As
the data in Table 1 illustrate, the number of location-specific
earmarks in appropriations bills has risen rapidly since the
mid-1980s, although some programs experienced a temporary decline
in the number of earmarks in the mid-1990s. In the majority of the
appropriations bills, the increase in earmarks between FY 1998 and
FY 1999 exceeds the implied annual rate of increase that occurred
between FY 1985 and FY 1999--suggesting a worsening of the trend
and the spread of the practice to bills that heretofore usually
were not subject to it, such as appropriations for Labor/Health and
Human Services (HHS), Veterans Affairs (VA)/Housing and Urban
Development (HUD), and Agriculture.
Obviously, should such a trend continue at
the pace it has in the recent past, federal programs will quickly
approach the point at which a majority of spending in the major
government functions will be earmarked for specific projects in
specific places, and state and local governments will become
bystanders to the public policies implemented in their
communities.
Although appropriations bills often are
the vehicle of choice for location-specific pork-barrel spending,
other legislation--including bills to authorize and reauthorize
programs and emergency supplemental spending legislation--have
hauled pork from Washington to privileged towns and cities across
America. The legislation periodically required to reauthorize
federal highway spending (of which TEA 21 is the most recent
manifestation) has become a congressional favorite for rewarding
privileged constituents. It also exhibits the same pattern of
escalating earmarks revealed in Table 1.
Chart 1 illustrates the growth in the
number of earmarks that were included in the last three highway
program authorization bills.
HOW FEDERAL EARMARKS MARGINALIZE STATE AND
LOCAL GOVERNMENTS
Although much of the media coverage of
congressional pork projects and earmarks emphasizes the wasteful
nature of such spending, the often humorous nature of this approach
obscures a more troubling consideration: the extent to which the
use of earmarked spending reflects Congress's increasing propensity
to micromanage local affairs, override local priorities, and in the
process undermine state and local decisionmaking in determining
local needs and solutions.
Setting Priorities in a Federal
System.
Traditionally, most of the money available through federal
domestic discretionary programs is distributed--at the limited
discretion of the department responsible for each
program--according to general legislative guidelines, formulas, and
provisions to determine eligibility, the proper use of funds, and
state and local allocations.
For
example, absent earmarks, annual spending by the federal highway
program is allocated to each state and territory using a
complicated mathematical formula that takes into consideration
population, miles of highway, fuel usage, and other quantitative
factors in order to match surface transportation needs with
available funds. Once the allocation is determined, it is each
state's prerogative to determine how and where this money will be
spent in accordance with the federal guidelines as well as federal
functional allocations for bridges, transit, repair and
maintenance, and new construction.
In
theory, it is the state's prerogative, in consultation with local
officials, to determine the priorities for, say, bridge repairs. At
the same time, the state's transportation department generally
reallocates the federal funds to each "transportation district"
using quantitative formulas similar to those used at the federal
level.
Federal earmarks circumvent this
decisionmaking process by overriding state and locally determined
priorities and substituting a series of detailed "priorities" from
Washington.
Although much of the public attention
focuses on transportation spending, congressional earmarks are much
more intrusive in such programmatic areas as Energy and Water and
spending for Military Construction. The FY 1999 Energy and Water
appropriations bill, for example, contained over 1,800 separate
earmarks--three times more than the Transportation appropriations
bill which, with 621, was second highest. And although the Military
Construction bill contained a little less than 500 earmarks, those
earmarks accounted for 42 percent of all spending in the bill.
OVERRIDING LOCAL PRIORITIES: THE CASE OF
TRANSPORTATION
Because the practice of earmarking highway
spending is so common and several government agencies have studied
it, the federal highway program and especially TEA 21 offer many
examples of how Washington's priorities impinge on state and local
decisionmaking. Consider just two:
-
The Oregon Department
of Transportation must spend its TEA 21 funds to construct a
bicycle path in Springfield paralleling 42nd Street to link with an
existing bike path, build right-of-way improvements to improve
pedestrian access to the MAX light rail in Gresham, and construct a
bike path between Main Street in Cottage Grove and the Row River
Trail.
