Rob West: ESG investing promises to align your portfolio with your values, but whose values are actually shaping the standards? I am Rob West. Environmental, social, and governance ratings are often presented as neutral measures of corporate responsibility, but they can reflect a moral framework that conflicts with biblical convictions. Nick Schmitz joins us today to explain how ESG can differ from faith-based investing and why Christians should pay attention to how their shares are voted. And then it's on to your calls at 800-525-7000. This is Faith & Finance on American Family Radio. Biblical wisdom for your financial decisions.
Well, it's a pleasure to welcome Nick Schmitz to the program. Nick's distinguished career has taken him from the Marine Corps and Wall Street to the university classroom. Most recently, he was appointed the inaugural Trey and Nina Treviesa endowed chair in finance at the Catholic University of America, and also serves as a board member for the Christian Investing Council. Nick, we're glad to have you with us today.
Nick Schmitz: It's great to be with you, Rob.
Rob West: Nick, ESG stands for, of course, environmental, social, and governance. So, what does an ESG rating actually measure? And let's talk about how that approach differs from evaluating investments through a faith-based lens.
Nick Schmitz: Sure. ESG evaluates environmental, social, and governance factors, but it's defined by secular ratings agencies, and it can shift with political trends. You know, faith-based investing starts with fixed moral truths: human dignity from conception to natural death, justice, stewardship, and measures companies against those principles. A firm can score quite highly on ESG, yet violate faith screens, for example, by actively funding abortion services.
Rob West: Yeah, that's really helpful and an important distinction. So, give us a real-world example of a company or shareholder proposal that received favorable ESG treatment, but raised significant concerns for faith-based investors.
Nick Schmitz: Sure, I can give you many, but just to name one or two. In 2023, a shareholder resolution initially co-filed by Planned Parenthood asked Google to label crisis pregnancy centers' websites "misinformation" and bury them in the search results. It was eventually consolidated with another related proposal and then refiled again in 2024. But the point's still the same. ESG advisors flag the proposals as, quote, "pro-reproductive rights," and that would be considered anti-ESG. So, your default proxy services that were ESG-aligned probably would have recommended a yes vote on that vote. Whereas faith-aligned investors should be voting no because it weaponized corporate power against the unborn and pro-life ministries. You know, while there may be occasional overlap on some issues, don't fall for that argument. There are a whole slew of issues that are core to our Christian mission of evangelization that secular ESG frameworks would categorize as anti-ESG. This could include fundamental Christian interests such as pro-life proposals, non-discriminatory charitable matching programs, religious discrimination in the workplace, Christian decency and pro-family programming from our largest media companies—things almost any pastor in America would find abhorrent and antithetical to their ministry work would often be pushed by pro-ESG frameworks.
Rob West: Wow. Yeah, that is really important. And alongside, Nick, several colleagues and even our friend Jerry Bowyer, I know you helped to overhaul the proxy voting policy for Catholic investors. So talk about what prompted that effort and what changes were involved.
Nick Schmitz: That's right. Well, we were asked to at the Catholic University of America, and it resulted by the request of some asset managers and consultants within the industry. When people realized how incongruent or misaligned some of the guidelines were that were purporting to be Catholic guidelines, they asked us at the Catholic University of America to propose new guidelines. So for most investors, two giant proxy firms, ISS and Glass Lewis, automatically process their recommendation votes. Asset managers delegate to them, giving these gatekeepers outsized sway over thousands of resolutions a year. For us, the US Bishops in 2021 had published a set of guidelines for Catholics to stop outsourcing blindly and instead vote proxies in engagement management. Our team was asked to build our own set of policies that mirror the guidelines of the bishops. We also were also on—we're on ISS, Glass Lewis, Broadridge, and Egan-Jones now. So essentially everywhere.
Rob West: Incredible. Folks, today we're talking about where ESG and faith-based investing differ. And as our guest Nick Schmitz said, there are big differences. We'll continue to unpack this. Your calls coming up a little later in the program as well: 800-525-7000. Much more to come. Stick around.
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Rob West: ESG investing promises to align your portfolio with your values, but the big question is, whose values are actually shaping the standards? We're talking today about where ESG and faith-based investing differ. Delighted to be joined by Nick Schmitz, professor of finance at the Catholic University of America and board member for the Christian Investing Council. And Nick, before the break, you were unpacking really some of these stark differences between ESG and faith-based investing. I'd love for you to share an example of faith-driven shareholder engagement that influenced a company's decision or perhaps brought greater attention to an important issue.
Nick Schmitz: Sure. For example, last year, faith-based investors urged Costco to reconsider stocking the abortion pill mifepristone or Plan B. There's about 15 million of them distributed a year in America. And these investors presented data on customer backlash, legal risks, and moral costs. Costco willingly chose not to stock the drug. This is a big pro-life win ESG screens would have ignored or voted against had it gone to a shareholder resolution.
Rob West: Interesting. Yeah, and that's just one of, of course, many examples that could be shared. You know, the letter E, of course, in ESG is environmental, and I think some people assume that faith-based investing focuses primarily on social or moral concerns and perhaps gives less attention to environmental stewardship. How do you respond to that?
Nick Schmitz: You know, I don't think it's quite true. Although Christians may disagree about how specifically, Scripture commands us to steward creation. Waste and pollution matter. We should back companies reducing real environmental harm without crushing the poor or destroying jobs. How to do this is a very prudential judgment, and disagreements about how, and respecting a broad diversity of sincere opinions on that matter, are quite healthy. ESG created an unhealthy and intolerant kind of binary system where there was no room for debate among people of good faith over one-size-fits-all solutions.
Rob West: Hm. Yeah, that's helpful. Now, I've heard you say, Nick, that financial advisors and investment managers should have, quote, "skin in the game" on these issues. What does that mean in your mind, and why is that alignment important for investors?
Nick Schmitz: Yeah, and just full disclosure, I didn't invent that. That happens to be the title of a popular finance text by Nassim Taleb. I happen to assign it to my students. But, you know, people trust costly signals. For example, when I was a fund manager, I used to invest my own capital in the same strategy I was recommending to investors. You know, this alignment discourages gimmicks and rewards long-term discipline. Faith investors should look for managers who share both their convictions and their downside risk. It's always tempting to avoid sharing downside risk on and off Wall Street, and we all fall short, but I don't think it's controversial to say that few other virtues were so emphatically demonstrated by Christ.
Rob West: Yeah, that's well said. Now, of course, as we talk about the differences between ESG and faith-based investing, you know, they're stark, and we've highlighted some of the the ways that's the case. But I'd love for you to maybe press into some of the most common misconceptions people have about both ESG and faith-based investing.
Nick Schmitz: Sure. I mean, a few. You know, the first would probably be that ESG is neutral. In reality, it carries its own moral agenda that is often opposed and antithetical to biblical truth. You know, two might be that faith-based screens, proxy voting, and engagement are only a negative practice. In practice, Christians can and should do engagement and improve companies. This is not just a list of "thou shalt nots." You know, three maybe that faith-based investing is somehow an attempt to establish a theocracy in an otherwise morally neutral entity of a corporation. It's just testifying to the truth and expressing your deeply held convictions through the shares you own in your private property. If Christians don't do that, then other moral or immoral frameworks will fill the vacuum. Democratic capitalism is a wonderful pluralistic system, and Christians shouldn't feel pressured to check their deeply held convictions at the door while others aggressively push theirs. And you know, finally I'd say that investors have no influence. I suppose you could believe that about political elections as well, but when we testify to the truth in communion, that's powerful. The last decade or so demonstrated that stakeholder interest groups who own little to no shares can influence the system. Imagine what Christians could do as the rightful majority shareholders when they act in communion.
Rob West: Yeah, that's exactly right. And and to think about that is pretty stark in that, you know, you put both Protestant and Catholics together, and that represents more than half of the public market investments today, which is just massive. Now, Nick, for listeners who want to understand whether their investments reflect their convictions, what would you suggest they ask their advisor? Perhaps the questions they would ask, or even their employer-sponsored retirement plan or investment manager?
Nick Schmitz: Definitely confirm the alignment with your goals with your advisor or your retirement plan. You know, if you own a 401(k) plan or you invest in a large secular firm, ask your 401(k) provider how proxy votes are cast and demand a faith-aligned policy. For those using the large secular asset managers like BlackRock, State Street, Vanguard, demand a choice with an aligned set of guidelines, and don't assume the initial choices they offer you and their labels mean there is Christian alignment. Remember, you pay them fees, they work for you, and you can shop around. That would be number one, I think. Also consider Christian or Catholic mutual funds and ETFs that are transparent and publish their results and methods on screening and proxy. Finally, I'd just say join shareholder coalitions to co-file resolutions or support engagement efforts wherever you can. There's a whole list of ways to get involved.
