The Politics of Stimulus Spending
USA Today investigates how members of Congress are “working behind the scenes to try to influence how the [stimulus] money is spent.”
Congress and President Obama proudly noted that there were no earmarks in the $787 stimulus bill. But…
Ten of 27 departments and agencies receiving stimulus money have released records of contacts by lawmakers under Freedom of Information Act requests USA TODAY filed in April. Those records detailed 53 letters, phone calls and e-mails recommending projects from 60 members from February through the end of May. Thirteen of those lawmakers voted against the stimulus package.
Critics of the stimulus bill pointed out that government money is always politically directed. It’s little consolation to be proven right.
The Stimulating Story of Dr. Robert Felner
In 2003, after a stint heading up the school of education at the University of Rhode Island, Dr. Robert Felner took the same job at the University of Louisville. Two years later, he secured an earmarked federal government grant for $694,000 from the Dept. of Education, ostensibly for a vast study of Kentucky public school performance. According to federal investigators, the money ended up in Dr. Felner’s pockets instead. In fact, investigators allege that Felner and a partner in crime managed to defraud taxpayers of $2.3 million by promising to deliver educational assessment services that never materialized.
The checks and balances you might expect to have stopped this from happening were seldom checked and never balanced. And that’s what’s so stimulating about this story: Felner allegedly duped everyone involved for nearly 3 years — at a time when the $100 billion federal education stimulus package wasn’t yet a twinkle in president Obama’s eye.
Given that officials couldn’t stay on top of millions of dollars in taxpayers’ money under normal circumstances, it’s unsettling to think what is going on right now as the system is suddenly flooded with billions of new dollars.
Amazing Coincidences
The coincidences that occur in Washington, D.C. are truly extraordinary. According to the Washington Post:
The headquarters of Murtech, in a low-slung, bland building in a Glen Burnie business park, has its blinds drawn tight and few signs of life. On several days of visits, a handful of cars sit in the parking lot, and no trucks arrive at the 10 loading bays at the back of the building.
Yet last year, Murtech received $4 million in Pentagon work, all of it without competition, for a variety of warehousing and engineering services. With its long corridor of sparsely occupied offices and an unmanned reception area, Murtech’s most striking feature is its owner — Robert C. Murtha Jr., 49. He is the nephew of Rep. John P. Murtha, the Pennsylvania Democrat who has significant sway over the Defense Department’s spending as chairman of the House Appropriations defense subcommittee.
Robert Murtha said he is not at liberty to discuss in detail what his company does, but for four years it has subsisted on defense contracts, according to records and interviews. He said Murtech’s 17 employees “provide necessary logistical support” to Pentagon testing programs that focus on detecting chemical, biological, radiological and nuclear threats, “and that’s about as far as I feel comfortable going.” Giving more details could provide important clues to terrorist plotters, he said.
Murtha said he does not advertise being the nephew of John Murtha and considers it “unfortunate” that some will unfairly assume Murtech received its federal contracts because of his uncle’s influence at the Pentagon.
“If we’re not doing our job well, we wouldn’t be doing our job,” he said. “I’m successful at the work I do because of the skill sets I have. . . . You don’t know how good someone is unless you work with them.”
A spokesman at Murtha’s office did not return calls seeking comment. The lawmaker, a former Marine, has said in the past that he is proud of his family’s service to the military and the government.
Over the years, John Murtha has proudly claimed credit for using his Appropriations Committee seat to steer hundreds of millions in Pentagon work to companies in his district, many of them fledgling enterprises run by campaign contributors. His influence also may be seen in the military improvements at the Johnstown airport that bears his name. The little-used commuter airport doubles as a wartime preparedness facility for the Pentagon after $30 million in improvements.
Murtha’s power has had beneficial effects within his family. His brother, Robert C. “Kit” Murtha, built a longtime lobbying practice around clients seeking defense funds through the Appropriations Committee and became one of the top members of KSA, a lobbying firm whose contractor clients often received multimillion-dollar earmarks directed through the committee chairman.
Of course there is no relationship between Rep. John Murtha’s position and the taxpayer money collected by his relatives. Still, it is amazing how things like this just seem to happen when Capitol Hill gets involved.
The Politics of Budget-Cutting
In Washington, the symbolic almost always trumps the substantive. Thus, legislators complain, for good reason, about pork and earmarks, which ran about $35 billion at their maximum, and ignore entitlements, which entail some $100 trillion in unfunded liabilities.
So it is with President Obama. He continues the endless bailouts, which cumulatively now run around $13 trillion. He proposed a $3.6 trillion budget and will leave us with a $1.4 trillion deficit next year–and nearly $5 trillion in additional debt on top of the massive deficits already projected over the coming decade. But he asked his Cabinet officers to chop $100 million in administrative expenses.
