[Senate Hearing 109-684]
[From the U.S. Government Publishing Office]
S. Hrg. 109-684
EARMARK REFORM: UNDERSTANDING THE OBLIGATION OF FUNDS
TRANSPARENCY ACT
=======================================================================
HEARING
before the
FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
INFORMATION, AND INTERNATIONAL
SECURITY SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MARCH 16, 2006
__________
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
_____
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27-752 PDF WASHINGTON : 2006
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL
SECURITY SUBCOMMITTEE
TOM COBURN, Oklahoma, Chairman
TED STEVENS, Alaska THOMAS CARPER, Delaware
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
LINCOLN D. CHAFEE, Rhode Island DANIEL K. AKAKA, Hawaii
ROBERT F. BENNETT, Utah MARK DAYTON, Minnesota
PETE V. DOMENICI, New Mexico FRANK LAUTENBERG, New Jersey
JOHN W. WARNER, Virginia
Katy French, Staff Director
Sheila Murphy, Minority Staff Director
John Kilvington, Minority Deputy Staff Director
Liz Scranton, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Coburn............................................... 1
Senator Carper............................................... 4
WITNESSES
Thursday, March 16, 2006
Hon. Jeff Flake, a Representative in Congress from the State of
Arizona........................................................ 6
Hon. John McCain, a U.S. Senator from the State of Arizona....... 10
Thomas A. Schatz, President, Citizens Against Government Waste... 14
Steve Ellis, Vice President of Programs, Taxpayers for Common
Sense Action................................................... 16
Scott Lilly, Senior Fellow, Center for American Progress......... 18
Alphabetical List of Witnesses
Ellis, Steve:
Testimony.................................................... 16
Prepared statement........................................... 51
Flake, Hon. Jeff:
Testimony.................................................... 6
Prepared statement........................................... 39
Lilly, Scott:
Testimony.................................................... 18
Prepared statement........................................... 57
McCain, Hon. John:
Testimony.................................................... 10
Prepared statement........................................... 41
Schatz, Thomas A.:
Testimony.................................................... 14
Prepared statement........................................... 43
APPENDIX
Charts submitted for the Record from Senator Coburn.............. 27
EARMARK REFORM: UNDERSTANDING THE OBLIGATION OF FUNDS TRANSPARENCY ACT
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THURSDAY, MARCH 16, 2006
U.S. Senate,
Subcommittee on Federal Financial Management,
Government Information, and International Security,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:32 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Tom Coburn,
Chairman of the Subcommittee, presiding.
Present: Senators Coburn and Carper.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. The Subcommittee will come to order.
Good morning. We have convened this hearing to look at the
need for earmark reform and legislation that would be an
important step toward achieving such reform.
Pork politics is not an ancient practice that can't be
reformed. Pork, as we know it today, didn't exist 20 years ago.
In 1987, President Ronald Reagan vetoed a spending bill because
it contained 121 earmarks. Disturbingly, the number of earmarks
has skyrocketed over the past decade--from 4,126 in 1994 to
15,887 in 2005--according to the Congressional Research
Service.
Last year, the number of earmarks dropped to 12,852, but
the total cost of the earmarks rose by $16 billion last year to
a total of $64 billion, not including the highway bill, the
earmarks that are contained in the highway bill. And those are
truly authorized earmarks in the highway bill.
America's greatness was built on sacrifice and service, not
the politically-expedient politics of pork. There is no lost
Article of the Constitution or missing Federalist Paper that
gives Members of Congress a blank check to fund any project
they desire.
Indeed, Thomas Jefferson wrote James Madison in 1796 that
allowing Congress to spend Federal money for local road
projects would ``be a source of eternal scramble among the
members [for] who can get the most money wasted in their State,
and they will always get most who are meanest.''
Jefferson's prophetic warning has been borne out by the
reality that there exists an indisputable linear relationship
between the runaway spending of the last 10 years and a
markedly increased earmarks, as you can see from the other
chart.
The truth is earmarks are a gateway drug on the road to
spending addiction. One day, an otherwise frugal member votes
for pork, the next day, he or she votes for a bloated spending
bill or an entitlement expansion. After all a ``no'' vote might
cut off access to earmarks.
Congressional leaders and appropriators use earmarks as a
leverage to get members to vote their way--often for monstrous
spending bills that a member otherwise might oppose. In other
words, earmarks help grease the skids for bigger government--
not necessarily more efficient government, not necessarily
better government.
The task of selecting a share of the 15,000 annual pork
projects has become an all-consuming endeavor for most
congressional offices. Gathering earmark requests, meeting with
lobbyists, working to secure a coveted seat on the
Appropriations Committee leaves little time for the traditional
duties of overseeing government and reforming outdated
programs.
And we see the consequences of this neglect: In recent
years, layers of government waste have gone virtually ignored,
and bloated agencies have failed to deliver basic services, but
their budgets are just increased each year as if on auto-pilot.
Congress has failed miserably in its oversight responsibility.
For example, last year the Department of Education told the
Washington Times that it was facing ``a significant challenge
to process and monitor all of these earmarks.'' This was in
reference to 1,175 congressionally mandated projects in small
print taking up 40 pages of the 663-page omnibus spending bill.
The next chart shows a comparison between earmarks and
entitlement savings.
Some congressional critics of earmark reform make the
excuse that getting rid of earmarks isn't the solution to
reigning in runaway spending, controlling entitlements is. But
as we saw with the recent budget reconciliation bill, Congress
was barely able to trim even a relatively tiny amount of
entitlement spending.
While earmarks cost $64 billion last year, entitlement
savings from budget reconciliation was only $4.8 billion. And
its estimated savings over 5 years was just $38.8 billion.
If Congress is unable to eliminate the most unjustifiable
spending--which earmarks usually are--then how could it
possibly make tougher choices on politically charged
entitlement programs like Medicare and Social Security? Given
current and future national debt realities, we cannot afford to
spend money on these individual pet projects.
Even if the individual projects had merit--and many do, and
I am sure that most of them have good-hearted and honest
constituencies in their support--those merits for a small
parochial interest have to be weighed against the broader risks
of the out-of-control growth of earmarking and the long-term
financial health of the United States.
Earmarking can lead to outright corruption, as seen in the
recent guilty plea of former Representative Duke Cunningham for
bribery over an earmark of money for his district. Reducing or
eliminating earmarks would help reduce the power of lobbyists,
who often raise campaign money for Members of Congress if they
slip an earmark into a bill that benefits a lobbyist's client.
Next you will see posters of two lobbyists' Web sites with
some pretty revealing quotes.
The Web sites of these top lobbying outfits make no bones
about their ability to serve up pork for their clients. All of
the sites stress the firms' cozy relationship with members and
their staff and highlight their employees' previous government
experience as a signal to potential clients that they are
networked into the pork game.
Many sites outright brag about the amount of earmarks they
have secured for clients. The two examples that you might see--
and this is just two of many. First is a blown-up poster of a
lobbying firm's Web site with quotes of interest pulled out for
viewers to read.
The quote states, ``Each year, our attorneys secure
hundreds of millions of dollars in Federal funds for a wide
range of clients. We have successfully designed and implemented
strategies to win Federal funds for hundreds of new programs,
to keep controversial programs funded, to increase funding for
client priority programs, and, when called for, to initiate for
programs not requested in the budget.
``Many of our attorneys are veterans of congressional
committee staffs or Federal offices and, thus, know the budget
process from both sides, giving them a depth of perspective on
the process that greatly benefits our clients.''