Rob West: Yeah. I mentioned Nick serves on the board of the Christian Investing Council. I'm on that board and many others. And if you'd like to check out the work of the CIC, go to christianinvestingcouncil.org. Coming this fall, the CIC will actually help you be able to uncover exactly what investments that are marketed to Christians actually stand for, and what practices they're employing as they build their portfolios, hopefully to serve the needs of Christians. Nick, I know your career has taken you from serving as a Marine officer to studying as a Rhodes Scholar and managing a hedge fund. So, I'd love for you, as we begin to wrap up here today, to share some guidance to young believers who want to pursue excellence in finance without allowing ambition or success to become an idol. What would you share?
Nick Schmitz: Yeah, and I try to tell my students this, or communicate it, or convey this at least. You know, character compounds much faster than credentials. Work ethic, integrity, and courage open doors in the long term. I just say keep Christ at the center of your ambition so you remain grounded and that doesn't become an idol. And finally, I'd say be willing to suffer for the truth. Markets and heaven both reward conviction. You know, on Wall Street, there's horizon arbitrage, as the phrase, that investors that are more patient are usually rewarded. It's a smart play on Wall Street, so keep your investment horizons long—not just long term, but eternal.
Rob West: Wow, that is well said. And let me just finish with this, Nick, and we've got just 20 seconds. Are you encouraged about where we're headed with faith-based investing and the opportunity for Christians to bring their values into their capital?
Nick Schmitz: Definitely. I think there's a sea of change and awareness being raised, particularly in the last 4 to 5 years. You know, faith-based investing, it used to be pretty opaque and it was hard to decipher, and I think people are more aware of what's at stake these days, and there's a lot of ability to collaborate and move the needle.
Rob West: Yeah, I couldn't agree more. Nick, so appreciate you, my friend. Thanks for your time today.
Nick Schmitz: Thanks for having me, Rob.
Rob West: Absolutely. That's Nick Schmitz, professor of finance at the Catholic University of America and board member at the Christian Investing Council. If you want to learn more about the CIC, go to christianinvestingcouncil.org. Back with your questions after this, so call right now: 800-525-7000. Or, if you'd prefer to email your question, send it to us at [email protected]. Stick around.
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Rob West: Great to have you with us today on Faith and Finance, on American Family Radio. I'm Rob West. Well, the lines are open and in just a moment, we'll begin taking your calls and questions. That number: 800-525-7000. You can call right now. Pat's taking your calls today. Again, the number: 800-525-7000. Also coming up in our final segment today, Jerry Bowyer and Walker Wildmon will be by. We'll get their take on what's moving the markets. We'll also get an update on AFA's work in corporate engagement. Never a shortage of incredible engagements with some of the biggest companies in the world on behalf of Christian values. That report in our final segment today.
In the news today, as we look at the national debt, it's climbed above $40 trillion, just five months after crossing $39 trillion. The government is adding debt quickly because it continues to spend more than it collects in revenue. One of the fastest-growing costs is interest. The federal government now spends more than $1 trillion a year—that's with a T—just paying interest on the debt, making it the second-largest federal expense behind Social Security. $1 in every $6 going toward interest now, in terms of the revenue coming in to the United States.
Higher government borrowing can also, of course, affect consumers. That's why we're seeing long-term Treasury yields at a 19-year high. That's pushing mortgage rates toward 6.7% and increasing borrowing costs throughout the economy. Both the White House and fiscal watchdog groups acknowledge the debt is a growing challenge, but Congress and the administration have to agree on a long-term solution. Rising federal debt isn't just a Washington problem; it can translate into a higher mortgage loan and interest costs for everyday Americans. We'll get Jerry's take on this in the final segment today. Lord willing, this will become more of a front-and-center issue as we move forward. You know, we are pushing closer and closer to a possible—I would say European-style—debt crisis. What could that look like if we were to get to that point? Which, we're not just going to wake up one day and see it; it's going to happen over time. But what might that look like, and what do we need to do about it? We'll get Jerry to weigh in on that on the last segment today.
We will be turning to your phone calls here in just a moment. So no matter what's going on in your financial life, if you have a question today, something you're wrestling with—perhaps it's paying off some debt, maybe it's preparing the next steward. You know, we've been deep into Field Guide No. 2. In fact, we're just a couple of weeks away from sending it to the printer. But we've done a deep dive into the various types of, I'll say, wealth that you will transfer to the next steward. Remember, your next steward is either going to be an heir, or it's going to be a ministry, or a combination of the two. But how do you prepare the next steward? And how do you transfer spiritual wealth or spiritual capital? How do you transfer character wealth? How do you transfer relational wealth? And then finally, how do you transfer financial wealth? And in that transfer process, what does it look like to prepare and assess the readiness of that next steward, and then how can you intentionally, over time, really lean in and make sure that they are ready to receive the financial wealth, and prior to that, that they have already received the character and the spiritual wealth?
We're going to give you some exercises; we're going to take you into God's Word to understand a biblical framework for it. And I think this is going to be one of the most sought-after tools we've ever created, just because so many of you, I know, are wrestling with that idea: How do I make sure my now-adult kids are ready to receive whatever I'm going to leave behind? This could give you a pathway to leaning into that and doing everything you can possibly do to prepare to transfer, Lord willing, wisdom before wealth.
Perhaps that's what's on your mind today. It's an inheritance, or maybe you're thinking about investments, your credit score, or just balancing the budget. Whatever you're considering today, call right now. We've got some lines open: 800-525-7000. Pat's taking your calls today, and she's ready for them: 800-525-7000. Any financial question today, and we will dive into those here in just a moment.
You know, as we think about a biblical worldview of money management, we recognize, of course, God owns it all. That's the starting point. That Jesus, that Christ, is our ultimate treasure, not money. That He is our Sustainer and Provider, and He is the One that should be the object of our affection. We also understand that faithfulness is the measure. That as we consider our role in managing God's money, faithfulness should be the goal. And not just faithfulness when I get that pay raise, or faithfulness when the bonus comes in, or faithfulness when I ultimately get that job over there. No, it's: What does faithfulness look like today? And because God owns it all, the question is not, "God, what should I do with my money?" It's, "What do You want me to do with Your money? And how can I be faithful right now with what You have entrusted to me?"
And so, if Christ is our treasure, and God owns it all, and then we understand that faithfulness is the measure, well, money then is a tool. First Timothy 6 has some of Scripture's clearest instructions for people who possess wealth. Paul doesn't condemn them or treat money as inherently evil. Instead, he tells them not to become proud and not to place their hope in the uncertainty of riches. Their hope must remain in God. And then he gives money an assignment. He tells them to do good, to be rich in good works, to be generous, to be ready to share. Money is not the treasure; money is a tool. You see, it's a good gift from God, and Scripture gives us permission to enjoy His provision with gratitude. Money can provide food, shelter, education, rest, and opportunity. It can also provide beauty and meaningful experiences with those we love. But it can't bear the weight of our souls. It can't tell us who we are. It can't guarantee peace. It can't remove the fear of death or repair every broken relationship, or even provide the deep security for which the human heart longs.
But it can add meaning to parts of our life. It cannot become the meaning of life. You know, when we ask money to provide identity and purpose and protection and peace, we're asking a created thing to do what only the Creator can. But listen: when money is surrendered to God, it becomes a powerful instrument of love to feed the hungry, support a family, fund the spread of the gospel, help a struggling neighbor, and even protect the vulnerable. That's the real power of money. Stay with us.
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Rob West: Great to have you with us today on Faith & Finance here on American Family Radio. Well, August the 31st is the end of our partnership, our campaign with Preborn. You know it well. You love the ministry providing free ultrasounds to moms considering an abortion. Our goal: 1,500 ultrasounds funded, $28 at a time. Would you help us get there? Just go to faithfi.com/preborn to join us. faithfi.com/preborn. Let's go to Michigan. Hi, Betty. How can I help?
Betty: Yes. I had—yes, I had called a couple years ago because of my situation. My husband had passed away, and I took some money out of my husband's 401(k), and I—so you have to move it out. Well, I did not want it where it was at. I wanted to move it over to some place else. Well, the guy told me I couldn't do it, and I had the attitude, "Watch me. I will move it." Well, where I brought it, I did not realize that it has to go from one advisor to another advisor. Anyhow, I called your show, and you told me to talk to my congressman about this. As it turns out, if your spouse passes away, and if you can prove that, um, you had intended it to be invested, and there's a couple other things, well, because my husband passed away, I did not have to pay all that tax of, all of a sudden, I have this income, and I could keep it in a 401(k). Like I said, I thought the other company understood place of business, and they had not. So now I got to have it all put where I wanted it, and, yeah. So now you know, too, and all those people that might not know.
