December 20, 2007 | WebMemo on Budget and Spending
Now that it appears the 3,417-page omnibus appropriations bill (H.R. 2764) will be signed into law, the question remains whether the American people must endure the estimated 11,331 earmarks, worth approximately $20 billion, in this year's spending bills. Earlier this year, President Bush and Democratic congressional leaders pledged to cut the number of pork projects in half--from the 2005 peak of 13,492 to 6,746. While Congress brazenly broke its pledge to the American people, the President's hands are not necessarily tied. Indeed, the President said in a press conference this morning, "I am instructing the budget director to review options for dealing with the wasteful spending in the omnibus bill." The President has several options to bring some merit and accountability to fiscal year 2008's appropriations, including perhaps cancelling many of Congress's most egregious earmarks.
The Earmark Problem
In the past, lawmakers would fund government grant programs and then let federal agencies distribute the funds to state or local governments through statutory formulas or to specific groups though competitive application processes. Today, however, Congress actually determines, within legislation, who will receive government grants by "earmarking" grant money to specific recipients. Earmarks are known as "pork projects." Since 1996, the number of annual earmarks has leapt from 958 to 11,331.
Earmarking is a corrupting process. It effectively gives individual lawmakers their own pot of tax dollars to distribute to organizations of their choosing. So rather than file an application, many federal grant seekers today have to make a political donation. Lobbyists promote their matchmaker role, effectively auctioning government grants to the highest bidder. As a result, the FBI has launched several corruption investigations to determine whether lawmakers based earmark decisions on personal profit.
Because they are outside the competitive application process, earmarks are distributed with little or no government oversight or accountability. Most earmarks are not fully audited, and the result has been cases of earmarked funds being embezzled by their recipients.
Eliminating earmarks would not reduce FY 2008 grant spending, but it would ensure that grants are distributed by merit rather than politics and would stifle the enormous appetite for federal largesse. Worthy projects should have no trouble securing funding based on merit; only the unworthy projects would lose funding.
Immediate Ways to Reform Fiscal Year 2008 Earmarks
President Bush should consider three options for keeping his pledge to rein in pork projects:
In the November 2006 elections, the American people sent a loud and clear message that they are tired of runaway spending, pork, and corruption. Despite promising reform, the Democratic congressional majority produced an omnibus spending bill that includes the second highest number of pork projects of any bill in American history. The estimated $20 billion of FY 2008 pork is not a trivial amount; it is equal to the entire federal personal income tax liability for the states of Iowa, New Hampshire, New Mexico, West Virginia, and Delaware combined. President Bush also pledged to rein in earmarks and has several options to follow through on that promise. Taxpayers will be watching with interest.
Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
The Web site of House Speaker Nancy Pelosi (D-CA) states: "The second [transparency and accountability commitment] is cutting the amount of earmarks in half--the total FY 2008 earmarks will be half of the earmark total included in the FY 2006 bill under the Republican-controlled Congress," at www.speaker.gov/legislation?id=0045. The Office of Management and Budget's Web site states: "On January 3, 2007 President Bush called on Congress to cut the number and cost of earmarks by at least half," at www.earmarks.omb.gov.
Earmark data from 1996 is calculated by Citizens Against Government Waste, at www.cagw.org. The current 11,331 estimate is derived from Taxpayers for Common Sense's estimate of 2,161 earmarks in the defense appropriations bill, at www.taxpayer.net/budget/fy08appropschart.html, plus publicly reported estimates of 9,170 earmarks in the omnibus bill.
Office of Management and Budget, "Memorandum for the Heads of Departments and Agencies," Memorandum 07-10, February 15, 2007, at www.whitehouse.gov/omb/memoranda/fy2007/m07-10.pdf.
CNN's 2006 election exit poll revealed that 41 percent of voters listed corruption/ethics as "extremely important"--the highest total for any issue. See www.cnn.com/ELECTION/2006/pages/results/states/US/H/00/epolls.0.html.
The FY 2005 omnibus appropriations bill (P.L. 108-447) contained 11,108 earmarks, according to Heritage Foundation calculations based on earmark data from Citizens Against Government Waste, at www.cagw.org. The new FY 2008 omnibus bill contains an estimated 9,170 earmarks.
Individual Income Tax Returns: Selected Income and Tax Items by State, ZIP Code, and Size of Adjusted Gross Income, Tax Year 2005.