The second lobbying firm's Web site, ``Collectively, our
Federal practice group possess an intricate knowledge of the 13
annual Federal funding bills and the methods for obtaining
identified appropriations from a variety of accounts. We have a
strong relationship with numerous key members and staff in both
House and Senate and a knowledge of precisely how, where, and
when to intervene to achieve desired results.
``Although success is never guaranteed, the fees that our
clients pay in pursuit of legislative appropriations are almost
always greatly exceeded by the amount of funding they receive.
For fiscal year 2004, this group obtained $334 million for our
appropriation clients.''
While there is nothing inherently wrong with lobbying per
se, earmarking in particular develops an unhealthy relationship
between members, their staff, and the lobbyists seeking favors.
According to the Wall Street Journal, the number of companies
hired to pursue earmarks has doubled since 2000. According to
the Center for Public Integrity, the commonly lobbied issue is
budget and appropriation--6,800 companies as of 2005.
The willingness of those in power to abuse the
appropriation process through earmarking has led to an
explosive growth in the lobbying industry and encouraged the
excesses illustrated by the Cunningham and Jack Abramoff
scandals.
Abramoff has described the appropriation committees and, by
extension, the appropriation process, as an ``earmark favor
factory'' in which influence and votes are bought and sold. I
believe Senator McCain's legislation--which I proudly co-
sponsored--and its companion in the House, sponsored by
Congressman Jeff Flake, is an important first step in a process
that should ultimately lead to the shutdown of this process.
This legislation would require that earmarks be placed in
the text of legislation rather than the committee reports that
accompany bills. Under current practice, committee report
language directs Federal agencies to spend money on particular
earmarks--and the agencies have learned that congressional
appropriators will retaliate if their language is ignored, even
if it's in the national interest to ignore it.
Next is a recent Congressional Research Service report that
shows that 96 percent of the 12,852 appropriation earmarks in
FY2006 were hidden within the report language. That means the
language was slipped in behind closed doors, at the last
minute, or in the middle of the night. Everyone knows that the
conference reports become public almost immediately before they
have to be voted on, which makes it almost impossible for
members to know what they're voting on or for.
Earmarks need transparency and time for debate to make sure
each item is considered on its own merits and in light of the
competing priorities that this country faces. Tucking earmarks
into a conference report prevents taxpayers from the benefit of
debate and disclosure about how their money is being spent.
Requiring earmark projects to be a part of actual legislation
would also make it easier for legislators to challenge them by
offering amendments to change or strike them.
Transparency and debate will also reduce the value of
earmarks as an instrument for party discipline by leadership in
appropriators. And, shining light on these pet projects will
help ethics compliance by curbing the incentive for members to
take campaign donations from special interests.
Ideally, forcing lawmakers to defend projects will expose
them to ridicule and, eventually, the practice of earmarking--
and the out-of-control spending it leads to--will slow.
The truth is Congress will never take meaningful steps to
tackle our enormous fiscal challenges as long as it indulges
with impunity in a practice that creates a culture of
complacency.
They say every cloud has a silver lining. I believe that
the various lobbying and earmark-related scandals, both real
and imagined, have opened a unique window of opportunity to
enact reforms now that may not ever come again. If Congress
fails to pass meaningful reforms that attack this climate of
corruption at its source, the public will, and should, take
reform into its own hands in November.
I want to thank our witnesses for being here today, and I
look forward to our dialogue.
Senator Carper.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thanks, Mr. Chairman.
It is good to be with you, and I want to welcome
Congressman Flake. I don't think I have ever met you before.
And so, just very nice to have a chance to meet you.
I am going to listen to your testimony, and then I am going
to have to slip out.
Today, we hold this hearing as the Senate debates the
budget for the debt ceiling. We are going to be asked to vote,
probably later today, to raise the debt ceiling by about three
quarters of a trillion dollars.
And that will mark, I think, the fourth time we have been
asked to raise the debt ceiling in the last 5 years. And we
have gone from a time when we had balanced budgets--literally,
surpluses as far as the eye could see--to a time when we have
deficits for as far as the eye can see.
And as baby boomers, my generation, are moving toward
retirement, the situation doesn't look brighter. In fact, it
looks bleaker. As a result, I think we have to look in every
corner of where we spend money or how we bring money into this
Federal Government of ours to make sure that we are doing all
we can do to reverse our slide into fiscal insanity and to get
back on the right track.
There are a lot of things that we can be doing. We have
talked, in fact, we have had hearings about some of those. One
of them is just to collect the monies that are owed to the U.S.
Treasury. IRS reported to us just weeks ago that about $290
billion in tax revenues that were owed to the Federal
Government last year were not collected--$290 billion.
We have had a series of hearings on improper payments. And
it turns out that the Federal Government makes a lot of
payments, mostly overpayments, for things that we ought not to
be doing, and it is about $50 billion. It is real money.
We know that some of the folks who benefit from entitlement
programs, frankly, make enough money that they probably should
be means tested and that we can go to, not to balance the
budget on the backs of folks who depend on entitlement
programs, but there is money that can be saved, particularly
from those that are more affluent and who are eligible for
entitlement programs.
We get to the issue of earmarks, and it reminds me a little
bit of what we used to have in our State. Maybe you have it in
Oklahoma or Arizona as well, but we had something called a
grant in aid package that would come through the legislature
every year.
We would pass an operating budget. We would pass a capital
budget. And the legislature itself would put together a grant
in aid package. And the grant in aid package would allow each
of the legislators to pick their favorite good cause--and they
were good causes. I mean, Boy Scouts, Girl Scouts, boys and
girls clubs. Any number of nonprofits doing the Lord's work in
a whole lot of ways--and it was beginning to take more and more
of the budget.
And one of the things that we did in our State, and I think
they probably have done in other States, is to say it is not
inherently bad to have a grant in aid package, but to limit it
to some percentage of the overall spending so that it just
doesn't continue to grow.
When I look at the charts that we see this morning, the
thing that concerns me is not so much that we do have earmarks,
but that the trend is going in the wrong direction. It
especially is going in the wrong direction now as the budget
deficit gets larger and larger.
The last thing I would say. The thing that troubles me most
about earmarks is the idea that if you pass a House bill, it
doesn't have a provision in it. The Senate passes an
appropriations bill, it doesn't have a provision in it. And
when a bill comes out of conference and there is a provision in
it that wasn't in either bill going in, that is not good.
And that, in terms of reforms and things to change, I
think, will get at least my support for cleaning that up and I
suspect the support of a lot of us.
Congressman Flake, welcome. Glad to see you, and look
forward to your testimony.
Senator Coburn. Congressman Flake, thank you for being
here. Congressman Jeff Flake presently is serving his third
term in Congress, represents the 6th Congressional District of
Arizona. He serves on the House Committees on the Judiciary,
the Committee on International Relations, and the Committee on
Resources.
Congressman Flake, your entire testimony will be made a
part of the record, and you are recognized.
TESTIMONY OF HON. JEFF FLAKE,\1\ A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF ARIZONA
Mr. Flake. Thank you. I appreciate the opportunity to be
here, and I want to commend you, Senator Coburn, for your lead
on earmark reform and for all you have done in this area and
for co-sponsoring the legislation that we have in the House.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Flake appears in the Appendix on
page 39.
---------------------------------------------------------------------------
And Senator Carper, thank you for what you are doing, and
your recognition as far as conference reports and what is going
on there with earmarks being airdropped in at the last minute
truly is a growing problem. And it is something that is
addressed by this legislation.
I think it is appropriate that you are having this hearing
today. I am not sure what deadlines the Senate has, but the
biggest deadline in Congress on the House side is today. It is
the deadline for submission of earmark requests before the
Appropriations Committee.
You have a lot of staffers from district offices in
Washington this week that wouldn't be otherwise. You have
lobbyists on the Hill in droves that wouldn't be otherwise.
