Thursday, July 22, 2010

The Paradox of Earmark Reform

Earlier this year House Appropriations Committee Chairman Dbavid Obey (D-WI) announced a ban on earmarks for private for-profit companies in House Appropriations bills.  Like earlier earmark reforms--public disclosure of earmark requests, public posting of earmark requests, and listing earmarks in committee reports, to name a few--the aim of Chairman Obey’s dictum was to increase public confidence in the appropriations process by responding to a demand of Washington-based “watchdog groups.” Over the past several decades these groups have mercilessly attacked the practice of congressional earmarks arguing , without much supporting evidence, that they increase federal spending, are inherently wasteful, and inevitably lead to corruption.

Ink and indignation are predictably hemorrhaging from Washington, DC over the recent revelation that private firms have discovered loopholes in Obey’s ban allowing them to gain access to earmark funds.  Reporters from The New York Times and the Seattle Times cite cases where for-profit companies formed non-profit organizations eligible for earmarked funds, and other cases where for-profit companies have partnered with non-profits or universities that assist their research, allowing the companies to skirt the ban.[1] These strategies have been pilloried by watchdogs and the media as additional examples of the “corruptness” of earmarks, and the basis of repeated demands for further earmark reform or even a complete ban on the practice.

Obey’s ban while well-intentioned was ill-advised.  The Senate Appropriations Committee did not enact a similar ban, which provided an immediate alternative strategy for private companies seeking earmarks; just approach the Senate.  Further, favoring non-profit organizations over for-profit businesses is an arbitrary policy.  The marketplace of good ideas does not observe strict adherence to the for-profit/not for-profit distinction that Obey codified in the reform.  For-profit companies are often developing important products and technologies that are worthy of public support.  One example is the Mine Resistant Ambush Protected vehicle (MRAP) that is widely used in Iraq to protect soldiers from improvised explosive devices.  With only one customer (the Pentagon) the original designers and producers of the MRAP relied on earmark funding (in part) to develop and produce the first vehicles.  With design and production capability in place, when the need for MRAP vehicles in Iraq became obvious large-scale production could quickly ramp up.  In the absence of earmarks it likely would have taken years to design, test, and produce the MRAP vehicle that has saved the lives of thousands of soldiers.

The more fundamental problem with Obey’s ban springs from what we refer to as the “paradox of reform.”  The intention of the reform was to increase public confidence in the earmarking process by responding to one of the many objections of watchdog groups; the result, inevitably, is precisely the opposite. Opponents of earmarks use the imperfect results of the reform to intensify their attacks on congressional appropriations earmarks and their reports, amplified by the media, drive down public trust in the process. This paradox was evident following the first round of earmark reforms.  Rules that required listing earmarks in committee reports provided easy access to earmark data that, when combined with data on campaign contributions from the Federal Election Commission, could form the basis of a contributions-for-earmarks conspiracy, which is not well supported by the data (but disseminated by the groups and dutifully reported by the media).[2]  In this round of reform, for-profit companies skirt an ill-conceived and impossible to enforce reform; the resulting examples of the “failure of the reform” are presented as evidence of the “corruption” that sparked demands for the reform from the group in the first place. Watchdogs, in turn, demand new stricter reforms, supported by predictable public outrage,  with the eventual aim of driving Congress out of the earmarking business altogether (and, by the way, their loud objections do not hurt their fundraising efforts).

In the final analysis the only way to satisfy earmark critics is to ban appropriations earmarks altogether.  This would irreparably upset the Constitutional order envisioned by the framers of the Constitution who granted the power of the purse to the Congress to make government spending more responsive to public demands, and to balance congressional power against presidential power.  In the absence of appropriations earmarks the only recourse available for federal funding of local and national priorities are appeals by citizens to a faceless, non-transparent, and electorally unaccountable federal bureaucracy incapable of appreciating the priorities and concerns of people in communities across the country (except, perhaps, those cities, towns, and organizations with the resources to hire expert grant writers to help them jump through the hoops of the federal grants and contracts process).  Concentrating the power of the purse in the executive branch would further inflate the power of the executive branch and undermine the power of Congress, the people‘s branch.

Most of the cases of earmark abuse that were uncovered (and there are fewer than most of the public would believe) came to light through the legislative process itself; the legislative process has many of the features of a self-regulating system.  Reforms that improve transparency are good; most in Congress and most in the lobbying community supports reforms that improve transparency.  Reforms without a basis in policy, or that are meant to appease watchdog groups are ill-advised at best and, at worst, could erode the unique balance between the public and our political institutions that our founders sought to embody in the Constitution.

[1] Eric Lipton and Ron Nixon, “Companies find ways to bypass ban on earmarks” The New York Times, accessed July 4, 2010; David Heath “Congressman Dicks finds way around earmarks rule”
The Seattle Times accessed July 6, 2010.

[2] Scott Frisch and Sean Kelly
“Earmarks and campaign contributions: less than meets the eye.” accessed July 6, 2010.

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