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Posts Tagged ‘Earmarks’

This is depressing.

Republicans botched the repeal of Obamacare. They’ve already sold out (twice!) on the spending caps in the Budget Control Act, and they’re about to do it again.

And now they want to bring back earmarks.

In this interview with Neil Cavuto, I explain why this is a very troubling development.

One thing I didn’t mention in the interview is that earmarks are inherently corrupt. Indeed, there’s a near-universal four-step process that – in a just world – would result in politicians getting arrested (see 18 U.S. Code § 203) for bribery, graft, and conflicts of interest.

  1. An interest group decides it wants other people’s money and decides to use government as a middleman.
  2. The interest group hires lobbyists, most of whom are former members of Congress or former staff members.
  3. The interest group and the lobbyists direct campaign contributions to one or more politicians.
  4. In exchange for those contributions, one or more earmarks are inserted in a spending bill.

That’s a great deal for Washington insiders, but not so good for taxpayers or honest government.

And if you don’t believe me, read about the oleaginous behavior of Senator Tom Harkin and Representative Jim Moran.

Now let’s consider an argument in favor of earmarks. Writing for Bloomberg, Professor Tyler Cowen of George Mason University argues that the system needs a bit of grease to work better.

…think of earmarks as local benefits inserted into bills to buy more votes in Congress. …Recalcitrant representatives can be swayed by the promise of a perk for their district. That eases gridlock…whether we like it or not, there is something inherently transactional about being governed.

As I stated in the interview, I don’t think this assertion is persuasive. Most legislation is bad for liberty, so I agree with America’s Founders that gridlock is good.

That being said, Tyler makes a couple of compelling arguments. First, he points out that we may need some pork to get good legislation through the process.

Advocates of smaller government should keep in mind that reforming spending and regulation requires some activism from Congress. Gridlock today is not the friend of fiscal responsibility, coherent policy, or a free, well-functioning capitalist economy.

I agree with the first sentence and said the same thing in my talk with Neil. We will need congressional action to reform entitlements and save the country. And if that means bribing a few members to get votes, so be it.

However, I think his second sentence is too optimistic. Good reform is not very likely with Trump in the White House. It’s a judgement call, to be sure, but I believe gridlock will be a good thing for the next few years.

Second, Tyler acknowledges that politicians try to buy votes, but he suggests that earmarks are cheap compared to potential alternatives (such as new entitlements, presumably).

…virtually every member of Congress looks to support government spending that will boost his or her re-election prospects. It is often the case that directly targeted local spending — which may take the form of earmarks — buys support for a relatively low dollar price per vote. If earmarks are removed, representatives are still going to pursue votes, but the total amount of electorally motivated, wasteful government spending may be higher.

This is a potentially persuasive point, but I’ll be skeptical until I see some supporting evidence.

In a gridlock environment, I suspect enacting non-earmark spending is not that easy (though I admit an Obamacare-level budget buster every 10 years would completely wipe out in just one year the money that might be saved over several decades with an earmark ban).

In addition to what Tyler wrote, another pro-earmark argument is that there will always be a person who decides how money is spent. And I’ve had members of Congress tell me that they’d rather make those decisions that have a bunch of left-wing bureaucrats allocate money.

That’s a perfectly reasonable argument, but it doesn’t address my fundamental concern that the existence of earmarks will seduce members into supporting higher overall levels of spending.

Which brings me to my final point. I’m willing to cut a deal.

I’m willing to let politicians allocate 100 percent of spending with earmarks if they’ll agree to a comprehensive spending cap that complies with the Golden Rule and slowly but surely shrinks the overall burden of federal spending.

If the crowd in Washington is serious about the argument that earmarks are needed to grease the skids for desirable legislation, it’s time for them to put their votes where their mouths are.

Given the track records of most of the politicians who support earmarks, I’m not holding my breath.

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I wrote a few days ago that advocates of smaller government have won a very significant victory over the past five years, as measured by the fact that there’s been zero growth in overall federal spending.

And because the private economy has grown while the federal budget has been flat, this means that the burden of government spending – measured as a share of GDP – has declined.

This doesn’t mean our fiscal problems are solved. Indeed, the long-run numbers are still horrible and we desperately need genuine entitlement reform to avoid becoming a failed European-style welfare state.

But a long journey begins with a first step and the spending freeze over the past five years is worth celebrating.

And let’s also celebrate the fact that members of Congress no longer have carte blanche, generally using “appropriations” legislation, to specifically allocate spending for campaign contributors and other favored constituencies. Such spending allocations, known as “earmarks,” have been banned ever since the GOP took the House in 2010.