After today, this is kind of like April 15 for accountants.
When today is gone, many lobbyists' work is done for the year.
There will be a run on the airport tonight for the Bahamas, I
think. This is what this process has become.
My office, we don't do any earmarks, but still we get
lobbyists hoping that we will change our mind, apparently,
because we got this year several request forms already filled
out for us. Typically, the practice is these request forms from
the Appropriations Committee come to the member offices. The
members will simply turn them over to lobbyists, who will fill
them out, give them back to the members, sign them, and turn
them in.
And we received several filled out. Just all that was
needed was my signature to make earmark requests. I would
submit that when that is what the process has become, we have a
problem, a huge problem.
Senator Coburn outlined the trend that we are on in terms
of earmarks. It is not a pretty picture. It is exploding.
Depending on how you define an earmark--it is anywhere from
$4,000 to $15,000 or $2,000 to $14,000--in any event, any way
you look at it, it has exploded and under our watch as
Republicans. And I think it is nothing to be proud of.
You mentioned the CRS study that was just released,
indicating that 96 percent of earmarks are in conference
reports or committee reports. They aren't contained in the
actual legislation. What that means is that individual members
simply have no access to challenge those earmarks.
We talk a lot about giving the President line-item veto
authority. I think that he ought to have it. I would be more
pleased if we had it. And we have given it up. When we
legislate by report rather than actual legislation, we have
given up our ability to challenge individual spending items.
I have pointed out before that had any of us suspected that
Duke Cunningham had been bribed to get any of the $90 million
in earmark that he allegedly got for his clients, we couldn't
have stopped very many of them, if any, because they were
contained in conference and committee reports that we simply
don't have access to. That is a problem, and that is something
that we have got to stop.
H.R. 1642 and the companion bill in the Senate, as you
mentioned, Senator Coburn, simply say that if you want an
earmark, you have got to put it in a bill. And members ought to
have access to that bill on the House floor.
But when it comes to conference reports, conference reports
by definition are unamendable when they get back to the floor.
So there has to be a process, a point of order protection,
something that prevents earmarks from being the term that is
used is ``airdopped in'' at the last minute.
And I am afraid that if we shut down the process at the
committee level and make sure that earmarks have to be in the
bills there, then the trend will be--and we don't shut down the
conference report process, then all earmarks will simply shift
to a later stage, and there will be even more incentive to move
them where they cannot be accessed at all.
There is some discussion about even if we don't allow the
earmarks into bills, that we have access through limitation
amendments on the reports. But if we do that, then we will have
to tighten up the rules in the House because, as it stands, the
House can waive rules, and does, requiring that committee
reports even be there on the floor when the legislation is
voted on. And unless we tighten that process, all we will have
is reports being approved after the bill has already passed.
You mentioned earmarks as the gateway drug to spending
addiction. That is the best description that I can think of.
People will point out, well, it is only a small percentage of
the budget. But what we have seen over the past couple of years
with the spending increases that we have seen, it has coincided
with the number of earmarks.
Typically, if you have an earmark in a bill, you can't vote
against that bill, or you might lose your earmarks in the
conference committee. That is the game that is played in the
House. And so, you have members supporting bloated
appropriation bills that they wouldn't support otherwise. And
so, it simply balloons spending everywhere. The earmarks are
more important than the sum of their parts in terms of dollar
value because they simply leverage higher spending everywhere
else.
We had a discussion the other day in the House as to
whether or not there is a constitutional right to earmark, and
it was a fascinating discussion. Members will point out Article
1, Section 9, Clause 7, saying that it is the Congress's power
to appropriate. Certainly it is.
But we ought to point out that James Madison in 1817 vetoed
the first appropriation bill with earmarks. Didn't feel it was
proper to do so. It has been debated since then. The Supreme
Court has ruled a couple of times and has simply said that
Congress makes the determination.
So Congress can say that earmarking is proper, but if you
accept the notion that it is OK for Congress to have an earmark
for an indoor rainforest in Iowa, then it begs a question, what
kind of funding would be unconstitutional? Where does it stop?
Where does parochialism end in this sense?
So this legislation is important in that it brings not only
transparency, but just as important, it brings accountability.
You not only have to have names associated with earmarks and
shine more light, there has to be an ability for members to be
able to stand up and challenge.
It is interesting that some of those who will claim a
constitutional right to an earmark will go further and claim
that they should have a right to have an earmark without that
funding even being scrutinized by other Members of Congress
because they know their district better than anyone, and they
should have a right to actually decide what funding goes there.
I think that is dangerous territory for anybody to be in,
and for those who pretend to believe in limited government, it
is simply inconsistent with that philosophy. But with that, I
have the statement in the record, and I will be glad to answer
any questions you might have.
And thank you again for the invitation to come here.
Senator Coburn. Let me ask you a couple of questions.
Hopefully, Senator McCain will arrive.
What you often hear from Members of Congress is that if we
don't earmark, then there is an uncontrolled bureaucracy that
will spend the money any way they want. First of all, what is
your response to that? And second, is there any truth to it?
And is there a constitutional solution to that if, in fact, it
is true?
Mr. Flake. Well, we have a process in Congress, a carefully
designed process of authorization, appropriation, and
oversight. And the problem with earmarks is they circumvent
that process.
For those who say that we need to be able to tell the
Federal agencies that they are not spending in a way that we
outlined or that is proper, we kind of lose all credibility.
For example, in this past year's defense bill, when we
criticize the Department of Defense for not spending sufficient
funds on body armor. Yet we earmark more than $1 million for a
museum in New York in the defense bill. What kind of
credibility do we have, as Members of Congress, when we
stipulate that kind of spending?
So it has really taken away our ability to have proper
oversight because we simply can't pass the laugh test when we
criticize Federal agencies for profligate spending or for not
following the dictates of the Congress because here we are
saying you have to spend money. Here is our spending
instructions on the Punxsutawney weather museum in Pennsylvania
or the Cowgirl Hall of Fame. It is simply we have a process of
oversight, and earmarks simply circumvent that.
Senator Coburn. So the fact is the Congress has not done
its oversight?
Mr. Flake. You bet. No doubt. We simply aren't doing
oversight, and I think it is largely because it is
embarrassing, once we get into it, to actually confront the
same Federal agencies that we have stipulated should spend
money on 800 projects of questionable value and then to try to
tell them that they are not spending money properly.
And for those who say we are simply spending money that is
authorized or appropriated anyway, and we are simply deciding
where it is spent, we are earmarking accounts that we never
dreamed of earmarking in years past. There are certain
agencies--the FAA, for example, that has designated accounts
for maintaining runways or towers. When we earmark accounts
like that, then the next year, those agencies have to come back
and maintain those runways, those facilities. Yet the accounts
they have to do that are gone. And so, they will have to come
back and ask us to backfill those accounts. And so, it simply
leads to higher spending everywhere else.
With regard to transportation, the transportation bill is
an authorization bill, but it acts like an appropriation bill.
And the trend has been to actually spend less money on highways
and roads and methods that actually promote mobility or
pollution abatement because typical Members of Congress will
say I want a long list of earmarks that I can claim credit for.
And so, they will have a transportation museum or a
beautification of this street or a bike path here. So they can
have a long list, and it typically drains money away from the
infrastructure that the gas tax was intended to fund.
Senator Coburn. In your oath of office, when you take an
oath of office as a congressman for the United States of
America, is there anything in there that says your obligation
is to bring the most back for your State? Is there anything in
that oath that would imply that?
Mr. Flake. Nothing that I have discovered. And I can tell
you a lot of my colleagues are tired of this process. They
simply are tired of being an errand boy for the local mayor,
tired of having so much staff time spent on securing these
earmarks. And so, it is a problem.