And he says he doesn’t need a new helicopter. Fiscal responsibility in action.
Alas, the helicopter, while costing billions, isn’t an easy budget target.
Reports the New York Times:
At a Washington conference on fiscal responsibility in February, President Obama tried to set the tone by saying he did not need the new costly presidential helicopters that had been ordered by the Bush administration.
“The helicopter I have now seems perfectly adequate to me,” he said to laughter. On a more serious note, he added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”
But the president is learning that in the world of defense contracting, frugality can be expensive. Some lawmakers and military experts warn that his effort to avoid wasting billions of dollars could end up doing just that.
The administration’s plan to halt the $13 billion helicopter program, announced this month, will leave the government with little to show for the $3.2 billion it has spent since the Bush administration set out to create a futuristic craft that could fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast.
Critics say the Pentagon would also spend at least $200 million in termination fees and perhaps hundreds of millions to extend the life of today’s aging fleet. As a result, several influential lawmakers and defense analysts are now calling for a compromise that would salvage a simpler version of the helicopter that is already being tested.
They say it could be a more palatable alternative in tough economic times than seeking new bids for a more advanced craft, which has proved difficult to develop.
No wonder Washington is known as a place where everything about government is permanent. Once you start spending money on a program, it becomes extremely hard to stop. Part of that is the political dynamic of interest groups, the problem so well dissected by the Public Choice economists. And part of it is legal and procedural. Contracts are let, cancellation fees are due. It’s bad to waste money on a gold-plated helicopter. It seems even worse to waste money developing a gold-plated helicopter, and then getting nothing at all by canceling it.
There is, however, an amazingly simple solution, of which Congress and the president apparently are not aware.
Don’t spend the money in the first place. Eschew new programs. Say no to special interests. Let taxpayers keep more of their own money.
This approach would seem to make sense at any time. But especially today, with the federal government facing a deficit approaching $2 trillion in 2009.
Didn’t Nancy Reagan lecture us to “just say no”? We should invite her back for a return tour of Washington, only she should talk about federal spending this time.
Members with Undisclosed Earmarks Will Still Get Their Goodies
The Hill reports that Members of Congress who failed to disclose their earmark requests as required by new rules in the House will still get their goodies.
Members who failed to disclose their earmarks as required by the April 4 deadline should have them rejected out of hand. But Congress makes the rules, and Congress can break the rules.
WashingtonWatch.com compiled a state-by-state list of links to earmark requests recently. Because Members of Congress published their requests in different formats, information about all the earmarks that have been requested is still rather obscure.
The Beginnings of Earmark Transparency
Under reforms announced in March, House members have to publicly declare the earmarks they’re requesting from the Appropriations Committee. Most of the requests have now been published and WashingtonWatch.com has assembled a state-by-state catalogue of links to Members’ earmark requests.
Getting earmark requests published is progress. Getting them published in uniform, machine-readable formats would allow the public to do really thorough oversight of all the projects that Members of Congress think federal taxpayer dollars should go to.
In December, we had a policy forum called “Just Give Us the Data!” where we explored some of the current issues in government transparency.
Week in Review: A School Choice Victory, Earmark Reform, and Drug Violence in Mexico
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Obama Dips a Toe in the Educational Choice Pool
After Congress voted to let the Washington D.C. voucher program expire, stripping 1,700 low-income children of the opportunity to attend private schools, President Obama said he will keep the program afloat in subsequent legislation.
“It wouldn’t make sense to disrupt the education of those that are in that system,” said Robert Gibbs, the White House press secretary. “And I think we’ll work with Congress to ensure that a disruption like that doesn’t take place.”
Andrew J. Coulson, director of Cato’s Center for Educational Freedom, commented on Obama’s decision to continue to extend school choice benefits to underprivileged children in the nation’s capital:
This is a crucial milestone. There is finally a major national Democratic leader who is beginning to catch up to his state-level peers. Democrats all around the country have been supporting and signing small education tax credit programs because they realize that these programs are win-win: good for their constituents and good for their long-term political futures.
In an op-ed that ran the day Gibbs made the announcement, Coulson explained why those who oppose school choice will find themselves on the wrong side of history.
In 2006, Susan Aud and Leon Michos published a report on the fiscal impact of the D.C. voucher program, which documented the success of the District’s school choice pilot, the first federally funded voucher program in the United States.
Obama Signs Earmark-Heavy $410 Billion Omnibus Bill
After signing a bill that had nearly $8 billion in earmarks, President Obama declared that from then on, his administration would work toward earmark reform.