-
In Virginia, state
officials must repair a historic wooden bridge along the Virginia
Creeper Trail near Abingdon, conduct a historic restoration of the
Roanoke Passenger Station, and construct an access road and
"related facilities" for Fisher Peak Mountain Music Interpretive
Center. These and many other marginal projects will be at the
expense of funds that could be used to widen and rehabilitate the
increasingly dangerous, 35-year-old Interstate Route 81, a major
north-south artery serving much of the East Coast from as far north
as Canada.
In
the face of criticisms that such earmarks circumvent state and
local decisionmaking, most Members of Congress will claim that
these earmarks reflect locally determined priorities and are
included in the legislation to ensure that such "high priorities"
(such as a bike path between Mount Clemens and New Baltimore in
Michigan and an elevated walkway between Centre Station and the
Arena in Chicago) are not overlooked by state officials. Indeed, in
early 1997, faced with growing criticism of pork in the emerging
highway bill, Congress renamed the earmarks "high priority"
projects.
The new title certainly conveys a sense of urgency that was missing
in the previous title of "demonstration projects," but it is likely
that state transportation officials will still judge these projects
to be as worthless as those Congress forced on them in the
past.
State Impact.
How these earmarks affect a state is vividly described in a 1996
performance audit conducted by Pennsylvania's Legislative Budget
and Finance Committee. Pennsylvania is burdened with a
congressional delegation whose Members' relative seniority has
brought vast quantities of earmarked pork back to the state; the
audit's detailed conclusion summarizes the adverse impact such
"influence" has had on Pennsylvania motorists. In a section
entitled "Congressionally Earmarked Projects Directly Affect
Commonwealth Priorities," the audit concludes:
Although the planning process established
under ISTEA [the 1991 Intermodal Surface Transportation Efficiency
Act] appears sound, the process can be undermined when Congress
targets specific highway projects for federal funding. The local
planning organizations and the Department [PA D.O.T.] are then put
in the position of either giving the project a high priority on
their transportation plans, which means that the monies are not
available for other potentially more worthy projects, or rejecting
the project....
The
practice of Congress earmarking funds for specific purposes can
significantly impact the Commonwealth's ability to fund the
projects of greatest need. For example, approximately 27.5 percent
($1.32 billion of $4.8 billion) of the total funding projected to
be available for the highway and bridge component of the 1997-2000
Statewide Transportation Improvement Program is for specific
projects earmarked by Congress. When only the funding available for
major highway construction projects is considered, the percentage
applied to earmarked projects rises to 84 percent ($1.32 billion of
$1.57 billion). Most (70 percent) of this $1.32 billion is for
projects in central Pennsylvania. Rather than turn down these
projects and risk losing the associated federal funding, the
Department accepts the earmarked projects. The earmarking by
Congress of funding for specific major construction projects
therefore severely limits the ability of the Department and the
State Transportation Commission to allocate funds to other projects
that may be of higher priority.
It
should be noted that Pennsylvania's harsh assessment of
congressional munificence referred to the ISTEA as enacted in 1991,
which included only 538 earmarks, not the 1,850 included in the
ISTEA's 1998 successor, TEA 21.
Government Studies Confirm
Marginal Value.
A Congressional Research Service (CRS) study of a sampling of
demonstration projects incorporated in the 1987 and 1991 highway
authorization bills came to a similar conclusion:
For
demonstration projects to provide the welfare gains citizens might
expect from transportation public policy, they would have to
produce outcomes at least as good as those that result from the
local, state and regional planning process. Evidence so far
suggests that many demonstration projects may have difficulty
passing this test.
Much
of the research cited in the CRS report was derived from an earlier
U.S. General Accounting Office (GAO) study that evaluated 66 of the
152 demonstration projects included in the 1987 highway
bill. The
1987 bill allocated $1.4 billion to these projects; but after five
years, about 64 percent of these funds had not been obligated
because of inaction in the states. In a survey of state
transportation officials, the GAO found that more than half of the
earmarked projects were not included in state transportation plans
because state officials felt the projects would add little to
mobility goals based upon state and regional needs. The GAO also
reported that many of the earmarks that did address real state and
local mobility needs were not undertaken because state officials
judged them to be too costly to implement, and the earmarked funds
significantly understated the actual cost of the projects.