One reporter approached me the other day and mentioned that
he had just read Mo Udall's old book, ``How To Be A
Congressman.'' Mo Udall came here in a special election, famous
Arizonan, and he didn't get any introduction or instruction on
what to do. So he wrote a book on what a Member of Congress is
supposed to do.
That reporter pointed out that nowhere in the book were
earmarks mentioned at all. This is a recent phenomena. You
pointed that out. There have been earmarks in years past, but
it is typically just in the Appropriations Committee, just an
appropriator here or there, and they tended to be a little more
judicious with it.
In fact, in our discussion the other day, when we were
discussing earmarks in the policy committee of the House, one
member mentioned, ``Well, let us get a little institutional
perspective. How did earmarks work in the 1980s?''
And they asked one of the members that was there in the
1980s. This member said, ``Well, I can't tell you. We didn't
get any then. It was different. I only discovered a few years
ago that I could do this, but it is wonderful.''
And so, it is a recent phenomenon, and it has simply become
out of control in the last couple of years.
Senator Coburn. One last question for you, Congressman
Flake. Can Arizona, as a State, be viable and healthy if the
United States is on a financial tailspin?
Mr. Flake. No. And the notion that you are a Member of
Congress, it is your job to bring home the bacon because that
is in the best interest of your district simply doesn't square
with reality.
If we continue with this process and continue out-of-
control spending that is really fostered with these earmarks,
every district, every State is worse off. And that is why we
have to change the process.
Senator Coburn. Thank you. Senator McCain, welcome.
TESTIMONY OF HON. JOHN McCAIN,\1\ A U.S. SENATOR FROM THE STATE
OF ARIZONA
Senator McCain. Thank you very much, Mr. Chairman.
---------------------------------------------------------------------------
\1\ The prepared statement of Senator McCain appears in the
Appendix on page 41.
---------------------------------------------------------------------------
And could I just add on to Congressman Flake's comment and
his personal example?
I believe that Congressman Flake has shown enormous
courage, and a friend of his and mine decided to challenge him
in a primary because he didn't bring home the bacon, because he
didn't have enough ``earmarks.'' And I am happy to tell you
that Congressman Flake won overwhelmingly, and that was
probably the key issue associated with that primary, wouldn't
you say?
Mr. Flake. Let me just say I had a good example to follow
here.
Senator McCain. But Mr. Chairman, if there is such a thing
as preaching to the choir, it is testifying before you today--
or maybe preaching to the preacher.
I want to thank you for everything you have done. I think
that every American home should see these two charts.\2\ And I
know that we are doing our best to get them around.
---------------------------------------------------------------------------
\2\ The charts referred to appear on pages 29 and 34 respectively
in the Appendix.
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One of the issues that I did want to discuss is this
placement in the conference report of earmarks. This is an
insidious and ever-growing practice that is really
unconscionable because, according to law, conference reports
don't have the force of law. But as soon as the bill is passed,
the various agencies get a phone call and say, hey, it is in
the conference report, and you better treat it as law. In fact,
I think a couple of times it has been written into the bill
that the provisions of the conference report will have the
force of law.
Mr. Chairman, you and I don't have the ability to remove
those from the conference report when we are in debate on the
floor and when we discuss the provisions of a bill. We can go
after the earmarks in the bill itself, but we can't the
conference report. So we have to ban it. And I really believe
that the time is right now for it.
I was down in Memphis last weekend with a group of the
party faithful from all over the country, but mainly from the
South, and it was obvious to me from my remarks to them--but
more importantly, from their remarks to me--that they know this
has got to stop. That we are mortgaging our children's futures.
And I think that we have our base energized. They support
us. I think the majority of the American people support us, no
matter what their party affiliation is. And this is a time to
act, and we will be able to do it, I believe, when we take up
the lobbying reform.
And Mr. Chairman, I was thinking last night in anticipation
of appearing before you today, if, for some reason, this reform
bill does not proceed, then, Mr. Chairman, I think you and I
and our other colleagues have just got to start slapping it on
as amendments on bills.
We can't let another appropriations cycle go by. The
appropriators are already beginning to shape their bills. We
cannot let another cycle go by with the kind of activity such
as is described on that chart.
So, Mr. Chairman, I would appreciate it if you would allow
my complete statement to be made part of the record, and I know
you have to proceed. But committee reports and manager
statements do not have statutory force. They cannot. And
departments and agencies are not legally bound by their
declarations, as we stated in a letter to the President of the
United States just last week.
I thank you, Mr. Chairman, for all you do, and I appreciate
you for the courage you continue to display and the leadership
you continue to give those of us who are interested in fiscal
responsibility.
And I am very pleased and proud of my colleague from the
State of Arizona. It is a little tougher environment over there
in the House, as you know, and he shows a great deal of
courage.
Senator Coburn. Thank you, Senator McCain. Your entire
statement will be made a part of the record.
Senator McCain. Sometimes my entire record is made part of
my statement. [Laughter.]
Senator Coburn. Yes, well, it comes with you. That is for
sure.
I want to thank you for coming here and thank you for what
you have done. There is no question you have been a leader on
this issue in the Senate for years.
I want to ask a couple of questions. When a House bill
comes to the Senate floor today, an appropriation bill, and we
are considering it, do we have any knowledge of the earmarks
from the House?
Senator McCain. I don't think so, unless we have had an
opportunity to see the bill.
Senator Coburn. But the record is not a part of what we are
voting on. Is that correct?
Senator McCain. That is correct, sir.
Senator Coburn. So the senators in the Senate chamber are
voting on, they can have access on a delayed basis and
oftentimes untimely basis to the report language in the Senate.
But that does not include the report language from the House,
does it?
Senator McCain. No, sir.
Senator Coburn. So, in essence, the Senate, every time they
vote on an appropriation bill, has no knowledge of the earmarks
from the House on the bill that they are voting on. Is that
correct?
Senator McCain. Yes, sir.
Senator Coburn. And so we don't know what we are voting on
on appropriation bills, based on what the earmarks are that are
coming from the House?
Senator McCain. That is exactly correct. And even if we
did, sometimes, as you know--not sometimes, but all too
frequently--the bill is completed in the middle of the night
the night before we are supposed to go into recess. By
unanimous consent, it is brought. It appears on our desk, and
then we vote.
And everybody wants to leave to go into recess. So,
therefore, any bad guys that want to examine the bill or make
changes or amendments are under enormous pressure not to do so.
And we have not only seen this with individual appropriations
bills, but unfortunately, quite frequently, with omnibus
bills--omnibus stacking them all together.
And then we are shocked, shocked and surprised weeks and
months later when we find out that provisions were put in which
we find incredibly bad.
Senator Coburn. What do you think----
Senator McCain. Do you want to say something, Jeff? Go
ahead.
Mr. Flake. I just want to point out, the House--and I am
not sure what the Senate rules are--but the House actually has
some pretty good rules to prohibit this kind of airdropping of
earmarks into a conference report, but we waive them routinely.
We waive all points of order lying against a bill.
Otherwise, anyone could stand up and say there is non-
germane--in this case meaning spending that wasn't authorized
by either the Senate or the House--in the bill. But we waive
those rules. And that is what this legislation is all about, an
effort to say we simply will enforce our own rules that we
have. And I don't think that is too much to ask.
Senator Coburn. What is the likelihood of this legislation
to pass in the House?
Mr. Flake. Well, today, we will find out what is part of
the earmark reform proposal that will be in the lobbying
reform. And the last check, as of last night and this morning,
is that we aren't dealing sufficiently with the conference
report angle.
