Tag: Appropriations

Taxpayers Got a Big Christmas Present Yesterday, but It Wasn’t the Tax Bill

There’s a lot of attention being paid to yesterday’s landslide vote in the House to prevent a big tax increase next year. If you’re a glass-half-full optimist, you will be celebrating the good news for taxpayers. If you’re a glass-half-empty pessimist, you will be angry because the bill also contains provisions to increase the burden of government spending as well as some utterly corrupt tax loopholes added to the legislation so politicians could get campaign cash from special interest groups.

If you want some unambiguously good news, however, ignore the tax deal and celebrate the fact that Senator Harry Reid had to give up his attempt to enact a pork-filled, $1 trillion-plus spending bill. This “omnibus appropriation” not only had an enormous price tag, it also contained about 6,500 earmarks. As I explained in the New York Post yesterday, earmarks are “special provisions inserted on behalf of lobbyists to benefit special interests. The lobbyists get big fees, the interest groups get handouts and the politicians get rewarded with contributions from both. It’s a win-win-win for everyone — except the taxpayers who finance this carousel of corruption.”

This sleazy process traditionally has enjoyed bipartisan support, and many Republican senators initially were planning to support the legislation notwithstanding the voter revolt last month. But the insiders in Washington underestimated voter anger at bloated and wasteful government. Thanks to talk radio, the Internet (including sites like this one), and a handful of honest lawmakers, Reid’s corrupt legislation suddenly became toxic.

The resulting protests convinced GOPers — even the big spenders from the Appropriations Committee — that they could no longer play the old game of swapping earmarks for campaign cash. This is a remarkable development and a huge victory for the Tea Party movement.

Here’s part of the Washington Post report on this cheerful development:

Senate Democrats on Thursday abandoned their efforts to approve a comprehensive funding bill for the federal government after Republicans rebelled against its $1.2 trillion cost and the inclusion of nearly 7,000 line-item projects for individual lawmakers.

…Instead, a slimmed-down resolution that would fund the government mostly at current levels will come before the Senate, and Reid and Minority Leader Mitch McConnell (R-Ky.) said it will pass by Saturday.

…The majority leader’s surrender on the spending bill marked a final rebuke for this Congress to the old-school system of funding the government, in which the barons of the Appropriations Committee decided which states would receive tens of millions of dollars each year.

…Almost every Senate Republican had some favor in the bill, but as voter angst about runaway deficits grew before the midterm elections, Republicans turned against the earmark practice.

This is a very positive development heading into next year, but it is not a permanent victory. Some Republicans are true believers in the cause of limited government, but there are still plenty of corrupt big spenders as well as some Bush-style “compassionate conservatives” who think buying votes with other people’s money somehow makes one a caring person.

In other words, fiscal conservatives, libertarians, and Tea Partiers have won an important battle, but this is just one skirmish in a long war. If we want to save America from becoming another Greece, we better make sure that we redouble our efforts next year. Eternal vigilance is the price of liberty.

The Market for ‘Pull’ on Capitol Hill

Economists can actually measure the value of insider connections:

[L]obbyists connected to US Senators suffer an average 24% drop in generated revenue when their previous employer leaves the Senate. The decrease in revenue is out of line with pre-existing trends, it is discontinuous around the period in which the connected Senator exits Congress and it persists in the long-term. … Measured in terms of median revenues per ex-staffer turned lobbyist, this estimate indicates that the exit of a Senator leads to approximately a $177,000 per year fall in revenues for each affiliated lobbyist.

The fall is steeper, the researchers find, when the departing member of Congress sat on a powerful committee such as Appropriations, Senate Finance, or (on the House side) Ways and Means. Lobbyists who are ex-staffers are also more likely to quit the lobbying business once “their” member departs office. Incidentally, actual per-lobbyist revenue is lower than you might assume from the above figures, because many lobbying contracts are shared out among several participants with each individual getting only a portion of the proceeds. (Jordi Blanes i Vidal, Mirko Draca, and Christian Fons-Rosen, “Revolving Door Lobbyists,” via Alex Tabarrok).

If you needed another reason to vote against that unsatisfactory incumbent this fall, reflect that by doing so you’ll also be dimming the stars of his or her unsatisfactory ex-staffers.

Controversy? Or Confidence Game?

While Washington, D.C. and the newstalk-osphere are gripped by the story of forced-out USDA bureaucrat Shirley Sherrod, six appropriations subcommittees have advanced FY 2011 spending bills that will collectively spend over $4,000 per U.S. family. (They’ll get to the big ones later.)

Are you paying attention? What are you paying attention to?

There are important social and political kernels within the Sherrod story (and “Journolist”), but in the context of Washington policymaking, they might just be distraction.

Emergency Spending

A recent paper by Veronique de Rugy examines how policymakers use various budgeting gimmicks to increase spending and obscure liabilities. One particularly abusive mechanism is the designation of supplemental spending as an “emergency.” The emergency designation makes it easier for policymakers to skirt budgetary rules, particularly “pay-as-you-go” (PAYGO) requirements.

The following chart from the paper shows how supplemental spending, most of which was designated as “emergency,” has taken off in the last decade:

As the chart notes, much of the increase is attributable to supplemental appropriations for the wars in Iraq and Afghanistan. The Bush administration was rightly criticized by analysts across the ideological spectrum for funding the wars outside of the standard budget process.