The
earmarked demonstration projects in the subsequent highway
bill--the 1991 ISTEA--did not fare much better as local officials
declined to build them in their communities despite the fact that
the federal government would cover 80 percent of the cost. Of the
$6.23 billion earmarked for 538 location-specific projects listed
in the 1991 ISTEA, slightly more than half the money, or $3.3
billion, remained unobligated as of January 31, 1997, when ISTEA
expired. In effect, and as the GAO discovered from its review of
the 1987 highway bill, state and local officials deemed these
projects to be of such marginal value that they did not justify the
spending of state financial resources to meet the law's 20 percent
local funding requirement.
So
little spending of the earmarked money during those five years may
also be due to the slapdash procedures used by Congress to
determine what projects to include as earmarks. Both the haste and
the absence of careful thought that often characterize legislative
development frequently lead to faulty cost estimates and budget
allocations. In contrast to projects and priorities determined by
the states through comprehensive review and analysis, as well as
consultation with local officials, many congressional earmarks tend
to arise in the few weeks or months leading up to a bill's
enactment as votes are sought to ensure passage. As a result, each
project's financial needs and related cost estimates tend to be
roughly estimated and, consequently, sometimes incorrect.
Many
such cost estimates probably are understated deliberately to ensure
that each project's cost will fit within overall spending totals.
As an indication of just how far off the mark such earmark cost
estimates have been, the GAO's analysis of the 1987 demonstration
projects found that the spending authorization included in the
highway bill covered only 37 percent of the cost needed to complete
51 of the 66 earmarks. Specifically, the GAO found that the
authorized federal funds, combined with the required state match,
yielded $700 million in available funds, but the states estimated
this to be about $1.2 billion short of what was needed to complete
the 51 projects. As a result, with many earmarked
projects requiring the commitment of public funds in excess of the
amount included in the original legislation, states have an
additional incentive to ignore congressionally mandated,
low-priority projects.
More Conflicts with
States.
Whether the same fate awaits the 1,850 earmarks included in TEA 21
will not be known until the legislation expires at the end of 2003,
but conflicting interpretations over legislative language in H.R.
2400 suggest that the value of these earmarks could be greatly
diminished even for those states and communities that want to go
forward with the projects.
Recognizing that such earmarks diminish
the value of federal spending for the states by forcing unwanted
projects on communities, Senator John McCain (R-AZ), a leading
congressional critic of pork, introduced legislation during
consideration of TEA 21 that would have required the cost of all
earmarks to be deducted from a state's formula allocation of
highway trust fund money rather than taken as additional money from
another state's share.
Senator McCain's language did not make it
into the final bill. However, other language in the bill designed
to ensure that "donor" states receive a fairer share of trust
fund spending was interpreted by some states--including perennial
donor state Florida--as requiring communities that receive the
earmarks to give up a dollar of their unrestricted formula
allocation for every dollar for "high priority" projects they
receive from TEA 21. Under this interpretation, if a transportation
district was authorized to receive $10 million in federal highway
money from a state's highway allocation formula but also was
authorized by TEA 21 to spend $1 million on one of its 1,850
earmarks, the state would be entitled to reduce that district's
formula allocation to $9 million. This would limit total district
transportation spending to no more than the $10 million authorized
by the state's allocation formula. As a result of this
interpretation, communities that elect to go forward with their
earmarked projects would do so at the explicit expense of other
local transportation projects in their district which they
otherwise might have undertaken.
Because the TEA 21 language on earmarks is
more ambiguous than that of the previous highway bill, Florida's
interpretation would have had the effect of ensuring that an even
smaller proportion of the funds so earmarked in TEA 21 actually
would be used for "high priority" projects. But the interpretation
would have struck a severe blow to the implementation of many of
the 1,850 earmarks included in TEA 21.
