Tag: Earmarks

Buy American, Destroy American Jobs

The “buy America” provision in the misnamed stimulus bill was supposed to protect jobs in the U.S.  Alas, by encouraging foreign protectionism, the measure is likely to end up destroying American jobs.

Indeed, the provision has all the earmarks of a grand political fiasco.  Reports the Financial Times:

Confusion reins. For fear of missing out on contracts, many companies are demanding that all their suppliers are Buy American-compliant regardless of any exemptions.

“Those companies that can comply are of course thrilled and are trumpeting that in their marketing. Those that cannot are in agony and are losing business and cutting workers,” says David Ralston, a government procurement lawyer at Foley & Lardner. “The many companies that find themselves in the gray areas are calling their lawyers.”

Canada’s government has been an early and vocal lobbyist against the measures, sending officials to Washington to warn that a trade war is brewing. Canadian municipalities threatened to attach “do not Buy American” provisions to their own public projects after manufacturers were cut out of US stimulus projects, but have agreed to hold off while the national government tries to resolve the problem.

Canada wants to broker a bilateral trade agreement on government contracts which would extend all the way down to the level of local authority. The US trade representative says it is open to the idea.

While this would quieten the Canadians, it could spark cries of protest from the US’s other trading partners. The British ambassador has given several speeches in recent weeks chastising the US over Buy American and the way it is being implemented. The Europeans are watching closely. But could the US write bilateral deals with them all? Buy American’s supporters in Congress would surely kick back.

The Chamber of Commerce is proposing a compromise. It has called on the administration to tell municipalities to act as if they were signatories to the federal government’s agreements. “I think there is enough flexibility for OMB [the Office of Management and Budget] to make that change. I don’t have a crystal ball but for multiple reasons it would make sense for them to do it,” says Chris Braddock, the Chamber’s procurement expert.

On Monday all groups with a stake in the debate submitted their written comments to the OMB, the White House department handling the stimulus. The administration must now write the final rules on how to implement Buy American.

The U.S. has gained enormously from the expansion of trade in recent years.  We all will lose if Washington now encourages a global retreat from free markets.

“It’s a Lot Easier to Promise to Change Washington Than It Is to Actually Change It”

The New York Times has an interesting story on President Obama’s continuing failure to follow through on his “Sunlight Before Signing” promise. On the campaign trail, he said he would post bills online for five days before signing them. Two dozen bills now have his signature, and only one has been posted for five days before signing.

The article (and accompanying video) fixes on a couple of reasons why the president might be excused from carrying out the promise. One is the technical difficulty of managing potentially hundreds of thousands of comments. The promise did not include a promise to publish comments, though – much less to read them (though it would be politically astute to appear to do so). In my view, the difficulty of administering a public comment system – which was not part of the promise – does not excuse the failure to post the bills Congress presents to the president for five days before he signs them.

A second excuse is that posting bills online would be ineffectual. Ellen Miller of the Sunlight Foundation is quoted saying, “There isn’t anybody in this town who doesn’t know that commenting after a bill has been passed is meaningless.”

I have done my level-best to illustrate how a five-day hold at the White House would have good effects on reducing earmarks, parochial amendments, and other shenanigans – such as congressional approval of bonuses to AIG executives.

Miller’s preferred approach – placing a similar hold on bills before they leave Congress – would have a similar effect – but nothing dramatically more open. Just as under a presidential hold, members of Congress and Senators would be more reticent to introduce potentially controversial amendments. Just as under a presidential hold, they would carefully avoid a blossoming of debate about their pet projects at the end of the legislative process. A congressional hold would change the upstream behavior of the politicians – just like a presidential hold would.

A presidential hold and a congressional hold are both good ideas, and they are not mutually exclusive. The presidential hold has a key advantage: The president has already promised it – to the cheers of American voters.

The New York Times story reports a small step toward meeting the actual terms of President Obama’s pledge:

“In order to continue providing the American people more transparency in government, once it is clear that a bill will be coming to the president’s desk, the White House will post the bill online,” said Nick Shapiro, a White House spokesman. “This will give the American people a greater ability to review the bill, often many more than five days before the president signs it into law.”

