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Yahoo
12 hours ago
- Business
- Yahoo
Couple faces retirement fears amid market swings
Dinner at the Gomez home outside Boston provides a textbook image of the sandwich generation: three sets of relatives living under one roof. "A club sandwich has a lot of layers, and we have a lot of layers," 57-year-old Alicia Gomez said. It's not the easiest way to save for retirement, as Gomez and her 59-year-old husband, Chu, told CBS News during an interview last year. Back then, their nest egg was healthy and growing. Stocks were climbing, hitting an all-time high by February of this year. But they cratered as the trade war started, only to climb back and recover most of the losses. "I feel like I'm on a rollercoaster," Alicia Gomez said. "You just hope that if we're gonna be on the downturn now, will we be on the upturn when we decide to retire?" Like millions of Americans, the couple is experiencing waves of an uncertain, see-sawing market. These gyrations can trigger rash decisions, said labor economist Teresa Ghilarducci of the New School for Social Research. "We have a name for living through that kind of volatility, and it's called scarring," Ghilarducci said, stressing the importance of asking the experts in times of financial crisis. "Do not talk to your friends or your family about what to do. Take a breath, take a minute and rely on expert advice," Ghilarducci said. Alicia, who holds down two jobs, had thought maybe she'd cut back work at 62. Chu, who works in logistics, thought it would be at 65. Now, they've adjusted that mindset. "It's probably gonna be 67 at least, but you know, I think there's still a lot of unknowns," Alicia said. Right now, the couple is maxing out their retirement accounts, Chu said, but that could change if they needed to pull back. Adding to their anxiety is the fear that the Social Security system could run dry. There's been a 13% jump this year in people claiming retirement benefits early, despite the reduced payouts, according to the Urban Institute. Ghilarducci strongly advises against that. "Wait for the maximum benefit that you can get. Don't haircut yourself now, anticipating it'll be cut later," she said. The Gomezes say their retirement investments are up by about 3% this year, so they'll simply sit tight and work hard to hold onto their jobs. "A lot of us have been through a lot within, you know, just less than a year. We don't have do-over time," Alicia said. Sneak peek: Where is Jermain Charlo? Baldwin grills McMahon on unallocated funds for students, schools, approved by Congress Hegseth orders Navy to rename USNS Harvey Milk, Jeffries calls it "a complete and total disgrace"
Axios
a day ago
- Business
- Axios
Why more Americans are filing for Social Security this year
Social Security is certainly beloved, but it's usually a little bit boring. Not this year. Why it matters: There's been a surge in older Americans applying for benefits in 2025, and a large increase in the amount of money paid out. Zoom in: That's happening for a host of reasons, including a new law that marks the biggest expansion to the program this century, a White House that made changes to the program and, of course, a growing elderly population. By the numbers: Social Security retirement claims are on track to rise 15% this year from 2024, per an analysis by the Urban Institute, a research group. From 2012 to 2024, claims increased by 3% per year, on average. At the same time, benefits payments surged in March and April, according to data from the Bureau of Economic Analysis released last week. Between the lines: The benefits increase was so large that it boosted income data also released last week. "The economy has apparently been benefitting from a stealth form of income support for the past several months," writes Jonathan Levin in a column for Bloomberg Opinion. "Which may be giving some of us false confidence about the future." The big picture: Many new applicants are filing for benefits earlier than planned out of anxiety over moves by the Trump administration on Social Security this year, according to the Urban Institute. High-earning individuals appear to be driving the rise in applications, says Jack Smalligan, a senior policy fellow at the Urban Institute. Another piece of the increase is simply attributable to the growing population of retiring Baby Boomers. 2024 marked the start of the Peak 65 Zone, the largest surge of Americans turning 65 in U.S. history, the Social Security Administration points out. The agency emphasizes recent improvements in how it notifies spouses of Social Security recipients that they may be eligible for larger benefits. Zoom out: For years, policymakers didn't mess with Social Security. This year has been different. The Social Security Administration made a flurry of changes: staff and office cuts, updates to phone policies and other customer service changes. The messaging around the moves was confusing. New policies were announced, rolled back or changed. At the same time, the agency was experiencing more systems crashes. Meanwhile, Elon Musk called Social Security a Ponzi scheme, while Commerce Secretary Howard Lutnick made public statements about benefits fraud that also upset people. That sent a surge of people to agency field offices, while others started calling in as well. "People were very concerned that their benefits were going to stop," says Jessica Lapointe, who works in a field office in Wisconsin, and is a union official. "The public really didn't understand what was going on." For the record: "I am fully committed to upholding President Trump's promise to protect and strengthen Social Security," Frank Bisignano, the recently appointed agency commissioner, tells Axios in a statement. "Beneficiaries can be confident that their benefits are secure. We will deliver the highest standard of service, ensuring every payment is accurate, timely, and delivered to the right person." The agency has prioritized processing retirement claims this month and says it has reduced the number pending by nearly 13% over the past two weeks. How the new law expands benefits Some of the increase in applications — and most of the surge in benefits payouts — is due to the Social Security Fairness Act, which passed with overwhelming bipartisan support last year. How it works: The law, the biggest expansion in the program over the past quarter-century, increases benefit payments to about 3 million people, mostly workers for state and local governments, like teachers, firefighters and police officers, who were previously shut out from receiving Social Security checks, or were getting smaller checks. Some of the payments increases are temporary. Many have been paid lump-sum checks this year for benefits dating back to 2024, elevating payouts over the last few months. That's expected to decline. Between the lines: The new law is estimated to cost about $200 billion over the next 10 years. Critics have warned that it will speed up the depletion of the Social Security trust fund.