There is some movement on if not putting all language,
earmark language in the bills during the committee process or
the appropriation process, at least allowing members access
through limitation amendments to the committee reports.
But the problem with that is as along as there is an out
with the conference report, that is where the earmarks will go.
If members fear that their earmarks may be seen or singled out
in that process, they will simply airdrop them into the
conference report at the end of the process, and we aren't
moving yet to close that down.
Senator Coburn. Senator McCain, do you have any experience
or knowledge with the fact of what would happen if an agency
didn't follow conference report language in terms of the
expenditure of money?
Senator McCain. Then there are implicit threats of cuts in
travel, administrative costs, etc., and other threats to cut
programs that are of high priority to the people in those
bureaucracies. I know it happens. It is not done in writing.
Senator Coburn. So, basically, you have----
Senator McCain. You have the powerful committee chair
people, members of the committee that are responsible for the
funding of an agency saying treat these provisions as law. And
if you don't, then there will be repercussions.
And I know that happens, and I doubt if we could find a
single member of those agencies who would come over and testify
before you that it is true. But they certainly have told me
that many times.
Senator Coburn. So, basically, you pass a report language
that does not have the force of the law, that most of the time
is not available to the members of either body when they have
to vote on it, and then you have leverage applied, coercion
applied. Is the answer does the President have to spend this
money?
Senator McCain. No, sir. Jeff, did you want to answer?
Mr. Flake. Just on the agencies, it is even more pernicious
than that. I have actually been contacted by somebody from a
Federal agency who said that they will sometimes get calls from
the Appropriations Committee, from staff after a bill has
passed and saying, ``We forgot to include this earmark. Can you
fund it as if it were included?''
And I joked at the time that this is what our oversight has
come to. ``We made an oversight. We forgot to put this in. Can
you fund it anyway?''
But as Senator McCain said, they simply can't afford not to
fund those requests, or they are punished in the next year.
Senator Coburn. Yes. And a great example of that is we had
a USAID program that went to California, which cost a whole lot
more money had it been done somewhere else. And the head of
USAID was actually threatened with his job because of his
complaint about that earmark. So there is not only behind-the-
scenes coercion, there is also threats that are made in public.
Senator McCain. And I would like to bring up another
unpleasant episode, Mr. Chairman. Somehow one Member of
Congress, an appropriator, with a crooked lobbyist, all by
themselves, were able to channel hundreds of millions of
dollars to one ``defense contractor'' for the most nebulous and
wasteful and criminal projects. And obviously, I am referring
to former Congressman Cunningham.
Is the system so broken, is there so little oversight, Mr.
Chairman, that one member and one lobbyist can divert hundreds
of millions of dollars of taxpayers' dollars that are supposed
to be for the men and women in the military to a corrupt
enterprise?
I think everybody was so alarmed at what Congressman
Cunningham did. I think we should be alarmed that he was able
to.
Senator Coburn. Yes. So we discussed before you arrived the
lack of oversight and the oversight responsibility of Congress
and that part and parcel of the earmark process is lack of that
oversight.
Well, I want to thank both of you. We appreciate you
coming. And Senator McCain and Congressman Flake, thank you so
much for your service to the country.
Senator McCain. Thank you, Mr. Chairman.
Senator Coburn. Our next panel has Steve Ellis, vice
president for programs for Taxpayers for Common Sense; Tom
Schatz, president of the Council for Citizens Against
Government Waste; and Scott Lilly, senior fellow at the Center
for American Progress and somebody who has extensive experience
inside the appropriation process.
I want to welcome each of you. Your entire testimony will
be made a part of the record, and you are each recognized for 5
minutes.
Mr. Schatz.
TESTIMONY OF THOMAS A. SCHATZ,\1\ PRESIDENT, CITIZENS AGAINST
GOVERNMENT WASTE
Mr. Schatz. Thank you very much, Mr. Chairman.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Schatz appears in the Appendix on
page 43.
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And as I mentioned to you very briefly earlier, we have
been waiting 16 years for someone to come up with a proposal
and a serious one to reform the earmark process.
Senator Coburn. Let me interrupt you for a minute.
Mr. Schatz. Yes.
Senator Coburn. You can see how important this hearing is
to the rest of the Members of the Senate.
Mr. Schatz. I was going to mention that.
Senator Coburn. There is no one else here. There is no one
else in attendance because this is not deemed to be a problem.
Mr. Schatz. I think they are also probably off trying to
figure out what earmarks they want to add into these bills,
given certainly what Congressman Flake mentioned, that this is
a deadline in the House, and the appropriations process is
moving forward in the Senate.
And that is one of the points that we have made in our
testimony, that this is not a large amount of dollars, although
$64 billion is. And our definition of pork barrel spending,
which we have been using since 1991, which was developed in
conjunction with the Congressional Porkbusters Coalition, is a
little bit more narrow than the overall earmark number. But
whatever you want to call it, it is a problem. There is no
question about it.
And the witnesses prior to this have described it well, as
have you. And being aware of that, I think the question is what
do we do about it?
I think there will be some very public repercussions if
nothing is done because this process has been and is really
symbolic of the larger problems here in the U.S. Congress.
These are low-priority projects that take up a lot of time,
leaving little time and effort and oversight to see what we
have done with our money and also to look at these larger
problems, like Social Security and Medicare.
So the very least that we should be doing is what is
contained in S. 1495, the Obligation of Funds Transparency Act,
which tells the agencies you can spend money only if it is the
committee report.
And to address one of your questions, when did this start?
In 1988, the Office of Management and Budget issued a report
identifying unauthorized projects in the appropriations bills.
That was the first and last time they ever did that because the
following year, the Appropriations Committee started talking
about, as the Senator and the Congressman mentioned, cutting
off certain funds to OMB.
We, in turn, took that idea and turned it into the first
Congressional Pig Book in 1991, and we have been issuing them
ever since. And we have identified more than 66,000 projects,
costing $212 billion over that period of time.
And as the government has grown, so has the number of
earmarks and the pork and the waste, which points to,
obviously, the need to reduce the size and scope of government,
and it would certainly help to start with these low-priority
projects.
Taxpayers have probably heard about the $50 million indoor
rainforest. They may not have heard about $3 million provided
to the First Tee Program in Florida or $273,000 to combat Goth
culture in Blue Springs, Missouri, which turned out to be such
a ridiculous project that they returned $132,000, saying maybe
this isn't such a big deal.
But originally, they claimed that these kids were running
around town, and they were going to blow up the school like
they had done at Columbine, and we needed to do something about
it. And Congressman Graves apparently believed this and added
this money in. And then it was given back.
But since the vast majority of projects are added in
committee reports and in conference reports, that is really
where the focus of any legislation should be. We have seen some
proposals to allow points of order to be presented against
items added in conference reports. That is certainly helpful.
But I think there needs to be a very comprehensive look
because, as both of your first witnesses said--Congressman
Flake and Senator McCain--this is our chance. These scandals
have brought forth the interest, at least with the public, if
not your colleagues here today, on this issue to an extent that
it has never been done before.
We have been issuing the Congressional Pig Book--and
Senator McCain and Congressman Flake have come along, and we
hope you will join us as well this year--and we get a few days
of publicity and some conversation and some possible reforms.
But the result of what has happened, where the digitization of
DOD manuals can turn into a bribe has really indicated things
have gone too far.
So we have been talking about this for a long time, and
people say, well, is it really that big a deal? It is because
of what it symbolizes and what it has become over the period of
time and also, of course, the explosion in this type of
spending.
In fact, we really refer to the whole process as a form of
legalized bribery, where we have taken this money from the
taxpayers, kind of washes through the Appropriations Committee.
