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NEWS SOURCES | ARCHIVES OF PAST MONTHS

Recent Economic News

Treasury Secretary Expects Strong Economic Growth (AP) - Treasury Secretary John Snow said Sunday he expects continued strong economic growth and "lots and lots of good jobs" created in the coming months.
At the same time, however, he said world affairs have so dominated the public's attention that the strong growth is not reflected in polls about President Bush's stewardship of the economy.
"There's been so much attention to other things, particularly the war in Iraq, that it's deflected attention from the economy," Snow said. "But the news on the economy ... is so good and so pervasive, so far-reaching, that I think people will change their views here."
The nine-month period that ended April 30 showed an annual growth of 5.5% in the gross domestic product, which measures the value of all goods and services produced in the United States. That was the strongest three-quarter growth in 20 years, Snow said on CNN's Late Edition.
"I think we're going to see more of the same continuing strong GDP growth and continuing strong job growth," Snow said.
USA Today 6/20/2004

Jobs Creation Act (6/17/04) On June 17, 2004, the House passed by a vote of 251-178 the American Jobs Creation Act (H.R. 4520). The Act has four major sections and benefits.
First, it will end the sanctions by the European Union on American products. The EU is steadily increasing tariffs on American products, since it had determined that the existing U. S. tax law with respect to exports was illegal under World Trade Organization rules.
Second, it reduces the corporate tax rate from 35% to 32% for both domestic manufacturers and small businesses.
Third, it reduces double taxation of U. S. corporations with foreign entities.
Fourth, it is designed to facilitate job growth for U. S. companies.
The House and Senate JOBS bills will now proceed to a conference committee.
GiftLaw 6/18/04

Related story - The House Ways and Means Committee late June 16 released the committee report to accompany H.R. 4520, the American Jobs Creation Act of 2004, that would revise tax laws to make U.S. manufacturing businesses more competitive. With respect to charitable giving, the bill extends the enhanced charitable deduction for gifts of computer technology and equipment; modifies the rules for donations of patents and other intellectual property; requires increased reporting for noncash gifts; requires qualified appraisals for vehicle donations; and includes a charitable deduction for certain expenses in support of native Alaskan subsistence whaling.
PGDC 6/20/04

Greenspan Re-Nominated (5/19/04) - President Bush nominated Alan Greenspan to a fifth term as chairman of the Federal Reserve on Tuesday, making short work of speculation that the White House was holding up the renomination in hopes of persuading the Fed to keep interest rates low during the presidential campaign. Bush said in a statement that he had "great confidence" in the 78-year-old central banker, who had done a "superb job." Greenspan replied in kind, saying he was honored and would be happy to continue in office. The renomination attracted bipartisan political support. The president's likely Democratic rival, John Kerry, said Greenspan's "overall record as chairman … has been one of distinction." The reaction was a tad cooler among some close to the Fed. "It's about time," declared Allan Meltzer, a Carnegie Mellon University economist who is writing a multivolume history of the central bank. Meltzer said he didn't know whether the White House had intended to pressure the Fed, but suggested the renomination was coming awfully late. Greenspan's term as chairman runs out June 20.
From NYTimes G. Gosselin, Times Staff Writer

Senate Passes JOBS Act with Car Donation Amendments, No CARE Act (May 13, 2004) - On Tuesday, May 11, the Senate passed S. 1637, the Jumpstart Our Business Strength (JOBS) Act, which includes provisions to crackdown on individuals who take over-inflated deductions for charitable gifts of vehicles.
The Charity Aid, Recovery and Empowerment (CARE) Act had been offered by Sens. Rick Santorum (R-PA) and Joseph Lieberman (D-CT) as an amendment to the bill, but was never considered on the Senate floor.
Included as an amendment to the measure are provisions authored by Senate Finance Committee Chairman Charles Grassley (R-IA). Grassley's amendment changes the rules for valuing and reporting donations of vehicles (including boats and airplanes). For such gifts, donors would only be able to claim as a donation the actual sales price received by the charity-not the fair market value permitted under current law.
A donor of a vehicle must get a written acknowledgement from the charity indicating for how much it had sold the vehicle. If the charity did not sell the vehicle, it must provide a receipt for the vehicle within thirty days. To receive the deduction, the donor must include the acknowledgement or receipt with his or her tax return.
The House has yet to act on the bill. However, Rep. William Thomas (R-CA), the chairman of the Ways and Means Committee, has introduced a proposal that would disallow charitable deductions for donated vehicles unless the donor had the vehicle appraised.
AFP is concerned about the impact the Senate provision would have on charitable vehicle donation programs. The association will be working with other organizations to see a more balanced and less burdensome car donation provision included in the final legislation.
AFP will also be continuing to seek passage of the CARE Act and will be advocating for its inclusion in the House version of the JOBS bill.
Source: www.afpnet.org