Yahoo
28-05-2025
- Business
- Yahoo
Florida says it's ready for hurricane season, with or without FEMA's help
Every hurricane season in Florida comes with uncertainty but there's a surprising new source of questions this year surrounding the federal agency that responds to disasters and has historically helped pay for often massive cleanup and recovery costs. The Federal Emergency Management Agency, already down thousands of employees under cuts directed by the Trump administration, is also under new marching orders to slash federal spending on disaster responses, leaving bigger shares of the bills to state and local governments. Republican state leaders — starting with Gov. Ron DeSantis and U.S. Sen. Rick Scott — have dismissed serious concerns over the FEMA overhaul, arguing that Florida has always directed response in the immediate wake of the storms. 'On the core prep, response and then stabilize and get people back to normal, just know that we've never relied on FEMA for any of that here in the state of Florida,' DeSantis told reporters last week. But he acknowledged there are still unresolved issues over how much, or how little, FEMA will pay for after hurricanes and other disasters. 'We're working through that,' he said. 'I assume that people will still qualify, but who knows how generous and all that.' South Florida governments say they are going into the season with more unknowns than normal. One is even talking about creating a brand-new disaster fund to cover the shortfalls they might see under the new regime. FEMA has floated proposals to sharply reduce federal financial help — a move that might not impact major hurricanes but could leave Florida fully on the hook for its smaller disasters, like the tornadoes that tore through Tallahassee last year or the massive flood that submerged Fort Lauderdale in 2023. 'Local governments are going to be expected to pick up a bigger part of the tab. That could not only be costly, but it could put extra strain and stress, even in a state as prepared as Florida,' said Andrew Rumbach, a senior fellow at the Urban Institute, which focuses on climate and disasters. MORE: Are you ready for hurricane season? See forecast, get tips — and don't do this FEMA's new leadership has bristled at questions about whether it was prepared for the looming hurricane season, one that forecasters predict will again be busy. A FEMA spokesperson dismissed comments from former employees as an example of the bureaucratic intransigence that's hobbled the agency. 'FEMA is shifting from bloated, DC-centric dead weight to a lean, deployable disaster force that empowers state actors to provide relief for their citizens. The old processes are being replaced because they failed Americans in real emergencies for decades. Comments about 'not being ready or prepared' are coming from the same ex-FEMA employees that failed Americans for decades,' said FEMA spokesman Geoff Harbaugh. FEMA rescinded its official strategic plan for the hurricane season last week and has yet to release a new one. This comes a week after CBS News reported that a leaked presentation from inside the agency noted, 'As FEMA transforms to a smaller footprint, the intent for this hurricane season is not well understood, thus FEMA is not ready.' READ MORE: U.S. hurricane forecast: 'Everything is in place' for another above-average season It potentially sets up as a stress test of Florida's vaunted emergency response capabilities. Despite the questions about Washington's response, Florida officials insist the state is prepared for the hurricane season — at least for the immediate response. Scott, who directed state response to a string of hurricanes while governor, praised the workers at FEMA he's dealt with in the past but, echoing DeSantis, said Florida emergency managers are at the front lines of disasters. 'They're not a first responder. FEMA is primarily a piggy bank,' he said. 'They're not the ones that are going to do house rescues. They're not the ones who do debris pickup. They pay for things.' 'If there's great hurricane response, it's tied to what the governor does,' he said. Still, there are big questions over the capabilities of a downsized FEMA. The agency has shed roughly 2,000 full-time staff members and over a dozen senior leaders since January as part of the Trump administration's reductions. The personnel reductions come as the agency faces a $646 million budget cut and renewed calls from Homeland Security Secretary Kristi Noem to 'eliminate FEMA as it exists today.' 'FEMA is ready, but not to handle multiple events or to handle a catastrophic event,' said Michael Coen, former chief of staff at FEMA during the Biden and Obama administrations. 