Saturday, November 18, 2006

What "Earmarking" Means

Earmarking

(Redirected from wikipedia "Earmark" )

An earmark has different meanings in the fields of public finance and US politics.

Earmarks in public finance

In public finance, an earmark is a requirement that all or a portion of a certain source of revenue (such as a tax) must be devoted towards spending on a specific public expenditure. Earmarking bypasses the normal procedure where tax revenue is pooled in a general fund which is then distributed among separate spending programs.

For example, in the United Kingdom a tax on television licences is directly allocated to the British Broadcasting Corporation (BBC).

Governments are often fond of earmarking, while public finance experts often criticize earmarking since it provides an avenue for corruption including kickbacks and because it reduces the discretion and flexibility of the government, which may lead to a loss in economic efficiency.

Earmarks in US spending legislation

In the United States legislative budget process, Congress has the power to earmark (designate) funds it appropriates (revenue) to be spent on specific named projects. This differs from the normal practice where Congress grants a lump sum to an agency to allocate entirely at its discretion, according to the agency's internal budgeting process. Earmarks tie the hands of agency bureaucrats, obliging them to spend a portion of the budget on special projects chosen by politicians.

Earmarking became notorious in 2005 when $223 million was earmarked to construct a bridge nicknamed the Bridge to Nowhere, to connect an Alaskan town of 8,900 to an island of 50 inhabitants (saving a short ferry ride). In the ensuing uproar the earmark was removed, but the Alaska government apparently still has the authority to spend the funds on the bridge if it so chooses.

Total earmarks for 2005: 15,000, costing $47 billion. The House Appropriations Committee receives about 35,000 individual spending requests per year.

Definitions

Congressional Research Service

The Congressional Research Service (CRS) notes that earmarks are often contained only in reports issued by House and Senate Appropriations Committees before formal debate begins in the House or the Senate, rather than appearing in the actual legislation itself. This makes earmarking a non-transparent process that is difficult to quantify. The CRS points out that there is no widely agreed upon definition of an earmark, and that definitions tend to vary depending on the type of bill,

"often reflecting procedures established over time that may differ from one appropriation bill to another. For some bills, an earmark may refer to funds set aside within an account for a specified program, project, activity, institution, or location. In others, the application may reflect a more narrow set of directives to fund individual projects, locations, or institutions."

For example, when analysing agriculture appropriates, the CRS defines an earmark as "any designation in the annual appropriations act or accompanying conference report which allocates a portion of the appropriation for a specific project, location, or institution." However, it would be misleading to apply such a definition to defense appropriations, since it is normal practice to specify projects in substantial detail. The CRS therefore applies a narrower definition of earmarks when analysing defense appropriations, that only captures projects specified with more detail than ordinary.

Office of Management and Budget

According to the CRS, the Office of Management and Budget (OMB)

"uses a different definition of earmarks, namely specified funds for projects, activities, or institutions not requested by the executive, or add-ons to requested funds which Congress directs for specific activities."

Citizens Against Government Waste

Citizens Against Government Waste (CAGW) considers 'earmark' to be an ambiguous and neutral term, and prefer to define 'pork' as "a line-item in an appropriations bill that designates tax dollars for a specific purpose in circumvention of established budgetary procedures". In their 2006 edition of the Congressional Pig Book, the group identified nearly 10,000 projects that met at least one of their seven conditions:

"Not specifically authorized; Not competitively awarded; Not requested by the President; Greatly exceeds the President’s budget request or the previous year’s funding; Not the subject of congressional hearings; or Serves only a local or special interest."

Examples

The CRS tracked earmarks from 1994 to 2005 in 13 categories, from Agriculture to Veterans Affairs. It did not provide a grand total of earmarks, since it applied a different definition for each category, and because of limitations in their methodology, most notably not taking into consideration earmarks contained only in reports from House and Senate Appropriations Committees.

As an example, federal appropriations for agriculture in 2005 totalled $16.8 billion, of which CRS counted at least 704 earmarks that came to $500 million, or 3% of total appropriations. These numbers are double the 1994 numbers: 313 earmarks for $219 million, or 1.5% of the total appropriations of $14.5 billion.

The New York Times reported on April 30, 2006 that $568.5 million of NASA's $16.6 billion budget for 2006 has been earmarked for "198 special interest items", up from a decade ago when only $74 million was earmarked for 6 items.

References

Posted by Amy A.Chang at 6:29 PM

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