karl Marx's famous dictum, "From each according to his ability, to each according to his need."

Egalitarianism uses a similar moral inversion.  It was once considered immoral to take a person's property for the benefit of others by threatening use of force.  Now, inequality is advanced as a greater evil than theft.

But, as I wrote in my last post here, there are things, such as the relief efforts after the Chinese Sichuan Earthquake in 2008 when government intervention is absolutely essential.  Even with all the losses of freedom and the coercive nature of government activities there, only government could do some of the things which it did in Sichuan Province.

Nevertheless, according to the Ninth and Tenth Amendments to the U.S. Constitution, the U.S. Government can do only what is specified and delegated to it in the Constitution.  All the rest of live's activities -- charity, education, regulation of business, crime control, etc. -- were to be handled by state governments or the people on their own.

Although Os Guinness is specifically addressing America in his A Free People's Suicide: Sustainable Freedom in the American Future, what he says about the present crisis in America, a crisis of cultural authority, variously described as a crisis of faith and a legitimate crisis of civilizational morale, where "the center no longer holds; the core has lost its compelling power; the moral and social ecology of the nation has been contaminated; the different spheres of society are undermining each other; and the escalation of extremes is underway," is quite applicable around the world, not just in America.  According to Guinness:
What we are witnessing is a gathering crisis of freedom, stemming from a dangerous neglect of the notion of ordered liberty that alone allows a democracy to be durable and a free people to stay free.  The founders gave no name to their vision of sustainable freedom; Tocqueville called it "habits of the heart," . . . .
     If the founders were correct, contemporary America's pursuit of political leadership without character, economic enterprise without ethics and trust, scientific progress without human values, freedom without virtue and negative freedom without positive freedom can end only in disaster.
* * *
     A sustainable society is a self-renewing society in which from generation to generation, the citizens choose to do what the society needs them to do if it is to last -- in other words, a society in which leaders and citizens alike have cultivated the habits of the heart to do without thinking what they need to do if they were to think about it.
As Guinness points out quoting from a well-known historian, that the concept and sense of freedom cannot just be learned and understood  by studying the great declarations, such as the Magna Carta, the Declaration of Independence, or great books and writings by great philosophers, like John Locke or Edmund Burke.  Rather, in the words of Alexander Hamilton,
The sacred rights of mankind are not to be rummaged for among old parchments or dusty records.  They are written, as with a sunbeam, in the whole volume of human nature, by the hand of the Divinity itself.
Article 1 of the Universal Declaration of Human Rights proclaims that:
All human beings are born free and equal in dignity and rights.  They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. 
There is nothing in the Declaration of Human Rights that tells us the source for this freedom, dignity, and these rights.  Oxford University philosopher in his 1958 lecture, "Two Concepts of Liberty," spoke of negative freedom as freedom from -- in essence, freedom from individual and constraint, and positive freedom as freedom for -- in essence, freedom for excellence according to whatever vision and ideals define that excellence.  Both must be held in balance, and both can be distorted.  There is something about the Feldstein proposal for the treatment of tax expenditures that does both, although he does seem to allow some freedom with respect to the contributions to charity, or at least to certain charities.

Again, while America may not be unique in this respect, the concept of negative and positive freedom applies broadly.  As Guinness points out in his A Free People's Suicide:
     . . .  [N]o positive freedom is self-evident except to those who believe in it.  Even "humanitarian intervention" is not self-evident.  It happens to be the term Hitler used to justify invading the Sudetenland and Mussolini used to justify his seizure of Ethiopia. Humanitarian intervention that is just must first be morally justified.  It is never self-evident.
     At the same time, Americans must also remember that unconstrained negative freedom can be just as destructive as positive freedom and needs to be guarded against from two directions.  To begin with, unconstrained negative freedom can easily degenerate into apathy and moral callousness, for what begins with freedom from interference easily slides into the freedom of indifference -- "I am happy to be left to myself, so why should I care about others?"  Thus, emancipation from the constraints of others quickly becomes an evasion of concern for others.  "I don't care what you do" becomes "What happens to you is no business of mine," so that no one becomes their brother's keeper.
Perhaps none of this makes any sense unless there is the foundational understanding that freedom is connected in some way with the inherent nature of human dignity and "of the equal and inalienable rights of all members of the human family," in the words of the Preamble to the Universal Declaration of Human Rights.