That makes me happy. As I wrote after that election, earmarks facilitate bad policy.

…earmarks are the proverbial apple in the congressional Garden of Eden. Members who otherwise might want to defend taxpayers are lured into becoming part of the problem. …earmarks [are] a “gateway drug” that “seduces members into treating the federal budget as a good thing that can be milked for home-state/district projects.” …they finance a racket featuring big payoffs to special interests, who give big fees to lobbyists (often former staffers and Members), who give big contributions to  politicians. Everyone wins…except taxpayers.

You’ll notice, though, that I didn’t really offer any supporting evidence four years ago.

So it’s time to rectify that oversight. The easy evidence to cite is that the federal budget hasn’t grown over the past five years, but there are several reasons for that spending freeze.

While I think the earmark ban deserves some of the credit, let me share a couple of anecdotes that also show why it was good to end this odious version of pork-barrel spending.

Here are some excerpts from a Northern Virginia news report about the looming retirement of a member of the Appropriations Committee.

U.S. Rep. Jim Moran departs Congress unrepentant on the need for those much-maligned targeted budget items known as earmarks. Moran – who once famously, if jokingly, promised to “earmark the shit out of” the federal budget if Democrats regained control in Congress – told the annual meeting of the Inter-Service Club Council of Arlington that the spending measures that used to be inserted at the behest of individual members of Congress should be brought back.

You may be wondering why this is newsworthy. After all, it’s hardly a shock that a big spender likes earmarks.

But it’s this next excerpt that makes the key point.

Why is he leaving? At the luncheon, Moran expanded on earlier frustrations. “Congress as an institution is dysfunctional,” he said. “Life’s too short to be part of an institution that only produces frustration.” Things were different when Moran first was elected to Congress in the early 1990s.

In other words, Cong. Moran got frustrated and decided to quit (at least in part) because he no longer had the ability to play favors and raise campaign cash by doling out earmarks.

Gee, it’s almost enough to make you cry with sympathy. I’m sure taxpayers are very sad that Congressman Moran won’t be prowling the halls of Congress any longer.

And it’s a double tragedy because he won’t have as much value as a lobbyist since he can’t finagle earmarks from his former colleagues. Oh, the humanity!

And keep your hankie ready, because our next story also is a tear-jerker. It’s from before the election and it’s about outgoing Senator Tom Harkin of Iowa and his refusal to share his stash of campaign cash with fellow Democrats.

Despite direct appeals from Senate Majority Leader Harry Reid of Nevada and other top Democrats, Harkin has refused to transfer money from his $2.4 million campaign account to the Democratic Senatorial Campaign Committee, according to sources and campaign finance records.

So why did Harkin decide to hoard his campaign cash, even though he was retiring from politics?

Because the poor fellow wasn’t allowed to subsidize his own ego with a taxpayer-funded earmark and had to use money from his contributors instead.

…the retiring Iowa senator has informed party leaders that he plans to use the campaign funds for a charitable contribution to an entity that bears his name: The Harkin Institute for Public Policy and Citizen Engagement at Drake University in Des Moines, according to sources close to discussions with the senator. …the ban on congressional earmarks…has prevented him — a senior member of the Senate Appropriations Committee — from steering money to Drake University, said Democratic sources. Finding a home for his official papers has been a priority for Harkin, who has served in the Senate for three decades after 10 years in the House.

Gosh, no wonder Harry Reid wants to bring back earmarks. If politicians can steal from taxpayers, they’ll have more money available to win elections!

Which is another reason why the earmark ban should be preserved.

P.S. Want another argument against earmarks? Well, how about the fact that reporters at the Washington Post think President Obama would have been able to push through more gun control if he could have used earmarks as bribes.

P.P.S. I want to switch topics and close by giving readers a riddle.

What would happen if you scrambled the genes of George W. Bush and David Cameron (the Prime Minister of the United Kingdom) and produced two new people, sort of like Danny DeVito and Arnold Schwarzenegger in Twins?

The answer is that you’d get Calvin Coolidge and Richard Nixon.

Allow me to elaborate. I’ve previously pointed out that George W. Bush was a reckless big spender, but at least he was somewhat consistent in advocating lower taxes.

David Cameron is the opposite. I’ve groused about his disturbing affinity for tax hikes, but he’s been much better on spending than I thought he would be.

And he’s about to get even better according to Allister Heath of the U.K.-based Telegraph.