Rob West: That is incredible!
Betty: Yes.
Rob West: I am so thrilled to hear that, yeah.
Betty: Yes.
Rob West: Absolutely. Well, you don't want to cash out that 401(k), to your point. That lump sum withdrawal creates a high—a large tax income, taxable income bill, and generally, you're right, you should have several choices, including leaving the money in the inherited plan or rolling it as a spouse into your own IRA or 401(k) or using the inherited IRA. So, I love that, and I think, you know, that was the great—the best option for you. And now, you can decide how and when to take that out in a way that meets your income needs, but also considers the tax implications, and really, that was the key idea here. So, well done, Betty.
Betty: So, but it's the idea that you only got a short period of time to put it in a 401(k). And I didn't know that, either. I thought, you know, I thought I was doing that. But yeah. Okay, thank you. I just want to make sure other people are aware.
Rob West: Excellent. Well, thanks for mentioning that, Betty. We appreciate you being on the program today. Lord bless you. 800-525-7000 is the number to call. That's 800-525-7000. Let's go to Texas. Richard, go ahead.
Richard: Uh, yes. Yes, sir. About about, uh, 15 years ago, I bought a house for $9,000. The plans on flipping it. Uh, took me a few years to work on it, cause it was in real bad shape, and, uh, I started renting it. And I've never paid—I I paid property taxes, but I never paid, uh, taxes for my income.
Rob West: Yes.
Richard: On that house.
Rob West: Yes.
Richard: And then I bought another house 5 years ago, uh, and, uh, I bought that one for 40,000, and I've never paid income—I never paid income taxes on that house, either.
Rob West: Hmm.
Richard: Am I in serious trouble?
Rob West: Yeah. You know, I wouldn't say you're in serious trouble, but it is a serious situation, and you ought to get on it on it sooner rather than later. Um, you know, the the situation may be less severe, uh, than simply owing tax on all the rent you collected. Of course, rental income is taxable, but you're going to have substantial deductions and depreciation. Uh, so I would get a CPA or enrolled agent involved, somebody preferably with experience with rental real estate and representing taxpayers before the IRS. Um, I have someone who specializes in that. You can hold on the line when we're done here today if you want, uh, a referral. I'd be happy to give you that to somebody who really specializes in offers in compromise, those kinds of things. But you're going to want to start to reconstruct each year separately. Gather the rent received, the mortgage interest statements, property taxes, insurance, utilities, management fees, repairs, maintenance, all the things. Uh, you're going to have to account for depreciation, and then we'll probably want to start with the current year to get in compliance, which demonstrates to the IRS that you're ready to, you know, get this, uh, back on track. And then again, um, you know, you can have a a CPA or an enrolled agent go back and start filing those previous year returns, and then separate from that, you can deal with whatever balance is actually owed. If you can't pay all at once, you know, it's very easy to to work on a short-term repayment plan. Uh, the IRS will gladly give that to you. That's 6 months or less. They also have long-term arrangements. There could be an offer in compromise option. They'll work with you. The key is to get those returns filed as quick as you can, and again, I would start with the current year. So, don't ignore it. I don't think you're in significant trouble, but we do need to get on top of it because those penalties and fees are going to continue to mount, and it's going to make a a difficult situation even worse.
Richard: Are those pretty high fees and penalties?
Rob West: They do stack up, yeah, and over time they go up. So, you know, I mean it could be 10%, um, but but they'll work with you again, and as soon as you get in compliance and start working toward a repayment plan, that's going to help. So, I wouldn't worry about it. It's probably not as bad as you, you know, have imagined it is in your mind. And again, despite the IRS's reputation, they're they're very willing to work with you if you're demonstrating a a true desire to to get in compliance. And then once we get you back caught up, we're going to want to get on a plan moving forward where you're making estimated payments and, you know, this isn't catching you by surprise in the future.
Richard: Okay. All righty. Okay, well, if you'll give me that, uh, information for, uh, Uh, what kind of a person did you say was going to help me?
Rob West: Yeah, so he's an CPA and enrolled agent, but he specializes in representing taxpayers before the IRS. So he just has a lot of experience in what are called offers in compromises, which is where you're able to settle for less than you owe if you have the ability to do so, or getting on a payment plan. You just want somebody who's a a tax professional, but also has quite a bit of experience in taxpayer representation for situations like this, and I think, you know, he could provide that service. There's plenty of others that could as well if you want somebody local. I just wanted to get you started with at least one name.
Richard: Yeah, cause I hear a lot of them on the on the radio, you know, where they could even erase it all or get it down to very low. I just wondered if that was really for real.
Rob West: Yeah, I'd be real careful about somebody promising, you know, big results like that, especially, you know, if if they're doing that with, uh, online ads or something like that. Uh, this is not going to be erased, but if you have the ability to make a lump sum payment, there is a legitimate offer in compromise, basically like a a settlement that you might do on a credit card. That's legitimate, but I'd want you to work with somebody who's reputable, you know, the particular person I'm going to give you is a Christ follower, and, uh, you know, I've known him for 25 years. But again, as long as you come go with somebody who has experience in this area, is either a CPA or enrolled agent that you can verify, and is referred to you from somebody, you know, that you trust, then I would be comfortable, you know, with with anybody that you choose in that regard.
Richard: Okay, well, thank you very much, sir.
Rob West: All right, Richard. You you're going to get on top of this. Uh, let's just not uh let it sit any longer. Let's get this moving in the right direction. Stay on the line. We'll give uh give you that name and and get you in touch with uh uh this CPA that I'm referring to. Thanks for your call. A quick break, back with more questions. 800-525-7000. Call right now.
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Rob West: Great to have you with us today on Faith & Finance on American Family Radio. Well, here in our final segment today, we're going to check in with Jerry Bowyer and Walker Wildmon on two things: the economy, the markets, but also corporate engagement. Jerry, let's start with the economy. You know, what's front and center right now is just all this talk around this $40 trillion national debt. You know, we've hit this level. Obviously, we're seeing Treasury yields moving higher. We recognize that the interest, $1 in $6 now coming in, going toward interest. We've talked about this before and how, you know, we're not going to wake up one day and be in the middle of a crisis, but, you know, you've said that you can see a European-style debt crisis in a way that you'd not been able to see as a reality in the United States before. Just give us your assessment of where we're at right now.
Jerry Bowyer: Well, it's as you've described it. You and I have been talking about this for a couple of years now. And my whole life, I was the person who said, "No, not yet. We know the crisis is not yet." I mean, you understand the people back in like the early '80s were saying, "We're about to have an economic collapse because of the debt." And maybe especially conservative Christians have a little bit been prone that way. I think because of the moral drift of the nation, we kind of had a sense that, well, then we're going to be punished for something. And sometimes it gets kind of wrapped up with prophetic concern about the future of the country.
My job is just to look at the economics, and during the vast majority—during that whole time period, I said, "No, these are not the preconditions of a financial crisis." And it didn't happen. We didn't get the hyperinflation. And there's one thing I want everyone to think about: how much was coming into your ears and eyes from conservative Christian sources, you know, going back 20 and 30 years of "this collapse is about to happen," and the blood moons and all the rest of it. There is a certain tendency for fear and panic, which was not grounded in the data.
But eventually, you do hit levels of debt where it becomes a very real possibility, a non—what I call non-trivial event. And I think what I've said to you over the past couple of years, I think we're in that zone now, really post—after COVID, and after we inflated our way out of COVID and spent our way out of the COVID, excuse me, shutdown. Basically, my conclusion was we've got one recession more than we can handle before we probably have something like a European crisis.
Now, the narrative caught up with that in the past, you know, week. And it is kind of strange. Why do we care about 40 trillion? We didn't care when it was 39.9 trillion, right? Something about round numbers kind of, you know, get us to pay attention to something. So if that's what it takes—it's like sometimes people, you know, they don't have their midlife crisis until their 50th birthday. At 49 they were okay, but at 50, "Oh no, I'm old!" So I think we're doing that with the debt a little bit.