In this regard, all visions, including those teleological visions which try to define for us as a society, the "good life" and "common good" are freighted with religious content whether we are prepared to recognize or admit it.  Whereas, humanitarianism stresses the practice of doing good for people who need help on the basis of the idea of humanity as a deity, Christianity teaches that humans are created beings in the image of God, and as such, there is an inherent human dignity with all members of the human family.

A third assumption is that all the resources in a given geographical area somehow belong to the government, maybe collectively for all the people, but at least belong to the government for governmental determination as to how they are to be used.  I get this from the language frequently used politicians, and economic tax experts which refers to the granting of exemptions, tax credits, and itemized deductions allowed for state and local taxes, medical expenses, mortgage interest payments, and charitable contributions for example.

 So, we tend to speak of these kinds of features of our tax codes as tax expenditures, as if the government owns the money, and gives it to the taxpayer according to certain accepted tax policies.  So, as Professor Feldstein wrote in his Wall Street Journal column, "To be sure, the largest tax-expenditures are the deductions that individuals take on their tax returns for mortgage interest, state-income tax and local property taxes paid, and exclusions from taxable income from municipal bond interest, and for employer provided health insurance."

Although I am not an economist, financial wizard, or tax expert, I understand the concept of stewardship.  I just don't believe that this concept applies to my assets and income as belonging to the government or to the public at large, and that as trustee of those resources, I am obligated to hold them in trust for the benefit of the government.

A fourth assumption that I think lies behind this discussion is the assumption  that what "legitimate" charities do, or what civil society organizations do, is to is to expend resources that clearly belong to the government for those purposes recognized by the government as meeting some obligation of government, that benefit all taxpayers, and can be described as a "quasi-government function."

The essence of this is that governments determine what is the public benefit and in the interest of the state, either through its legislative, executive (including regulatory), and perhaps its judicial authority. Of course, even in its granting of tax exempt status in those countries in which that is allowed, the government already makes a determination of what the public benefit is, even in the most general terms.

If the cost of providing the goods and services is ultimately borne by the government or on the behalf of the government, then it would seem that the government would have the ultimate say in how those "tax expenditures" are made or authorized.  In those cases of direct funding or grants, this essentially reduces the work and operations of civil society organizations to executing government programs on behalf of the government.  But, as we have seen in many places, it deprives the charity or civil society organization of building community support for the project, including funding support through donations and contributions.  When, government funding ceases, or is reduced, the civil society organization is left without the ability to function and perform its basic mission.

What is lacking in this discussion is what belongs legitimately to government and what belongs legitimately to the people acting in their own behalf or for their own purposes.  If, the "tax expenditures" are recognized for "quasi-governmental functions," then how are tax deductions authorized for such things as contributions and dues to sports clubs, union activities, and churches, for example, which might not normally be identified with government functions, particularly in a free society?

What is the legal or philosophical basis for determining what is a government function within the constitutional framework of a particular state, and the extent which the functions performed by the "legitimate" charities and educational institutions may be considered "quasi-governmental?"  Assuming, of course, that when we speak of "quasi" we mean "as if; almost as it were; analogous to."   In other words, as used in legal phraseology, it is intended to indicate that one subject resembles another with which it is compared, in certain characteristics, but that there are certain intrinsic and material differences between them that keep them from being identical.

When the foundations of a society are undermined, when the principles of anthropology are not considered and applied to policy decisions, the roles of government and of charity become nothing more than financial transactions.  The moral justification for performing any of these social welfare and public benefit functions is lost, or at least diminished.  These include the principles that God made man in His image and likeness which is essential to human dignity, that marriage and the family also bear the divine image, and are the foundation of a society, that freedom of religion is not only essential to the right to believe, worship, and even persuade others to believe, it involves the recognition that both humans and religion are social, and that being human involves being in a particular place.