PARIS, May 11 (Reuters) - OECD urges Fed action to cool US economy - Policy makers should start efforts to cool the U.S. economy sooner rather than later and a hike in the Federal Reserve's interest rates in June would be a reasonable start, the Organization for Economic Growth and Development's chief economist said.
The U.S. central bank would have to shoulder the burden of withdrawing stimulus from the world's largest economy as there was little prospect of a tightening of fiscal policy, Jean-Philippe Cotis told Reuters in an interview.
"The general message we have is basically withdrawals (of stimulus) should be started sooner rather than later," he said. "For the U.S., the main risk is that macroeconomic policies remain too expansionary too long during the upswing."
Asked whether June would be a reasonable time for the Federal Reserve to start raising interest rates, Cotis said: "Yes, sure." Rate rises should be measured, he said: "Incremental is the best option, but it could depend obviously on circumstances."

Fed holds fast on interest rates - for now - 05/05/04 - The Federal Reserve on Tuesday left short-term interest rates unchanged but signaled a growing readiness to end its long campaign of cheap money.
The benchmark rate now will remain - for at least a little longer - at its lowest level since Dwight Eisenhower's second term as a spur to borrowing, investing and hiring. In a unanimous statement issued after its meeting Tuesday, the Fed's rate-setting committee cited evidence of economic growth and a start to hiring. Moreover, it shrugged off recent hints of inflation - for decades the Fed's main foe - as being "well-contained."
In previous statements issued with rate decisions, the Fed used the word "patience" to describe its commitment to low rates. This time, the Fed said it can retreat at a "measured" pace from rock-bottom interest rates. "They are saying they will raise rates, but they are being cagey about the timing," said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. "The timing depends on when job growth will stick."
Michael E. Kanell The Atlanta Journal-Constitution

When To Consider Revising Your Will

Once you write your will, you can file it away and forget it, right? Wrong. Life situations change and in many instances it becomes necessary to review and, perhaps, even update your will. Below, we've listed a few of life's events that might trigger another look at your last testament (taken from It's Your Money, May 2004):

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Mid-Month Updates from Last Month

Billion Dollar Scam Preyed on Seniors (5/07/04)

Mutual Benefits Corp., the giant viaticals company in Fort Lauderdale, was shut down by regulators. The industry sells sick people's life-insurance policies to investors. Viatical-settlement companies buy at a discount life insurance policies held by the terminally ill or elderly in need of cash. In turn, they sell the policies to investors, who collect the death benefits when the insured die. Seniors are often heavily targeted as investors.

State and federal regulators on Wednesday shut down Fort Lauderdale-based Mutual Benefits Corp., saying the nation's largest viatical-settlement company committed racketeering by luring tens of thousands of investors into an elaborate Ponzi scheme that raised more than $1 billion. The company faces criminal charges and a civil action. In essence, regulators say, the company promised investors that the policyholders would die within three years -- and was wrong nine out of 10 times.

By manipulating life expectancies, Mutual Benefits flooded the viaticals market with policies. The company thus created shortfalls in their premium funds and used new investor funds to keep up with premium payments. Hence the alleged Ponzi scheme.

"The scope of this fraud is enormous," David Nelson, head of the Miami office of the Securities and Exchange Commission, said. "We're talking about a scheme that involved more than 29,000 investors and raised more than $1 billion."