Nothing changed materially in the last week except we hit a round number. Now, I'll take it because finally people are paying attention to it. But we were as facing as much risk two weeks ago as we were this week, but now there's media attention. And part of that was because interest rates were rising. And so people said, "Well, maybe that's because of the possibility of a debt crisis." I think interest rates are rising largely on what's called inflation expectations. That most of the rise in interest rates is the market saying, "I don't think we're going to solve our debt problem, and we're going to monetize it, and there's going to be inflation. So I want more interest to compensate me if I'm going to give you money, and you're going to give it back 10 years later. I want more money 10 years from now than I would have wanted before to compensate me for the fact that the dollar is going to be worth less in 10 years—or 5 years for that matter."
They call that the inflation premium. That sounds really technical. It's just real—I've used this analogy with you before. If I loan you $100 and then you're going to give me $105 back next year, but there was 5% inflation, I didn't get anything. You know, you just gave me back, you know, the value that I loaned to you for a year. So if I think there's going to be 5% inflation and I want a 5% return, then I want 10% interest. I get back $105, but I got $5 during the year, and that was the real interest, and the rest is just compensating me for lost value. The market is responding to that.
And I think that's what's going on with interest rates. Now, what's happened in response to that is people are looking at the Fed and saying, "Okay, what's the Fed going to do?" Because we have a dilemma. If we have all this debt, how are we going to get out of it? Well, that debt's inflationary, so maybe the central bank will shrink the money supply to fight the inflation. But wait, interest rates are going up because of this inflation. Oh, well, maybe the central bank will increase the money supply to fight the high interest rates. And there it is, right there it is in front of us: the dual mandate for the Fed that conflicts with one another. And so markets are going back and forth. Are they going to try to, you know, print their way out of trouble, or are they going to run the printer in reverse to get out of the inflation trouble?
And right now, I think markets are saying, "You know, the Fed's probably not going to do all that hiking to fight inflation, because the Fed's probably going to be more worried about the higher interest rates are, the tougher it's going to be for the federal government to pay its mortgage with high interest rates, and so it will probably continue to enable the spending." Which, given history, is probably the smart bet.
Rob West: Yeah. Jerry, obviously the Treasury's been busy here, the Treasury Secretary. You know, one of the actions maybe flew below the radar, something related to Japan and the carry trade. The one that was more front and center was this week with a doubling of the buyback. You know, what are they doing and what are your thoughts on it?
Jerry Bowyer: Well, they're trying to stave off the interest rate crisis using things other than the central bank in order to do that. And this is a Treasury that is really hands-on in terms of managing the economy and managing the markets. So rather than solve the fundamental problem, which is we overspend and therefore overborrow and undersave... So, I mean, if our government has borrowed $40 trillion, who'd they get that from? We don't save enough for most of it to have come from us, so we got it from Japan and China. And so that creates all these problems.
Look, you get calls every day from people, many of whom are in a financial jam. And some of them are in a financial jam because something terrible happened, somebody got cancer or whatever. But a lot of times, people are in a jam because there were just many years of making decisions which were not optimal for their financial health, and now they face tough choices. And once you're there, the tough choices are unavoidable. That's where we are. We've had decades of non-optimal decisions, and so the tough choices are: do we let interest rates rise, do we let the dollar rise too much against the yen or fall too much against the yen? And so what we're doing is we're using these like ad hoc, these interventions from the Treasury Department to stop bad things from happening that are happening because of decades of bad policy, bad fiscal policy.
What I would hope is that, well, just like, "Okay, hey, I'm having chest pains, I'm going to go to the emergency room." Okay, but what is that? "Oh, I smoked for 30 years." Okay. So it's the smoking, that's the thing, right? Yes, you have to go to the emergency room. Yeah, they're going to have to do something, maybe they'll do an angioplasty, whatever. But the long-term solution isn't the emergency room. The long-term solution is to give up the smoking or give up, you know, the overeating, etc. Well, that's where we are as a nation. We've been making these bad decisions, and Treasury Secretary Bescent is kind of doing his best within the context of those in order to deal with some of the interest rate spikes and foreign currency fluctuations that come from those bad—from a long train of bad decisions. Bipartisan bad decisions, by the way. Not just the Democrats. Just to be clear.
Rob West: Yeah, very good. Well, thanks for that, Jerry. We'll continue to talk about this, obviously, a lot in the future. Let's turn the corner here. Walker Wildmon's with us as well. We're going to pivot to corporate engagement. We dedicate some time in this segment each Friday to an update on the work of AFA, engaging with the biggest companies in the world on behalf of religious and Christian values. Walker, tell us what you've been working on.
Walker Wildmon: Yeah, we in the past have had great success on the corporate engagement front, specifically with the Apple Corporation, which we own a substantial amount of shares in. And we got them to take measures to protect children on their devices last cycle. And so right now, we're looking with eyes still on Apple as one of America's largest technology companies in the world as well. We're looking at their partnership in the past with the Southern Poverty Law Center, and to be more specific, in 2017, Tim Cook announced a $1 million donation to the Southern Poverty Law Center. And in the past, Apple has allowed donations directly to the SPLC through their iTunes Store and their App Store as well, where iPhone users have had this streamlined means of giving donations directly to the Southern Poverty Law Center. The problem is that the Southern Poverty Law Center is a very left-wing outfit that pretty much exists to demonize and slander conservatives and Christians.
And so that's the problem with Apple's past, and so what we want to do is ensure that this doesn't continue in the future, because this is a very divisive thing to be doing as a corporation that serves the broader audience and the broader general public. And so we're going to be talking with Apple, we're going to be putting forth a proposal to ensure that Apple is not giving millions of dollars and engaging in corporate partnerships with a very dangerous and now federally indicted group, the Southern Poverty Law Center.
Rob West: Wow. Sounds like a major initiative here with huge implications. Jerry, 30 seconds. Your thoughts on this? Tie a bow on it for us.
Jerry Bowyer: I mean, it was unwise in 2017. Now it is absolutely indefensible because of the FBI indictment, because of the fact that it looks like money was actually going to the Klan and the Nazis, and then the arrest of a high SPLC official for, I think, wiretapping fraud. How in the world can any responsible company still defend this?
Rob West: Yeah. Wow. Well, we'll certainly ask you all to keep us updated on that. Incredible work, gentlemen. Thanks for that report today. Walker Wildmon, Jerry Bowyer, we appreciate your time.
Walker Wildmon: Thank you, Rob.
Jerry Bowyer: God bless you.
Rob West: All right. Well, folks, that's going to do it for us today. So thankful to have you along today. Grateful to have Nick Schmitz, grateful to have Jerry and Walker, plus your questions as always. Hope you have a wonderful weekend. Don't forget, if you'd like to support Faith & Finance, this is a listener-supported ministry, we'd love for you to head to faithfi.com/give. Consider making a one-time gift or becoming a partner. Again, that website: faithfi.com/give. And then come back and join us next time. On Monday, we'll do it all over again. Big thanks to Pat, Devin, Taylor, and everybody here at Faith & Finance. We'll see you next week.
Announcer: The views and opinions expressed in this broadcast may not necessarily reflect those of the American Family Association or American Family Radio.
Rob West: ESG investing promises to align your portfolio with your values, but whose values are actually shaping the standards? I am Rob West. Environmental, social, and governance ratings are often presented as neutral measures of corporate responsibility, but they can reflect a moral framework that conflicts with biblical convictions. Nick Schmitz joins us today to explain how ESG can differ from faith-based investing and why Christians should pay attention to how their shares are voted. And then it's on to your calls at 800-525-7000. This is Faith & Finance on American Family Radio. Biblical wisdom for your financial decisions.
Well, it's a pleasure to welcome Nick Schmitz to the program. Nick's distinguished career has taken him from the Marine Corps and Wall Street to the university classroom. Most recently, he was appointed the inaugural Trey and Nina Treviesa endowed chair in finance at the Catholic University of America, and also serves as a board member for the Christian Investing Council. Nick, we're glad to have you with us today.
Nick Schmitz: It's great to be with you, Rob.
Rob West: Nick, ESG stands for, of course, environmental, social, and governance. So, what does an ESG rating actually measure? And let's talk about how that approach differs from evaluating investments through a faith-based lens.
Nick Schmitz: Sure. ESG evaluates environmental, social, and governance factors, but it's defined by secular ratings agencies, and it can shift with political trends. You know, faith-based investing starts with fixed moral truths: human dignity from conception to natural death, justice, stewardship, and measures companies against those principles. A firm can score quite highly on ESG, yet violate faith screens, for example, by actively funding abortion services.
Rob West: Yeah, that's really helpful and an important distinction. So, give us a real-world example of a company or shareholder proposal that received favorable ESG treatment, but raised significant concerns for faith-based investors.