If this means posting links to bills on the Thomas legislative system from Whitehouse.gov, this is something the White House has done sporadically, and it would increase transparency by a small margin if it were regularized. The administration should establish a uniform URL where bills are posted so that every American can easily find every bill the president signs. But, in terms of fulfilling President Obama’s promise, “posting a link from WhiteHouse.gov to THOMAS of a conference report that is expected to pass doesn’t cut it.”

I think this is grudging progress toward implementation of President Obama’s “Sunlight Before Signing” promise. In the video, the author of the Times article has the best line illustrating why the White House deserves modest congratulations for taking this step: “It’s a lot easier to promise to change Washington than it is to actually change it.”

The Politics of Stimulus Spending

USA Today investigates how members of Congress are “working behind the scenes to try to influence how the [stimulus]  money is spent.”

Congress and President Obama proudly noted that there were no earmarks in the $787 stimulus bill. But…

Ten of 27 departments and agencies receiving stimulus money have released records of contacts by lawmakers under Freedom of Information Act requests USA TODAY filed in April. Those records detailed 53 letters, phone calls and e-mails recommending projects from 60 members from February through the end of May. Thirteen of those lawmakers voted against the stimulus package.

Critics of the stimulus bill pointed out that government money is always politically directed. It’s little consolation to be proven right.

The Stimulating Story of Dr. Robert Felner

In 2003, after a stint heading up the school of education at the University of Rhode Island, Dr. Robert Felner took the same job at the University of Louisville. Two years later, he secured an earmarked  federal government grant for $694,000 from the Dept. of Education, ostensibly for a vast study of Kentucky public school performance. According to federal investigators, the money ended up in Dr. Felner’s pockets instead. In fact, investigators allege that Felner and a partner in crime managed to defraud taxpayers of $2.3 million by promising to deliver educational assessment services that never materialized.

The checks and balances you might expect to have stopped this from happening were seldom checked and never balanced. And that’s what’s so stimulating about this story: Felner allegedly duped everyone involved for nearly 3 years – at a time when the $100 billion federal education stimulus package wasn’t yet a twinkle in president Obama’s eye.

Given that officials couldn’t stay on top of millions of dollars in taxpayers’ money under normal circumstances, it’s unsettling to think what is going on right now as the system is suddenly flooded with billions of new dollars.

Amazing Coincidences

The coincidences that occur in Washington, D.C. are truly extraordinary.  According to the Washington Post:

The headquarters of Murtech, in a low-slung, bland building in a Glen Burnie business park, has its blinds drawn tight and few signs of life. On several days of visits, a handful of cars sit in the parking lot, and no trucks arrive at the 10 loading bays at the back of the building.

Yet last year, Murtech received $4 million in Pentagon work, all of it without competition, for a variety of warehousing and engineering services. With its long corridor of sparsely occupied offices and an unmanned reception area, Murtech’s most striking feature is its owner – Robert C. Murtha Jr., 49. He is the nephew of Rep. John P. Murtha, the Pennsylvania Democrat who has significant sway over the Defense Department’s spending as chairman of the House Appropriations defense subcommittee.

Robert Murtha said he is not at liberty to discuss in detail what his company does, but for four years it has subsisted on defense contracts, according to records and interviews. He said Murtech’s 17 employees “provide necessary logistical support” to Pentagon testing programs that focus on detecting chemical, biological, radiological and nuclear threats, “and that’s about as far as I feel comfortable going.” Giving more details could provide important clues to terrorist plotters, he said.

Murtha said he does not advertise being the nephew of John Murtha and considers it “unfortunate” that some will unfairly assume Murtech received its federal contracts because of his uncle’s influence at the Pentagon.

“If we’re not doing our job well, we wouldn’t be doing our job,” he said. “I’m successful at the work I do because of the skill sets I have… . You don’t know how good someone is unless you work with them.”

A spokesman at Murtha’s office did not return calls seeking comment. The lawmaker, a former Marine, has said in the past that he is proud of his family’s service to the military and the government.

