Keeping An Eye On Earmarks

Cato's Mark Calabria summarizes new research on earmarks and private investment:

In an interesting new working paper, a trio of economists…measure the impact of increased earmarks on the local economy receiving those earmarks, and compare the impact to areas not receiving the increased earmarks, which allows t

hem to control for the overall macroeconomic environment.  Their finding: even in a setting where government spending is "free" to the recipients (but not free to the rest of us), such spending reduces private investment.

More specifically, the authors examine what happens to a state when one of its senators becomes a chair of a powerful committee.  First, the obvious, upon taking a power chairmanship, the value of earmarks increase almost 50%.  This results in roughly a $200 million annual increase to the state.  But the authors find this is not simply a transfer from the rest of the country to the state, it also depresses private capital investment and R&D spending in the state.  On average, once a state has a senator obtain a powerful chairmanship, state level private investment in capital expenditures decreases $39 million annually and state private R&D decreases $34 million annually. 

I've long viewed earmarks as a symbolic issue as much as anything else: Although they account for a lot of money in simple dollar terms—a little more than $15 billion in 2009—they make up only a tiny fraction of the federal budget. Yet even with broad bipartisan support for trimming earmarks, it's proven exceedingly difficult to get Cong

ress to significantly reduce total earmark spending. Given the political support and the comparatively small amount of money involved, earmarks are the sort of thing that Congress ought to be able to cut relatively easily. Yet it's still a struggle.

That's probably at least partially a result of the fact that they're so hard to track, and transparency-focused reforms haven't proven as effective as hoped. Jerry Brito, the director of the Mercatus Center's Technology Policy program, explains:

Congress recently changed its rules to require members to disclose their earmark requests online. Unfortunately, they don't disclose these in any consistent way. You have to hunt for where each member has decided to place their disclosure, so there's no way to systematically analyze earmark data. The White House has promised to give us a unified database of earmarks, but so far hasn't acted.

Brito, along with Gunnar Hellekson and Jim Harper (who also runs WatchingtonWatch.com), have started a new site, EarmarkData.org, which is intended to encourage government officials to make earmark data easier to track by releasing it in a single, standardized format. If Congress won't get rid of earmarks, the least it could do is make them more transparent.

Comments

[Hazel Meade]

Corniest alt test ever.

[Jeffersonian]

I'm not so sure earmarks are as pernicious as all that, honestly, though I'm willing to be persuaded. Why is it worse for Congress to specifically appropriate, say, $200 million to repave I-24 between Nashville and Chattanooga than it is to simply allocate the same funds to a general expenditure bucket for repaving? Assuming, of course, that I-24 does need repaving along that stretch, that is? Isn't this what legislators are supposed to do, spend money on specific, legislated items?

[Groovus Maximus]

Because of the potential (and actualized) cases of payoffs to those politically connected. The power of the purse can sway a state to support unpopular federal legislation or to perhaps bribe encourage local and atate electorates to support a particular party.

Also, oversight of these projects is pretty dismal, with all sorts of money being siphoned off in all sorts of creative accounting ways.

Now would be an especially good time for such schemes to be implemented as states finde themselves more and more in the toilet, but with the passage of the Teh Stimulus, all pretenses of impartiality are moot.

[cynical]

For one thing, in practice it isn't "Congress" that decides that I-24 deserves repaving -- a specific Congressperson does, and in return for his back being scratched he scratches every other Congressperson's back.

Congress is intended to pursue the general interest of the U.S., not the specific interests of states or individuals.

[Warren]

The problem isn't earmarks. The problem is the money. They shouldn't be spending it. But if they're gonna spend it I'm ever so lightly less pissed about knowing what it's being spent on, rather than just handing it over to some bureaucratic agency.

[Groovus Maximus]

That's like saying ,"I know the identity of my rapist," as opposed to being raped by an unidentifiable attacker in a gorilla mask.

I understand transparency is a good thing, but not when the behavior is of questionable constitutionality and ethics in the first place.

I agree wholeheartedly that the money should not be spent in the first place.

Earmarks = Bribing the electorate.

[R C Dean]

The problem is that earmarks are a way of steering other people's money to your district, and often directly to your supporters, without any regard for the general welfare.

As such, they are a violation of the General Welfare Clause of the Constitution, if anyone still cares about that document.

[P Brooks]

Earmarks, in and of themselves, may be an "insignificant" portion of the overall budget, but they serve to grease the skids for some really major outlays (TARP, anyone?).

[adam]

All this concern over earmarks is based on a fundamental misunderstanding of the federal budget process. The comments here reflect that misunderstanding too ("Why is it worse for Congress to specifically appropriate, say, $200 million to repave I-24 between Nashville and Chattanooga than it is to simply allocate the same funds to a general expenditure bucket for repaving").

There is no "general expediture bucket." Here's how it works- the President submits a budget in February for the upcoming fiscal year. That budget is broken down line by line with proposed programs, projects and activities (repaving I-24 for example). All those projects get in the budget through a multi-year budgeting process in the agencies that are responsible for that work. Agencies submit their proposed budgets to OMB, which then culls through them. Depending on the program, the specific projects get reviewed in a separate "authorization" process (different from the appropriations process that leads to the budget).

When Congress gets the PResident's budget, the budget committees use it to adopt a joint resolution that sets the overall amount of federal spending for that fiscal year and allocates amounts to each committee. Then the committees take the President's budget and start "mark-up"- that's where what are usually called earmarks come in. Earmarks are when a congressman proposes to add in something that wasn't in the president's budget. Usually, because of the budget allocations, that means something else within that committee's jurisdiction has to get cut. When Congress enacts the appropriations law, it contains detailed line by line allocations of all spending, whether its an earmark or in the president's budget- check out a conference report for an appropriations act. moving money between items is a reprogramming or transfer and usually require prior notice to the committee.

The criticisms of earmarks seem to assume that the President's budget is submitted with no influence. I can assure that there is plenty of influence on that process.