Nick Schmitz: Sure, I can give you many, but just to name one or two. In 2023, a shareholder resolution initially co-filed by Planned Parenthood asked Google to label crisis pregnancy centers' websites "misinformation" and bury them in the search results. It was eventually consolidated with another related proposal and then refiled again in 2024. But the point's still the same. ESG advisors flag the proposals as, quote, "pro-reproductive rights," and that would be considered anti-ESG. So, your default proxy services that were ESG-aligned probably would have recommended a yes vote on that vote. Whereas faith-aligned investors should be voting no because it weaponized corporate power against the unborn and pro-life ministries. You know, while there may be occasional overlap on some issues, don't fall for that argument. There are a whole slew of issues that are core to our Christian mission of evangelization that secular ESG frameworks would categorize as anti-ESG. This could include fundamental Christian interests such as pro-life proposals, non-discriminatory charitable matching programs, religious discrimination in the workplace, Christian decency and pro-family programming from our largest media companies—things almost any pastor in America would find abhorrent and antithetical to their ministry work would often be pushed by pro-ESG frameworks.
Rob West: Wow. Yeah, that is really important. And alongside, Nick, several colleagues and even our friend Jerry Bowyer, I know you helped to overhaul the proxy voting policy for Catholic investors. So talk about what prompted that effort and what changes were involved.
Nick Schmitz: That's right. Well, we were asked to at the Catholic University of America, and it resulted by the request of some asset managers and consultants within the industry. When people realized how incongruent or misaligned some of the guidelines were that were purporting to be Catholic guidelines, they asked us at the Catholic University of America to propose new guidelines. So for most investors, two giant proxy firms, ISS and Glass Lewis, automatically process their recommendation votes. Asset managers delegate to them, giving these gatekeepers outsized sway over thousands of resolutions a year. For us, the US Bishops in 2021 had published a set of guidelines for Catholics to stop outsourcing blindly and instead vote proxies in engagement management. Our team was asked to build our own set of policies that mirror the guidelines of the bishops. We also were also on—we're on ISS, Glass Lewis, Broadridge, and Egan-Jones now. So essentially everywhere.
Rob West: Incredible. Folks, today we're talking about where ESG and faith-based investing differ. And as our guest Nick Schmitz said, there are big differences. We'll continue to unpack this. Your calls coming up a little later in the program as well: 800-525-7000. Much more to come. Stick around.
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Rob West: ESG investing promises to align your portfolio with your values, but the big question is, whose values are actually shaping the standards? We're talking today about where ESG and faith-based investing differ. Delighted to be joined by Nick Schmitz, professor of finance at the Catholic University of America and board member for the Christian Investing Council. And Nick, before the break, you were unpacking really some of these stark differences between ESG and faith-based investing. I'd love for you to share an example of faith-driven shareholder engagement that influenced a company's decision or perhaps brought greater attention to an important issue.
Nick Schmitz: Sure. For example, last year, faith-based investors urged Costco to reconsider stocking the abortion pill mifepristone or Plan B. There's about 15 million of them distributed a year in America. And these investors presented data on customer backlash, legal risks, and moral costs. Costco willingly chose not to stock the drug. This is a big pro-life win ESG screens would have ignored or voted against had it gone to a shareholder resolution.
Rob West: Interesting. Yeah, and that's just one of, of course, many examples that could be shared. You know, the letter E, of course, in ESG is environmental, and I think some people assume that faith-based investing focuses primarily on social or moral concerns and perhaps gives less attention to environmental stewardship. How do you respond to that?
Nick Schmitz: You know, I don't think it's quite true. Although Christians may disagree about how specifically, Scripture commands us to steward creation. Waste and pollution matter. We should back companies reducing real environmental harm without crushing the poor or destroying jobs. How to do this is a very prudential judgment, and disagreements about how, and respecting a broad diversity of sincere opinions on that matter, are quite healthy. ESG created an unhealthy and intolerant kind of binary system where there was no room for debate among people of good faith over one-size-fits-all solutions.
Rob West: Hm. Yeah, that's helpful. Now, I've heard you say, Nick, that financial advisors and investment managers should have, quote, "skin in the game" on these issues. What does that mean in your mind, and why is that alignment important for investors?
Nick Schmitz: Yeah, and just full disclosure, I didn't invent that. That happens to be the title of a popular finance text by Nassim Taleb. I happen to assign it to my students. But, you know, people trust costly signals. For example, when I was a fund manager, I used to invest my own capital in the same strategy I was recommending to investors. You know, this alignment discourages gimmicks and rewards long-term discipline. Faith investors should look for managers who share both their convictions and their downside risk. It's always tempting to avoid sharing downside risk on and off Wall Street, and we all fall short, but I don't think it's controversial to say that few other virtues were so emphatically demonstrated by Christ.
Rob West: Yeah, that's well said. Now, of course, as we talk about the differences between ESG and faith-based investing, you know, they're stark, and we've highlighted some of the the ways that's the case. But I'd love for you to maybe press into some of the most common misconceptions people have about both ESG and faith-based investing.
Nick Schmitz: Sure. I mean, a few. You know, the first would probably be that ESG is neutral. In reality, it carries its own moral agenda that is often opposed and antithetical to biblical truth. You know, two might be that faith-based screens, proxy voting, and engagement are only a negative practice. In practice, Christians can and should do engagement and improve companies. This is not just a list of "thou shalt nots." You know, three maybe that faith-based investing is somehow an attempt to establish a theocracy in an otherwise morally neutral entity of a corporation. It's just testifying to the truth and expressing your deeply held convictions through the shares you own in your private property. If Christians don't do that, then other moral or immoral frameworks will fill the vacuum. Democratic capitalism is a wonderful pluralistic system, and Christians shouldn't feel pressured to check their deeply held convictions at the door while others aggressively push theirs. And you know, finally I'd say that investors have no influence. I suppose you could believe that about political elections as well, but when we testify to the truth in communion, that's powerful. The last decade or so demonstrated that stakeholder interest groups who own little to no shares can influence the system. Imagine what Christians could do as the rightful majority shareholders when they act in communion.
Rob West: Yeah, that's exactly right. And and to think about that is pretty stark in that, you know, you put both Protestant and Catholics together, and that represents more than half of the public market investments today, which is just massive. Now, Nick, for listeners who want to understand whether their investments reflect their convictions, what would you suggest they ask their advisor? Perhaps the questions they would ask, or even their employer-sponsored retirement plan or investment manager?
Nick Schmitz: Definitely confirm the alignment with your goals with your advisor or your retirement plan. You know, if you own a 401(k) plan or you invest in a large secular firm, ask your 401(k) provider how proxy votes are cast and demand a faith-aligned policy. For those using the large secular asset managers like BlackRock, State Street, Vanguard, demand a choice with an aligned set of guidelines, and don't assume the initial choices they offer you and their labels mean there is Christian alignment. Remember, you pay them fees, they work for you, and you can shop around. That would be number one, I think. Also consider Christian or Catholic mutual funds and ETFs that are transparent and publish their results and methods on screening and proxy. Finally, I'd just say join shareholder coalitions to co-file resolutions or support engagement efforts wherever you can. There's a whole list of ways to get involved.
Rob West: Yeah. I mentioned Nick serves on the board of the Christian Investing Council. I'm on that board and many others. And if you'd like to check out the work of the CIC, go to christianinvestingcouncil.org. Coming this fall, the CIC will actually help you be able to uncover exactly what investments that are marketed to Christians actually stand for, and what practices they're employing as they build their portfolios, hopefully to serve the needs of Christians. Nick, I know your career has taken you from serving as a Marine officer to studying as a Rhodes Scholar and managing a hedge fund. So, I'd love for you, as we begin to wrap up here today, to share some guidance to young believers who want to pursue excellence in finance without allowing ambition or success to become an idol. What would you share?
Nick Schmitz: Yeah, and I try to tell my students this, or communicate it, or convey this at least. You know, character compounds much faster than credentials. Work ethic, integrity, and courage open doors in the long term. I just say keep Christ at the center of your ambition so you remain grounded and that doesn't become an idol. And finally, I'd say be willing to suffer for the truth. Markets and heaven both reward conviction. You know, on Wall Street, there's horizon arbitrage, as the phrase, that investors that are more patient are usually rewarded. It's a smart play on Wall Street, so keep your investment horizons long—not just long term, but eternal.
Rob West: Wow, that is well said. And let me just finish with this, Nick, and we've got just 20 seconds. Are you encouraged about where we're headed with faith-based investing and the opportunity for Christians to bring their values into their capital?