As Congressman Flake pointed out, when you have the lobbyists
filling out these forms and handing them back to the members
just as if it is going to happen, nobody is thinking about the
fact that this is the taxpayers' money.
I don't think anyone who was asked to individually
contribute their share for that $50 million indoor rainforest
in Iowa would be very happy about it. But when they hear
members go back home and talk about these projects, it sounds
like it is the most wonderful thing in the world.
And in terms of the priorities of the agencies, the
National Park Service has a $9 billion maintenance backlog. And
one of the things we will put into our Congressional Pig Book
this year is the information that the National Park Service has
a program called ``Save America's Treasures.'' They asked for
$15 million, a competitive program. They got the $15 million.
The appropriators added $16.2 million above that and
earmarked every single dollar. So they thought the program was
important enough to more than double the amount of money, but
they started making those decisions.
So that is just one small example of what is wrong with
what has been going on. And we really appreciate your
leadership on this issue, and we will be ready to help you get
this legislation moving forward.
Senator Coburn. Mr. Ellis.
TESTIMONY OF STEVE ELLIS,\1\ VICE PRESIDENT OF PROGRAMS,
TAXPAYERS FOR COMMON SENSE ACTION
Mr. Ellis. Thank you very much, Mr. Chairman.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Ellis appears in the Appendix on
page 51.
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Good morning, and I am Steve Ellis, Vice President of
Programs at Taxpayers for Common Sense Action, a national
nonpartisan budget watchdog.
And you know, I noticed when you mentioned that the Senate
hasn't recognized they have a problem. As anybody who has done
any 12-step program recognizes, that is the first step towards
curing your addiction to spending is to recognize that you have
a problem.
I think some of the efforts that we have seen today or at
least some of the comments from leadership has been that there
is a political problem rather than actually a substantive
problem. Taxpayers for Common Sense Action definitely believes
there is a problem and strongly believes in making earmarks and
the legislative process, particularly the appropriations
process, fully transparent and more accountable.
By denying funding for pork provisions that are not in the
actual law, S. 1495, the Obligations of Funds Transparency Act,
helps force the earmarks out of the shadows and into the light
of public debate.
As everyone on this panel is painfully aware, and you, Mr.
Chairman, and the previous panel, earmarking has exploded in
recent years. But as noted, at least a bit by Mr. Schatz, is
that earmarks, to me anyway, I guess, are a little like
pornography.
Maybe in more ways than one, but more going off of the late
Supreme Court jurist's Potter Stewart's observation that he
couldn't define pornography, but that he knew it when he saw
it. Well, earmarks are hard to define, but we all know it when
we see it.
As your chart showed, in constant 2005 dollars, the CRS
found 4,126 earmarks in fiscal year 1994 worth $29.6 billion.
That increased by fiscal year 2005 to 15,877 earmarks worth
$47.4 billion. That represents a 285 percent increase in the
number of earmarks since fiscal year 1994 and a 60 percent
increase in the cost of those earmarks.
TCS's own analysis of the earmarks in fiscal year 2005
found 15,584 earmarks worth $32.7 billion. In the fiscal year
2006 defense appropriations bill, TCS found 2,837 earmarks
worth $11.2 billion. That is up from 62 earmarks worth $8.9
billion in 1980 and a dozen earmarks worth $5.6 billion in the
1970 defense appropriations bill.
The average 1970 earmark was worth $466 million compared to
the average 2006 earmark at $3.9 million. You could argue that
those dozen half billion dollar 1970 earmarks may have
represented the legitimate policy differences between the
Legislative and Executive Branches. But it is clear that at
$3.9 million, the 2006 earmarks were an effort to steer defense
dollars back home for pork barrel spending and political
favors.
Last year's highway bill had a record $24 billion in
earmarks, including the infamous ``bridges to nowhere,'' which
were part of a billion dollars obtained for Alaska by
Transportation Infrastructure Committee Chairman Don Young.
When Congress finally passed the Foreign Sales Corporation/
Extraterritorial Income (FSC/ETI) bill, what was supposed to be
a fix for a $5 billion trade distorting subsidy became a $140
billion Frankenstein's monster larded up with tax provisions to
benefit bow and arrow manufacturers, professional sports teams
owners, fish and tackle box manufacturers, and shopping mall
developers.
The U.S. Army Corps of Engineers, their budget is built
project by project. So it is virtually all earmarks. The
President zeroed out 532 of the fiscal year 2006 earmarked
projects in his latest budget. The Army inspector general
remarked that for the Corps, ``The budget process was deemed a
first half irrelevancy. The measure of effectiveness was the
amount of funds actually appropriated by Congress.''
The American Association for the Advancement of Science had
noted recently that, ``Although earmarked funding has been
increased steadily over the past several decades, by all
accounts, the dramatic explosions in R&D earmarks in 2005 and
2006 coincide with the flattening and even declining R&D
budgets,'' meaning that earmarks cut into competitive programs
instead of adding to them. In fiscal year 2005, there were $1.5
billion in R&D earmarks. By fiscal year 2006, $2.4 billion.
Simply limiting the number of earmarks is not going to
work. The first step is to make the budgeting process
transparent. Every earmark request should be made public in
real time. Additionally, each successful earmark should be
accompanied by amplifying information and the name of the
requesting Members of Congress.
Next, earmarks can be defined as legislative provisions
that specify certain discrete projects or entities to receive
Federal funding. These provisions could appear in
appropriations, authorizations, and revenue bills.
Additionally--and this differs from S. 1495--all entities
should be included--private, non-Federal, and Federal. To leave
out Federal entities entirely would leave many earmarks, such
as those for defense or for the Corps of Engineers, untouched.
Finally, there has to be some teeth. S. 1495 has teeth. If
it is not in the bill, it doesn't get funded. But just because
an earmark is in the law, it isn't necessarily worthwhile,
which is some of what Representative Flake was mentioning.
We also need to have effective tools to highlight and
remove egregious earmarks. The consequences of earmarking are
clear. Duke Cunningham's schemes to profit off the backs of
taxpayers counted on earmarks. Jack Abramoff called
appropriations bills ``favor factories,'' as you mentioned.
Earmarks are the direct result of a corrupt process that
encourages lawmakers to scrutinize and fight over the minutiae,
to spend their time not legislating and conducting oversight,
but pulling money into million dollar chunks back to their home
districts.
Taxpayers for Common Sense Action stands ready to work with
you and others to enact real reform. S. 1495 could be a hammer
in our toolbox working to build a responsible Federal budget.
Thank you very much for inviting me to testify today.
Senator Coburn. Thank you, Mr. Ellis.
Mr. Lilly, I want to thank you especially for being here.
Your knowledge, institutional knowledge and background is very
important to this debate.
Thank you.
TESTIMONY OF SCOTT LILLY,\1\ SENIOR FELLOW, CENTER FOR AMERICAN
PROGRESS
Mr. Lilly. Thank you. The idea that a legislature should
control purse strings really goes back to 1215, when the
British nobility told King John that if he was going to spend
money, they were going to be in on the decisionmaking.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Lilly appears in the Appendix on
page 57.
---------------------------------------------------------------------------
When the Founding Fathers met in Philadelphia to put the
Constitution together, they spent months over the structure of
the government. But one provision, probably the most profound
provision in the document with respect to the model of
government we had, was adopted without any debate at all.
That is Article 1, Section 9, Clause 7, which
Representative Flake mentioned earlier. ``No money shall be
drawn from the Treasury, but in consequence of appropriation
made by law.''
There was virtually universal support among the Founding
Fathers for a Congress that had really dominant power over
spending. But what this hearing is about, and I think this a
very important hearing, is what do we do when Congress uses
that power foolishly?
