Tag: Earmarks

Earmark Donor States

I have an op-ed in Politico about “earmark donor states.” It’s a term I invented to highlight a rarely discussed side of earmarking: public choice economics.

As public choice theory would predict, the earmarking process operates under a system of concentrated benefits and diffuse costs.  Based on an analysis of 2009 data, 16 states receive a disproportionately large percentage of the earmark pie and can be labeled “earmark beneficiary” states. The other 34 states and the District of Columbia are “earmark donors,” as they receive fewer earmark dollars than they proportionally should.

To determine which states win and lose in the earmarking game, I looked at the share of taxes each state sends to Washington and compared it to the share of earmarks that each state receives. 

In the op-ed, I use Colorado, one of the biggest earmark donor states, as an example:

Colorado taxpayers contribute about 1.6 percent of total federal taxes, but they receive just over two-tenths of one percent of earmarked funds—proportionally speaking, less than a third of what it should be getting. This works out to more than $200 million dollars that Coloradans are spending to subsidize earmarks in other states – hardly chump change. So while Colorado’s representatives might pat themselves on the back for securing funding for an occasional municipal bus or bioenergy plant, their earmarking rivals in other states like West Virginia and Hawaii obtain funding for larger and more expensive projects and send the bill to the Centennial State.

Below is a table with additional data indicating which states are earmark donors and recipients.  The key column is the “earmark ratio.” The lower the figure, the smaller a state’s share of earmarks is relative to the amount of taxes its residents and businesses pay.  A state with an earmark ratio below 100% is a donor state.  As you can see, Utah is the first state on the table that receives slightly more than its proportional share of earmark funds. Mississippi, the last state on the list, remarkably receives 11 times more than its proportional share. 

 Also note that the most populous states in the country are earmark donors – almost 90 percent of Americans live in earmark donor states.

