Lobbyists’ Earmarks Left in Flux

Posted March 10, 2010 at 6:23pm

Lobbyists are bracing for a tumultuous appropriations season following the decision Wednesday by House Democrats to bar earmarks to for-profit companies.

While K Streeters moved into overdrive on Capitol Hill to gather intelligence about how specific funding requests will be affected, lobbyists said lawmakers’ move to ban the Congressional practice of directing federal money was just for show.

“They are doing the best that they can to cover their butts, and they would like to be able to say we aren’t [earmarking] for the evil people we are taking money from,” said lobbyist Howard Marlowe of Marlowe & Co.

House Democrats said that while they will stop giving earmarks to for-profit entities, they will continue to dole out the pots of money to nonprofit entities such as universities and local governments. Republicans today are meeting to consider banning all earmarks.

But Marlowe, a longtime appropriations lobbyist, said Congress won’t take on the real culprit: campaign finance reform.

“Nor is their heart into doing anything more than trying to protect their public image,” he added.

As House Appropriations Chairman David Obey (D-Wis.) moved to claim the high ground on earmark reform before his Republican counterparts could, several lobbyists suggested that Congress is actually going to end up making the process less transparent. Members of Congress currently must list on their Web sites all earmarks they have sponsored.

“What [Obey] just got rid of is a system of total transparency where it was very clear who was getting earmarks,” said Rich Gold, head of Holland & Knight’s lobbying practice, which represents many appropriations clients.

Even with lawmakers moving to distance themselves from their pet projects, K Streeters said they expect Members to continue to weigh in on where federal funding goes by calling agencies and their counterparts in the Senate to help win earmarks for private, for-profit companies in their Congressional districts.

Additionally, since President Barack Obama’s fiscal 2011 budget was finalized before this new rule was even under discussion, lobbyists said it has holes that the executive branch was expecting Congress to fill with earmark requests.

The defense industry is expected to take the biggest hit from the newly installed policy.

“The use of earmarking is so pervasive now that it has almost become institutionalized in the budget process,” said Loren Thompson, a defense industry analyst with the Lexington Institute. “Some particular programs for companies are going to be very distressed at the outcome.

“It’s not that the industry is going to get a lot less money, but rather the money is going to go where the Defense Department wants it to go,” he added.

Defense contractors have created a cottage industry of lobbyists focused solely on procuring earmarks, and the connection between their campaign donations and Members’ earmarks has been a major focus of ethics committee and federal probes in recent years.

Of the more than 1,000 earmarks that Obey said would be cut from the fiscal 2010 budget, the majority are from the Pentagon’s annual budget.

Obey, who is charged with overseeing the earmarking process, said he and Rep. Norm Dicks (D-Wash.), who is chairman of the Appropriations Subcommittee on Defense, would set up a new program that would be run by the Defense Department that will fund projects that could go to for-profit businesses.

Defense industry lobbyists said they weren’t going to give up on getting federal funding for programs.

As scrutiny on earmarks has increased in recent years, lobbyists have gotten more creative in securing taxpayer dollars. One way they have done that is by getting public institutions to partner with private-sector companies and having the public entities make them ask for the money.

In addition to continuing to lobby House Members who will still meet with them about projects, lobbyists said they also remain focused on the Senate, which, so far, hasn’t followed suit.

Senate Appropriations Chairman Daniel Inouye (D-Hawaii) firmly cemented his role in directing federal money and questioned the House’s decision to differentiate between nonprofit and for-profit institutions.

“I don’t believe this policy or ceding authority to the Executive Branch on any spending decision is in the best interests of the Congress or the American people,” Inouye said in a statement. “By increasing the transparency and reporting requirements we have erased the impropriety that could have existed when these matters were done in private.”

But government watchdogs cheered the House Democrats’ decision as a good move.

“This is definitely a step in the right direction,” Taxpayers for Common Sense’s Ryan Alexander said.

Melanie Sloan of Citizens for Responsibility and Ethics in Washington agreed.

“Today I am going to give people credit; this is a first step,” Sloan said. “Even if Members will deny an actual link, there is a perception that there is a link [between campaign contributions] and earmarks.”