…this government is a free marketeer’s dream. It believes in cutting spending as a share of GDP much more severely than any previous government had dreamed of. On that metric, it is more Thatcherite than Thatcher, more Reaganite than Reagan. Public spending is expected to fall to 35.2pc of GDP by 2019-20, the lowest level in at least 80 years. …When looking just at the Government’s consumption of goods and services, the state’s relative size will fall to levels last seen in 1938, according to a historical Bank of England dataset. …the aspiration is revolutionary.

Considering that government spending in the United Kingdom was consuming more than 48 percent of GDP as recently as 2009, it truly would be a dream if the burden of the public sector dropped to “only” 35 percent of economic output.

That surely would earn the U.K. a spot on my list of nations that have complied with Mitchell’s Golden Rule for multi-year periods.

Returning to my riddle, Danny DeVito and Arnold Schwarzenegger supposedly had the same genetic stock in Twins, but one of them somehow got the bad genes and the other one got the good genes.

So I’m speculating that the genes of Bush and Cameron, scrambled together, would produce one good politician who believes in lower spending and lower tax (i.e., Coolidge) and one bad politician who supports higher taxes and bigger government (i.e., Nixon).

P.P.P.S. Here are my most recent numbers showing which modern Presidents were the most frugal and most profligate.

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I’ve written before about the sleazy and corrupting impact of earmarks.

And I’ve debunked the lobbyist arguments in favor of earmarks.

Heck, I’ve even done NPR interviews about this unseemly Washington practice.

So I like to think I’m reasonably knowledgeable about the system. But even I’m shocked to learn how a former Massachusetts Congressman has taken graft to the next level.

And I’m slightly happy that he’s been caught with his hand in the cookie jar and feels compelled to give up his share of the loot.

Here are some excerpts from a report in the New York Times.

A former congressman who became a lobbyist has abandoned his plans to collect $90,000 from working on an energy project that he helped finance through Congress. …An apologetic Mr. Delahunt told town officials he wanted to eliminate the “black mark” created by questions of a possible financial conflict, Patrick Cannon, chairman of the Hull Light Board, said on Saturday. …Mr. Delahunt, a Democrat who retired from Congress last year, had faced criticism for the last week from legal and ethics specialists over the unusual lobbying arrangement he had struck with the town, which is seeking federal help to build an offshore wind energy plant at a cost of more than $60 million. While in Congress, Mr. Delahunt earmarked $1.7 million for the same project, and he was to be paid 80 percent of his monthly consulting fees out of that same pot of money. …Mr. Delahunt and executives at his firm did not respond to e-mails Saturday seeking further comment on the decision.

Wow. For all intents and purposes, Congressman Delahunt directly pilfered the Treasury for personal gain.

This is amazing. But what’s remarkable isn’t that he stole money. After all, the federal budget is largely a big scam enabling various groups of people to obtain unearned loot.

The noteworthy thing about this story is that he didn’t launder the money.

In most cases, politicians do earmarks as part of a corrupt quid pro quo. They direct money to a certain group of beneficiaries and, in exchange, get campaign contributions from both the lobbyists who facilitated the deal and the interest groups that receive the taxpayer funds.

But Delahunt cut out one of the middlemen. He created an earmark, and then became one of the lobbyists pocketing the cash.

So it is poetic justice that this unsavory deal has become public knowledge and the former Congressman has been shamed into giving up his fees.

But don’t be deluded into thinking this is a victory.

The earmark is still there. Money is still being wasted. Delahunt is still a lobbyist. Government is still too big. And corruption is still rampant.

And if you think the former Congressman is genuinely apologetic….well, please get in touch with me. I’m selling a bridge in Brooklyn and need a gullible buyer – i.e., the kind of person who doesn’t think there’s anything wrong with this unseemly example of sleaze.

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Since I’m involuntarily forced to finance National Public Radio, I guess I should be happy that free-market views occasionally are allowed on air. Click here to listen to a segment where I talk about earmarks, “phonemarks,” and special interest corruption in Washington.

The risky part of a pre-recorded interview is that you never know what the journalist will use. If the person interviewing you is biased, they can use a quote out of context to make you appear stupid, or use an incomplete quote to distort the meaning of your words. That did not happen in this case. The NPR interviewer, at least to my ear, was quite fair.

I wish the segment had been longer, however, so I could have explained why even “honest” earmarks are wrong. Let’s say that Congressman Smith or Senator Jones inserts an earmark, or makes a phonemark, to get funding for a sewer system. It’s quite possible that such a request is completely untainted by corruption (other than the run-of-the-mill practice of trying to buy votes with other people’s money).

But that doesn’t make it right. One of the reasons why federalism is such a good idea is that money is much more likely to be spent wisely is if it is raised at the state and local level and people at those levels decide how it should be allocated.