'The agency does have significant capability, it's just been degraded since Jan. 20.' The staffing reductions have already been felt across the country. In Missouri, St. Louis Mayor Cara Spencer reported that 'FEMA has not been on the ground' following recent tornadoes there. In Mississippi, Gov. Tate Reeves is still waiting on federal disaster assistance for tornado damage in March. Former FEMA acting director Cameron Hamilton was fired just one day after telling Congress that eliminating the agency would not serve 'the best interest of the American people.' His replacement, David Richardson, told staffers his goal is to move much of the response and recovery operations down to the state level. The timing of the restructuring is concerning officials as Florida prepares for 'a particularly active' hurricane season with three to five major hurricanes expected, according to the assessment by the National Oceanic and Atmospheric Administration. While the state maintains robust capabilities and a pair of FEMA-backed search and rescue task force teams in the Miami-Dade area, Coen forecasts that personnel cuts could hinder federal recovery. 'There's not going to be probably enough staff,' Coen said. 'It's going to be the recovery.' He added, 'There may be a hurricane that impacts Florida, where the people of Florida are going to be shocked that there's no disaster declaration.' READ MORE: With hurricane season ahead, Trump cuts leave Florida weather offices understaffed There are signs that the federal agency is already moving toward pushing costs back toward the states. A leaked memo from the former acting administrator, Hamilton, said the agency wants to quadruple the threshold for what qualifies as a presidential disaster — and unlocking all the federal cash that comes with it. If enacted, that higher threshold would mean that 71% of all national events from 2008 to 2024 wouldn't have qualified for disaster assistance, a report by the Urban Institute found. In Florida, all of the big hurricanes in recent years would still be covered, even with a quadrupled threshold. But notably, even a slight increase in that threshold would have meant Florida got no federal assistance for the tornado spree in Tallahassee last year, or the rain bomb that flooded Fort Lauderdale in 2023, a Herald analysis found. That's both individual assistance — the cash survivors can claim directly from FEMA — as well as public assistance, including federal reimbursements for things like debris cleanup or overtime costs for first responders. For the tornadoes, FEMA shelled out $9.5 million to about 3,300 people. And for the flood that submerged Fort Lauderdale, the agency doled out a whopping $38.9 million to 9,600 residents, as well as another $5.2 million to local governments. Another suggestion in the memo is to lower the percentage of the tab that the federal government picks up in a disaster. The standard is that the feds carry 75% of the cost at a minimum, with state and local governments paying the rest. But in recent years, the agency has paid much more, all the way to 100% — like during debris cleanup in Florida after Hurricane Milton, after Hurricane Helene, or after the Surfside condominium collapse — often at the direct request of DeSantis. Per the memo, FEMA is considering dropping its contribution back to the minimum 75%. And it's already doing so in some situations. Last week, the agency declined to continue offering 100% reimbursement for North Carolina's continued cleanup of Tropical Storm Helene. 'FEMA's denial of our appeal will cost North Carolina taxpayers potentially hundreds of millions of dollars to clean up out west. The money we have to pay toward debris removal will mean less money towards supporting our small businesses, rebuilding downtown infrastructure, repairing our water and sewer systems, and other critical needs,' North Carolina Gov. Josh Stein said in a statement. As concerns have grown among lawmakers on Capitol Hill, the agency has scrambled to get up to speed. An internal memo obtained by the Miami Herald outlined how Noem had signed three memos on May 14 that will 'significantly improve FEMA's readiness posture going into hurricane season,' including the approval of 2,652 six-month employees, training and education at FEMA centers and training for firefighters who comprise a critical portion of first responders. The question now is if the reversals can be implemented before the first storm lands. 'They're on their back foot,' said Jeremy Edwards, the deputy director for public affairs at FEMA during the Biden administration. 'They took all these actions, they let thousands of people go … they cancelled trainings. And less than two weeks ahead of hurricane season, they're starting some programs back up. I'm worried it may be too little, too late.' Harbaugh, a FEMA spokesman, waved off concerns from former officials and told the Herald, 'In fact, their gross negligence and failures are the exact reason President Trump established a review council to change FEMA.' The review council met for the first time on May 20, and it's Florida-heavy. Of the ten members, three are from the Sunshine State, including Miami-Dade County Sheriff Rosie Cordero-Stutz and Tampa Mayor Jane Castor. Noem, who co-chairs the council, told members the goal was to maintain the core responsibilities of FEMA but slim it down and rebrand it with a new name. 