Two seemingly unrelated events in 2005 promise to contribute to some of the most significant changes in federal budget practices since the enact­ment of the Budget Control and Impoundment Act in 1973.

First, the enactment of the Safe, Accountable, Flex­ible, Efficient Transportation Equity Act (SAFETEA- LU)1 in late July revealed that there was a limit to the congressional waste that the American public was prepared to tolerate. With its more than 6,300 pork- barrel earmarks, the federal highway program and Representative Don Young's (R-AK) $220 million for the infamous "bridge to nowhere" became objects of national ridicule. As the public demanded a remedy, many fiscally conservative Members intensified their efforts to curtail the embedded fiscal irresponsibility that has made pork-barrel spending increasingly commonplace.

Second, the indictment of former Representative Randy Cunningham (R-CA) for selling earmarks to defense contractors and the revelations of Jack Abramoff's unethical lobbying practices have added the taint of corruption to the earmarking process, which had once seemed merely irresponsible.

Egged on by the national media, the public responded with a degree of disgust that initially forced worried Members of Congress to take a num­ber of steps to appear responsive to the public's con­cern. Among these early steps was a dramatic request from Senator Ted Stevens (R-AK) that the Senate delete funding for the two controversial bridges in Alaska, though the governor decided to restore spending for them a month later.2

Despite the Senate's empty gesture, the public's concern was not satisfied. As evidence of more improprieties emerged, demands for a fundamental reform continued to escalate. In response, many in Congress have sought ways to clean up the process. As of mid-April 2006, 51 bills had been introduced in the House and Senate to regulate the relationship between Congress and its earmarks and lobbyists. President George W. Bush took the unprecedented step of addressing the issue in his State of the Union address:[1] [2]

I am pleased that Members of Congress are working on earmark reform-because the federal budget has too many special- interest projects. And we can tackle this problem together, if you pass the line item veto.[3]

Yet despite the broad public concern, presiden­tial interest, and the introduction of dozens of leg­islative remedies, most in Congress remain skeptical about the need for any change in behav­ior. In a radio interview, Senate Minority Leader Harry Reid (D-NV) said, "There's nothing basi­cally wrong with the earmarks. They've been going on since we were a country."[4] In response to the President's expression of concern, Senator Stevens retorted that "What needs fixing is to have the public understand what we do when we ear­mark bills."[5] During his recent primary challenge, Representative Tom DeLay (R-TX) emphasized "that he can bring home pork. His handouts claimed more than $1 billion in federal dollars to Houston-area transportation projects, the port, NASA, universities and law enforcement." Of the transportation earmarks, Delay said, "Quite frankly…[we're] using earmarks to force dollars into this region."[6]

With their lucrative client contracts now at risk, the vast lobbying community is providing congres­sional skeptics and opponents of reform with vocal support and will certainly use its considerable skills, contacts, and resources to thwart any mean­ingful reform that would undermine its prosperity. John Engler, head of the National Association of Manufacturers and former Michigan governor, tes­tified in a Senate hearing that "Additional rules and laws weren't needed." At the same hearing, Paul Miller, president of the American League of Lobby­ists, echoed a theme that will be at the core of the anti-reform defense effort in the coming months: "[T]his is not a widespread scandal…. Our gov­ernment is not corrupt, lobbyists are not bribing people, and members of Congress are not being bought for campaign contributions…. I don't think we can say with certainty that the current system is broken."[7]

Source: Citizens Against Government Waste, at http://www.cagw.org.

Put on the defensive, many Members of Con­gress and the lobbyists have responded to the crit­icism with justifications for their actions and activities. Some have promised to consider changes and reforms, but not everyone has. The leadership and staff of the House Appropriations Committee went on the offensive in February 2006 by compil­ing a list of earmark requests submitted to the com­mittee by Members who have co-sponsored the earmark control legislation introduced by Repre­sentative Jeff Flake (R-AZ). In turn, the committee staff leaked the list of 717 earmarks and who requested them to select journalists in an effort to embarrass the bill's supporters.[8]

Earmark Corruption: Widespread or an Aberration?

