Monday, August 06, 2007

Did Earmarking Cause the Bridge Collapse?

There are many unknowns about the collapse of the I-35W Bridge in Minnesota, but some things are absolutely certain. One of them is that Congress will rush to spend more money on road projects. But what if Congress’ road funding habits actually contributed to the bridge’s demise?

Here’s an interesting question. What has increased 63,710% in 14 years? Nope, it’s not federal highway spending. It’s earmarks in federal highway spending bills. The 1981 highway funding bill included 10 earmarks. As stated in this WSJ article, “A decade later there were 1,850, and by 2005 the earmarks had multiplied to 6,371, or nearly 10% of total spending.”

Of course, the 2005 bill occurred under GOP control. Now that Congress is controlled by Democrats, those earmarks are all going away, right? Well, no. At first, Democrats “got rid of earmarks” by simply calling them something else. That worked until people caught on. At present there are more than 32,000 earmark requests pending in legislation under consideration. As noted in this Standard Examiner editorial, Congress “went soft on earmarks” when it negotiated last week’s ethics reform bill.

Let’s first clarify what an earmark is. The basic budget process is for Congress to determine the amount that will be allotted to a given department to accomplish its mandated tasks. In this case, we’re talking about the Transportation Department. But this leaves all of that money in the hands of whichever administration is in the White House. Legislators have sought to control some of the ways the money is spent by adding earmarks to spending bills. Earmarks mandate that specific amounts be spent on specific projects.

Now this might sound like a fair give and take between the legislative and executive branches of government. But let’s further consider the methodology behind earmarking. Earmarks are never directly discussed or debated during the legislative process. Members work behind the scenes with appropriators to include earmarks. Earmarks are usually intended to benefit a specific congressional district and are used chiefly to buy votes for certain measures. We can thank Democrats for passing a rule that legislators must attach their names to earmarks and must state that they have no financial interests in the provisions (as if such was not already illegal).

But the real problem is that, as the SE Editors note, the earmarking process is “disgusting…. [Earmarks] crave privacy, preferring no notice of their odious presence.” The SE Editors go so far as to state, “The practice is filthy and corrupt to the core. If legislators want pork for their districts, they should put it to a vote, not attach it, parasite-like, to another piece of legislation.” In other words, it’s not the legislative spending directive they deplore; it’s the entire earmarking process, which is employed as the currency for purchasing influence.

But what has Congress wrought with the earmarking process, at least as far as transportation? According to WSJ Editors, “A main problem with these earmarks is that they often supersede the more urgent repair and replacement needs identified by state and local officials.” You see, politicians just don’t believe that maintenance projects will garner as many votes as new construction or pet projects that satisfy a core of well heeled donor constituents.

WSJ Editors also note that most earmarks require some matching funds from the state. Earmarked projects are often low priorities for state governments, so states end up not even taking advantage of the funds. As states scramble to figure out how to maintain the transportation infrastructure they’ve got, more than half of all federally earmarked transportation funds go unclaimed and unspent. Federal legislators get the best of both worlds. They happily report to donors and constituents that they have secured federal funding for pet projects, and then the federal government doesn’t ever have to cough up the money for them.

I might hasten to add that state and local governments don’t help the matter much either. They often hire lobbyists that practically guarantee a federal earmark that will fund some project they desire. That’s why some of the earmarked spending actually does get spent. Voters get in on the game by thinking that Representative X or Senator Y deserves our vote because he/she secured federal funds for some project at home.

And lest you think that the executive branch is a hapless victim of this process, consider the fact that when the media reports that the administration is twisting arms on Capitol Hill, it means that promises are being made for funding of a legislator’s pet projects. Besides, a president that really didn't like earmarks could bring the whole process to a halt simply by vetoing every bill that includes earmarks.

It seems that the basic problem is the struggle between the legislative and executive branches over who gets to direct how budgeted money is spent. But that’s just the tip of the iceberg. The real problem is that earmarking is nothing more than peddling and purchasing of influence. The problem would not be so severe if we demanded that the federal government stick to its constitutionally enumerated responsibilities. A small central government would not control the vast amounts of money it does at present, so the impacts of influence peddling would be less.

The WSJ Editors assert that “more local spending, less cynically allocated, combined with private investment, is far more likely than current habits to replace bridges before they collapse.” (Here is an interesting article on how private investment could help our ailing transportation infrastructure.) While the WSJ Editor’s claim is surely true, the likelihood of their suggestion coming about anytime soon is approximately nil.

But perhaps other factors play into this mess as well. In this WSJ article, John Fund discusses the current dysfunction in Congress, noting specifically the extreme problems in the House of Representatives. But what he describes sounds more like a long-term systemic issue. He cites, for example, “gerrymandered districts that have led to the election of more fierce partisans and fewer centrists.” Only a small fraction of congressional districts are truly competitive, in part, thanks to gerrymandering that purposefully disenfranchises some voters to ensure desired partisan outcomes.

I would like to see a drastically smaller federal government. I would like to see earmarking and legislative micromanagement diminish substantially. I would like to see any remaining legislative spending directives voted on specifically, rather than buried and used as a tool for buying votes. But all of that is very idealistic and utopian.