Sounds a bit like St. Augustine’s famous prayer, “Lord, make me chaste but not just yet,” said Daniel Griswold, director of Cato’s Center for Trade Policy Studies:
Recall that as a candidate, Obama said he and Democratic leaders in Congress would change the “business as usual” practice of stuffing spending bills with pet projects. Those earmarks, submitted by individual members to fund obscure projects in their own districts and states, typically become law without any debate or transparency.
Saying he would sign the “imperfect bill,” President Obama offered guidelines to curb earmarks … in the future. “The future demands that we operate in a different way than we have in the past,” he said. “So let there be no doubt: this piece of legislation must mark an end to the old way of doing business and the beginning of a new era of responsibility and accountability.”
Lord, make us fiscally responsible, but not just yet.
Meanwhile, Republican leaders are condemning the president’s expansion of the federal government. But do they have any standing to judge? Senior Fellow Michael D. Tanner said no:
The Bush administration’s brand of big-government conservatism was, at the very least, the greatest expansion of government from Lyndon Johnson to, well, Barack Obama.
For Cato’s policy recommendations on earmarked spending, see the “Corporate Welfare and Earmark Reform” chapter in the 2009 Cato Handbook for Policymakers.
Violence Spills into the U.S. from Mexico’s Drug War
With daily reports of increased violence coming from Mexico, Cato Vice President for Defense and Foreign Policy Studies Ted Galen Carpenter said the brutality is an indicator of power and arrogance, not desperation, and asserts that gun restrictions in the U.S. will not subdue violence:
The notion that the violence in Mexico would subside if the United States had more restrictive laws on firearms is devoid of logic and evidence. Mexican drug gangs would have little trouble obtaining all the guns they desire from black market sources in Mexico and elsewhere…
… Even assuming that the Mexican government’s estimate that 97 percent of the weapons used by the cartels come from stores and gun shows in the United States-and Mexican officials are not exactly objective sources for such statistics-the traffickers rely on those outlets simply because they are easier and more convenient, not because there are no other options.
Carpenter spoke at a Cato policy forum last month, and explained why the war on drugs sparks such intense levels of violence.
In a Policy Analysis published in early February, Carpenter warned of the need to change our policy on the Mexican drug conflict, so as to prevent the violence from spreading across the border.
No Wonder the GOP Has No Credibility on Spending
You would think Barack Obama’s tsunami of federal spending would provide an easy target for Republicans. But they apparently haven’t learned the right lessons after two successive electoral debacles.
Earmarks don’t account for a lot of money in Washington terms. You know, just a few billion dollars out of trillions or quadrillions or whatever we are now up to — it’s so easy to lose track!
Nevertheless, earmarks are a powerful symbol. So trust the “stupid party” to muff its chance. Reports Politico:
Bashing Democrats on the day President Obama signed the $410 billion omnibus spending bill was the easy part for Republican leaders Wednesday.
But getting Rep. John Boehner and Sen. Mitch McConnell on the same page on earmarks will be a lot tougher.
At a joint press conference designed to present a united Republican front against Democratic spending habits, McConnell (R-Ky.) and Boehner (R-Ohio) appeared to diverge on earmark reform.
“I think the president missed a golden opportunity to really fulfill his campaign commitment to not sign bills that have a lot of wasteful spending and are overburdened with earmarks,” Boehner said. “If you look at the earmark reforms that he proposed, the question I have is, ‘Where’s the beef?”
McConnell declined to answer the question about earmarks, and instead criticized the president’s contention that the omnibus bill was simply last year’s unfinished business.
“Let me tell what was not last year’s business was plussing the bill up 8 percent, which is twice the rate of inflation,” McConnell said. “This bill is not last year’s business. … It further illustrates my point that when you add up the stimulus and the omnibus, the spending in the first 50 days of the administration [comes] at a rate of $1 billion an hour.”
Republicans have tried to come up with a unified earmark reform plan, but have struggled as GOP appropriators are reluctant to sign on. McConnell is on the Senate Appropriations Committee and has called for earmark reforms, but he and many lawmakers defend Congress’ constitutional right to direct spending.
In the omnibus bill, McConnell secured some $75 million worth of earmarks, while Boehner, a long-time critic of earmarks, did not. Boehner says Congress should freeze earmarks for the rest of the year, saying it leads to wasteful and potentially corrupting Washington spending.
Of course, Democrats have taken not. In signing the latest spending bill President Barack Obama landed a nice blow against GOP hypocrisy:
And I also find it ironic that some of those who rail most loudly against this bill because of earmarks actually inserted earmarks of their own and will tout them in their own states and their own districts.
If Congress can’t take a vow of poverty on distributing pork when the nation faces a $1.3 trillion budget deficit and trillions more in deficits over the coming years, then it isn’t likely ever to be more responsible with the public’s money.