As Congress and the lobbying community scramble to defend themselves against charges of questionable practices and illegal influence ped­dling, many note-quite correctly-that the vast majority of Members and lobbyists are scrupu­lously honest, abide by all the rules, and are doing nothing more than exercising their constitutional right to petition government on behalf of them­selves or their clients. Nonetheless, a growing body of evidence suggests that illegal and questionable lobbying practices are not uncommon and that incidents such as those involving Mr. Abramoff have likely been repeated in similar transactions between other lobbyists and Members.

A recent Congressional Research Service (CRS) analysis indicates the scope of such activities. The analysis found that the number of earmarks authorized by Congress in appropriations bills alone increased from 4,155 in 1994 to 15,887 in 2005-an increase of 282 percent.[9] Using a slightly different methodology, Citizens Against Government Waste (CAGW) concluded that there were 1,439 earmarks in 1995, which grew to 13,997 in 2005, for an increase of 872 percent.[10] By both the CRS and CAGW counts, earmarks in fiscal year (FY) 2006 fell by about 3,000, in large part as a result of the refusal of Senator Arlen Specter (R-PA) to allow any in the Labor-Health and Human Services bill.

Earmarking in federal highway reauthorization bills shows an even more dramatic longer-term trend. Notwithstanding Senator Reid's contention that "They've been going on since we were a coun­try," the data in Table 1 and the data provided by the CRS and CAGW demonstrate that today's volume of earmarking is a relatively recent phenomenon.

In large part, this escalation in the number of earmarks reflects the growing number of lobbyists offering to obtain them for a fee. As the number of earmarks increases with each passing year, the business attracts more lobbyists who apply more pressure on Congress to spend more on pork-bar­rel spending.

For example, the annual appropriations bill for the civilian programs of the Army Corps of Engi­neers typically is the most earmarked bill produced by Congress. The Corps' $5.3 billion annual budget for FY 2006 spawned a lucrative practice among lob­byists seeking a piece of the action for their paying clients. Among them is Marlowe & Co., which spe­cializes in representing seaside resort communities seeking money from the Corps for "beach nourish­ment" projects. With the Corps' budget limited by annual appropriations, beach projects that promote tourism and enhance the value of vacation homes come at the expense of investment in flood control, including improved levees.

In a 2004 interview, firm owner Howard Mar­lowe bragged: "We know beaches." The article went on to note that the company earned more than $700,000 in 2003 and estimated that it had won more that $100 million in beach projects since entering the business.[11] Even more revealing is the Marlowe & Co. Web site, which provides prospec­tive clients with its success stories. In its beach nourishment practice, the firm lists 172 beach ear­marks that it claims to have earned for its clients over the past several years.[12] Assuming that Mr. Marlowe is providing an accurate description of his company's successes, taxpayers deserve an expla­nation of how a for-profit firm is allowed to partic­ipate so intimately in the congressional budgeting and appropriations process.

*Includes only earmarks assigned a number in the bill and listed in specific sections of the bill. Including the earmarks in dozens of other provisions would increase the total to about 7,000.

Source: Highway reauthorization bills, 1982-2005.

Turning Pennies into Dollars. As the number of earmarks has escalated, there has been a similar increase in the number of lobbyists registered with the House and Senate, indicating their intentions to pursue clients' interests with the Appropriations Committees. According to a Knight-Ridder article on lobbying, 1,865 lobbyists were registered with Congress in 2000 to pursue appropriations issues, but by 2004, the number is estimated to have increased to 3,523 lobbyists, an increase of 89 per­cent in four years.[13] Even if Mr. Abramoff's activities were an aberration or a "not widespread" practice, 3,522 other lobbyists would still be registered to pursue earmarks for paying clients.

Adding to the pressure for earmark growth is lob­byists' increasingly common practice of aggressively marketing their services with unsolicited offers to prospective earmark buyers. This side of the busi­ness was exposed more than a year ago when offi­cials in Culpeper County, Virginia, received an unsolicited offer of assistance to obtain a congres­sional earmark from Alcalde & Fay, a Washington- area lobbying firm. According to the public discus­sion of the offer at a subsequent meeting of the county's board of supervisors, a representative of the firm approached a county official with the offer to obtain an earmark of $3.5 million to construct a community sports complex in the county.

