Text of letter to Senate leaders from OMB Watch supporting passage of the CARE Act with Title VIII, which deals with government funding of religious groups, dropped from the bill. April 1, 2003 The Honorable Bill Frist Majority Leader The Honorable Thomas A. Daschle Minority Leader U.S. Senate Washington, D.C. 20510 Dear Senator Frist and Senator Daschle, Late last week Senator Rick Santorum of Pennsylvania announced he would support passage of the Charity Aid, Relief and Empowerment (CARE) Act without Title VIII, which deals with government grant rules for faith-based organizations. OMB Watch supports Senator Santorum’s proposal, assuming the House leadership also concurs with this approach. Without Title VIII, the CARE Act has tax incentives to increase charitable giving, improves oversight of charities, restores funding for Title XX, the Social Services Block Grant Program, simplifies IRS rules on charity lobbying, and encourages savings by low income households. All of these features are crucial to charities. These very helpful and badly needed provisions of the CARE Act have been stalled in the debate over the terms of government funding for faith-based organizations. There is no consensus on the controversial and complicated issues involved in government funding for faith-based groups, and continued linkage between charitable giving incentives and the faith-based initiative had lead to stalemate, depriving charities across the country of the benefits of the CARE Act. Senator Santorum’s proposal recognizes that America’s charities need this bill – and much more – right now. Moreover, the tax provisions are “paid for” with other tax offsets. Last year, OMB Watch raised a number of issues about the non-itemizer deduction, including its efficiency, whether it will generate significant new charitable giving, and whether it is the right priority in an era of scarce resources. Our concerns were reinforced by a Congressional Research Service study that showed the costs greatly outweighed its benefits to charities. We remain concerned about this tax break, but given the provision is limited to two years and a study of its costs and impacts is required before it can be renewed, we believe the overall bill should move forward. We will continue to closely watch implementation of the non-itemizer deduction and look forward to reviewing the results of the required study to see if its benefits outweigh its costs. In this time of economic downturn and shrinking budgets for government funded social service programs, charities are looking for help in raising resources. The CARE Act, stripped of Title VIII, can provide some help. We urge you to proceed with the CARE Act without Title VIII, and ensure that, once passed, it keeps its focus on the needs of charities in conference with the House, and that the controversial faith-based issues not be allowed to drag it down. Sincerely, Gary D. Bass Executive Director cc: Senator Santorum Senator Lieberman Senator Grassley Senator Baucus