While there clearly will often be some overlap between some of the activities of civil society organizations and government, particularly in the social welfare and educational realm, the assumption that civil society organizations are performing quasi-government functions obscures the central role of civil society and raises the question as to how they can be regarded as being the "third sector."

As a result of the "social contract theory" and its rationale, the fifth assumption, it seems to me, is that the legitimacy of government and of government action may not only be derived from that social covenant notwithstanding at social contract theory.  The powers of legislation, enforcement, taxation, war-making, and perhaps in some respects, the right of control of normative doctrine, are connected in such a way that the loss of one may thwart the effective exercise of the others.

What has been happening in the United States, and I suspect elsewhere in the world, has been what has been, what social scientists call, the framing of concerns about the changing character of society in terms of the concept of "social capital."

As Professor Robert Putnam points out in Bowling Alone:
    Whereas physical capital refers to physical objects and human capital refers to properties of individuals, social capital refers to connections among individuals -- social networks and norms of reciprocity and trustworthiness that arise from them  In that sense, social capital is closely related to what some have called "civic virtue."  The difference is that "social capital" calls attention  to the fact that civic virtue is most powerful when embedded in a dense network of reciprocal social relations.  A society of many virtuous but isolated individuals is not necessarily rich in in social capital.
So, the core idea of social capital theory is that social networks have value.  The idea is not simply that individual clout and companionship are all there is to social capital.  Rather, we expect it to effect the wider community.  So social capital can be both a "private good" and a "public good" where people outside the network receive benefit and benefit also rebounds to the immediate interest of the person making the investment.  As Yogi Berra once said: "If you don't go to somebody's funeral, they won't come to yours."

In the case of faith-based institutions, the lack of separate identity and function mutes the moral witness by sending mixed signals and curbs their freedom to live their faith by providing vital services, including social and communal connections to others.  As Gerhard Ludwig Müller wrote in a recent essay,
     Either way, something is lost.  For religious communities are valuable not only for the social services they provide. Even from a perspective of the common good, they are not interchangeable with secular entities.  Religious organizations do not just serve the beneficiaries; they fulfill their participants in genuine communion.  These and other free associations do not just offer what the state could provide; they also mediate between state and the individual.  They foster virtues on which depend a well-ordered society and even the state itself.
      Indeed, their purpose is not always merely instrumental.  The flourishing of our free associations can have its own value, for we are social beings.  Solidarity fulfills us.  All of this is obscured or denied by a state that hampers religious and other social and cultural enterprises by imposing on them unjustly, [or simply treats these religious and other social or cultural enterprises as arms of the state performing quasi-government functions].
Because of our need for, and respect for these association, we can affirm the principle of subsidiarity. Negatively, we know that this means that it is unjust to assign to greater and higher organizations what lessor and subordinate organizations can do.  Positively, we know that a healthy society requires nested and overlapping forms of free community to thrive where each makes its own contribution, by its own initiative and authority, to the common good.

Pope Benedict XVI, put it this way:
When those responsible for the public good attune themselves to the natural human desire for self-governance based on subsidiarity, they leave space for individual responsibility and initiative, but most importantly, they leave space for love.
In other words, subsidiarity is implicit in the dignity and inviolability of the individual, the family, and the religious community.  There are many bounds and limits on the state's authority.  Therefore, as these foundations are undermined, the state looms larger.  As the state expands into areas that are properly within the sphere of the individual, the family, the religious community, and social and cultural institutions, they are weakened, and their dignity obscured.

While I do not deny a role for the state, it appears to me that the assumptions as articulated above generally do not support the conclusion that anything charity, or civil society does, must be regarded as performing some quasi-government function where the costs and investment of resources are to be regarded as tax expenditures.

As some thinkers, such as Jürgen Habermas have noted, the Christian vision that many seek to extinguish or render irrelevant, in fact provides the best basis for the state's broad goals of protecting human rights and the common good.  This point is lost on those who would deny a place in public life for religious faith, and who depict religion as a force for superstition and prejudice.  Faith and reason shed light on our true worth and destiny, making deeper virtue possible.