Nick Schmitz: Definitely. I think there's a sea of change and awareness being raised, particularly in the last 4 to 5 years. You know, faith-based investing, it used to be pretty opaque and it was hard to decipher, and I think people are more aware of what's at stake these days, and there's a lot of ability to collaborate and move the needle.
Rob West: Yeah, I couldn't agree more. Nick, so appreciate you, my friend. Thanks for your time today.
Nick Schmitz: Thanks for having me, Rob.
Rob West: Absolutely. That's Nick Schmitz, professor of finance at the Catholic University of America and board member at the Christian Investing Council. If you want to learn more about the CIC, go to christianinvestingcouncil.org. Back with your questions after this, so call right now: 800-525-7000. Or, if you'd prefer to email your question, send it to us at [email protected]. Stick around.
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Rob West: Great to have you with us today on Faith and Finance, on American Family Radio. I'm Rob West. Well, the lines are open and in just a moment, we'll begin taking your calls and questions. That number: 800-525-7000. You can call right now. Pat's taking your calls today. Again, the number: 800-525-7000. Also coming up in our final segment today, Jerry Bowyer and Walker Wildmon will be by. We'll get their take on what's moving the markets. We'll also get an update on AFA's work in corporate engagement. Never a shortage of incredible engagements with some of the biggest companies in the world on behalf of Christian values. That report in our final segment today.
In the news today, as we look at the national debt, it's climbed above $40 trillion, just five months after crossing $39 trillion. The government is adding debt quickly because it continues to spend more than it collects in revenue. One of the fastest-growing costs is interest. The federal government now spends more than $1 trillion a year—that's with a T—just paying interest on the debt, making it the second-largest federal expense behind Social Security. $1 in every $6 going toward interest now, in terms of the revenue coming in to the United States.
Higher government borrowing can also, of course, affect consumers. That's why we're seeing long-term Treasury yields at a 19-year high. That's pushing mortgage rates toward 6.7% and increasing borrowing costs throughout the economy. Both the White House and fiscal watchdog groups acknowledge the debt is a growing challenge, but Congress and the administration have to agree on a long-term solution. Rising federal debt isn't just a Washington problem; it can translate into a higher mortgage loan and interest costs for everyday Americans. We'll get Jerry's take on this in the final segment today. Lord willing, this will become more of a front-and-center issue as we move forward. You know, we are pushing closer and closer to a possible—I would say European-style—debt crisis. What could that look like if we were to get to that point? Which, we're not just going to wake up one day and see it; it's going to happen over time. But what might that look like, and what do we need to do about it? We'll get Jerry to weigh in on that on the last segment today.
We will be turning to your phone calls here in just a moment. So no matter what's going on in your financial life, if you have a question today, something you're wrestling with—perhaps it's paying off some debt, maybe it's preparing the next steward. You know, we've been deep into Field Guide No. 2. In fact, we're just a couple of weeks away from sending it to the printer. But we've done a deep dive into the various types of, I'll say, wealth that you will transfer to the next steward. Remember, your next steward is either going to be an heir, or it's going to be a ministry, or a combination of the two. But how do you prepare the next steward? And how do you transfer spiritual wealth or spiritual capital? How do you transfer character wealth? How do you transfer relational wealth? And then finally, how do you transfer financial wealth? And in that transfer process, what does it look like to prepare and assess the readiness of that next steward, and then how can you intentionally, over time, really lean in and make sure that they are ready to receive the financial wealth, and prior to that, that they have already received the character and the spiritual wealth?
We're going to give you some exercises; we're going to take you into God's Word to understand a biblical framework for it. And I think this is going to be one of the most sought-after tools we've ever created, just because so many of you, I know, are wrestling with that idea: How do I make sure my now-adult kids are ready to receive whatever I'm going to leave behind? This could give you a pathway to leaning into that and doing everything you can possibly do to prepare to transfer, Lord willing, wisdom before wealth.
Perhaps that's what's on your mind today. It's an inheritance, or maybe you're thinking about investments, your credit score, or just balancing the budget. Whatever you're considering today, call right now. We've got some lines open: 800-525-7000. Pat's taking your calls today, and she's ready for them: 800-525-7000. Any financial question today, and we will dive into those here in just a moment.
You know, as we think about a biblical worldview of money management, we recognize, of course, God owns it all. That's the starting point. That Jesus, that Christ, is our ultimate treasure, not money. That He is our Sustainer and Provider, and He is the One that should be the object of our affection. We also understand that faithfulness is the measure. That as we consider our role in managing God's money, faithfulness should be the goal. And not just faithfulness when I get that pay raise, or faithfulness when the bonus comes in, or faithfulness when I ultimately get that job over there. No, it's: What does faithfulness look like today? And because God owns it all, the question is not, "God, what should I do with my money?" It's, "What do You want me to do with Your money? And how can I be faithful right now with what You have entrusted to me?"
And so, if Christ is our treasure, and God owns it all, and then we understand that faithfulness is the measure, well, money then is a tool. First Timothy 6 has some of Scripture's clearest instructions for people who possess wealth. Paul doesn't condemn them or treat money as inherently evil. Instead, he tells them not to become proud and not to place their hope in the uncertainty of riches. Their hope must remain in God. And then he gives money an assignment. He tells them to do good, to be rich in good works, to be generous, to be ready to share. Money is not the treasure; money is a tool. You see, it's a good gift from God, and Scripture gives us permission to enjoy His provision with gratitude. Money can provide food, shelter, education, rest, and opportunity. It can also provide beauty and meaningful experiences with those we love. But it can't bear the weight of our souls. It can't tell us who we are. It can't guarantee peace. It can't remove the fear of death or repair every broken relationship, or even provide the deep security for which the human heart longs.
But it can add meaning to parts of our life. It cannot become the meaning of life. You know, when we ask money to provide identity and purpose and protection and peace, we're asking a created thing to do what only the Creator can. But listen: when money is surrendered to God, it becomes a powerful instrument of love to feed the hungry, support a family, fund the spread of the gospel, help a struggling neighbor, and even protect the vulnerable. That's the real power of money. Stay with us.
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Announcer: Whatever kind of day that you're having, I invite you to just take a minute to listen in. I've got such an encouraging show for you today. And before the break, we were just talking about replacing happiness with joy. When we fix every problem for our kids, we deny the opportunity for them to fix it. The Doctor Nurse Mama Show. For more from Dr. Jessica Peck, tune in at 2:00 p.m. Central on American Family Radio, or on the podcast page at afr.net.
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Announcer: I was in ministry full-time, and I was always looking for a way to integrate my faith with this new industry around money and finances. This is Mark. He is a Certified Kingdom Advisor. As a CKA, one of the best things I offer my clients is trust in knowing that they're working with a professional that understands their values. And I think in all of the different challenges that clients go through, if we can go back to trusting in God, then He'll make the path straight. You can find an advisor like Mark at findacka.com.
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Rob West: Great to have you with us today on Faith & Finance here on American Family Radio. Well, August the 31st is the end of our partnership, our campaign with Preborn. You know it well. You love the ministry providing free ultrasounds to moms considering an abortion. Our goal: 1,500 ultrasounds funded, $28 at a time. Would you help us get there? Just go to faithfi.com/preborn to join us. faithfi.com/preborn. Let's go to Michigan. Hi, Betty. How can I help?
Betty: Yes. I had—yes, I had called a couple years ago because of my situation. My husband had passed away, and I took some money out of my husband's 401(k), and I—so you have to move it out. Well, I did not want it where it was at. I wanted to move it over to some place else. Well, the guy told me I couldn't do it, and I had the attitude, "Watch me. I will move it." Well, where I brought it, I did not realize that it has to go from one advisor to another advisor. Anyhow, I called your show, and you told me to talk to my congressman about this. As it turns out, if your spouse passes away, and if you can prove that, um, you had intended it to be invested, and there's a couple other things, well, because my husband passed away, I did not have to pay all that tax of, all of a sudden, I have this income, and I could keep it in a 401(k). Like I said, I thought the other company understood place of business, and they had not. So now I got to have it all put where I wanted it, and, yeah. So now you know, too, and all those people that might not know.
Rob West: That is incredible!
Betty: Yes.
Rob West: I am so thrilled to hear that, yeah.
Betty: Yes.
Rob West: Absolutely. Well, you don't want to cash out that 401(k), to your point. That lump sum withdrawal creates a high—a large tax income, taxable income bill, and generally, you're right, you should have several choices, including leaving the money in the inherited plan or rolling it as a spouse into your own IRA or 401(k) or using the inherited IRA. So, I love that, and I think, you know, that was the great—the best option for you. And now, you can decide how and when to take that out in a way that meets your income needs, but also considers the tax implications, and really, that was the key idea here. So, well done, Betty.