For
both sides, the stakes in the dispute were exceptionally high, and
both sides gave it their full attention. House Transportation
Committee Chairman Bud Shuster (R-PA), the chief architect of TEA
21, wrote to the governor of Florida and asserted that TEA 21's
language in no way permits the state to deduct "high priority"
spending from a district's formula allocation. But Senate
Environment and Public Works Committee Chairman John Chafee (R-RI),
along with Highway Subcommittee Chairman John Warner (R-VA), wrote
in support of Florida's interpretation, arguing that:
Since Federal law requires that high
priority projects are included in the distribution of Federal funds
to states, it is not appropriate that the Federal government
mandate a complete opposite approach and mandate that a state
exclude these very same projects in a state's distribution
formula.
Unfortunately for congressional efforts to
limit the spread of pork and enhance the ability of state and local
officials to determine and meet their priorities, Secretary of
Transportation Rodney Slater sided with the House in a December 22,
1998, letter to Florida's Department of Transportation. This could
settle the matter in favor of earmarked pork if the Senate
ultimately concedes to Secretary Slater's interpretation of TEA
21.
HOW TO LIMIT THE USE OF EARMARKS
Congress's propensity to earmark federal
spending is rising at an alarming rate and, if allowed to continue,
will soon account for a substantial share of federal discretionary
spending. Although many Members of Congress have expressed concern
about these trends, efforts to deter them have not been very
successful. Moreover, even though there are several steps that
Congress can take to discourage earmarks, it is not likely that
such action will be taken until governors, mayors, and other state
and local officials oppose the practice more aggressively than they
have in the past. Given the recent increases in the use of
earmarks, governors and mayors will find the trend increasingly
hard to ignore.
What Congress and the President Can
Do
Moral Suasion. Some Members of Congress
commonly use a technique called moral suasion to induce their
colleagues to show some measure of restraint and prudence in
setting aside money for location-specific earmarks of questionable
value. Although very recent attempts to use moral suasion have not
stemmed the escalation in the use of earmarks, an earlier effort by
senior members of the Appropriations Committee appears to have had
some success in several appropriations accounts.
Such
an effort occurred in 1993 when Representatives William H. Natcher
(D-KY) and George E. Brown, Jr. (D-CA), then chairmen,
respectively, of the House Appropriations Committee and House
Science Committee, worked to reduce significantly the number of
appropriated earmarks for academic institutions, which had risen
from seven in 1980 to 499 in 1992. As a result of their efforts in
writing the FY 1994 appropriations bills, earmarks in four
appropriations bills were reduced by half between FY 1993 and FY
1994.
Not
surprisingly, cooperation among their colleagues was not universal:
Ten projects that Brown succeeded in stripping from the FY 1993
Energy and Water Appropriations bill appeared several days later
attached to the Defense Appropriations bill, which was passed
before an effort could be mounted to strip them from the bill.
Nonetheless, in looking at the trend in earmarks in the sample of
appropriations bills included in Table 1, several (but not all)
show evidence of some restraint in the use of earmarks over the
1990-1995 period for appropriations bills related to Agriculture,
Interior, Military Construction, and Treasury. Regrettably, Table 1
also reveals that this selective restraint, at least in these
accounts, appears to have evaporated by FY 1999.
Senator McCain attempted to reinstitute a
similar effort through legislative initiatives and aggressive moral
suasion, but his well-organized and highly visible efforts appear
not to have had much effect in slowing the growth of earmarks.
Unlike his somewhat more successful Democrat predecessors, who held
leadership positions within the Appropriations Committee, Senator
McCain's lack of membership on that committee may limit the
effectiveness of his opposition.
Legislative
Remedies.
Despite an inability to convince his colleagues through moral
suasion, Senator McCain was not deterred from using the legislative
process to discourage earmarks. When it became obvious during the
congressional debate on TEA 21 in 1997 that the House version of
the bill was collecting an unprecedented number of earmarks, McCain
introduced legislation that would have required states and
communities receiving special earmarks to "pay" for them out of
their formula-based highway funding. Absent such legislation, less
favored states end up paying for earmarks that privileged states
receive.
According to a GAO study of the fairness
of the earmark process, earmarks in the 1987 highway bill caused 21
states to receive fewer highway funds than they would have received
under the formula in order to "pay" for the extras received by 15
states.