State TOTAL FEDERAL TAXES % of Total Taxes Proportional Share of Earmarks (millions of $) Earmarks Received (millions of $) % of Total Earmarks Earmark Ratio % of Delegation on Approps
New York 193,446,916 8.2% 1642.75 418.71 2.1% 25.5% 12.9%
Illinois 116,130,852 5.0% 986.18 252.19 1.3% 25.6% 14.3%
Nebraska 16,200,400 0.7% 137.57 41.53 0.2% 30.2% 20.0%
Colorado 38,484,608 1.6% 326.81 106.15 0.5% 32.5% 11.1%
Connecticut 44,684,141 1.9% 379.46 124.83 0.6% 32.9% 14.3%
New Jersey 103,548,696 4.4% 879.34 319.06 1.6% 36.3% 13.3%
Arizona 32,372,226 1.4% 274.91 102.00 0.5% 37.1% 10.0%
Ohio 103,638,344 4.4% 880.10 345.98 1.7% 39.3% 25.0%
Georgia 59,486,251 2.5% 505.16 203.94 1.0% 40.4% 13.3%
Minnesota 67,646,589 2.9% 574.46 233.10 1.2% 40.6% 10.0%
Texas 200,521,512 8.5% 1702.83 695.59 3.5% 40.8% 17.6%
California 264,868,391 11.3% 2249.27 971.05 4.9% 43.2% 14.5%
Indiana 42,108,854 1.8% 357.59 156.44 0.8% 43.7% 9.1%
Massachusetts 70,108,079 3.0% 595.36 265.75 1.3% 44.6% 8.3%
Wisconsin 38,642,363 1.6% 328.15 171.34 0.9% 52.2% 20.0%
North
Carolina
63,348,252 2.7% 537.95 288.11 1.4% 53.6% 6.7%
Pennsylvania 106,613,979 4.5% 905.37 488.57 2.5% 54.0% 14.3%
Tennessee 44,047,939 1.9% 374.06 208.02 1.0% 55.6% 27.3%
Michigan 56,050,689 2.4% 475.98 279.99 1.4% 58.8% 5.9%
Florida 110,156,809 4.7% 935.45 556.55 2.8% 59.5% 14.8%
Delaware 13,683,353 0.6% 116.20 69.38 0.3% 59.7% 0.0%
Oklahoma 24,297,410 1.0% 206.33 123.91 0.6% 60.1% 14.3%
Oregon 21,736,643 0.9% 184.59 111.85 0.6% 60.6% 0.0%
Virginia 58,598,281 2.5% 497.62 312.80 1.6% 62.9% 15.4%
Wyoming 3,833,691 0.2% 32.56 21.33 0.1% 65.5% 0.0%
District of
Columbia
19,487,689 0.8% 165.49 111.59 0.6% 67.4% 0.0%
Missouri 44,310,000 1.9% 376.28 256.45 1.3% 68.2% 18.2%
Washington 48,587,720 2.1% 412.61 287.22 1.4% 69.6% 18.2%
Maryland 44,484,984 1.9% 377.77 304.09 1.5% 80.5% 10.0%
Kansas 20,374,354 0.9% 173.02 141.68 0.7% 81.9% 33.3%
New Hampshire 8,739,838 0.4% 74.22 62.40 0.3% 84.1% 25.0%
Louisiana 34,882,848 1.5% 296.23 272.57 1.4% 92.0% 22.2%
Arkansas 25,727,268 1.1% 218.48 202.37 1.0% 92.6% 33.3%
Rhode Island 10,909,205 0.5% 92.64 87.58 0.4% 94.5% 50.0%
South Carolina 17,806,603 0.8% 151.21 145.36 0.7% 96.1% 0.0%
Utah 14,270,839 0.6% 121.19 131.18 0.7% 108.2% 20.0%
Idaho 6,859,632 0.3% 58.25 63.27 0.3% 108.6% 25.0%
Nevada 13,770,576 0.6% 116.94 129.88 0.7% 111.1% 0.0%
Kentucky 23,313,696 1.0% 197.98 248.74 1.2% 125.6% 37.5%
Maine 6,105,799 0.3% 51.85 73.04 0.4% 140.9% 25.0%
Iowa 17,614,407 0.8% 149.58 336.88 1.7% 225.2% 28.6%
Alabama 20,093,422 0.9% 170.63 424.18 2.1% 248.6% 33.3%
Vermont 3,366,627 0.1% 28.59 81.97 0.4% 286.7% 33.3%
Montana 4,136,011 0.2% 35.12 101.02 0.5% 287.6% 66.7%
South Dakota 4,888,826 0.2% 41.52 135.48 0.7% 326.3% 33.3%
New Mexico 8,188,815 0.3% 69.54 235.09 1.2% 338.1% 0.0%
North Dakota 4,115,943 0.2% 34.95 136.79 0.7% 391.3% 33.3%
Hawaii 6,747,592 0.3% 57.30 270.74 1.4% 472.5% 25.0%
Alaska 4,670,157 0.2% 39.66 227.81 1.1% 574.4% 33.3%
West Virginia 6,332,264 0.3% 53.77 336.92 1.7% 626.6% 20.0%
Mississippi 9,603,121 0.4% 81.55 900.57 4.5% 1104.3% 16.7%

Source:
IRS: http://www.irs.gov/taxstats/article/0„id=206488,00.html
Taxpayers for Common Sense
Author’s calculations

Suspecting that the disparity between states is a product of political clout, I calculated the percentage of each state’s congressional delegation serving on the House and Senate Appropriations Committees.  The graph below shows the correlation between this metric and the earmark ratio of each state. The closely tracking trend lines suggest there is a connection between a state’s representation on the Appropriations Committees and earmarks. The correlation between these figures is 0.264, which is especially strong when you consider that earmarking proponents often argue that the process is entirely merit-driven and apolitical.  To be sure, this is a very rough indicator – earmark recipient states like Alaska and West Virginia were long represented by earmark champions Ted Stevens and Robert Byrd, neither of whom is included in the figure.  Also, it should be noted that Hawaii and Mississippi are represented by Daniel Inouye and Thad Cochran who, respectively, are the chairman and ranking Republican on the Senate Appropriations Committee.  As such, they carry significantly more clout than the average appropriator. Additionally, Nevada’s status as an earmark beneficiary state despite its lack of appropriators might be explained by Senator Harry Reid’s influence as Senate Majority Leader.

I also evaluated the correlation between earmark ratios and median income. Based on the arguments of earmark proponents, one would expect a very strong negative correlation here as earmarking is intended to direct federal funds to needy, underserved parts of the country.  The strength of that correlation is -0.255, which is slightly weaker than the political-based correlation.  This suggests that in the earmarking process, political power is more important than financial need.

