In a startling decision that calls into question whether some
congressional appropriators heard the message of the 1994
elections, House and Senate negotiators have scuttled an apparent
agreement to curb welfare for lobbyists. The decision to sidetrack
action on proposals to limit politicking by federal grant
recipients was intended to free the appropriations legislation
providing funds for the White House, IRS, and numerous other
federal agencies. Instead, it may impede further progress on that
bill.
When the conferees on the FY 1996 Treasury-Postal appropriations
bill met on October 25, it was widely expected they would adopt
compromise grant reform language crafted by Senator Alan Simpson
(R-WY) and Representative Ernest Istook (R-OK) with the guidance of
House and Senate leadership. The compromise would have liberalized
the provisions of an amendment adopted by the House by allowing
"true charities" (direct service providers) to spend considerably
more money on political advocacy than the original proposal would
have permitted.
However, the conferees agreed to issue a conference report that
left the issue of welfare for lobbyists unresolved. As a result,
the House and Senate must vote separately on the appropriations and
grant reform language. Failure to agree on both items would stop
final action on the conference report.
The Message
With the decision to scuttle the House-Senate agreement on
curbing welfare for lobbyists, the appropriations committees
decided that funding the White House, IRS, Post Office, and
lobbyists was more important than fiscal responsibility. The effect
of the conference committee's action was to say to the voters that,
simply to appease the White House, Congress will continue to
require American taxpayers to subsidize advocacy by
special-interest lobbyists.
The Simpson-Istook Compromise
The compromise reached by House and Senate negotiators permits
"true charities"direct service providers, particularly those with
small budgets that serve people at the local level to comply with
its provisions easily.
For example, a small local charity that raises $500,000 a year
from private sources could spend $25,000 on political advocacy
under the original House proposal offered by Representatives
Istook, David McIntosh (R-IN), and Bob Ehrlich (R-MD). The
compromise language now permits that same charity to quadruple its
advocacy to $100,000or one out of every five private dollars while
still remaining eligible for federal grants.
This dramatic change is accomplished by liberalizing the
Istook-McIntosh-Ehrlich formula to one that mirrors the
restrictions placed on 501(c)(3) charitable organizations that
elect to engage in lobbying (the "501(h) election"). Independent
Sector, a leading opponent of the reform efforts, advises its
members to use this provision.
The compromise formula is a sliding scale that permits the
following to be spent on political advocacy:
- 20 percent of the first $500,000 in private funds,
plus
- 15 percent of the next $500,000, plus
- 10 percent of the next $500,000, plus
- 5 percent of the remainder, up to an overall cap of
$1,000,000 for advocacy.
The Simpson-Istook compromise also protects small charities by
exempting organizations that spend less than $25,000 a year on
political advocacy from its prohibitions. This permits even the
smallest organizations to spend a significant amount of money on
advocacy without being ensnared by these needed reforms. Small and
large organizations alike would be required to disclose basic
information about how they spend taxpayer funds and the extent to
which they engage in political advocacy.
While loosening restrictions on smaller charities, the
compromise recognizes the significant abuse of the current system
by larger taxpayer-subsidized lobbying organizations. To address
the issue of fungibility of taxpayers' funds and curb present
abuses, the compromise would:
- Place a firm $1,000,000 cap on political advocacy to
compensate for the more liberal formula at lower levels;
- Limit heavily subsidized grantees (those that depend on
the taxpayers for more than one-third of their budgets) to no more
than $100,000 in political advocacy; and
- Prohibit 501(c)(4) nonprofits that can engage in
unlimited lobbying from receiving federal grants if their annual
budget exceeds $3 million. The Senate originally voted to ban all
grants to any 501(c)(4) group, regardless of size.
A Test of Leadership
The decision by the congressional appropriations club to
sidetrack needed reforms in a rush to keep federal grants flowing
to lobbyists represents business as usual in Washington. To allow
the insidious practice of taxpayer-subsidized political advocacy to
continue would be a victory for special interests over fiscal
responsibility and accountability to the taxpayer.
The House and Senate leadership now must decide how to proceed
with this vitally important issue. The activities of reformers and
the leadership over the next several weeks will determine the
outcome of this commonsense reform.