Although the county had planned to finance the complex with the proceeds of a county bond offering that the voters had already approved, the represen­tative "expressed optimism that funds for the $3.5 million sports complex could be tied to one or more federal appropriation bills."[14] "The cost of hiring Alcalde and Fay would be $5,000 per month, with an 18-month recommended contract."[15] For a total fee of $90,000 in return for a prospective federal grant of $3.5 million, the lobbying firm was propos­ing to sell the county federal taxpayer money for just 2.6 cents on the dollar-something that was not really the firm's to sell. That the lobbyist believed he could deliver on the transaction indicates that some­thing is terribly wrong in today's Congress.

Members of Congress making pork-barrel spend­ing promises to their constituents and delivering on them is one thing, but the buying and selling of ear­marks by private speculators as if they were bushels of wheat on the open market is quite another.[16] Appar­ently, all this wheeling and dealing is taking place without any involvement (at least not yet) by a Mem­ber of Congress. Since Article I, Section 9, Clause 7 of the Constitution reserves the power of appropriating money from the U.S. Treasury exclusively to Con­gress, how is it that these lobbyists have come by the same privilege, and who has allowed it to happen?

Representatives of Alcalde & Fay and Marlowe & Co. are just a few of the many registered lobby­ists who attempt to provide clients with taxpayer- funded earmarks and other legislative favors in exchange for costly retainers. Exactly how these many firms make good on their client commit­ments remains something of a trade secret that nei­ther the lobbyists nor the Members and staff of the Appropriations Committee are eager to reveal.

Nonetheless, those firms with a successful track record are not shy about reporting it. In a recent interview, David Carmen, president of the Carmen Group, a mid-size lobbying firm in Washington, D.C., revealed:

In 2004, the latest year available…[Carmen Group] collected $11 million in fees and delivered $1.2 billion in benefits-a ratio of less than 1 to 100. The payoff is large but fairly typical of modern-day lobbying.[17]

Carmen's fee/reward ratio compares favorably to Alcalde & Fay's proposal to Culpeper County, which was more than double Carmen's implied rate. It also compares favorably to former Repre­sentative Cunningham's price list, in which ear­marks of up to $20 million were for sale for a nickel on the dollar. Perhaps reflecting volume discounts, his price for larger earmarks fell to half this rate.[18]

In defense of the lobbying practice, some contend that the lobbyists earn their fees because they are more adept at making an effective pitch to Members and staff on the importance of a project. Yet if that was all there was to it, why could the Culpeper County officials not simply visit with their Congressman when he or she was back in the district and make the request themselves? While many earmarks may in fact result from routine meetings between Members and constituents, the fact that so many petitioner/ constituents pay tens of thousands of dollars for an alternative channel to the U.S. Treasury offers dis­turbing insight into the appropriations process and the extent to which parts of it have been outsourced to the K Street lobbyists in return for campaign con­tributions and other sorts of rewards and favors.

Delivering the Earmark. Who the lobbyists are and whom they represent is known from their con­gressional registrations, and the evidence of their success appears annually in the appropriations and varied authorization bills. However, little is known about the process by which the lobbyists secure these rewards from Congress for their paying cli­ents. Recent investigations by some in Congress and in the U.S. Department of Justice are beginning to shed some light on the process.

One such instance was exposed by Senator McCain, who released copies of a September 2001 e-mail exchange between Jack Abramoff (JA) and his colleague Tony Rudy (TR) at a hearing before the Senate Committee on Indian Affairs in mid 2005. The afternoon exchange between the two lobbyists was in an e-mail entitled "Is This Viable?":

TR to JA: There are a few senate staffers I would like to help reward. Would the choctaws or coushetta donate like 10k to pay for a trip? Tony Rudy

JA to TR: A trip where?

TR to JA: There is a hunting and fishing resort 3 hours south of texas that smith's[19] people expressed an interest in. Tony Rudy

JA to TR: I don't see how we can sell them on funding that.

TR to JA: Thank you trip for the approps we got. Tony Rudy[20]

The bribery investigation into former Representa­tive Cunningham has revealed additional informa­tion on how earmarks are placed into legislation. At the hearing held to accept a guilty plea from Mitch­ell Wade of MZM Inc.-the defense contractor accused of bribing Cunningham-Wade also pleaded guilty to making nearly $80,000 in illegal campaign contributions to "Representatives A and B" in return for earmarks that would benefit MZM operations in their districts. According to news reports, Representative A succeeded in placing the earmark in a bill, while Representative B "made such a request for funding, but it was not granted."[21]

Given how little access the public and media have to the detailed process of lobbying and the rewards that are privately offered and received in response to legislative favors, there is no way of knowing how typical such reward arrangements are among Members and staff.