The connection between political power and earmarking prowess is hardly surprising. More startling is the disparity between the shortchanged earmark donor states and the earmark beneficiary states. Perhaps politicians from donor states are unaware of the extent to which their constituents subsidize out-of-state projects. More likely, most congressmen are successfully pulling off a political sleight of hand – trumpeting their occasional earmark project and hoping it distracts their constituents from the disproportionately large number of earmarks in other states.

After all, the vast majority of Americans would be far better off if Congress stopped earmarking and removed itself from spending decisions that should be made by local governments and private entities.  

I must acknowledge several of my colleagues who helped with this analysis – many thanks to Kurt Couchman and Andrew Mast.

Ban Spending Earmarks, But Not Tariff Cuts

Republican leaders in Congress announced Monday that they are all on board to ban spending “earmarks” when the newly elected Congress convenes in January. That is all to the good. While not a large share of the federal budget, the designation of tax dollars to fund specific pet projects in member districts has come to symbolize out-of-control spending in Washington.

Those same leaders should clarify that the earmark ban applies only to spending projects—not to the kind of tariff suspensions including in a recent miscellaneous tariff bill.

The U.S. Manufacturing Enhancement Act approved by Congress in July suspended tariffs on hundreds of imported items of special interest to U.S. manufacturers. House Republican leaders made the mistake earlier this year of including such tariff suspensions in an earmark ban they announced in March.

The overly broad definition of an earmark boxed the leadership into opposing a perfectly sensible trade bill. Despite the half-hearted opposition of the GOP leadership, the U.S. Manufacturing Enhancement Act passed overwhelmingly in the House on July 21, by a margin of 378-43, with Republicans supporting it by a 3-1 margin.

Most members of Congress already understood what the Cato Institute pointed out in a September 2010 study recommending reform of future miscellaneous tariff bills—that tariff cuts are not the same as spending earmarks. Here is what I wrote in the study about the difference between tariff cuts and the kind of spending earmarks that has angered voters:

Spending-bill earmarks distribute tax dollars not for any public purpose authorized under the U.S. Constitution, but rather to benefit a certain special interest or a specific city or district. They grant favors to a small group of beneficiaries at the public’s expense. In contrast, a tariff suspension repeals a narrow tax that falls disproportionately and unfairly on a small group of producers. Instead of granting a favor at the public’s expense, a tariff suspension relieves individual producers of a burden that falls on them and nobody else. Unlike a spending earmark, a tariff suspension creates no new claim on public resources. It does not expand the scope or size of government.

Including tariff suspensions in the moratorium is not a matter of curbing the power of lobbyists. There is a world of difference between lobbying for a $500,000 government grant for a project with narrow benefits, and lobbying to remove a $500,000 tax bill that only a handful of enterprises are required to pay. The former seeks an expansion of the government’s power and influence, the latter a reduction. Republicans who rightly complain about the growth of the federal government should be the first to embrace the suspension and repeal of hundreds of nuisance taxes distorting the economy and burdening American producers.

The new Congress may soon consider another miscellaneous tariff bill to further reduce discriminatory tariffs that impose real costs on U.S. companies trying to compete in global markets. Republican leaders should join with their Democratic counterparts in the new Congress to clarify that suspending or repealing unfair tariffs should not be banned but should be vigorously pursued.

Earmarks and the Constitution

Today POLITICO Arena asks:

Is Senate Minority Leader McConnell’s announcement yesterday that he will support a moratorium on earmarks a sign that establishment Republicans are caving in to the tea party faction of their party?

My response:

Far from a sign that ”establishment” Republicans are “caving in” to the Tea Party faction soon to arrive here, Senate Minority Leader McConnell’s announcement yesterday that he “will join the Republican Leadership in the House in support of a moratorium on earmarks in the 112th Congress” suggests that Republicans may be rediscovering their roots in limited government, however reluctantly for some. At the same time, McConnell’s unusually long press release brings out two main difficulties surrounding the subject: first, and most important, the overall growth of spending; and second, the question of who decides where that spending goes.

On the second question, McConnell is clearly right: It’s hardly an improvement if ending earmarks amounts simply to giving the president the discretion to determine where spending goes. And on that point he contrasts earmarks he himself has made toward projects that properly were federal – e.g., cleaning up a dangerous chemical weapons site in his state, which presidents in both parties had ignored – with the Stimulus Bill, “which Congress passed without any earmarks only to have the current administration load it up with earmarks for everything from turtle tunnels to tennis courts.”