'The president has said to me many times that he believes that FEMA should be eliminated as it exists. What that means is this agency should be re-imagined,' she said. 'Our vision is that states should respond to their disasters, and we should be there to support them.' She continually pointed to Florida as a model of what that new relationship could look like — where the state responds first, with plenty of help from private companies. READ MORE: Florida bill could block communities from rebuilding stronger after hurricanes Kevin Guthrie, the head of Florida's emergency management department, rattled off the state's bragging rights: debris is picked up 24/7 after a storm, power is restored within 120 hours, roads are reopened in 72 hours and schools are back online in under five business days. 'And we do all of that with 225 employees. We depend on the private sector to plus us up,' he said. 'We had 1,000 extra folks for Helene and Milton.' Broward and Miami-Dade County told the Herald they were effectively in 'wait and see' mode until — or if — any of the proposals in the memo are enacted. In the meantime, both counties say they're keeping a close eye on FEMA news. 'If implemented, the proposed executive orders could potentially have an impact on how Miami-Dade County manages and recovers from disasters,' wrote Miami-Dade Spokeswoman Natalia Jaramillo in a statement. 'While we continue to advocate for clear guidance and flexibility from FEMA, we're also running internal scenarios and updating our fiscal strategy to ensure we can respond effectively even under potential new proposed constraints.' Fort Lauderdale said it was floating the idea of creating a new contingency emergency fund to dip into if a storm (or a rain bomb) strikes. 'The City maintains a healthy fund balance to ensure that adequate resources are available to respond to unanticipated costs such as natural disasters. We are actively reviewing the City's budgeting practices and fund balance policy to further refine the way that funds are reserved to swiftly, and effectively, respond to these events,' wrote city spokeswoman Ashley Doussard in a statement.
Miami Herald
28-05-2025
- Business
- Miami Herald
Florida says it's ready for hurricane season, with or without FEMA's help
Every hurricane season in Florida comes with uncertainty but there's a surprising new source of questions this year surrounding the federal agency that responds to disasters and has historically helped pay for often massive cleanup and recovery costs. The Federal Emergency Management Agency, already down thousands of employees under cuts directed by the Trump administration, is also under new marching orders to slash federal spending on disaster responses, leaving bigger shares of the bills to state and local governments. Republican state leaders — starting with Gov. Ron DeSantis and U.S. Sen. Rick Scott — have dismissed serious concerns over the FEMA overhaul, arguing that Florida has always directed response in the immediate wake of the storms. 'On the core prep, response and then stabilize and get people back to normal, just know that we've never relied on FEMA for any of that here in the state of Florida,' DeSantis told reporters last week. But he acknowledged there are still unresolved issues over how much, or how little, FEMA will pay for after hurricanes and other disasters. 'We're working through that,' he said. 'I assume that people will still qualify, but who knows how generous and all that.' South Florida governments say they are going into the season with more unknowns than normal. One is even talking about creating a brand-new disaster fund to cover the shortfalls they might see under the new regime. FEMA has floated proposals to sharply reduce federal financial help — a move that might not impact major hurricanes but could leave Florida fully on the hook for its smaller disasters, like the tornadoes that tore through Tallahassee last year or the massive flood that submerged Fort Lauderdale in 2023. 'Local governments are going to be expected to pick up a bigger part of the tab. That could not only be costly, but it could put extra strain and stress, even in a state as prepared as Florida,' said Andrew Rumbach, a senior fellow at the Urban Institute, which focuses on climate and disasters. FEMA's new leadership has bristled at questions about whether it was prepared for the looming hurricane season, one that forecasters predict will again be busy. A FEMA spokesperson dismissed comments from former employees as an example of the bureaucratic intransigence that's hobbled the agency. 