Recommendation #1: The House Committee on Standards of Official Conduct and the Senate Select Committee on Ethics should invite a cross section of registered lobbyists and current and former congressional staff to testify on all facets of the lobbyist/earmark process.

Some in Congress Propose Reforms

In response to the many revelations of misbehav­ior by Members of Congress, congressional staff, and registered lobbyists, the House and Senate leadership have promised to develop a package of reform pro­posals that would more closely regulate the conduct and contact between Congress and the lobbyists. On March 29, 2006, the Senate passed an amended ver­sion of the Transparency and Accountability Act of 2006 (S. 2349), sponsored by Senator Trent Lott (R- MS), which would ban gifts from lobbyists, require more extensive reporting by both Members and lob­byists, allow for points of order against earmarks that originate in conference, and provide a comprehen­sive definition of earmarks. The House has yet to pro­duce a comprehensive bill, but an effort to do so is underway in the committees of jurisdiction.

For the most part, the delays in developing a comprehensive legislative response reflect strong disagreements among Members on key provisions and the extent to which they are willing to limit their discretion. While the leadership debated the proper course of action, many Members introduced their own proposals as pending legislation.

Lobbying Reform. Of the 51 bills introduced on earmarks/lobbying reform through early April 2006, the most notable is the Lobbying Transpar­ency and Accountability Act of 2005 (S. 2128), introduced by Senator McCain. Among its many provisions, the bill would:

• Require lobbying firms, lobbyists, and their political action committees to disclose their campaign contributions to federal candidates and officeholders, their political action com­mittees, and political party committees;
  
• Mandate both the disclosure of fundraisers hosted, co-hosted, or otherwise sponsored by these entities and the disclosure of contribu­tions for other events involving legislative or executive branch officials;
  
• Require registrants to list as clients those enti­ties that contribute $10,000 or more to a coali­tion or an association;
  
• Lengthen the period during which senior mem­bers of the executive branch, Members of Con­gress, and senior congressional staff are restricted from lobbying;
  
• Require registrants under the Lobbying Disclo­sure Act to report gifts worth $20 or more; and
  
• Require Members of Congress and congres­sional staff to pay the fair market value for travel on private planes and the cost of the highest-priced ticket in the arena for sports and entertainment tickets in skyboxes.

Introduced in mid-December 2005, Senator McCain's bill had only seven cosponsors as of early April 2006. The companion bill in the House (H.R. 4667) fared worse, gaining no cosponsors out of the 434 Representatives.

The absence of congressional support is espe­cially disturbing given that the bill would mostly just require greater disclosure of certain activities and contributions and require Members to pay their own way (at full market value) on private planes and at entertainment events. The bill's only new limitation would be extending the prohibition on lobbying former colleagues from 12 months to 24 months after the official leaves government. Several of the provisions of Senator McCain's bill have been incorporated into the final version of S. 2349, but overall, the bill is not as tough as S. 2128.

Earmark Reform. Senator McCain has also introduced two other lobbying reform bills: The Obligation of Funds Transparency Act of 2005 (S. 1495)[22] is intended to establish better control over the growth of congressional earmarks. The Pork- Barrel Reduction Act (S. 2265), which was intro­duced several weeks later, should be viewed as a much-improved version of S. 1495. It would attempt to limit the incidence of earmarks by:

• Allowing Senators to oppose an earmark by raising a point of order, which requires 60 votes to overrule under Senate rules. If the point of order is sustained, the earmark would be dropped from the bill or its report.
  
• Requiring that conference reports be filed and available publicly for at least 48 hours before consideration on the Senate floor.
  
• Requiring the disclosure of earmarks, including the identity of the lawmaker seeking the ear­mark and a description of the earmark's "essen­tial government purpose."
  
• Requiring recipients of earmark funding both to disclose the amount of money that they spent on registered lobbyists to obtain the ear­mark and to identify the lobbyists.
  
• Prohibiting federal agencies from spending money on items and earmarks that are included only in conference reports.
  
• Strengthening Senate rules against the inclu­sion in conference reports of matters not con­sidered by either the House or the Senate.