Earmarking is essentially the practice of taking discretion
that is normally exercised by program administrators and
directing it through the legislative process. That is done in
many instances for good and sufficient policy reasons, and that
is what makes this argument so difficult.
But in more recent years, the amount of earmarking, as
these charts show, has virtually exploded, and the motivation
behind the earmarks, the nature of the earmarks has become more
parochial and more political, rather than based on legitimate
policy differences between the two branches of government.
I think that the perception that this practice has a major
impact on public expenditures or the debt is probably wrong. I
think there is some impact, but I don't think that is why we
should be opposed to it.
I think the idea that most earmarks--and I think you
mentioned this in your opening statement--are ridiculous and
wasteful is also wrong. Most members work very hard, most
Senators work very hard at picking the things that they think
will benefit their communities the most.
But I do think the practice is out of control, and I think
it is diminishing the integrity and the effectiveness of the
Congress and the entire Federal Government.
Earmarks are distributed in a highly unfair manner, and I
mentioned in my written testimony that Bakersfield, California,
got over $700 million in transportation earmarks, far more than
nearby Los Angeles, which clearly has far greater
transportation difficulties.
While most earmarks are reasonably good, in my opinion, the
ones that are bad are really bad, and some of my favorite
candidates for the ``earmark hall of shame'' have been
mentioned by the other witnesses this morning.
More troubling to me is something else that has been
mentioned, and that is that earmarks are corrupting the
legislative process. People are being divided from their
constituents by offers or threats regarding earmarks and often
on unrelated policy questions. Not just more or less spending--
and I would say there are also instances where earmarks are
used to persuade members to vote for less spending than they
would otherwise--but also on tax policy and trade policy, on a
wide range of other things.
And I think while conservatives and liberals may disagree
on what the policy ought to be, there is room for both sides to
agree that they ought to be made based on the conscience of the
member and his relationship with his constituents, not on what
the leadership offers in terms of earmarks.
But the worst thing about earmarks, in my opinion, is that
they have eaten the legislative process. People are so consumed
by the practice, and the more earmarks you have, the more
communities, the more foundations you have coming to Washington
asking for earmarks. And the more time that staff and senators
and Members of Congress have to spend talking to people about
these, the more time they spend with the committee staff, and
the more time the staff that should be doing oversight is
wrapped up and dealing with this burden of earmarks.
As I mentioned in my written testimony, one subcommittee
got nearly 15,000 requests for earmarks, which would, if you
put each request on a single page, be a 10-foot high stack of
paper. So just the work that it takes to handle that is
enormous.
I think that we have an opportunity to do something now
that we haven't had in a long time, and I think this hearing is
a step in the right direction. I would say I am much less
sanguine about the legislation that is being promoted. I know
it is well intended. One provision in the legislation, which
requires separate votes on conference reports on ungermane
amendments, I think is good, but it doesn't get at the problem
of earmarks.
I would ask why, when one of the major issues that we are
raising here about earmarks, we don't do anything about the
earmark in the highway bill, which this legislation does not
do. It does not do anything about the earmarks that are showing
up in mandatory spending bills or in tax bills, all of which
should be included in any sensible approach to this.
Furthermore, I think the Appropriations Committee can walk
right away from this language because it is not difficult to
put these things in bill language. It is not difficult to put
them in bill language in a conference report. So they can be
put into the bill, brought back to the floor, and you have no
more choice than you do now.
I would also point out that any appropriation bill that is
reported out, which has earmarks in the report, that report is
available to members on both sides of the Capitol at the time
that the bill is reported. The earmarks that are in there are
there, and any member can reduce the account which is earmarked
by the amount that he wishes based on the quality of the
earmarks that are in there.
If he finds five offending earmarks, he can offer an
amendment to strike the amount that those earmarks would take
out of that account on the floor, and it would be, I think----
Senator Coburn. But not on a conference report?
Mr. Lilly. On a conference report, you have got a big
problem. I don't know how you get around that problem, but you
don't solve it with this bill because you can put the bill
earmarks into the bill language of the conference report.
Senator Coburn. Well, let me stop you there for a minute
and ask some questions. First of all, here is the theoretical
problem, which becomes a very practical problem, when they come
out of conference. The report language is printed. At the same
time the bill is put on the floor, it goes online, but the
report language is 280 pages long, and you are going to move
the bill today.
So no staff, outside of appropriations staff, ever gets a
chance to judiciously study what is in the report language. And
as you said, they are very crafty writers. We had report
language this last year in the defense appropriation bill on
FMAP for Alaska that never mentioned Alaska once.
But to the benefit of Alaska, but to the detriment of 13
other States, Alaska got $120 million more for their FMAP
program, when other States were suffering just as well. And
Alaska was never mentioned. It wasn't even discovered in terms
of the crafty writing. So the point is, time is of the essence
on report language.
I want to ask you a couple of other things.
Mr. Lilly. Could I respond to that?
Senator Coburn. Yes, sir.
Mr. Lilly. I worked with several members on the House side
who have introduced legislation that has over, I think, 120 co-
sponsors now. And one of the provisions in that legislation is
that conference reports, as well as bills, have to lay over,
and printed copies have to be available for 2 days before a
vote can be taken on it, and that can be waived only by
unanimous consent, every single member. Even a two-thirds vote
would not accelerate that.
Senator Coburn. That is in some of the legislation that is
coming through the Senate as well.
Mr. Lilly. And I think that is the only protection that you
have.
Now the provision that is in this bill which blocks non-
germane legislation from going in, and I think it would do a
great deal of good, for instance, with the drug liability
language that was airdropped into the defense appropriation
bill. What that would do would be to go back to what we did for
over 100 years in the House and Senate, and that is there is a
prohibition against House conferees adopting legislative
language in a conference report.
And so, the way they get the conference back is to bring it
back in technical disagreement, and then the rules require a
separate vote on each such provision. And we used to do that
all the time. That basically stopped in 1998, and I think that
is a terrible blow to the process, and not good for the
Appropriations Committee or the authorizing committees to let
that happen. And the Flake bill would correct that.
Whether there is some mechanism by which you could have
separate votes on earmarks that show up in a conference, I am
not sure. That is uncharted territory. But the best thing would
be to reduce the number and volume of them.
Senator Coburn. Right. One other question. I took you
right, but my staff didn't take you right. I recognize that
most earmarks have value, but they are just not in the priority
for what our Nation is when we are spending $630 billion more
than we take in every year.
Mr. Lilly. Well, I think we earmark--I don't agree with the
CRS numbers or some of the others. But I would say truly
district-oriented earmarking is probably 2 percent of
discretionary spending. The problem is that we are so focused
on that 2 percent that we almost have a deal with the White
House that they control the other 98 percent. That is what the
real problem with this is, and----
Senator Coburn. Well, the other problem is, is if you ask
for an earmark, and then the bill comes out that is horrendous
in terms of its spending and you don't vote for it, not only
does that earmark come out, you don't get one the next cycle.
So, in fact, it is a corrupt process, whereby members are
forced to vote for things they would never vote for because of
one small parochial interest that is in the political best
interest in the short term of that Member of Congress, but is
in the politically disinterest of this country and its future.
And that is what is so undeniably wrong with this process
is the process is used to grow the government in a way that is
not in the best interest of the country over the long term.
That is the problem with it.
Mr. Lilly. I agree.
Senator Coburn. If we were in surplus, I wouldn't have any
problem with that. I would love to compete with a lot of the
bureaucrats rather than have oversight. But we are not in
surplus. What we are is stealing every day the future from our
kids.