Betty: So, but it's the idea that you only got a short period of time to put it in a 401(k). And I didn't know that, either. I thought, you know, I thought I was doing that. But yeah. Okay, thank you. I just want to make sure other people are aware.
Rob West: Excellent. Well, thanks for mentioning that, Betty. We appreciate you being on the program today. Lord bless you. 800-525-7000 is the number to call. That's 800-525-7000. Let's go to Texas. Richard, go ahead.
Richard: Uh, yes. Yes, sir. About about, uh, 15 years ago, I bought a house for $9,000. The plans on flipping it. Uh, took me a few years to work on it, cause it was in real bad shape, and, uh, I started renting it. And I've never paid—I I paid property taxes, but I never paid, uh, taxes for my income.
Rob West: Yes.
Richard: On that house.
Rob West: Yes.
Richard: And then I bought another house 5 years ago, uh, and, uh, I bought that one for 40,000, and I've never paid income—I never paid income taxes on that house, either.
Rob West: Hmm.
Richard: Am I in serious trouble?
Rob West: Yeah. You know, I wouldn't say you're in serious trouble, but it is a serious situation, and you ought to get on it on it sooner rather than later. Um, you know, the the situation may be less severe, uh, than simply owing tax on all the rent you collected. Of course, rental income is taxable, but you're going to have substantial deductions and depreciation. Uh, so I would get a CPA or enrolled agent involved, somebody preferably with experience with rental real estate and representing taxpayers before the IRS. Um, I have someone who specializes in that. You can hold on the line when we're done here today if you want, uh, a referral. I'd be happy to give you that to somebody who really specializes in offers in compromise, those kinds of things. But you're going to want to start to reconstruct each year separately. Gather the rent received, the mortgage interest statements, property taxes, insurance, utilities, management fees, repairs, maintenance, all the things. Uh, you're going to have to account for depreciation, and then we'll probably want to start with the current year to get in compliance, which demonstrates to the IRS that you're ready to, you know, get this, uh, back on track. And then again, um, you know, you can have a a CPA or an enrolled agent go back and start filing those previous year returns, and then separate from that, you can deal with whatever balance is actually owed. If you can't pay all at once, you know, it's very easy to to work on a short-term repayment plan. Uh, the IRS will gladly give that to you. That's 6 months or less. They also have long-term arrangements. There could be an offer in compromise option. They'll work with you. The key is to get those returns filed as quick as you can, and again, I would start with the current year. So, don't ignore it. I don't think you're in significant trouble, but we do need to get on top of it because those penalties and fees are going to continue to mount, and it's going to make a a difficult situation even worse.
Richard: Are those pretty high fees and penalties?
Rob West: They do stack up, yeah, and over time they go up. So, you know, I mean it could be 10%, um, but but they'll work with you again, and as soon as you get in compliance and start working toward a repayment plan, that's going to help. So, I wouldn't worry about it. It's probably not as bad as you, you know, have imagined it is in your mind. And again, despite the IRS's reputation, they're they're very willing to work with you if you're demonstrating a a true desire to to get in compliance. And then once we get you back caught up, we're going to want to get on a plan moving forward where you're making estimated payments and, you know, this isn't catching you by surprise in the future.
Richard: Okay. All righty. Okay, well, if you'll give me that, uh, information for, uh, Uh, what kind of a person did you say was going to help me?
Rob West: Yeah, so he's an CPA and enrolled agent, but he specializes in representing taxpayers before the IRS. So he just has a lot of experience in what are called offers in compromises, which is where you're able to settle for less than you owe if you have the ability to do so, or getting on a payment plan. You just want somebody who's a a tax professional, but also has quite a bit of experience in taxpayer representation for situations like this, and I think, you know, he could provide that service. There's plenty of others that could as well if you want somebody local. I just wanted to get you started with at least one name.
Richard: Yeah, cause I hear a lot of them on the on the radio, you know, where they could even erase it all or get it down to very low. I just wondered if that was really for real.
Rob West: Yeah, I'd be real careful about somebody promising, you know, big results like that, especially, you know, if if they're doing that with, uh, online ads or something like that. Uh, this is not going to be erased, but if you have the ability to make a lump sum payment, there is a legitimate offer in compromise, basically like a a settlement that you might do on a credit card. That's legitimate, but I'd want you to work with somebody who's reputable, you know, the particular person I'm going to give you is a Christ follower, and, uh, you know, I've known him for 25 years. But again, as long as you come go with somebody who has experience in this area, is either a CPA or enrolled agent that you can verify, and is referred to you from somebody, you know, that you trust, then I would be comfortable, you know, with with anybody that you choose in that regard.
Richard: Okay, well, thank you very much, sir.
Rob West: All right, Richard. You you're going to get on top of this. Uh, let's just not uh let it sit any longer. Let's get this moving in the right direction. Stay on the line. We'll give uh give you that name and and get you in touch with uh uh this CPA that I'm referring to. Thanks for your call. A quick break, back with more questions. 800-525-7000. Call right now.
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Announcer: With all the chaos and unrest in our world today, it certainly feels as if we're living in the end times. But the trials we're facing right now are nothing compared to the Great Tribulation. This week on Pathway to Victory, Dr. Robert Jeffress shares what will take place during those final years on Earth. Join us for a revealing series called "Final Conquest" this week on Pathway to Victory. Weekday mornings at 6:00 Central on American Family Radio.
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Rob West: Great to have you with us today on Faith & Finance on American Family Radio. Well, here in our final segment today, we're going to check in with Jerry Bowyer and Walker Wildmon on two things: the economy, the markets, but also corporate engagement. Jerry, let's start with the economy. You know, what's front and center right now is just all this talk around this $40 trillion national debt. You know, we've hit this level. Obviously, we're seeing Treasury yields moving higher. We recognize that the interest, $1 in $6 now coming in, going toward interest. We've talked about this before and how, you know, we're not going to wake up one day and be in the middle of a crisis, but, you know, you've said that you can see a European-style debt crisis in a way that you'd not been able to see as a reality in the United States before. Just give us your assessment of where we're at right now.
Jerry Bowyer: Well, it's as you've described it. You and I have been talking about this for a couple of years now. And my whole life, I was the person who said, "No, not yet. We know the crisis is not yet." I mean, you understand the people back in like the early '80s were saying, "We're about to have an economic collapse because of the debt." And maybe especially conservative Christians have a little bit been prone that way. I think because of the moral drift of the nation, we kind of had a sense that, well, then we're going to be punished for something. And sometimes it gets kind of wrapped up with prophetic concern about the future of the country.
My job is just to look at the economics, and during the vast majority—during that whole time period, I said, "No, these are not the preconditions of a financial crisis." And it didn't happen. We didn't get the hyperinflation. And there's one thing I want everyone to think about: how much was coming into your ears and eyes from conservative Christian sources, you know, going back 20 and 30 years of "this collapse is about to happen," and the blood moons and all the rest of it. There is a certain tendency for fear and panic, which was not grounded in the data.
But eventually, you do hit levels of debt where it becomes a very real possibility, a non—what I call non-trivial event. And I think what I've said to you over the past couple of years, I think we're in that zone now, really post—after COVID, and after we inflated our way out of COVID and spent our way out of the COVID, excuse me, shutdown. Basically, my conclusion was we've got one recession more than we can handle before we probably have something like a European crisis.
Now, the narrative caught up with that in the past, you know, week. And it is kind of strange. Why do we care about 40 trillion? We didn't care when it was 39.9 trillion, right? Something about round numbers kind of, you know, get us to pay attention to something. So if that's what it takes—it's like sometimes people, you know, they don't have their midlife crisis until their 50th birthday. At 49 they were okay, but at 50, "Oh no, I'm old!" So I think we're doing that with the debt a little bit.
Nothing changed materially in the last week except we hit a round number. Now, I'll take it because finally people are paying attention to it. But we were as facing as much risk two weeks ago as we were this week, but now there's media attention. And part of that was because interest rates were rising. And so people said, "Well, maybe that's because of the possibility of a debt crisis." I think interest rates are rising largely on what's called inflation expectations. That most of the rise in interest rates is the market saying, "I don't think we're going to solve our debt problem, and we're going to monetize it, and there's going to be inflation. So I want more interest to compensate me if I'm going to give you money, and you're going to give it back 10 years later. I want more money 10 years from now than I would have wanted before to compensate me for the fact that the dollar is going to be worth less in 10 years—or 5 years for that matter."