With only nine cosponsors as of early April 2006, the provisions of the Pork-Barrel Reduction Act were more than most Senators were willing to accept. Nonetheless, the House should revisit many of these proposals as it develops its own package of reforms.

One weakness in S. 2265 is that it would apply only to earmarks in appropriations bills, not those in authorization bills. While appropriations bills have been the chief legislative vehicles for ear­marks, authorization bills have also been used, and several have been loaded with costly earmarks. The most notorious pork-laden authorization bill is SAFETEA-LU, the recent highway bill. Signed into law in 2005, it contained more than 6,300 ear­marks, compared to the 13,997 to 15,877 ear­marks included in the 12 appropriations bills in 2005. If the Pork-Barrel Reduction Act were passed as is, Congress would likely shift more and more earmarks to authorization bills to preserve the ear­marks and keep their origins and associated finan­cial rewards confidential.

Although the Pork-Barrel Reduction Act has attracted more cosponsors than many of the other reform measures, the number was well short of the votes needed to pass it, especially since many Sen­ators view the pursuit of earmarks as an essential and legitimate part of their duties. As a result, there is a profound lack of enthusiasm for any type of earmark reform but lots of interest in figuring out how to get even more. Indeed, in October 2005, 82 Senators voted for spending more than $220 mil­lion on the infamous bridge to nowhere in a well- publicized, stand-alone vote after the project had become an object of national ridicule.

In response to the Pork-Barrel Reduction Act, the Senate Rules Committee produced the Trans­parency and Accountability Act of 2006 (S. 2349), which is more modest in scope, provides for less transparency, and includes fewer requirements and prohibitions. S. 2349 allows for points of order on a relatively small fraction of legislative earmarks, bans all gifts except for meals (which must be reported within 15 days), imposes limits on travel, and prohibits Senators from having "official" con­tact with a spouse or an immediate family member who is a registered lobbyist. While a weaker bill overall, it has some good points, notably a more robust definition of an earmark and limits on con­tact with family members acting as lobbyists. After extensive debate and numerous amendments, the Senate passed S. 2349 in late March 2006 by a wide margin.

Perhaps recognizing that their colleagues will not support any meaningful lobbying and earmark reform, Senators McCain and Tom Coburn (R-OK) have also announced that they intend to use what authority they have under existing Senate proce­dures to challenge each pork-barrel project. In a press release on January 26, 2006, the Senators announced: "We are committed to doing all we can to halt this egregious earmarking practice and plan to challenge future legislative earmarks that come to the Senate floor."[23]

Pressure to Move Forward with Reforms

For much of 2005, many in Congress responded to the public's escalating concern over lobbyists, earmarks, and corrupt practices with the attitude that these were one-day stories and individual aberrations that will soon be forgotten. Beyond some perfunctory sense of regret and an acknowl­edgement that they can probably do a little bit bet­ter, some Members and staff believe that nothing much needs to change and that the only priority that matters is the swift return to business as usual.[24] Campaign fundraisers with lobbyists remain on the schedule, including golf outings to Florida.

A week after the President urged earmark restraint in his State of the Union address, a staff member of the Senate Committee on Appropria­tions sent an e-mail notifying all Senate Republican offices that they had until April 5, 2006, to submit their earmark requests for the FY 2007 Labor and Health and Human Services bill. The staffer urged them to be "realistic," noting that "You should not have 50 project priorities. Remember, these lists will be held confidential by the committee."[25]

Thanks to an enterprising media and Justice Department prosecutors, this state of blissful avoidance may not last much longer. Former Rep­resentative Cunningham and Jack Abramoff and his associates have all agreed to cooperate with prosecutors, and revelations to date suggest that many more will be implicated and that new mech­anisms and channels for illicit influence peddling will be uncovered.

Added to this will be the evidence uncovered by the many more investigations now being con­ducted by the media. After all, a San Diego Tribune reporter was the one who asked why the new owner of Cunningham's former home-a defense contractor benefiting from congressional ear­marks-was selling it six months later for about half of the purchase price and why Cunningham was living rent-free on a yacht owned by the same contractor. This successful investigation has led to dozens more, and several more Members of Con­gress have recently been linked to questionable leg­islative initiatives that closely coincide with campaign contributions and lobbyist influence.[26]

Essential Provisions of Lobbying and Earmark Reform

With the prospect of ongoing revelations of cor­ruption and influence peddling, Congress will be forced to address fundamental lobbying and ear­mark reform. The bills introduced by Senator McCain offer an excellent place to start, but these proposals should be strengthened.

