It makes perfect sense that Democrats have brought back the practice of congressional earmarking: Democratic leaders want to entrench their own power and enrich themselves.
Earmarks, which refer to spending targeted by lawmakers to specific projects as opposed to whole departments or certain purposes, are mostly tools used by politicians for political gain. Through earmarks, lawmakers enrich their cronies and donors, buy loyalty, ensure their own future wealth, and consolidate power.
Earmark defenders say the benefits of earmarks are worth the cost of the corruption, but that ignores the fact that the benefits of the earmarks, on net, go entirely to the insiders.
Looked at simplistically, earmarks convey a benefit: They subsidize statues, parks, and institutions. But all benefits come at a cost. And the most important cost of earmarks is not the increase in the deficit but the crowding out.
That is, when the government funds certain projects with earmarks, it crowds out charitable spending and private sector investment.
Jonathan Gruber and Daniel Hungerman in 2007 published a study of New Deal spending and showed how it caused a reduction in churches’ charitable spending. Specifically, they showed that churches in districts of appropriators and party leaders saw a greater decrease in charitable spending.
In that case, the government spending was much larger than the charitable money it was crowding out. The crowd-out effect looks much worse when you consider private sector spending.
“Fiscal spending shocks appear to significantly dampen corporate sector investment and employment activity,” three scholars found in a 2010 study. That is, when a local congressman becomes a committee chairman, federal funds flow at a much higher rate into that district, but private sector investment tends to go down. That decline in private sector investment rebounds when that powerful congressman resigns.
So the broader district is hurt by a member’s earmarks. Who benefits?
The donor who owns the subsidized shipyard, the former staffers who lobbied for the earmarks and were paid handsomely, the congressman himself, who gets hired as the lobbyist for the subsidized nonprofit group.
That is, earmarking is a matter of slushing money around the well-connected circles of insiders and ripping off the home district.
The New York Times reported on congressmen of both parties who enriched themselves with earmarks. Republican Rep. Darrell Issa earmarked money to improve roads around commercial property he owned. Former Democratic Rep. Bill Delahunt earmarked money for the fishing industry and Indian tribes, then got hired as the lobbyist for both.
I wrote about this dynamic in 2014, during the reelection bid of Thad Cochran, a Republican appropriator from Mississippi: “Look at who’s working overtime to get the Senator reelected: Lott and Barbour, who are both K Street lobbyists. Their colleagues are all in, too. In a pre-primary analysis, I found $100,000 in donations from D.C. lobbyists to Cochran — with over half of that money coming from lobbyists who work on federal spending bills.”
Earmarking is good for politicians and their buddies and bad for everyone else. It’s no surprise that politicians are restoring the practice.