This doesn’t mean there is no corruption, insider deal-making, or special-interest shenanigans. That’s an inevitable part of government. But federalism at least makes it easier for people to monitor how their money is being spent – and to escape if they think their state or local government is going overboard with bad behavior.

In other words, centralization of government is a bad idea. This is why big government in Washington is worse than big government at the state and local level. And it’s why big government from the European Union in Brussels is worse than big government in Rome, Berlin, or Stockholm.

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There’s a lot of attention being paid to yesterday’s landslide vote in the House to prevent a big tax increase next year. If you’re a glass-half-full optimist, you will be celebrating the good news for taxpayers. If you’re a glass-half empty pessimist, you will be angry because the bill also contains provisions to increase the burden of government spending as well as some utterly corrupt tax loopholes added to the legislation so politicians could get campaign cash from special interest groups.

If you want some unambiguously good news, however, ignore the tax deal and celebrate the fact that Senator Harry Reid had to give up his attempt to enact a pork-filled, $1 trillion-plus spending bill. This “omnibus appropriation” not only had an enormous price tag, it also contained about 6,500 earmarks. As I explained in the New York Post yesterday, earmarks are “…special provisions inserted on behalf of lobbyists to benefit special interests. The lobbyists get big fees, the interest groups get handouts and the politicians get rewarded with contributions from both. It’s a win-win-win for everyone — except the taxpayers who finance this carousel of corruption.”

This sleazy process traditionally has enjoyed bipartisan support, and many Republican Senators initially were planning to support the legislation notwithstanding the voter revolt last month. But the insiders in Washington underestimated voter anger at bloated and wasteful government. Thanks to talk radio, the Internet (including sites like this one), and a handful of honest lawmakers, Reid’s corrupt legislation suddenly became toxic.

The resulting protests convinced GOPers, even the big spenders from the Appropriations Committee, that they could no longer play the old game of swapping earmarks for campaign cash. This is a remarkable development and a huge victory for the Tea Party movement. Here’s part of the Washington Post report on this cheerful development.

Senate Democrats on Thursday abandoned their efforts to approve a comprehensive funding bill for the federal government after Republicans rebelled against its $1.2 trillion cost and the inclusion of nearly 7,000 line-item projects for individual lawmakers. …Instead, a slimmed-down resolution that would fund the government mostly at current levels will come before the Senate, and Reid and Minority Leader Mitch McConnell (R-Ky.) said it will pass by Saturday. …The majority leader’s surrender on the spending bill marked a final rebuke for this Congress to the old-school system of funding the government, in which the barons of the Appropriations Committee decided which states would receive tens of millions of dollars each year. …Almost every Senate Republican had some favor in the bill, but as voter angst about runaway deficits grew before the midterm elections, Republicans turned against the earmark practice.

This is a very positive development heading into next year, but it is not a permanent victory. Some Republicans are true believers in the cause of limited government, but there are still plenty of corrupt big spenders as well as some Bush-style “compassionate conservatives” who think buying votes with other people’s money somehow makes one a caring person.

In other words, fiscal conservatives, libertarians, and Tea Partiers have won an important battle, but this is just one skirmish in a long war. If we want to save America from becoming another Greece, we better make sure that we redouble our efforts next year. Eternal vigilance is the price of liberty.

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I haven’t commented much on earmarks, but an oped in today’s Washington Post was has goaded me into action. A former Reagan Administration appointee (the Gipper must be spinning in his grave), who now makes a living by selling our money to the highest bidder, made several ridiculous assertions, including:

…earmarks are largely irrelevant to balancing the budget. The $16.5 billion Congress spent on earmarks in fiscal year 2009 sounds like a lot, but leaves a minuscule footprint – about 1 percent of 2009’s $1.4 trillion deficit. Those seriously concerned about deficits should look elsewhere for meaningful spending reductions. …On Capitol Hill, party leaders must appeal to lawmakers’ interests as well as their principles to get the votes they need. The leaders must be able to offer incentives – such as earmarks – to win votes on difficult issues. Earmarks are not the only possible incentives, nor do they need to be the most compelling ones. But they are a tool for taking care of members who might otherwise stray.

The author is right that earmarks technically are not a big share of the budget. But he conveniently forgets to address the real issue, which is the degree to which earmarks are the proverbial apple in the congressional Garden of Eden. Members who otherwise might want to defend taxpayers are lured into becoming part of the problem. This is how I described the process in a recent PolitiFact article.