Since utopia is not going to happen as long as imperfect humans are in charge of the government, we need to be concerned enough to demand that the marvelous disinfectant of sunlight be shined on every nook and cranny of every earmark. Americans have a right to know about every single dark backroom vote purchasing deal. Over time, this would bring a different kind of politician to Washington. But since federal legislators are not about to vote to cut their own power, pressure to do so will have to come from grassroots efforts.


Voice of Utah said...

I agree that, even if the GOP created the earmark mess (or perfected it), the Democrats need to live up to their word when they were elected and honestly address this issue. I am very disappointed in the earmark hijinks that appear to be continuing unabated from the predecessor Congresses.

Democracy Lover said...

Let's do the math. In 2006, the total cost of all earmarks was $67.1 Billion.

In 2000, the Highway Trust Fund had a balance of $23B. By 2010, it is estimated to have a SHORTFALL of $8.1B. Why? Because the gasoline tax that supplies revenue to the fund hasn't been raised since 1993 while the cost of road building and maintenance have gone up steadily. A measure to increase the tax failed in 2005 because Bush threatened a veto.

It is estimated that repairing the nation's decaying infrastructure would cost $1.6 Trillion over the next 5 years, or $320Billion per year.

Want a comparison? The budget for the Military including veteran's benefits, the wars in Iraq and Afghanistan, and the cost of the debt service for prior defense spending comes to $1.228 Trillion per year! That's not counting the "black budget" expenditures on spying and covert operations by the various intelligence agencies.

This is a classic guns vs. butter choice. The difference is that Bush has made it more complicated by reducing the revenue stream and increasing the expenditure stream.

Earmarks are bad and should be eliminated or reduced to a fixed amount per year, but that's not why we don't have money to fix highway infrastructure.

Reach Upward said...

You are right to contrast the cost of earmarks with other expenditures. But I disagree that it's a classic guns vs. butter issue. For starters, even in peace time we would still have most of the defense spending. The need for defense doesn't dry up and disappear when we aren't at war. We also consistently spend in deficit mode (32 of the past 36 years). This year's deficit of about $200 billion would have been a third less without the earmarks.

Gas tax is a very tricky way to fund road building because it is so volatile. While it would seem to make sense to index it for inflation, is it the general inflation rate or is it related to the price of fuel at the pump? Either way, you displease significant lobbies that work hard to prevent inflation indexing. Government watchdog groups dislike any inflation indexing of taxes because it allows the government to raise taxes in perpetuity without a vote. I'm not saying that it's wrong to fund roads via gas taxes. I'm simply saying that there are some political realities that introduce uncertainty and difficulty into the process.

A major problem is that when we build new infrastructure, we are not very good at allocating resources for its required upkeep. And when we do allocate maintenance resources, we allow politicians and bureaucrats to siphon it off to other things, such as occurred in New Orleans instead of paying for levee upkeep.

The problem is not a matter of being undertaxed; it's a matter of mismanagement. The bigger the bureaucracy, the greater the difficulties in properly managing.

Democracy Lover said...

The reason we have most of the "defense" spending during peacetime is not that it is required for our national security, but that it is required for the health of the military contractors and the many Congressional districts over which they distribute their subcontracts.

There is no security reason why the US should need to spend more on its military than France or China or the UK. The reason is that our military is dispatched in over 700 bases around the world to intervene when US corporate interests are threatened.

The Highway Trust Fund has been funded by the Gasoline Tax throughout its history and it worked just fine. The fact that some corporate lobbyists do not like the idea of indexing the gas tax to inflation is no reason not to do it. It merely shows the level of subservience our legislative branch has to its sugar daddies in industry.

That said, we have a major transportation crisis looming in this country. The price of oil is going upward and by most accounts will continue to do so. I have heard estimates that oil will reach $100/barrel by early 2009. If that happens, our highway system will be unusable because most Americans will not be able to afford to fuel their cars. In addition, our airline industry is on the skids with bankruptcies, inordinate delays, lousy service, and a decaying air traffic control system.

The first thing we need to do is stop building new highways - that's a waste of time and money. Use that money to insure that our current roadways are safe. Then figure out how we can move people efficiently from place to place with the minimum use of non-renewable energy and the minimum impact on the environment, and put our money there.

Reach Upward said...

Consider Thomas Sowell's contention here that a major part of the problem is that the incentives for politicians to sponsor new projects far outweighs the incentives for doing maintenance. He suggests changing the incentives.

Democracy Lover said...

I think Sowell is correct about the political incentives being oriented toward new construction rather than maintenance. (Can you imagine the press conference to cut the ribbon opening the newly fixed pothole?)

His solution appears to be privatization which is ridiculous. There is no way you can pay a private company to maintain a road AND make a nice profit cheaper than just maintaining the road yourself.

The Democratic candidates last night made one part of the problem clear: if you set out to make political hay out of creating new jobs and those jobs are in construction (by definition, temporary jobs), then you have to continually create more construction projects regardless of need. That plus the mis-incentives Sowell talks about make a deadly combination for the taxpayers.

The Federal government needs to step back and rethink our national transportation policy in light of the realities of the 21st century. Of course they need to do a lot of things, and this is another on the long list of things they won't do.