StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Criticizing Those Who Criticize Earmarks

14 Nov 2010
Posted by Stan Collender

As David Herszenhorn in the New York Times and Philip Rucker in The Washington Post have reported the past few days, it looks like earmarks are going to be one of the big budget topics this week as the GOP caucuses in the House and Senate both debate whether to ban their use.

Let me make it clear that I'm not a fan of earmarks.  But I'm less of a fan of those who demand that they be eliminated because doing so will cut spending.  As I've said before...eliminating earmarks absolutely doesn't reduce spending.  All it does is change the place where the spending decision is made from the legislative to the executive branch.

Suppose, example, that Congress passes an appropriation for $100 to encourage blogging and designates, that is, earmarks, $10 of that amount for Capital Gains and Games.  Eliminating the earmark -- the amount relating to CG&G -- still leaves the appropriation at $100.  The only thing that would change is that employees at the U.S. Department of Blogging would determine which blogs would get the funds instead of a member of the House or Senate on the Blogging Committee.

The only way to reduce the amount spent is to appropriate less than $100 and that can be done with or without earmarks.  The impact on the deficit is the same whether $90 is appropriated with $10 of that earmarked for something or if $90 is appropriated without earmarks at all.

In other words, you can cut spending and keep earmarks and eliminate earmarks without cutting spending.  The two are unrelated.

So all those who this week say that eliminating earmarks is critical to getting control of federal spending or that eliminating earmarks will reduce what the government spends will be lying.  It will do neither and their attempt to use earmarks to make their case is nothing more than political demagoguery at its absolute worst.

Here's my longer analysis of the earmark situation from my column in Roll Call back in February 2008.

Earmark Debate Sounds Good, but It’s Mostly Nonsense

February 12, 2008
By Stan Collender
Roll Call Contributing Writer    

This is supposed to be the time of year when the budget is the story in Washington. But even though President Bush sent his fiscal 2009 budget to Congress, and the House and Senate Budget committees held hearings about the proposal with the director of the Office of Management and Budget, last week was all about the Super Bowl, Super Tuesday and economic stimulus. Only hours after it was released, the Bush budget was widely labeled as irrelevant and then largely forgotten.

That makes this the perfect time to catch up on the ridiculous and uninformed debate that’s raging over earmarks.

First, the much-ballyhooed Bush executive order to stop agency heads from spending money on earmarks is close to a complete sham.

Thanks to the diligence of a longtime budget colleague, I found out last week that the overhyped presidential directive only applies to appropriations enacted after the date the order was signed, Jan. 29. That means it will have no impact on the fiscal 2008 earmarks in the bills already passed, that is, on the ones the Bush administration has been so bitterly complaining about the past few months.

The executive order will apply to earmarks relating to the fiscal 2008 supplemental appropriation for activities in Iraq and Afghanistan expected in the spring and any fiscal 2009 appropriations adopted later this year. But the supplemental is not likely to have many earmarks, and very few (possibly only Defense and Homeland Security) 2009 appropriations bill probably will be adopted before the fiscal year begins. It is far more likely that almost all of the government will be funded with a continuing resolution through the end of the Bush administration and that it will be up to the next Congress to put the finishing touches on one or more of the individual 2009 appropriations or an omnibus spending bill.

That means the Bush executive order on earmarks will have no impact. Virtually none of the agency heads appointed by Bush will have to deal with it because they will be out of office by the time any of the spending bills to which the order applies are enacted. Although the next president could keep it in place, my strong guess is that, along with many of the other executive orders issued during the Bush administration, this one will be rescinded by whomever is elected this November.

Second, the talk that you can reduce federal spending by eliminating earmarks is flat wrong.

For years, lawyers and analysts have tried and failed to come up with a standard definition for “earmark.” But there is no dispute about one thing: All an earmark does is allocate part of the funds being appropriated.

That means that eliminating an earmark only eliminates the allocation and not the spending. The appropriation, the law that actually provides the funds for the government to spend stays at the original level regardless of whether the earmark stays in place. The only thing that changes is that the decision about how and where to spend the funds shifts from Congress to the executive branch agency that administers the funds.

And that, rather than lower spending, is what the earmark debate really is about.

Regardless of what is said about “fiscal responsibility” and spending the people’s money wisely, the issue is not about how much to spend. The dispute is over who gets to make the decision.

Another of my budget friends insists that eliminating earmarks will eventually lead to lower spending because if Representatives and Senators can’t provide funds for their districts and states, there will be fewer items in these bills for their constituents and that will make them less likely to be supported. I’m skeptical about that argument: Even if there isn’t an earmark, there is still something in most appropriations for almost everyone.

Third, eliminating earmarks doesn’t automatically mean that the decisions about how and where to spend the funds will be any less political or more objective.

The notion that executive branch departments and agencies make spending decisions solely by applying rigid criteria about which projects are more worthwhile than others is naive.

By definition, budgeting is the most political of all processes. You start by saying there’s not enough funds to do everything that everyone wants to do and then consider competing proposals that are not objectively comparable. That means most decisions must be subjective or, in other terms, political. That’s why the president’s budget, Congressional budget resolution and appropriations bills are more political statements than accounting documents.

It makes no sense to think that a bureaucracy headed by an appointee who was selected to implement the president’s agenda will do something different than what the administration wants ... or that the White House would allow it. The decision about how and where the funds will be spent will be just as political as if it was made for an individual Member of Congress.

Fourth, the ultimate irony of the earmark debate is that the fiscal conservatives who are the biggest supporters of eliminating earmarks are also the ones who typically express the greatest dissatisfaction with the federal bureaucracy.

But the bureaucracy making the decisions would be the result if the campaign to end earmarks were successful. Federal departments and agencies would end up having the sole power to decide how to allocate the funds included in appropriations, and the decisions would be every bit as political as the ones made with earmarks.

That has to make you wonder why anyone is spending any time on any of this.

But perception is everything

"All it does is change the place where the spending decision is made from the legislative to the executive branch."

But, to the "low information" voter (read Tea Party types) banning earmarks is a good thing. They think it means this spending will be completely elminated, and their leaders (McConnell, Bachmann, et al) are happy to let them think this is a big win for their side.


Do earmarks indirectly cause appropriations?

A potentially better argument is that some appropriations wouldn't happen if it weren't for the earmarks, either because the appropriation is increased to pay for the earmark or because the earmark buys votes for an appropriation that wouldn't otherwise have passed. Laymen imagine both of these are common; how wrong is this?




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