The Ethics of Earmarks According to the Congressional Research Service (CRS), there is no formal…

The Ethics of Earmarks

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According to the Congressional Research Service (CRS), there is no formal definition of earmarks. In fact, there is no informal definition upon which people generally agree. The CRS defines earmarks broadly as “provisions associated with legislation (appropriations or general legislation) that specify certain congressional spending priorities or in revenue bills that apply to a very limited number of individuals or entities. Earmarks may appear in either the legislative text or report language (committee reports accompanying reported bills and joint explanatory statement accompanying a conference report.”1 A key aspect of the definitions of earmarks in the Senate Reform proposals reviewed by CRS is the specification of the identity of the recipient of the assistance.2

Why do firms invest so much time, energy, and money in lobbying for earmarks? According to a 2007 BusinessWeek investigation, the average firm generates $28 in earmark revenue for each dollar invested in lobbying. Although some firms get no earmarks in spite of heavy lobbying, the most successful firms can generate $100 or more in earmark revenue from each dollar spent in their lobbying efforts.3

THE BUSINESSWEEK INVESTIGATION

For years, no one ever really knew how much money firms made from their lobbying expenditures. However, recent scandals over U.S. congressional earmarks prompted requirements for the disclosure of those spending measures that target money to go to legislators’ favorite companies. In “Inside the Hidden World of Earmarks,” BusinessWeek reports on the results of an investigation they conducted with Columbia Books. The team analyzed the earmarks that firms received in 2005, the first full year of data available. They compared the earmark revenue to the amount spent on lobbying in the previous year. Determining the value of lobbying by assessing earmark revenue is inexact because it is impossible to know how much firms spent on general lobbying rather than seeking earmarks. Nevertheless, the findings are instructive. In a nutshell, they found that lobbying is a highly lucrative activity:4

1. As already mentioned, firms average about $28 in earmark revenue for each dollar spent in lobbying. That is especially impressive when compared to the $17.52 brought in by S&P 500 firms for every dollar of capital expenditures in 2006.

a. The most successful firms did far better than the average. In terms of “bang for the buck,” Scientific Research, a small maker of classified intelligence technology, was the winner with $21 million earned from $60,000 spent on lobbying. That represented a return of $344 for each dollar spent on lobbying.

b. In terms of overall earmark revenue, the winner by far was Boeing. They received about $456 million in combined earmarks for purchases as varied as missile technology and helicopters.

2. Firms often received earmark revenue from different spending bills. For example Boeing received its $456 million in revenue from 29 different earmarks.

3. In terms of dollar value from lobbying, the clear winner is the defense industry. In addition to Boeing, Northrop Grumman, General Dynamics, Lockheed Martin, and Raytheon comprised the top five in earmark revenue generated. Even Raytheon, at fifth on the list, made an impressive $158 million from lobbying.

4. Hiring the right lobbyist is clearly a key to success in obtaining earmarks. The most successful firms hired lobby firms with not only former members of Congress but also former congressional aides with appropriations committee experience.

The number of firms using lobbyists has swelled in recent years. The number of firms that hired lobbyists for help with budget and appropriations issues grew from 1,447 in 1998 to 4,516 in 2006. Not surprisingly, given the increase in demand, the number of lobbying firms specializing in obtaining earmarks also grew from nearly none in 1997 to about a dozen in 2007.

EFFORTS TO END EARMARKS

The history of earmarks is replete with scandals that include using earmark funds for buying votes on other bills, gifts to political donors, and blatant bribery. Unfortunately, the scandals are part of the present as well as the past. In July 2007, the FBI raided the home of Senator Ted Stevens (RAK) to determine whether he used diverted earmark funds to benefit his son and his business partners. Senator Stevens became the butt of “pork barrel” jokes when he championed $223 million in funds to build a bridge to an island with fifty people on it. The bridge became known as the “Bridge to Nowhere.”5 Former Representative Randy “Duke” Cunningham (R-CA) is serving eight years in prison for directing earmarks to defense contractors in return for more than $2.4 million in bribes.6

Because of these and other scandals, both President George W. Bush and House Speaker Nancy Pelosi have called for a cut in earmark appropriations. The U.S. Congress passed new disclosure requirements, and Internet databases will make it easier for the public and the press to be aware of earmark activity. Early evidence suggests that the disclosure requirements may be having an impact. Fiscal 2008 earmarks are down significantly from the 2005 defense spending peak of 2,657 earmarks worth $11.6 billion. Many observers believe, however, that earmark activity will bounce back when the attention on it diminishes.7

ARE EARMARKS BENEFICIAL?

In a 2007 New York Times editorial, Representative Rahm Emanuel (D-IL) argues that the government should not get rid of earmarks entirely. He supported the action Congress took in 2007 to reform earmarks but explained that the purpose was never to get rid of them because they have a useful purpose to serve. According to Emanuel, putting all earmarks in one boat does a disservice to the public by distorting the debate.8 As Emanuel explains: In my own district, I obtained an earmark to rebuild a bridge that not only was rated as deficient but also was identified by the Department of Homeland Security as a major evacuation route in case of a terrorist attack on Chicago.

Does that make me an “earmark thug” or a congressman who took care of a critical need in his district? Other earmarks I’ve championed include money for after-school programs, computers for police patrol cars, master teacher training programs and a children’s hospital research facility. I make no apologies for these earmarks, which serve important public purposes—and might even save a life. I’m happy to defend them in the well of the House or against attacks from campaign opponents. In fact, I’ve voluntarily gone beyond the requirements of our reforms by posting on my Congressional Web site all the earmarks I’ve requested, not just those that have been approved. I’m gratified that a number of colleagues from both parties have followed that example.9

Emanuel explains that he knows the needs of the people he represents better than a Washington bureaucratic or White House occupant. From Emanuel’s perspective, getting rid of earmarks would make it more difficult for him to meet those needs. Subsequent letters to the editor took issue with his stand. They argued that if earmarks really do take care of an important need, then they should have their own bills and attendant debate. Finally, letters to the editor questioned whether there were other bridges with even greater needs for repair that might get overlooked because they were in a district with a less powerful congressperson. 10

Questions for Discussion

1. Visit the website that is designed to provide more transparency to the earmark process (http://earmarks.omb.gov/). Does it give you the information you need to understand current earmarks?

2. Where do you draw the line? What limits should be placed on earmarks? Does your attitude toward earmarks vary with the extent to which you agree with the causes the earmark is promoting?

3. Do you agree with Representative Emanuel? What, if any, public policy recommendations would you make?

4. From an ethics perspective, how do earmarks compare with general lobbying? What, if any, differences do you see? Is it ethical for businesses to lobby in a quest to get earmarks?

Case Endnotes

1. http://www.opencrs.com/rpts/RL33295_

20060306.pdf. The definitions are in Table 1, page 5.

2. Ibid.

3. Eamon Javers, “Inside the Hidden World of Earmarks.” BusinessWeek (September 17, 2007), 56–59.

4. Ibid.

5. John Fund, “Northern Exposure,” Wall Street Journal—Eastern Edition (August 7, 2007), A10.

6. Matt Kelley, “Congress Slated $5.6B in Bills for Private Sector; ‘Earmarks’ for Companies Increase Potential for Corruption, Critics Say,” USA Today (April 26, 2007), 5A.

7. Javers, 56–59.

8. Rahm Emanuel, “Op-Ed Contributor: Don’t Get Rid of Earmarks,” New York Times (August 14, 2007), A19.

9. Ibid., A19.

10. “Those Special Gifts from Congress,” New York Times (August 30, 2007), A22.

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