To be sure, there’s enough mischief at both ends of Pennsylvania Avenue to go around, but it’s the growth of spending, most on matters unauthorized by the Constitution, that is far and away the larger problem. McConnell calls for congressional oversight “to monitor how the money taxpayers send to the administration is actually spent.” Far more important will be hearings to determine whether Congress has constitutional authority to appropriate money on any particular matter in the first place.

Thus, the new Congress needs to see through the false alternative the earmarks debate has engendered. At bottom, it’s not a question of whether Congress or the president shall decide. Rather, after administration input, all but ministerial spending decisions belong to Congress – as constrained by the Constitution. Thus, if the voice of the electorate is to be respected, new and old members alike need to attend first to their oath of office.

Stopping the ‘Culture of Spending’

Sen. Mitch McConnell’s quick reversal on the subject of earmarks was a surprise, but that quick, largely symbolic win against profligate spending certainly won’t translate into a more permanent movement without sustained effort. Shortly after McConnell made his speech supporting a “moratorium” on earmarks, I spoke with Matt Kibbe of Freedomworks about turning the enthusiasm for smaller government into that enduring force. He said understanding public choice gives lawmakers a better shot at turning popular anger at government into reductions in its size and scope. Freedomworks recently held orientation sessions for freshmen members of Congress. A primer in public choice was on the agenda.

Cato’s Government Failure: A Primer in Public Choice is a good place to start to understand the mechanics of government dealmaking.

Dueling Earmark Op-Eds

With a key vote on earmarks slated for next Tuesday in the Senate Republican Conference, Republican leaders are having it out on whether their party should eschew earmarking or continue the practice. The debate centers on the division of power between Congress and the executive branch.

On NRO’s “The Corner” blog, Senator James Inhofe (R-Okla.) calls earmarks a “phony issue.” Doing away with earmarks doesn’t reduce spending. It simply transfers authority for spending decisions to the executive:

Earmarks have been part of the congressional process since the founding of our country. As James Madison, the father of the Constitution viewed it, appropriating funds is the job of the legislature. Writing in the Federalist, he noted that Congress holds the power of the purse for the very reason that it is closer to the people. The words of Madison and Article 1 Section 9 of the Constitution say that authorization and appropriations are exclusively the responsibility of the legislative branch. Congress should not cede this authority to the executive branch.

And he criticizes the anti-earmark movement as “pseudo” fiscal responsibility:

While anti-earmarkers bloviate about the billions spent through earmarks, many of them supported the trillions of dollars in extra spending for bailouts, stimulus, and foreign aid. Talk about specks versus planks! Over the course of the last several years, the overall number and dollar amount of earmarks has steadily decreased. During that same time, overall spending has ballooned by over $1.3 trillion. In reality, ballyhooing about earmarks has been used as a ruse by some to seem more fiscally responsible than they really are.

Taking the other side, Rep. Jeff Flake (R-AZ) writes in the Washington Post that earmarks are part and parcel of Congress’s abdication:

Those who view earmarking as an expression of the “congressional prerogative” sell Congress short of its preeminent role as the first branch of government. As the defenders of earmarking are fond of saying, earmarks represent less than 2 percent of all federal spending. Precisely! By focusing on a measly 2 percent of spending, we have given up effective oversight on the remaining 98 percent.

This lopsided exchange can be examined empirically. As the number of earmarks has risen significantly over the past two decades, the amount of oversight exercised by the House Appropriations Committee — as measured by the number of hearings held, witnesses called, etc. — has declined substantially. It is as if Congress has called a truce with the executive branch: Don’t hassle us about our 2 percent, and we’ll offer only token interference with your 98 percent.

Senator Inhofe misuses Federalist #58. The “power of the purse” refers to the fact that revenue measures must originate in the popularly elected House, strengthening its hand against the Senate, whose membership was to be selected by state legislatures. But he is right to castigate the earmark opponents who have thrown buckets of taxpayer money into the wind when Washington, D.C., has lately spun itself into a whirl.

Inhofe’s static view of earmarking produces the weaker of the two arguments, though. Rep. Flake is right to recognize earmarking’s dynamic effects. The fiscal weaklings—majorities in both parties—decline oversight and go along with spending bills they might otherwise oppose because of goodies for their home states or districts.

