November 10, 2004

November 10, 2004 | WebMemo on Federal Budget

Is Pork Barrel Spending Ready to Explode? The Anatomy of an Earmark

A news item appearing this November in a Virginia newspaper reveals the emergence of what may be a lucrative new lobbying strategy that could substantially increase federal pork-barrel spending. In the past, earmark-seeking entities approached earmark-providing lobbyists for assistance in getting a piece of the federal budget. But in this new strategy, lobbyists openly sell such services to unserved institutions and individuals by convincing them that they might be eligible for an earmark, providing that they are willing to pay a four-figure monthly retainer.


The new strategy was recently revealed by way of a prospective earmark for a $3.5 million community sports complex in Culpeper County, Virginia. The county has just begun construction on the project, which was to be funded with the proceeds of a county bond offering the voters approved a few years ago. But that financial arrangement might change now that a lobbyist paid the county a visit and pointed out that, for a fee, the county could get the federal government to pay for the complex. As reported in the Free Lance Star, a county official says that "he had been approached by a representative of Alcalde and Fay, a Northern Virginia lobbying group, who expressed optimism that funds for the $3.5 million sports complex could be tied to one or more federal appropriation bills."[1]


The article also noted that "The cost of hiring Alcalde and Fay would be $5,000 per month, with an 18-month recommended contract." While the average American family might consider this a steep price, the prospective arrangement's payoff reveals what a bargain it is for the county. With their fees totaling $90,000 for a prospective federal grant of $3.5 million, Alcalde and Fay are, for all intents and purposes, selling federal taxpayer money for just 2.6 cents on the dollar. Anyone who has suspected that Washington places little value on taxpayers' hard-earned dollars now has an idea of just how diminished that value is-somewhat less than the market price for defaulted Argentine debt.


How the Culpeper transaction unfolds bears watching for several reasons. From the perspective of federal fiscal integrity, this new earmark strategy could open the floodgates to me-too projects across the country that would otherwise be funded with local resources. Just thirty miles down the road from Culpeper is the town of Fredericksburg, which is now in the process of committing itself, and its budgetary resources, to a $6 million recreation complex with indoor and outdoor swimming pools. Now apprised of Culpeper's prospective earmark, could the elected officials in Fredericksburg be faulted for ringing up a lobbyist of their own?


And in the not-too-distant future it is quite likely that the federal budget process will no longer take place in the halls of Congress, as the Constitution requires, but in the dozens of offices of Washington's top lobbyists-largely driven by generous contracts between the firms and their clients.


Another reason this process bears watching is for how it reflects on Congress. The lobbyist is proposing to sell something that is not really his to sell. That he believes he can deliver it tells us that something is terribly wrong in Congress. It is one thing for members of Congress to make pork-barrel spending promises to their constituents and deliver on them, but it is quite another that earmarks can be bought and sold like bushels of wheat on the open market by private speculators. And apparently, all this wheeling and dealing is taking place without any involvement (at least not yet) by a member of Congress. As noted earlier, if Article I, Section 9, Clause 7 of the Constitution reserves exclusively to Congress the power of appropriating money from the U.S. Treasury, how is it that these lobbyists have come by the same privilege, and who has allowed it to happen?


That is a good question, and in the event that the County of Culpeper signs a contract with Alcalde and Fay to secure $3.5 million for the sports complex now being built, the Heritage Foundation, in partnership with fiscally responsible members of Congress, will closely track this process and determine how, and at what point, the writing of appropriations bills was outsourced to the lobbying community on a for-profit basis.


Alcalde and Fay, of course, is not the only firm engaged in the misdirection of federal resources through the pay-to-play process. In a process previously described (See Heritage Backgrounder No. 1527, "Can Congress Be Embarrassed into Ending Wasteful Pork-Barrel Spending?"), the market for earmarks in appropriation bills has been growing rapidly and, given its profitability, will likely continue its robust growth. In recent years, some members of Congress and government officials-notably former OMB head Mitchell Daniels, Sen. John McCain, and Rep. Jeff Flake-have tried to dampen the practice, but they have had little success in cultivating a greater awareness of fiscal hygiene among the vast majority of their colleagues who believe that electoral success grants unlimited access to taxpayers' credit cards. Between 1997 and 2004, appropriations earmarks have increased from under 2,000 to over 10,000, and this year's failed highway reauthorization contained more than 3,000 pork-barrel earmarks, compared to 1,800 in the previous bill and only 10 in the highway bill passed by Congress in 1982.


That Congress once showed budgetary restraint and fiscal continence suggests that the propensity to earmark is not some inherent flaw in American democracy, but rather a willful irresponsibility now embraced by all too many members. Among the many tasks confronting the re-elected President Bush will be to reduce federal spending from its near record levels as a share of GDP and to narrow the deficit, which now hovers at $413 billion. A good place to find fiscal redemption is in the appropriation bills that will soon come across the President's desk. The first step in the process should be a sharply worded veto threat. It would be a welcome change if that veto threat included excess earmarks as one of many items that would merit a presidential rejection.


Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

[1] Donnie Johnston, " Culpeper may hire sports-complex lobbyist," The Free Lance Star, November 4, 2004.

About the Author

Ronald D. Utt, Ph.D. Herbert and Joyce Morgan Senior Research Fellow