'FEMA is shifting from bloated, DC-centric dead weight to a lean, deployable disaster force that empowers state actors to provide relief for their citizens. The old processes are being replaced because they failed Americans in real emergencies for decades. Comments about 'not being ready or prepared' are coming from the same ex-FEMA employees that failed Americans for decades,' said FEMA spokesman Geoff Harbaugh. FEMA rescinded its official strategic plan for the hurricane season last week and has yet to release a new one. This comes a week after CBS News reported that a leaked presentation from inside the agency noted, 'As FEMA transforms to a smaller footprint, the intent for this hurricane season is not well understood, thus FEMA is not ready.' READ MORE: U.S. hurricane forecast: 'Everything is in place' for another above-average season It potentially sets up as a stress test of Florida's vaunted emergency response capabilities. Despite the questions about Washington's response, Florida officials insist the state is prepared for the hurricane season — at least for the immediate response. Scott, who directed state response to a string of hurricanes while governor, praised the workers at FEMA he's dealt with in the past but, echoing DeSantis, said Florida emergency managers are at the front lines of disasters. 'They're not a first responder. FEMA is primarily a piggy bank,' he said. 'They're not the ones that are going to do house rescues. They're not the ones who do debris pickup. They pay for things.' 'If there's great hurricane response, it's tied to what the governor does,' he said. Cuts keep coming Still, there are big questions over the capabilities of a downsized FEMA. The agency has shed roughly 2,000 full-time staff members and over a dozen senior leaders since January as part of the Trump administration's reductions. The personnel reductions come as the agency faces a $646 million budget cut and renewed calls from Homeland Security Secretary Kristi Noem to 'eliminate FEMA as it exists today.' 'FEMA is ready, but not to handle multiple events or to handle a catastrophic event,' said Michael Coen, former chief of staff at FEMA during the Biden and Obama administrations. 'The agency does have significant capability, it's just been degraded since Jan. 20.' The staffing reductions have already been felt across the country. In Missouri, St. Louis Mayor Cara Spencer reported that 'FEMA has not been on the ground' following recent tornadoes there. In Mississippi, Gov. Tate Reeves is still waiting on federal disaster assistance for tornado damage in March. Former FEMA acting director Cameron Hamilton was fired just one day after telling Congress that eliminating the agency would not serve 'the best interest of the American people.' His replacement, David Richardson, told staffers his goal is to move much of the response and recovery operations down to the state level. The timing of the restructuring is concerning officials as Florida prepares for 'a particularly active' hurricane season with three to five major hurricanes expected, according to the assessment by the National Oceanic and Atmospheric Administration. While the state maintains robust capabilities and a pair of FEMA-backed search and rescue task force teams in the Miami-Dade area, Coen forecasts that personnel cuts could hinder federal recovery. 'There's not going to be probably enough staff,' Coen said. 'It's going to be the recovery.' He added, 'There may be a hurricane that impacts Florida, where the people of Florida are going to be shocked that there's no disaster declaration.' READ MORE: With hurricane season ahead, Trump cuts leave Florida weather offices understaffed Local and state governments will foot the bill There are signs that the federal agency is already moving toward pushing costs back toward the states. A leaked memo from the former acting administrator, Hamilton, said the agency wants to quadruple the threshold for what qualifies as a presidential disaster — and unlocking all the federal cash that comes with it. If enacted, that higher threshold would mean that 71% of all national events from 2008 to 2024 wouldn't have qualified for disaster assistance, a report by the Urban Institute found. In Florida, all of the big hurricanes in recent years would still be covered, even with a quadrupled threshold. But notably, even a slight increase in that threshold would have meant Florida got no federal assistance for the tornado spree in Tallahassee last year, or the rain bomb that flooded Fort Lauderdale in 2023, a Herald analysis found. That's both individual assistance — the cash survivors can claim directly from FEMA — as well as public assistance, including federal reimbursements for things like debris cleanup or overtime costs for first responders. For the tornadoes, FEMA shelled out $9.5 million to about 3,300 people. And for the flood that submerged Fort Lauderdale, the agency doled out a whopping $38.9 million to 9,600 residents, as well as another $5.2 million to local governments. Another suggestion in the memo is to lower the percentage of the tab that the federal government picks up in a disaster. The standard is that the feds carry 75% of the cost at a minimum, with state and local governments paying the rest. But in recent years, the agency has paid much more, all the way to 100% — like during debris cleanup in Florida after Hurricane Milton, after Hurricane Helene, or after the Surfside condominium collapse — often at the direct request of DeSantis. Per the memo, FEMA is considering dropping its contribution back to the minimum 75%. And it's already doing so in some situations. Last week, the agency declined to continue offering 100% reimbursement for North Carolina's continued cleanup of Tropical Storm Helene. 'FEMA's denial of our appeal will cost North Carolina taxpayers potentially hundreds of millions of dollars to clean up out west. The money we have to pay toward debris removal will mean less money towards supporting our small businesses, rebuilding downtown infrastructure, repairing our water and sewer systems, and other critical needs,' North Carolina Gov. Josh Stein said in a statement. Last-minute changes As concerns have grown among lawmakers on Capitol Hill, the agency has scrambled to get up to speed. An internal memo obtained by the Miami Herald outlined how Noem had signed three memos on May 14 that will 'significantly improve FEMA's readiness posture going into hurricane season,' including the approval of 2,652 six-month employees, training and education at FEMA centers and training for firefighters who comprise a critical portion of first responders. The question now is if the reversals can be implemented before the first storm lands. 'They're on their back foot,' said Jeremy Edwards, the deputy director for public affairs at FEMA during the Biden administration. 'They took all these actions, they let thousands of people go … they cancelled trainings. And less than two weeks ahead of hurricane season, they're starting some programs back up. I'm worried it may be too little, too late.' Harbaugh, a FEMA spokesman, waved off concerns from former officials and told the Herald, 'In fact, their gross negligence and failures are the exact reason President Trump established a review council to change FEMA.' The review council met for the first time on May 20, and it's Florida-heavy. Of the ten members, three are from the Sunshine State, including Miami-Dade County Sheriff Rosie Cordero-Stutz and Tampa Mayor Jane Castor. Noem, who co-chairs the council, told members the goal was to maintain the core responsibilities of FEMA but slim it down and rebrand it with a new name. 'The president has said to me many times that he believes that FEMA should be eliminated as it exists. What that means is this agency should be re-imagined,' she said. 'Our vision is that states should respond to their disasters, and we should be there to support them.' She continually pointed to Florida as a model of what that new relationship could look like — where the state responds first, with plenty of help from private companies. READ MORE: Florida bill could block communities from rebuilding stronger after hurricanes Kevin Guthrie, the head of Florida's emergency management department, rattled off the state's bragging rights: debris is picked up 24/7 after a storm, power is restored within 120 hours, roads are reopened in 72 hours and schools are back online in under five business days. 'And we do all of that with 225 employees. We depend on the private sector to plus us up,' he said. 'We had 1,000 extra folks for Helene and Milton.' Local governments watching and waiting Broward and Miami-Dade County told the Herald they were effectively in 'wait and see' mode until — or if — any of the proposals in the memo are enacted. In the meantime, both counties say they're keeping a close eye on FEMA news. 'If implemented, the proposed executive orders could potentially have an impact on how Miami-Dade County manages and recovers from disasters,' wrote Miami-Dade Spokeswoman Natalia Jaramillo in a statement. 'While we continue to advocate for clear guidance and flexibility from FEMA, we're also running internal scenarios and updating our fiscal strategy to ensure we can respond effectively even under potential new proposed constraints.' Fort Lauderdale said it was floating the idea of creating a new contingency emergency fund to dip into if a storm (or a rain bomb) strikes. 'The City maintains a healthy fund balance to ensure that adequate resources are available to respond to unanticipated costs such as natural disasters. We are actively reviewing the City's budgeting practices and fund balance policy to further refine the way that funds are reserved to swiftly, and effectively, respond to these events,' wrote city spokeswoman Ashley Doussard in a statement.