Although the exact wording of Senator McCain's amendment did not
become part of the highway bill as enacted, it did lead to other
changes in the bill that most believed would achieve the same
result. Following Secretary Slater's resolution of the House/Senate
dispute over Florida's attempt to put this interpretation into
effect, however, this effort at damage control also failed.
Congress's other major attempt to control
pork-barrel spending occurred in 1995 when it enacted the line-item
veto as part of the Contract With America. President Clinton used
this new veto privilege (which took effect on January 1, 1997) to
cancel $355 million in FY 1998 pork-barrel spending, much to the
chagrin of many in Congress. Unfortunately, in mid-1998 the U.S.
Supreme Court took this power away from the President when it ruled
that the line-item veto is unconstitutional. In response, many in
Congress promised to enact a version of the line-item veto that
would not run afoul of the Court's ruling. Proposals included an
enhanced rescission authority or a restoration of presidential
impoundment powers, but nothing came of these promises, and the
absence of any credible deterrent may be one reason why
congressional pork and earmarks set new records in the most recent
federal budget.
What Governors Can Do
With
Congress apparently either unable or unwilling to impose meaningful
restraint on its wasteful spending practices, the last best hope
for slowing the growth of federal pork-barrel spending may very
well lie with governors and local leaders. Because it is their
communities that pay the price of congressional micromanagement,
unwanted projects, misdirected resources, and diminished funds, the
governors have every incentive to find ways to encourage Congress
and the President to improve their performance beyond the narrow,
parochial, pork-barrel interests that characterized the last
federal budget.
Indeed, shortly after the federal budget
fiasco in October 1998, the Republican governors at their annual
conference made it quite clear that they expect better performance
from Congress in the future. As one press account of the meeting
read:
There was nothing subtle about the message
the governors wanted to deliver this week. It was that their
congressional leaders had made a hash of the final weeks of the
105th Congress and the mid-term election, and it was now time to
turn to the states for help.
Such
concerns, while escalating, have been brewing for years. The
pork-barrel nature and regional inequities of past highway bills
have encouraged several states to become better organized and
aggressively seek a more equitable relationship with the federal
government. The 1991 ISTEA, for example, perpetuated outdated
highway funding formulas that penalized the fast-growing states and
rewarded slow-growing states with more senior congressional
representation.
Under ISTEA, for example, 22 states
received less money from the highway trust fund than they paid into
it in fuel tax revenues, while 28 states did better. Virginia, for
example, received back only 83 percent of what it paid in, while
South Carolina did worst of all, receiving just a 71 percent share
of what it paid in fuel taxes. When congressionally mandated pork
is deducted from these already diminished allocations, donor states
and their citizens suffer even more.
In
1996, as a result of such inequitable federal transportation
policies, more than 20 donor states joined in urging Congress to
enact an alternative federal surface transportation approach called
STEP 21. Although Congress promised that several of the key
fairness elements of STEP 21 would be included in TEA 21, the
Administration's resolution of the House/Senate dispute over how to
account for the pork forced on Florida shows how ephemeral this
promise was. As a result, the 20 states that put their support
behind the more moderate approach of STEP 21 next time might be
more likely to endorse the far more radical "turn-back" plan of
Senator Connie Mack (R-FL) and Representative John Kasich (R-OH),
which would transfer virtually all federal surface transportation
programs, and the tax authority that goes with them, back to the
states.
CONCLUSION
As
the 106th Congress gets underway, there will be no shortage of
opportunities to show restraint and moderation in federal spending,
earmarks, and congressional micromanagement. In addition to the 13
appropriations bills that will have to be enacted before the end of
the fiscal year on September 30, 1999, there will be numerous
infrastructure authorization bills (or amendments thereto) that
will tempt the more overweening Members to interfere with state and
local priorities.
The
anticipated reauthorization of the Federal Aviation Administration
will be the first main opportunity to show restraint, and the
threat to reopen TEA 21 (and spend even more) will be a key test of
Congress's willingness to honor the historic divisions of
responsibility within the nation's federal system of
governance.
Dr.
Ronald D. Utt is Grover M. Hermann Fellow in Federal
Budgetary Affairs at The Heritage Foundation.