However, with the Democrats in control, the emergency designation is now being abusively applied to domestic spending. Congressional Research Service data obtained by the office of Senator Tom Coburn (R-Okla.) finds that emergency spending has increased deficits by almost $1 trillion since the 111th Congress was seated in January 2009.

The biggest chunk came with passage of the $862 billion “emergency” stimulus bill in February 2009. The Obama administration insisted that the emergency spending legislation was necessary to jump-start the economy and keep unemployment below 8 percent. Oops.

Congress has since passed additional multi-billion dollar “emergency” bills to extend supposedly simulative activities like unemployment benefits. The latest “emergency” extender bill that is bogged down in the Senate would add another $57 billion in debt.

What is Congress allowed to designate as emergency spending? Keith Hennessey, a former economic advisor to George W. Bush, offers the best definition: “it’s whatever you can get away with labeling as an emergency.”

However, Hennessey points out that there was originally a test with a fairly high bar created by the Office of Management and Budget in 1991 under the first President Bush. According to Hennessey, all five of these conditions had to be met:

  1. Necessary; (essential or vital, not merely useful or beneficial)
  2. Sudden; (coming into being quickly, not building up over time)
  3. Urgent; (requiring immediate action)
  4. Unforeseen; and
  5. Not permanent.

Hennessey says the definition was included in congressional budget resolutions during Bush II’s administration and that the president proposed codifying it in law. But that doesn’t seem to be the policy that the Bush II administration actually followed. With perhaps the exception of initial hostilities, there was nothing “unforeseen” about Bush’s “emergency” war spending in Iraq and Afghanistan. It seems that Bush’s inability to abide by his own proposal is another sad reminder that his fiscally reckless tenure helped pave the road to Obama.

Davy Crockett’s Lesson for Congress

Fess Parker, the actor who portrayed both Davy Crockett and Daniel Boone in classic television shows, has died at the age of 85. In his honor, I offer this version of Parker singing the theme song “The Ballad of Davy Crockett”:

And more substantively, I note that Col. David Crockett served three terms in Congress from Tennessee, where he is best known for delivering a speech known as “Not Yours to Give.” In response to a proposal for an appropriation to benefit the widow of a naval officer, Rep. Crockett said:

I have as much respect for the memory of the deceased, and as much sympathy for the sufferings of the living, if suffering there be, as any man in this House, but we must not permit our respect for the dead or our sympathy for a part of the living to lead us into an act of injustice to the balance of the living. I will not go into an argument to prove that Congress has no power to appropriate this money as an act of charity. Every member upon this floor knows it. We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right so to appropriate a dollar of the public money. …

We cannot, without the grossest corruption, appropriate this money as the payment of a debt. We have not the semblance of authority to appropriate it as a charity. Mr. Speaker, I have said we have the right to give as much money of our own as we please. I am the poorest man on this floor. I cannot vote for this bill, but I will give one week’s pay to the object, and if every member of Congress will do the same, it will amount to more than the bill asks.

He went on to quote a constituent who had complained when he previously voted for a similar measure:

The people have delegated to Congress, by the Constitution, the power to do certain things. To do these, it is authorized to collect and pay moneys, and for nothing else. Everything beyond this is usurpation, and a violation of the Constitution.

He may not actually have patched up the crack in the Liberty Bell, but he did his best to preserve the Constitution.

Tax Hike Commission

The Senate Homeland Security and Government Affairs Committee is holding hearings today focused on Senator Kent Conrad (D-ND) and Judd Gregg’s (R-NH) idea to set up a special Task Force to draft a deficit-reduction plan. The plan would get fast-tracked through Congress for a vote and “everything would be on the table.”

For taxpayers, this idea creates the threat of large tax increases on top of all the other tax increases being discussed in Congress. While the senators supporting a Task Force express valid concerns about the government’s exploding debt, the plan could launch a drive to impose a European-style value-added tax in America.

In theory, such a Task Force could come up with some meaty and long-overdue cuts to the federal budget. But nine of the senators co-sponsoring the Conrad-Gregg Task Force, including Conrad, voted in favor of the massive spending bill passed by the Senate on Sunday, which increased appropriations by 10 percent in a single year.

In calling for deficit reduction, Senator Conrad says that “it is no longer enough for Congress to simply talk about reform; it is time for action and leadership.” But Senator Conrad certainly hasn’t shown reform leadership on farm subsidies. So until he and his colleagues start restraining their own spending appetites, it’s safe to assume that ”everything on the table” really just means a sneaky, under-the-table tax increase.

Breaking: Economics 101 Still in Effect

Dairy farmers are working lobbying hard to ensure they get their hands on more of your money.  Apparently, changes made last year to the Milk Income Loss Contract – mainly to take account of rising feed costs – were not enough to stem the losses.

The Senate recently voted to give the USDA an extra $350 million for dairy farmers’ support. The House left dairy support out of its appropriations bill, so the two chambers are working on the compromise now (prediction: the taxpayer will get screwed).

Here’s an ironic quote from a Brownfield news post yesterday (linked to above). It’s Missouri Dairy Association Chairman Larry Purdom on how to bring prices back up:

“Our feeling is that if [USDA] would buy some cheese and product that’s in storage…hanging over our heads, depressing prices,” Purdom tells Brownfield from his farm at Purdy, Missouri, “we feel like the prices would start moving on their own if we didn’t have this surplus.”

More on U.S. dairy policy here.