Yahoo
23-05-2025
- Business
- Yahoo
Bill Gates shows what the end of perpetual philanthropy looks like
For the last quarter-century, Bill Gates has been the donor behind what has long been one of the nation's largest private philanthropic foundations, a behemoth that has long dwarfed nearly all other charitable institutions. The Gates Foundation, in its commitment to a large, professionalized staff, driven by quantifiable data, and with its focus on global health, has served as a model for many other donors. And as an individual, Gates has long been the world's most recognized philanthropist, in terms of media attention, accolades, and public knowledge. As one of the co-founders of the Giving Pledge, the campaign to get the world's billionaires to donate more than half their wealth to charitable causes, he has also been the individual most closely identified with efforts to shape global philanthropic norms in an age of super-wealth. (Disclosure: I am an employee of the Urban Institute, which receives funding from the Gates Foundation.) That, in fact, is the best context in which to understand the significance of Gates's recent announcement that he will give virtually all this wealth to the Gates Foundation over the next 20 years, and that the foundation would 'close its doors permanently' by the end of 2045, after all that money has been given away. With Gates's own wealth listed at north of $100 billion, and his foundation sitting on an endowment of more than $75 billion, Gates estimates that his foundation 'will spend more than $200 billion between now and 2045.' As he explained it: 'I have decided to give my money back to society much faster than I had originally planned.' In sheer monetary terms, this pledge, if honored, would be a very big deal. It would require the foundation to maintain an unprecedentedly high level of annual spending, likely doubling its current $9 billion per year. And it would require contemplating a world in which the Gates Foundation no longer exists. But the extent to which Gates's announcement might encourage important shifts in broader philanthropic norms may be an even bigger deal. To put it simply: It could galvanize billionaires to give more — and perhaps more importantly, to give more faster. 'You could say this announcement is not very timely,' Gates quipped to the New York Times in an interview accompanying his announcement. He meant by this that his new pledge was fueled by an optimism about philanthropy's power to dramatically improve global health that sits oddly with a prevailing sense that progress seems to be eroding. But looked at another way, what was most significant about Gates's announcement was not the sheer dollar figure that received so much attention, but its embrace of the importance of timeliness in philanthropy. By philanthropic timeliness, I mean that he's elevated his responsibility to the current moment, to contemporary needs, exigencies, and opportunities, as the driving motive in his giving. In the rollout of his announcement, Gates has made clear that he is placing a premium on getting more money out the door now. He told the Times that 'this is a 'miraculous time,' ripe with all sorts of possibilities for astonishing advances in global health, like single-shot gene therapy for HIV/AIDS and new tools to prevent maternal and childhood mortality, like portable, AI-enabled ultrasounds. Given all these opportunities, Gates says, 'It makes a big difference to take the money and spend it now versus later.' That might seem obvious. But for many philanthropists, foundations are instruments designed as much to warehouse wealth as to give it away. Gates is now putting his celebrity brand behind the latter, pushing for present-day concerns to be met by large-scale philanthropic contributions. But there's obviously another reason why the current moment matters. Gates's announcement acknowledged that he's committing additional funds at a time when governments around the world, especially in the US, are slashing their own funding for global aid. He has maintained his insistence that philanthropy can never adequately stand in for government funding for global health — in 2023, USAID managed more than $35 billion in appropriations, for instance — and he's situating large-scale giving less as confirmation of the superiority of private philanthropy than as an urgent argument that Elon Musk's team got it wrong in gutting aid. 'It's unclear whether the world's richest countries will continue to stand up for its poorest people,' he wrote in a blog post explaining his decision. 'But the one thing we can guarantee is that, in all of our work, the Gates Foundation will support efforts to help people and countries pull themselves out of poverty.' For this reason, Musk, who has bragged about 'feeding USAID into the wood chipper,' has emerged as a sort of nemesis in the rollout of the announcement. 'The picture of the world's richest man killing the world's poorest children is not a pretty one,' Gates commented to the Financial Times. It's an uncharacteristic public feud for Gates, who until recently has studiously cultivated a public persona that avoided any hint of partisanship. Still, his comments did conjure up one inconvenient fact: Musk has actually signed the Giving Pledge (in 2012). But Gates took this on directly, and in doing so, offered an implicit critique of the system of philanthropic norms that he had taken the lead in developing. 