Over the years, John Murtha has proudly claimed credit for using his Appropriations Committee seat to steer hundreds of millions in Pentagon work to companies in his district, many of them fledgling enterprises run by campaign contributors. His influence also may be seen in the military improvements at the Johnstown airport that bears his name. The little-used commuter airport doubles as a wartime preparedness facility for the Pentagon after $30 million in improvements.

Murtha’s power has had beneficial effects within his family. His brother, Robert C. “Kit” Murtha, built a longtime lobbying practice around clients seeking defense funds through the Appropriations Committee and became one of the top members of KSA, a lobbying firm whose contractor clients often received multimillion-dollar earmarks directed through the committee chairman.

Of course there is no relationship between Rep. John Murtha’s position and the taxpayer money collected by his relatives.  Still, it is amazing how things like this just seem to happen when Capitol Hill gets involved.

The Politics of Budget-Cutting

helicopterIn Washington, the symbolic almost always trumps the substantive.  Thus, legislators complain, for good reason, about pork and earmarks, which ran about $35 billion at their maximum, and ignore entitlements, which entail some $100 trillion in unfunded liabilities.

So it is with President Obama.  He continues the endless bailouts, which cumulatively now run around $13 trillion.  He proposed a $3.6 trillion budget and will leave us with a $1.4 trillion deficit next year–and nearly $5 trillion in additional debt on top of the massive deficits already projected over the coming decade.  But he asked his Cabinet officers to chop $100 million in administrative expenses.

And he says he doesn’t need a new helicopter.  Fiscal responsibility in action.

Alas, the helicopter, while costing billions, isn’t an easy budget target.

Reports the New York Times:

At a Washington conference on fiscal responsibility in February, President Obama tried to set the tone by saying he did not need the new costly presidential helicopters that had been ordered by the Bush administration.

“The helicopter I have now seems perfectly adequate to me,” he said to laughter. On a more serious note, he added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”

But the president is learning that in the world of defense contracting, frugality can be expensive. Some lawmakers and military experts warn that his effort to avoid wasting billions of dollars could end up doing just that.

The administration’s plan to halt the $13 billion helicopter program, announced this month, will leave the government with little to show for the $3.2 billion it has spent since the Bush administration set out to create a futuristic craft that could fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast.

Critics say the Pentagon would also spend at least $200 million in termination fees and perhaps hundreds of millions to extend the life of today’s aging fleet. As a result, several influential lawmakers and defense analysts are now calling for a compromise that would salvage a simpler version of the helicopter that is already being tested.

They say it could be a more palatable alternative in tough economic times than seeking new bids for a more advanced craft, which has proved difficult to develop.

No wonder Washington is known as a place where everything about government is permanent.  Once you start spending money on a program, it becomes extremely hard to stop.  Part of that is the political dynamic of interest groups, the problem so well dissected by the Public Choice economists.  And part of it is legal and procedural.  Contracts are let, cancellation fees are due.  It’s bad to waste money on a gold-plated helicopter.  It seems even worse to waste money developing a gold-plated helicopter, and then getting nothing at all by canceling it.

There is, however, an amazingly simple solution, of which Congress and the president apparently are not aware.

Don’t spend the money in the first place.  Eschew new programs.  Say no to special interests.  Let taxpayers keep more of their own money.

This approach would seem to make sense at any time.  But especially today, with the federal government facing a deficit approaching $2 trillion in 2009.

Didn’t Nancy Reagan lecture us to “just say no”?  We should invite her back for a return tour of Washington, only she should talk about federal spending this time.

Members with Undisclosed Earmarks Will Still Get Their Goodies

The Hill reports that Members of Congress who failed to disclose their earmark requests as required by new rules in the House will still get their goodies.

Members who failed to disclose their earmarks as required by the April 4 deadline should have them rejected out of hand. But Congress makes the rules, and Congress can break the rules.

WashingtonWatch.com compiled a state-by-state list of links to earmark requests recently. Because Members of Congress published their requests in different formats, information about all the earmarks that have been requested is still rather obscure.