Earmarker comity may even cause fiscal conservatives to go wobbly. Try counting the number of amendments Senator Inhofe has offered seeking to strike earmarks in 23 years of debating spending bills on the Senate floor, and you may not need to raise a finger on either of your hands.

The right answer is to take what both of these debaters has to offer. Earmarks should go, and Congress should withdraw spending discretion from the executive branch while it reduces spending overall.

I’ll be speaking Monday at a Hill event on earmark transparency. Should be a barn burner!

A First Test for Republicans

Republicans’ hands have been strengthened by a wave of voter angst about big-spending and business-as-usual in Washington, D.C. But have they landed on their limited-government feet? The first test of that question comes next Tuesday.

That’s when Senate Republicans will likely vote on a proposal to bar themselves from requesting earmarks. Last year, House Republicans adopted that policy for themselves the day after House Democrats limited their earmarking to non-profits and government bodies.

The Senate Republican earmark ban is championed by Tea Party favorite Sen. Jim DeMint (R-S.C.). Its strongest opponent is Minority Leader Mitch McConnell (R-Ky.).

Senator McConnell may have won his race in 2008 thanks to bringing home the bacon, but politics seem to have changed since then. Earmarker extraordinaire Rep. James Oberstar (D-Minn.) was bounced out of his office despite larding his district and state with federal pork.

McConnell’s own state may have changed, too. Witness the election of Rand Paul (without McConnell’s help). Paul supports the earmark ban.

McConnell has framed his opposition to the earmark ban as an argument for preserving Congress’ “discretion”—that is, its authority over the spending of federal dollars. Without earmarks, the administration will decide where the money is spent. But there’s a pretty long list of things McConnell could work for if he wants to defend Congress’ prerogatives, such as:

- Forcing the administration to be transparent about the grants it doles out.

- Limiting  or eliminating the administration’s grant-making and spending discretion.

- Withdrawing all the other massive delegations of authority that Congress has given to the executive branch.

- Reducing spending and cutting taxes so that spending discretion is where it should be: with the taxpayers who earned the money in the first place.

Earmarks are not a huge part of the federal budget, but that does not militate against ending them. Senator Tom Coburn (R-Okla.) calls them a “gateway drug to federal spending addiction,” which is a folksy way of talking about the political science of “log-rolling.” Former member of Congress Joe Scarborough (R-Fla.), who has seen it first-hand, talks in this clip about how House and Senate leaders use earmarks to buy votes on legislation they want to get passed.

If earmarks go away as a tool for wheeling-and-dealing in Congress, members and senators will be less likely to sell out the country as a whole with bloated spending bills and Rube-Goldberg regulatory projects for the benefit of some local interest or campaign contributor.

I’ll be speaking next Monday at a Hill event on earmark transparency. The vote in the Senate Republican Conference is Tuesday. It’s a secret ballot, so any senator who doesn’t trumpet his or her support of the earmark ban almost certainly opposes it and supports the practice of earmarking.

Cutting Spending to 2008 Levels

Following last week’s electoral victory, the House Republican leadership has been talking up its pre-election pledge to return federal spending to 2008 levels. As I’ve previously discussed, the Republicans are only talking about non-security, discretionary spending. This category of spending represents a relatively small portion of the overall federal budget, and would only shave about $100 billion off of what the president wants to spend.

A better idea would be to cut total spending to 2008 levels. Excluding interest, the president has proposed spending $853 billion more in fiscal 2011 than the government spent in fiscal 2008. The following table shows the increases by department.

As the chart shows, federal spending for the Pentagon alone is set to increase by $126 billion, or more than the amount that the Republican leadership says it wants to cut. Therefore, if the Republicans want to get serious about cutting spending and reining in the growing federal debt, all categories of spending must be on the table.

Apologists for government spending will complain that returning spending levels to 2008 would be draconian. But compare the percentage increases in spending over three years under the president’s proposed budget.

President Obama and the Democrats told the American people that this spending explosion was needed to fix the economy. Unfortunately, it has only succeeded in transferring a tremendous amount of resources from the private sector to the less efficient government. Republicans were elected, in part, to help put the private sector back in the economic driver’s seat. To do so, Republicans need to be much more ambitious than trimming just $100 billion off of the president’s three-year $853 billion spending increase.