Letting the Sun Shine: The Need for Greater Disclosure. Key to any meaningful reform is much greater transparency in the lobbying process. As former Supreme Court Justice Louis Brandeis observed, "Sunshine is the best disinfectant."

Several of the bills designed to diminish the cor­rupt aspects of the process would require more reporting on lobbyist contributions to Members of Congress and other government officials, but while this would lead to important improvements, most of the proposals stop well short of the degree of dis­closure necessary to clean up existing problems. For example, S. 2128 does not require any addi­tional reporting by Members of Congress or con­gressional staff, nor does it require lobbyists to report anything more than contacts at which some­thing of value transpires. It does not extend the reporting requirement to lobbyist's clients, who are often the ones providing the campaign contribu­tions and the other types of rewards and favors (although S. 2265 does cover clients).

The exemption of lobbyists' clients is of particu­lar importance because even though registered lob­byists are relatively modest contributors to candidates, evidence from several investigations of improprieties indicates that financial transactions between Members of Congress and the clients of lobbyists are significantly more substantial. Indica­tive of the confusion stemming from the lack of transparency are the hairsplitting allegations between the two political parties about whether campaign contributions and other financial favors from Jack Abramoff's clients, as opposed to Abramoff himself, reflect an attempt by Abramoff and his associates to influence a Member's vote.[27]

Similarly, officers of a company seeking legislation to require the Transportation Security Administra­tion to buy its products contributed a total of $122,000 to a well-placed Member's political action committee (PAC).[28] While some of these question­able contributions came from organized fundraising events and thus would have to be reported under the provisions of S. 2128, conducting these same finan­cial transactions outside the scope of an organized or reportable event would be relatively easy, thus escap­ing the reporting requirement. Such a loophole would not exist if clients of lobbyists were also required to report campaign contributions regard­less of the mechanism used to move money from one person to another.

New reform legislation should also require full disclosure by lobbyists of blood, marital, and other formal relationships between them and Members of Congress, senior congressional staff, and executive branch officials. At present, some restrictions apply to husbands and wives, but none address relationships between parents, sib­lings, or lobbyists serving as officers on a Mem­ber's campaign finance organization or political action committee.

As the lobbying industry has grown in size and profitability and as the appearance of ethical propri­ety becomes less important in today's Washington, more and more wives and husbands, sons and daughters, and in-laws of Members of Congress and staff have become registered lobbyists. Moreover, as the traditional family structure gives way to alterna­tive relationships among consenting adults, many of these otherwise close and intimate relationships are not subject to the same limits that would apply to a legally married husband and wife.[29]

In 2003, a lengthy investigative report in the Los Angeles Times revealed an extensive network of law­makers' sons who were registered lobbyists and were serving clients whose business and financial interests involved issues that came before their par­ents' congressional committees. Part 1 of the article named at least 17 Senators and 11 Representatives with family members who lobbied or worked as consultants on government relations. The article also quotes an attorney who worked as a consultant on government ethics for one of the political parties and who believed that at least 70 relatives of law­makers lobbied at the federal or state level.[30]

Part 2 focused on the relationship between one Senator and his four sons and his son-in-law, each of whom was then employed by one of two law firms with extensive lobbying practices targeted at state and federal officials.[31] Following publication of this information, the Senator announced that his son and son-in-law (the only two of the five who were regis­tered as federal lobbyists at the time) would not be allowed to visit his office on behalf of clients. Later that year, the son gave up his position as a Washing­ton-based federal lobbyist and returned to Nevada to work for a developer.[32]

While expressions of concern over potential conflicts of interest between Members of Congress and their family members and relatives who are registered as lobbyists have become more common in recent years, similar problems are emerging over such conflicts between congressional staff and their family members who lobby. In mid-February 2006, a Senator acknowledged allegations that clients of a lobbyist married to a member of his staff had received 13 earmarks totaling $48.7 million. To the Senator's credit, he has asked the Ethics Committee to look into the allegations.[33]