One other statement you made, and then I will let our other
panel members comment. You said there were earmarks that
sometimes are used for less spending. Could you give me an
example of an earmark that is placed in a bill that would
incentivize less spending?
I have never seen one. I served in the House for 6 years,
and I have been here a year and a half, and I have never seen
one.
Mr. Lilly. We had a funny situation on the Labor HS bill in
the House last November. That bill came back. Senator Specter
said that there is so little in for top priority programs we
can't afford to do earmarks.
Came back to the House a bill that was probably a good deal
better than the one that left the House comfortably. Came back
and was defeated on the House floor. And I think there was
widespread speculation that people would not have voted for it
without earmarks, but they would if they had earmarks.
And the intention this year is to put earmarks in it
because they know it is going to be a really bad bill and the
only way they can get the votes to cut Head Start, to cut a lot
of these programs is to give members something on the side.
Senator Coburn. The 302(b) numbers on Labor/HHS has
declined in the House this year?
Mr. Lilly. Yes. It will be lower.
Senator Coburn. They have a lower number than last year
after the 1.5 percent?
Mr. Lilly. Well, the budget resolution hasn't been passed,
but----
Senator Coburn. Well, it doesn't matter what that is
because the appropriators determine the separate 302(b) numbers
anyhow.
Mr. Lilly. Well, they can't do the 302 until they get the
budget number, but I think the expectation is that there are
going to be cuts across the board. If they stay within the
President's budget, which I think they will, then----
Senator Coburn. I think it is interesting for the public,
the public doesn't realize that when a budget is passed and you
have a total discretionary spending number, that the process
under which that goes is really a rather fluid process, is it
not, in terms of appropriations?
In other words, you can kind of play the game with the
numbers to move, depending on which bill you move first and
which one you want to get out there and how you leverage that
in terms of getting the votes to pass bills?
Mr. Lilly. Well, the big game that was played last year was
in the defense side, and this two-step process we have now
where we fund the government in one set of bills and then the
Iraq war in another creates a lot of opportunity for mischief.
And both sides took money out of defense, knowing that they
would replace that money in the supplemental.
One reason we have a $92 billion supplemental was that
money was taken out of defense in the 2006 bills. So, yes,
there is a lot of movement that goes on.
Senator Coburn. Mr. Schatz, Mr. Ellis, any comments?
Mr. Schatz. Well, I think Mr. Lilly has made some very good
points about how it all works, and I think it is instructive
for people to understand that there are a lot of games played
here that would get people in trouble.
The Enron trial is going on right now, and I wonder how
many Members of Congress would be in that same type of
situation for the kinds of accounting gimmicks that we use here
in Washington. We seem to add days to fiscal years to move
money from one place to another. I recall one of your
colleagues once tried to make Lake Champlain the sixth Great
Lake in order to get certain funds.
So it takes a lot of work to watch how these funds are
being spent. The more exposure, the more opportunity to
eliminate these projects, the better off we are. And certainly,
the member-directed local projects are the ones that really
have the least merit or have less merit than others.
Some members talk about wanting to have this discretion.
They would like to be able to direct funds back home. Why have
grant programs? If you don't like the way money is being
distributed, change the formula. Don't go around and say, well,
we would like to add $16 million to the Save America's
Treasures Program at the National Park Service, go to your
local theater or museum or whatever it might be and ask them to
apply and compete with the rest of the world.
Senator Coburn. You raise a great point. The other problem
with earmarks, which nobody ever talks about, is when something
is earmarked, the normal process of oversight and evaluation of
that money doesn't take place, most generally.
So if money goes through a grant process, there is an IG
that looks at it. There is an evaluation of the grant process,
in other words, internally. When it is earmarked, there is no
oversight.
And I will give you a great example. A million dollars, or
$500,000 went to a small school system in Oklahoma for
computers. They ended up paying $1,000 a month for this small
school system just for maintenance on the computers. They have
nothing, essentially nothing left in terms of computers or
maintenance, and the money is gone. And there is no
accountability except through the grant process.
Now the grant process is going to come back and look at how
that money was spent. And of course, the appropriate things
were done. Had I earmarked that money and the same thing
happened, there would have been no oversight on it. So that is
the other thing that the American public doesn't understand is
that when something is earmarked, very rarely does it ever get
looked at again in terms of how the money is spent.
Mr. Schatz. If I could add one example, and it is in my
statement, and I will try to summarize. The First Tee Program,
St. Augustine, Florida, which is a nonprofit organization
created to teach young people how to play golf, a few years ago
got $1 million for a character education program. And certainly
any sport can teach you character if it is done the right way.
And there is, in fact, a character education program at the
Department of Education, and you and I might agree it is
probably not something we should do anyway, but it is there.
All the money goes to State and local education agencies. The
largest amount is about $500,000. They apply. They are
evaluated. They may or may not get the money the following
year, but there is a group of people that are watching how the
money is being spent.
Since the First Tee Program would never qualify--and by the
way, this is an organization that is supported by the PGA, the
LPGA, major manufacturers of golf equipment--they even run ads
on the major golf tournaments. So they have got plenty of money
if they wanted to save a million dollars for character
education, they could get it somewhere else.
There is no way to evaluate how that program is working at
that entity because it doesn't qualify. So that is just one
example of, I am sure, many that we have identified over our
66,000 projects since 1991 that simply subvert the whole
process of spending money.
Senator Coburn. Thank you. Mr. Ellis.
Mr. Ellis. Yes, sir. I think that one of the things that
you have hit on and I think is incredibly important that is
going on here is that how much time actually that the
earmarking process absorbs. I mean, it takes away from the
oversight function, but it also just absorbs a tremendous
amount of staff time and members' time.
And I have here this is just one member's earmark requests
from last fiscal year that they had submitted to the House. And
you figure this times--this is only a sophomore member. So I
imagine as you get a little more senior you would have even
more. But this times 535 requests, you have a huge stack of
earmark requests that end up going to the Appropriations
Committee. The Appropriations Committee goes through all of
that. Not every single one gets funded. They make decisions on
that. There are replies back. The staff obviously had to
develop all of this.
I mean, there is a huge amount of energy that is directed
toward what is admittedly a small part of the Federal budget,
but it means that we are not spending nearly as much energy on
the rest of the Federal budget and dealing with all of those
other issues. And to some extent, I firmly believe that the
growth in earmarks is almost because it is a ``keep up with the
Joneses'' type of thing. It is that they do it because they
can.
A couple of years ago when we had an omnibus, we did a
listing of a wide variety of earmarks across the country. One
of the earmarks that we listed was A-Plus for Abstinence, a
group in Pennsylvania--laudable group, you know? And we just
put together the whole listing. As you said, some of these
earmarks are for otherwise laudable programs.
And the executive director called me to complain that they
were on this list. But her complaint was not so much that we
had listed them, but she had never even asked for an earmark.
She had never even asked for this money. A Member of Congress
had visited her program and had thought that this was a good
program and just added it there.
She wasn't sure if she wanted to take the money because she
didn't know if she wanted the Federal Government involved in
her program. And so, it is just a case of where the member is
just trying to shovel the cash out because they can.
Senator Coburn. Well, we have a vote on, and I have got
about 8 minutes left on it.
I want to say, first, thank you for coming. Thank you for
the work. Mr. Lilly, I am tremendously appreciative of you
participating in this panel.
I have asked my staff to try to make an appointment with
you, Mr. Lilly. I have met with these guys before, but I have
never sat down--and your experience is something that I would
like to just kind of spend some more time asking you questions
and learning some of what you know to try to address this
issue.
Mr. Lilly. I would be glad to.
Senator Coburn. I thank each of you for attending.
The hearing is adjourned.
[Whereupon, at 10:47 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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