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."
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.