Investors who have purchased viatical contracts from Mutual Benefits Corp. can find out information on the receivership by calling 305-577-1099 and leaving their name and number. A representative for the receiver will call back within two business days, according to a recorded message. A website, www.mbcreceiver.com, is expected to be in operation by Friday.
Patrick Danner Miami Hearld 050704

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"Middle Rich" Donate Lower Percentage of Wealth than Other Groups

A new study by San Francisco-based NewTithing Group has concluded that charitable giving in the United States would have increased by an additional $41 billion in 2001 if individuals in the upper middle class and "middle rich" had given as much as other income classes.
The study defines the "upper middle class" as those income tax filers with adjusted gross income (AGI) ranging from $200,000 to $1 million, and average investment assets of $1.7 million to $4.46 million. The "middle rich" class is defined as filers with AGI of $1 million to $10 million, and average investment assets of $8.5 million to $46 million.
By measuring charitable donations as a proportion of investment assets, the study found that individuals in the "upper middle class" and "middle rich" groups gave approximately half of 1 percent of their wealth to charity. In contrast, individuals in lower income groups (less than $200,000 annual income and $83,000 - $490,000 in investments) gave approximately 1 percent of their wealth to charity.
Although the "upper middle class" and "middle rich" owned in aggregate nearly twice as much in estimated investment assets, their less affluent counterparts donated a total of 21 percent more to charity-$3.26 billion more. Those individuals in the "super rich" category-filers with adjusted gross income of at least $10 million and average investment assets of $152 million-gave, on average, more than 1 percent of their wealth to charity.
In addition, the study found that by selling appreciated assets for taxable gains while donating cash to charity, the "middle rich" and "super-rich" paid more than half a billion dollars in avoidable capital gains taxes. Through more tax-advantageous giving strategies, they could have kept or donated to charity an additional $659 million.
From AFP Wire 5/10/04

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NCPG Government Relations Update - The CARE Act

The National Committee on Planned Giving has new assurances the White House is fully in support of the CARE Act and the IRA charitable rollover provision. At the special invitation of President George W. Bush, NCPG was represented by Tanya Howe Johnson, CEO, and Craig C. Wruck, Government Relations Chair, at the White House Conference on Faith-Based and Community Initiatives Tuesday in Washington, DC. NCPG attended the conference to support the CARE Act (S. 476) and the Charitable Giving Act (H.R. 7), both of which contain IRA charitable rollover provisions.
NCPG's successful drive to move the IRA rollover through Congress, which resulted in broad bipartisan passage of legislation in both the House of Representatives and the Senate, has been frustrated by Congress' unwillingness to convene a conference committee to reconcile the bills. In his opening address, President Bush expressed his frustration that key charitable legislation is "stuck on the hill," explaining that, "It's a debate about process now instead of a debate about purpose."
The president emphasized his continued support for legislation providing incentives for charitable giving to, "Encourage social entrepreneurs and empower the agencies of change in our communities." "Government cannot be replaced by charities, but it can and should welcome charities as partners," the president said. "Community organizations do a better job than government can alone."
Wruck said the president's statements speak to one of the key points in favor of the IRA charitable rollover provision. "By enacting legislation that could potentially bring about billions of dollars in additional charitable gifts, philanthropic entities will be less likely to rely on government dollars," Wruck said. "I think the president agrees that it's time to reduce that burden."
Mr. Bush praised the work of charitable organizations, saying, "Suffering and despair trouble all Americans regardless of their political standing."
In a private meeting, administration officials assured NCPG that the CARE Act and IRA charitable rollover are still high priorities for the White House. Later this week, NCPG will be represented in meetings with key legislators to discuss strategies for moving the IRA charitable rollover forward. Johnson is looking forward to a fruitful exchange of ideas on both sides of the Hill. "We are extremely pleased to hear continued support for this policy, especially from the president," Johnson said. "I'm hopeful we're just a short distance away from seeing this legislation through for the public good, and achieving a new level of bi-partisan cooperation in the process."
Source: http://www.ncpg.org

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Gift Annuity Rates Unchanged

At its meeting on May 5, 2004 in Orlando, immediately prior to the ACGA conference, the ACGA board approved the recommendation of the Gift Annuity Rates Committee to continue the current gift annuity rates for another year. Unless unforeseen circumstances should necessitate an interim adjustment, the rates that became effective on July 1, 2003 will remain in effect at least through June 30, 2005. (click here for current rates)
Although the rates will not change this year, there was a change in the methodology for calculating the assumed return on gift annuity reserves. The new methodology did not result in a change in the return assumption this year, but it could in subsequent years.
From Planned Giving Design Center 5/12/04

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