They call that the inflation premium. That sounds really technical. It's just real—I've used this analogy with you before. If I loan you $100 and then you're going to give me $105 back next year, but there was 5% inflation, I didn't get anything. You know, you just gave me back, you know, the value that I loaned to you for a year. So if I think there's going to be 5% inflation and I want a 5% return, then I want 10% interest. I get back $105, but I got $5 during the year, and that was the real interest, and the rest is just compensating me for lost value. The market is responding to that.
And I think that's what's going on with interest rates. Now, what's happened in response to that is people are looking at the Fed and saying, "Okay, what's the Fed going to do?" Because we have a dilemma. If we have all this debt, how are we going to get out of it? Well, that debt's inflationary, so maybe the central bank will shrink the money supply to fight the inflation. But wait, interest rates are going up because of this inflation. Oh, well, maybe the central bank will increase the money supply to fight the high interest rates. And there it is, right there it is in front of us: the dual mandate for the Fed that conflicts with one another. And so markets are going back and forth. Are they going to try to, you know, print their way out of trouble, or are they going to run the printer in reverse to get out of the inflation trouble?
And right now, I think markets are saying, "You know, the Fed's probably not going to do all that hiking to fight inflation, because the Fed's probably going to be more worried about the higher interest rates are, the tougher it's going to be for the federal government to pay its mortgage with high interest rates, and so it will probably continue to enable the spending." Which, given history, is probably the smart bet.
Rob West: Yeah. Jerry, obviously the Treasury's been busy here, the Treasury Secretary. You know, one of the actions maybe flew below the radar, something related to Japan and the carry trade. The one that was more front and center was this week with a doubling of the buyback. You know, what are they doing and what are your thoughts on it?
Jerry Bowyer: Well, they're trying to stave off the interest rate crisis using things other than the central bank in order to do that. And this is a Treasury that is really hands-on in terms of managing the economy and managing the markets. So rather than solve the fundamental problem, which is we overspend and therefore overborrow and undersave... So, I mean, if our government has borrowed $40 trillion, who'd they get that from? We don't save enough for most of it to have come from us, so we got it from Japan and China. And so that creates all these problems.
Look, you get calls every day from people, many of whom are in a financial jam. And some of them are in a financial jam because something terrible happened, somebody got cancer or whatever. But a lot of times, people are in a jam because there were just many years of making decisions which were not optimal for their financial health, and now they face tough choices. And once you're there, the tough choices are unavoidable. That's where we are. We've had decades of non-optimal decisions, and so the tough choices are: do we let interest rates rise, do we let the dollar rise too much against the yen or fall too much against the yen? And so what we're doing is we're using these like ad hoc, these interventions from the Treasury Department to stop bad things from happening that are happening because of decades of bad policy, bad fiscal policy.
What I would hope is that, well, just like, "Okay, hey, I'm having chest pains, I'm going to go to the emergency room." Okay, but what is that? "Oh, I smoked for 30 years." Okay. So it's the smoking, that's the thing, right? Yes, you have to go to the emergency room. Yeah, they're going to have to do something, maybe they'll do an angioplasty, whatever. But the long-term solution isn't the emergency room. The long-term solution is to give up the smoking or give up, you know, the overeating, etc. Well, that's where we are as a nation. We've been making these bad decisions, and Treasury Secretary Bescent is kind of doing his best within the context of those in order to deal with some of the interest rate spikes and foreign currency fluctuations that come from those bad—from a long train of bad decisions. Bipartisan bad decisions, by the way. Not just the Democrats. Just to be clear.
Rob West: Yeah, very good. Well, thanks for that, Jerry. We'll continue to talk about this, obviously, a lot in the future. Let's turn the corner here. Walker Wildmon's with us as well. We're going to pivot to corporate engagement. We dedicate some time in this segment each Friday to an update on the work of AFA, engaging with the biggest companies in the world on behalf of religious and Christian values. Walker, tell us what you've been working on.
Walker Wildmon: Yeah, we in the past have had great success on the corporate engagement front, specifically with the Apple Corporation, which we own a substantial amount of shares in. And we got them to take measures to protect children on their devices last cycle. And so right now, we're looking with eyes still on Apple as one of America's largest technology companies in the world as well. We're looking at their partnership in the past with the Southern Poverty Law Center, and to be more specific, in 2017, Tim Cook announced a $1 million donation to the Southern Poverty Law Center. And in the past, Apple has allowed donations directly to the SPLC through their iTunes Store and their App Store as well, where iPhone users have had this streamlined means of giving donations directly to the Southern Poverty Law Center. The problem is that the Southern Poverty Law Center is a very left-wing outfit that pretty much exists to demonize and slander conservatives and Christians.
And so that's the problem with Apple's past, and so what we want to do is ensure that this doesn't continue in the future, because this is a very divisive thing to be doing as a corporation that serves the broader audience and the broader general public. And so we're going to be talking with Apple, we're going to be putting forth a proposal to ensure that Apple is not giving millions of dollars and engaging in corporate partnerships with a very dangerous and now federally indicted group, the Southern Poverty Law Center.
Rob West: Wow. Sounds like a major initiative here with huge implications. Jerry, 30 seconds. Your thoughts on this? Tie a bow on it for us.
Jerry Bowyer: I mean, it was unwise in 2017. Now it is absolutely indefensible because of the FBI indictment, because of the fact that it looks like money was actually going to the Klan and the Nazis, and then the arrest of a high SPLC official for, I think, wiretapping fraud. How in the world can any responsible company still defend this?
Rob West: Yeah. Wow. Well, we'll certainly ask you all to keep us updated on that. Incredible work, gentlemen. Thanks for that report today. Walker Wildmon, Jerry Bowyer, we appreciate your time.
Walker Wildmon: Thank you, Rob.
Jerry Bowyer: God bless you.
Rob West: All right. Well, folks, that's going to do it for us today. So thankful to have you along today. Grateful to have Nick Schmitz, grateful to have Jerry and Walker, plus your questions as always. Hope you have a wonderful weekend. Don't forget, if you'd like to support Faith & Finance, this is a listener-supported ministry, we'd love for you to head to faithfi.com/give. Consider making a one-time gift or becoming a partner. Again, that website: faithfi.com/give. And then come back and join us next time. On Monday, we'll do it all over again. Big thanks to Pat, Devin, Taylor, and everybody here at Faith & Finance. We'll see you next week.
Announcer: The views and opinions expressed in this broadcast may not necessarily reflect those of the American Family Association or American Family Radio.
Environmental, Social, and Governance (ESG) ratings are often presented as neutral measures of corporate responsibility. But they can reflect a moral framework that conflicts with biblical convictions. On this Faith & Finance on AFR, Rob West and Nick Schmitz explain how ESG investing can differ from faith-based investing—and why Christians should pay attention to how their shares are voted. Then, it's on to calls.
(00:00) Rob West and Nick Schmitz discuss where ESG and faith-based investing differ
(08:35) Rob West continues his conversation with Nick Schmitz on the differences between ESG and faith-based investing
(21:18) In the News: U.S. national debt is quickly growing
(23:18) Faith & Finance Field Guide #2 addresses preparing the next generation to steward their finances
(25:17) A Biblical world view of money management
(31:44) Caller Betty: Possible tax penalties from a deceased spouse’s 401k
(34:04) Caller Richard: Past due taxes on income from rental properties
(42:24) Jerry Bowyer joins Rob West to talk U.S. national debt and interest payments
(50:48) Walker Wildmon joins Rob West to discuss AFA Action’s latest corporate engagement efforts on donations to the SPLC
Environmental, Social, and Governance (ESG) ratings are often presented as neutral measures of corporate responsibility. But they can reflect a moral framework that conflicts with biblical convictions. On this Faith & Finance on AFR, Rob West and Nick Schmitz explain how ESG investing can differ from faith-based investing—and why Christians should pay attention to how their shares are voted. Then, it's on to calls.
(00:00) Rob West and Nick Schmitz discuss where ESG and faith-based investing differ
(08:35) Rob West continues his conversation with Nick Schmitz on the differences between ESG and faith-based investing
(21:18) In the News: U.S. national debt is quickly growing
(23:18) Faith & Finance Field Guide #2 addresses preparing the next generation to steward their finances
(25:17) A Biblical world view of money management
(31:44) Caller Betty: Possible tax penalties from a deceased spouse’s 401k
(34:04) Caller Richard: Past due taxes on income from rental properties
(42:24) Jerry Bowyer joins Rob West to talk U.S. national debt and interest payments
(50:48) Walker Wildmon joins Rob West to discuss AFA Action’s latest corporate engagement efforts on donations to the SPLC
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