Part II

The Appropriations-Money Process:How to Get an Earmark.

The Federal Budget for FY 2007

• Outlays: $2.655 trillion

• Receipts: $2.407 trillion

• Deficit: $ 248 billion

• GDP $13.061 trillion

The national debt on July 24, 2007:    

$8,901,606,326,924.12 Your share of the national debt:     $29,434.13

What we’ll cover:

• Earmarks• The playing field• The Budget Process• Appropriations• Mandatory Spending

What is an Earmark:

• Old herdsman practice of cutting a notch in the ears of cattle or swine as a mark of ownership.

• For expenditures, an amount set aside with an appropriation for a specified purpose.

The Modern Sense: Pork– Not requested by president;

– Inserted by single member of congress;

– Intended for specific recipient;

– Not competitive;

– No agency discretion;

– A specified amount;

– Inserted into larger package, so no individual vote;

– Not subject to oversight;

– Benefits only a single local interest.

– Bad sense:• Places narrow organized interests over public good;• Sign of budget process out of control;• Yield themselves to corruption.

– Good sense:• Legitimate role of congressmen to represent local district.

New Rules on Earmarks - OMB:

• Goal: To cut earmarks in half: “In 2005 alone, the number of earmarks grew to over 13,000 and totaled

nearly $18 billion. … You didn't vote them into law. I didn't sign them into law. Yet they are treated as if they have the force of law. The time has come to end this practice.

“ So let us work together to reform the budget process, expose every earmark to the light of day and to a vote in Congress, and cut the number and cost of earmarks at least in half by the end of this session.

(APPLAUSE)

• Created Benchmark: – Executive Order for data collection: OMB Memorandum M-07-09--

– Earmark database -- http://www.earmarks.omb.gov/

New Rules on Earmarks – Congress:• Both chambers voted to require for earmark disclosure

– House: New Rule 9, adopted January 5 (first 100 hours)– Senate: Part of omnibus S.1 The Legislative Transparency and

Accountability Act, approved January 18, 2006• Final version approved by House and Senate this week.

– Provisions: • Require all earmarks be disclosed, along with the name of the sponsor, and be

posted publicly on the Internet for at least 48 hours before consideration on the Senate or House floor.

• Require earmark sponsors to provide the name and address of the intended recipient and the purpose of the earmark.

• Prohibit Members, their immediate family and their staff from financially benefiting from an earmark that the Member introduces or requests.

• For implementation, see: Taxpayers for Common Sense -- Public database on compliance, http://www.taxpayer.net/

• Also, attempts to strip out earmarks from some appropriation bills.

Tactical Impact:

– With all the current hostility toward “earmarks,” try to avoid them;

– The less your funding request looks like one, the better;– Build larger base of support, include authorizing

committee, OMB, and affected agency;

– Pursue visibility, including competition if possible.

The whole playing field:

• Appropriations bills: • “Discretionary Spending.”

• Entitlements: • “Mandatory spending.”

• Tax expenditures;• Payments in kind;

• Land grants, spectrum, commodity programs,

• Credit enhancements;• Loan guarantees, federal financing, insurance stop-loss,

• Regulatory benefits.• Licenses, registrations, product approvals.

Budget Process:• Created in 1974;

• Annual Budget Resolution;– Total spending ceiling;

• Mandatory allocations by functional area,• Appropriations “302(a)” allocations,

– Policed by:• Reconciliation Instructions,• Points of order,• Pay-Go points of order.

– Due by April 15 – usually late.

• Congressional Budget Office;– Official scorekeeper.

Appropriations:

• “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” Article I, section 9.

• Must be renewed annually,• Must be in place at start of fiscal year (October 1) … unless they aren’t.

• Each element must be authorized by law,– Two-step process: cannot legislate on appropriations bill,– Commonly violated, but usually w/ consent of Authorizing Committee,

• Originate in House of Representatives,• Must comply with Budget Act allocations,

Appropriations bills:

• Twelve “regular” appropriations bills;– One per subcommittee.

• Emergency or Supplemental bills;– Can be exempt from budget allocations.

• Continuing Resolutions;– To keep government functioning.

Senate Subcommittees:

• Agriculture, Rural Development, and Related Agencies

• Commerce, Justice, and Science

• Defense

• District of Columbia

• Energy and Water

• Homeland Security

• Interior and Related Agencies

• Labor, Health and Human Services, Education, and Related Agencies

• Legislative Branch

• Military Construction and Veterans Affairs

• State, Foreign Operations, and Related Programs

• Transportation, Treasury, the Judiciary, Housing and Urban Development, and Related Agencies

Factors:• Advantages:

– They are rarely completed on time;– Result in omnibus packages, thousands of pages long.

– They are “Must bills”– Gap can results in government shut down;– Available every year,

– Earmarks common– Members often request “wish lists,”– Report language given weight.

• Drawbacks:– Require annual renewal,

– Difficult for large, multiyear projects,– Cumbersome process,

– Require authorizations, coordination among committees– Uncertainly,

– Process under review – “Earmark Reform”– Bills sometimes ensnared.

– Often requires offset.

Mandatory Spending

Example: 2005 Highway Bill

• $286 billion measure,

• 6,371 pet projects inserted by members of Congress,

• Paid over five years, based on formulas designed to provide state and local flexibility

• Includes:– $2.3 million for beautification of Ronald Reagan Freeway in California; – $6 million for graffiti elimination in New York; – $4 million on the National Packard Museum in Warren, Ohio, and Henry

Ford Museum in Dearborn, Mich.; – $2.4 million for Red River Wildlife Refuge Visitor Center in Louisiana; and – $1.2 million for lighting & interpretative facility at Blue Ridge Music Center, – “Bridge to Nowhere,” Alaska.

• Financed via Highway Trust Fund,

• Reported from House Transportation and Infrastructure and Senate Commerce, Science, and Transportation.

Factors:

• Each “iron triangle” has its own:• Agriculture:

– Commodity Credit Corporation: $30 billion limit,– Federal Crop Insurance Fund: $56 billion exposure,

– Must fit with budget score;– Not always available:

– Agriculture: 5-7 year cycle,– Social Security: once a decade or less,

– But most secure: • That’s why they call them “entitlements.”

Players/ Resources:

• Office of Management and Budget• http://www.whitehouse.gov/omb/

• Congressional Budget Office;• http://www.cbo.gov/

• House and Senate Budget Committees; • http://budget.senate.gov/

• House and Senate Appropriations Committees;• http://appropriations.house.gov/

• Individual agency budget offices;• TCN Budget Research Links

• http://www.thecapitol.net/Research/federalbudget.htm