'The Giving Pledge — an unusual aspect of it [is] that you can wait until you die and still fulfill it,' he said in the New York Times interview. And it's true that from its conception, the Giving Pledge was agnostic on the question of timeliness. The metric of success for the Pledge was getting 'this set of billionaires to think earlier in their life about how they're going to give money back, whether it's during their lifetime or at their death,' as Melinda French Gates said during a 2010 interview with Charlie Rose. Gates is now signaling a call for donors to do more than start thinking about giving — and start actually giving more now. As he has explained it, he is now pushing the wealthy to increase not just the scale of their giving, but the pace of their giving too. It's something Gates learned from the example of Chuck Feeney, the co-founder of a duty-free shopping empire. Feeney gave significant amounts anonymously for years, only willingly embracing a public identity as a mega-donor as a means of spreading a gospel of 'Giving while Living.' It's an ethic that Gates namechecked in his announcement as having 'shaped how I think about philanthropy.' There are a host of reasons why donors have generally preferred to defer giving, from not having the time to devote to philanthropy, to the compulsion to get the gift exactly right, to a desire to maintain funds to address future problems, to the simple fact that for some, it's just hard to let go of wealth. On an institutional level, one of the main challenges is the commitment to perpetuity, which imposes a certain ceiling on spending levels so that the endowment isn't drained. For much of the final decades of the 20th century, and for the first decade of the new century, perpetuity was something of an implicit default in the philanthropic sector. In the deliberations over the Tax Reform Act of 1969, which established the regulatory regime under which foundations would operate for the next half-century, Congress considered imposing a 40-year time limit on foundations. The proposal, championed by Sen. Al Gore Sr., was ultimately rejected, and in its stead, a 6 percent (changed a few years later to 5 percent) annual payout requirement was passed, as part of a 'Grand Bargain' that exchanged some commitment to 'philanthropic timeliness' for the legitimation of perpetuity. But over the last two decades, the tendency to treat perpetuity as the default mode of philanthropy has eroded. The reasons behind that shift are varied, from the urgency of the environmental crisis (several of the first wave of 21st-century spend-down foundations devoted themselves to the cause), to the propensity of young tech donors who had made their fortunes relatively quickly to look to spend their philanthropic resources quickly as well. This might very well be a pivotal moment for the norms surrounding philanthropic timeliness. In a 2020 global survey, Rockefeller Philanthropy Advisors found that nearly half of the organizations established in the 2010s were founded as time-limited vehicles, up from around 20 percent in the 1980s. A 2022 survey found that, 'Of the responding philanthropies established since 2000, almost one quarter (23 percent) were established as time-limited, representing an increase of 22 percentage points.' In fact, Bill and Melinda French Gates had never really committed their foundation to perpetuity. Seven years after creating the foundation in 2000, they had pledged to shut it down 50 years after their deaths. At an event in 2022, Gates had suggested that the foundation would last another 25 years. But the new announcement of the 2045 date is a much more definite endorsement of 'time-limited philanthropy.' So this might very well be a pivotal moment for the norms surrounding philanthropic timeliness. We're living through a period defined by cascading crises — climate, racial justice, Covid, and now those related to the Trump administration's budget cuts. In response to each, a handful of foundations have significantly increased their spending rates; some have committed to spend down their assets. It's also been a period characterized by the proliferation of high-profile billion-dollar philanthropic pledges from individual donors. These are timely to the extent that they draw immediate public and media attention, but they have not necessarily translated into the commensurate timely disbursement of philanthropic funds. In recent years, MacKenzie Scott captured considerable attention, and for a moment rivaled Gates as the nation's most prominent public philanthropist, with the speed and urgency with which she embraced the challenge of directing her Amazon fortune to philanthropy, and with a commitment to 'keep at it until the safe is empty.' She's given some $19 billion away in the last five years, though even she has struggled to keep up with the relentless pace of compounding interest and Amazon's surging stock price; her total wealth has barely budged since. Taking it all in, then, there hasn't yet been a definitive shift toward giving now in philanthropy. Might Gates's announcement help precipitate one? If it does, Gates will cast light on a whole other assortment of debates within the philanthropic sector. One of the most important of these relates to a chief paradox of contemporary criticisms of philanthropy, which boils down to the old joke: 'The food here is terrible — and the portions are too small!' Alongside demands for more and faster giving sit concerns about the ways mega-philanthropy can warp democratic norms and institutions. Gates has not merely been one of the most recognized and celebrated philanthropists, but also one of the most criticized, on precisely those terms. Whether the surge of giving that will be coming from the Gates Foundation is compatible with democratic demands — whether, for instance, it can help shift power to local communities and institutions — will likely be as important a question to the construction of the next generation of philanthropic norms as those related to scale and pacing.