Daniel Mitchell, a senior fellow with the libertarian Cato Institute, …adds that the existence of earmarks increases the upward pressure on federal spending indirectly, since lawmakers “know they need to support the relevant powers on the spending committees in order to have their earmarks approved.” Mitchell calls earmarks a “gateway drug” that “seduces members into treating the federal budget as a good thing that can be milked for home-state/district projects.”

Since the author of the Washington Post column is trying, at least in part, to appeal to advocates of smaller government, I’m also puzzled that he says earmarks are good because they help grease the wheels so that more legislation can be passed. Does he really think reminding us about the “Cornhusker Kickback” and “Louisiana Purchase” will make us more sympathetic to his argument? Yes, it’s theoretically possible that congressional leaders will use earmarks to help pass legislation shrinking the burden of government. It’s also possible that I’ll play centerfield next year for the Yankees. But I’m not holding my breath for either of these things to happen.

Last but not least, earmarks are utterly corrupt. The fact that they are legal does not change the fact that they finance a racket featuring big payoffs to special interests, who give big fees to lobbyists (often former staffers and Members), who give big contributions to  politicians. Everyone wins…except taxpayers.

This is one of the many reasons why I did this video a couple of years ago with the simple message that big government means big corruption.

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The “appearance of impropriety” is often considered the Washington standard for corruption and misbehavior. With that in mind, alarm bells began ringing in my head when I read this Washington Times report about Jacob Lew, Obama’s nominee to head the Office of Management and Budget. Why did Citigroup decide to hire a career DC political operator for $1.1 million? As a former political aide, lobbyist, lawyer, and political appointee, what particular talents did he have to justify that salary to manage an investment division? Did the presence of Lew (as well as other Washington insiders such as Robert Rubin) help Citigroup get a big bucket of money from taxpayers as part of the TARP bailout? Did Lew’s big $900K in 2009 have anything to do with the money the bank got from taxpayers? Is it a bit suspicious that he received his big windfall bonus four days after filing a financial disclosure? Read this blurb from the Washington Times and see if you can draw any conclusion other than this was a typical example of the sleazy relationship of big government and big business.

President Obama’s choice to be the government’s chief budget officer received a bonus of more than $900,000 from Citigroup Inc. last year — after the Wall Street firm for which he worked received a massive taxpayer bailout. The money was paid to Jacob Lew in January 2009, about two weeks before he joined the State Department as deputy secretary of state, according to a newly filed ethics form. The payout came on top of the already hefty $1.1 million Citigroup compensation package for 2008 that he reported last year. Administration officials and members of Congress last year expressed outrage that executives at other bailed-out firms, such as American International Group Inc., awarded bonuses to top executives. State Department officials at the time steadfastly refused to say if Mr. Lew received a post-bailout bonus from Citigroup in response to inquiries from The Washington Times. But Mr. Lew’s latest financial disclosure report, provided by the State Department on Wednesday, makes clear that he did receive a significant windfall. …The records show that Mr. Lew received the $944,578 payment four days after he filed his 2008 ethics disclosure.

Lest anyone think I’m being partisan, let’s now look at another story featuring Senator Richard Shelby. The Alabama Republican and his former aides have a nice incestuous relationship that means more campaign cash for him, lucrative fees for them, and lots of our tax dollars being diverted to moochers such as the state’s university system. Here are some of the sordid details.

Since 2008, Alabama Sen. Richard Shelby has steered more than $250 million in earmarks to beneficiaries whose lobbyists used to work in his Senate office — including millions for Alabama universities represented by a former top staffer. In a mix of revolving-door and campaign finance politics, the same organizations that have enjoyed Shelby’s earmarks have seen their lobbyists and employees contribute nearly $1 million to Shelby’s campaign and political action committee since 1999, according to federal records. …Shelby’s earmarking doesn’t appear to run afoul of Senate rules or federal ethics laws. But critics said his tactics are part of a Washington culture in which lawmakers direct money back home to narrow interests, which, in turn, hire well-connected lobbyists — often former congressional aides — who enjoy special access on Capitol Hill.

Some people think the answer to these stories is more ethics laws, corruption laws, and campaign-finance laws, but that’s like putting a band-aid on a compound fracture. Besides, it is quite likely that no laws were broken, either by Lew, Citigroup, Shelby, or his former aides. This is just the way Washington works, and the beneficiaries are the insiders who know how to milk the system. The only way to actually reduce both legal and illegal corruption in Washington is to shrink the size of government. The sleaze will not go away until politicians have less ability to steer our money to special interests – whether they are Wall Street Banks or Alabama universities. This video elaborates.

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