January 26, 2009 1:46PM

Earmark Ban Only Treats a Symptom, Not the Problem

The Associated Press is reporting on the unsurprising attempt by special interests and their political benefactors to get around President Obama's ban on earmarks in the massive "stimulus" bill taking shape in Congress.

They're [lobbyists and lawmakers] just working around it — and perhaps inadvertently making the process more secretive. The projects run the gamut: a Metrolink station that needs building in Placentia, Calif.; a stretch of beach in Sandy Hook, N.J., that could really use some more sand; a water park in Miami. There are thousands of projects like those that once would have been gotten money upfront but now are left to scramble for dollars at the back end of the process as "ready to go" jobs eligible for the stimulus plan. The result, as The Associated Press learned in interviews with more than a dozen lawmakers, lobbyists and state and local officials, is a shadowy lobbying effort that may make it difficult to discern how hundreds of billions in federal money will be parceled out.

As distasteful and corrupting as congressional earmarking of taxpayer money is, earmarking is only a symptom of the problem -- not the problem as some well-intentioned lawmakers imply.  The real problem is that few, if any, limitations remain on what our federal masters can spend our money on.  For example, it matters little if a water park in Miami is funded through a Senator's explicit wishes in an appropriations bill or if it receives the money via one of the executive branch's numerous "economic development" granting programs.  Thus, lawmakers upset with earmarking should devote more effort to killing the programs that allow for such expenditures to occur in the first place.  (For a perfect example of lawmaker inconsistency on this subject, see here.)

More from the AP story:

Instead, the money will be doled out according to arcane formulas spelled out in the bill and in some cases based on the decisions of Obama administration officials, governors and state and local agencies that will choose the projects. "Somebody's going to earmark it somewhere," said Howard Marlowe, a consultant for a coalition working to preserve beaches. Lobbyists are hard at work figuring out ways to grab a share of the money for their clients, but the new rules mean they're doing so indirectly — and sometimes in ways that are impossible to track.

Tinkering with allocation formulas is a time-honored tradition in Congress.  HUD's Community Development Block Grant program (CDBG), which would get an extra $1 billion in the current House version of the "stimulus," offers a good example.  According to Cato's Chris Edwards:

The Northeast-Midwest Institute represents a group of 18 states stretching from Vermont to Minnesota...Interestingly, this institute both lobbies for federal aid to its member states and receives federal aid itself. Audits show that the institute receives about $800,000 annually from 12 different federal grant programs. The Northeast-Midwest Institute’s website boasts about its lobbying prowess...The CDBG program...illustrates how technical the battles over aid can be. One item in the formula that distributes CDBG funding to the states is “housing built before 1940.” How did this obscure item get into the CDBG formula? The Northeast-Midwest Institute got a member of Congress to insert it into legislation in 1977 in order to tilt aid toward older cities.

The CDBG program formula has been stretched to the point that even relatively wealthy communities can get in on the fun.  And, just as has been the case with earmarked money, the result is often corruption.  For instance, a 2007 HUD Inspector General report found that the City of Chicopee, Massachusetts had spent $1.1 million in CDBG money on projects in an affluent neighborhood that just happened to contain the home of the city's mayor.  In 2005, the mayor was arrested on extortion charges related to campaign contributions received from a developer the mayor tried to assist in obtaining CDBG-funded projects.