Let’s Be Fiscally Responsible, Starting Tomorrow
In his famous book, Confessions, the 5th-century theologian Augustine wrote that he used to pray before his conversion, “Lord, make me chaste, but not just yet.”
That quote came to mind as I read the news a moment ago that President Obama plans to sign the $410 billion catch-all appropriations bill even though it contains 8,500 “earmarks” that will cost taxpayers nearly $8 billion.
Recall that as a candidate, Obama said he and Democratic leaders in Congress would change the “business as usual” practice of stuffing spending bills with pet projects. Those earmarks, submitted by individual members to fund obscure projects in their own districts and states, typically become law without any debate or transparency.
Saying he would sign the “imperfect bill,” President Obama offered guidelines to curb earmarks … in the future. “The future demands that we operate in a different way than we have in the past,” he said. “So let there be no doubt: this piece of legislation must mark an end to the old way of doing business and the beginning of a new era of responsibility and accountability.”
Lord, make us fiscally responsible, but not just yet.
Republicans, Democrats, and Appropriators…and Pork
I’m sympathetic to the oft-repeated saying that there are really three parties in Washington: Republicans, Democrats, and Appropriators. This situation is likely to be demonstrated this evening when Republican members of the Senate Appropriations Committee provide enough votes for Democratic Sen. Harry Reid to close off debate and proceed to final passage of the pork-laden $410 billion fy2009 omnibus appropriations bill.
Greasing the skids for bigger government will be almost $8 billion in earmarks contained in the bill. Fox News is pointing out that almost all of the Republican Senators expected or likely to support the Democratic measure stand to deliver quite a bit of pork to constituents and special interests. Not coincidentally, all of the senators named, except Sen. Snowe of Maine, are appropriators. As a matter of fact, if you look at the top 20 senators (both parties) in terms of dollars of earmarks secured for this bill, 15 are appropriators.
Bottom line: Appropriators love spending and they particularly love pork. Sen. Snowe just likes the government spending other people’s money.
**Update: Cloture was invoked on a 62-35 vote and the legislation subsequently passed by voice vote. Every single Democratic member of the Senate Appropriation Committee voted for cloture. Republican appropriators Sens. Cochran, Specter, Bond, Shelby, Alexander, and Murkowski voted yes; Sens. McConnell, Gregg, Bennett, Hutchison, Brownback, Collins, and Voinovich voted no. Thus, without the support of these Republican appropriators, the bill would have been effectively killed. Of the top 20 recipients of earmarks in the bill, only 2 — Sens. Inhofe and McConnell — voted no.
Republicans and Earmarks
This week, a handful of fiscally conservative Republican senators have been trying to cut earmarks out of the $410 billion omnibus appropriations bill. According to Taxpayers for Common Sense, the legislation contains 8,570 earmarks worth $7.7 billion.
Senator Tom Coburn (R-OK) has sought to strike specific items, like the $200,000 earmark for Tattoo Removal Violence Prevention Outreach Program in Burbank, California and the $1.9 million earmark to the Pleasure Beach Water Taxi Service in Connecticut.
Senator John McCain (R-AZ) has taken a broader approach by introducing an amendment to strike all earmarks from the bill and revert to last year’s spending levels.
Not surprisingly, they have been unsuccessful. And given recent events, one must wonder if these efforts by fiscal conservatives are even welcomed by members of their own party.
The amendments introduced by Coburn and McCain were defeated by opposition from not only by the majority of Democratic senators, but also many Republican appropriators, like Senators Thad Cochrane (R-MS) and Lisa Murkowski (R-AK).
And despite his occasional anti-earmark rhetoric and support for the Coburn and McCain amendments, Senate Minority Leader Mitch McConnell (R-KY) is one of the chief beneficiaries of the earmark-laden omnibus bill. Reports suggest he requested either $75 or $51 million for his home state of Kentucky. Either way, he will obtain far more than his Democratic counterpart, Senate Majority Leader Harry Reid (D-NV), whose earmark requests total $26 million.
Democratic Senator Claire McCaskill (D-MO) has been fairly consistent in her criticism of the earmarking process and, for the most part, has voted accordingly. Proving that Republican affection for earmarking is a bicameral phenomenon, her stance attracted ire from Representative Roy Blunt (R-MO), formerly one of the highest-ranking Republicans in House, who said he “would hope that Claire would change her mind on this,” as he praised Senator Kit Bond’s (R-MO) prowess at earmarking.
Now, earmarks make up a relatively small slice of the overall budget, but as Coburn has noted, the problem with earmarks is ‘‘the hidden cost of perpetuating a culture of fiscal irresponsibility. When politicians fund pork projects they sacrifice the authority to seek cuts in any other program.”
For more on earmarks, check out the “Corporate Welfare and Earmarks” chapter of the Cato Handbook for Policymakers.
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