Dash for Cash Is On as Earmarks Return to Washington

Dash for Cash Is On as Earmarks Return to Washington

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Plus, Democrats blow off GOP's debt limit demands
Friday, May 14, 2021

Dash for Cash Is On as Earmarks Return to Washington

Banned for more than a decade, earmarks have returned to the halls of Congress, and lawmakers are wasting no time lining up their requests.

In recent weeks, more than 300 lawmakers have requested nearly $21 billion for “member-designated projects,” the new term of art for earmarks, The Washington Post’s Tony Room and Alyssa Fowers report. Every House Democrat but one has made a request in at least one of two spending areas, for a combined total of $14 billion, and about half of Republicans have done so as well, for a collective total of $7 billion.

A Republican from Louisiana, Rep. Garret Graves, has made the largest single request, seeking $955 million for transportation-related projects in his district, which includes Baton Rouge. Democrat Kim Schrier of Washington has made the second largest request, seeking $892 million for highways and bridges in her district east of Seattle.

Both requests were made for possible inclusion in the highway funding bill, a five-year law that passed in 2015 and was extended for one year, expiring at the end of September. Total requests for the transportation bill have come to nearly $15 billion.

Funding requests are also being made for community projects overseen by the House Appropriations Committee, which has received potential earmarks worth $6 billion. Breaking the numbers down by zip code, the Dallas-Fort Worth area has produced the largest request (see the chart from Axios below), with most of the funding to be spent on improvements at the Dallas-Fort Worth Airport.

Trying to clean up their act: Following scandals involving improper lobbying and the infamous “bridge to nowhere,” earmarks developed a reputation for corruption and were banned in 2010. But lawmakers have vowed to keep careful control over the renewed practice, which could make it easier for Congress to pass bills on time.

“It will make it much less likely we have government shutdowns,” Rep. Matthew Cartwright (D-PA) told the Post. “If you have members [who] have a stake in the spending package, they’re much less likely to pull a sophomore prank.”

Ethics experts who reviewed the earmark requests told the Post that they saw nothing obviously problematic.

Still, not everyone is happy to see earmarks make a comeback. Citizens Against Government Waste, a fiscally conservative watchdog group, is identifying requests that it claims are wasteful, including one for $300,000 to build a dog park in the district of Rep. Linda T. Sánchez (D-CA).

Sánchez defended her request, telling the Post that the dog park would “significantly benefit a community growing in population and already suffering from a lack of green space.” Adding a more general point, Sánchez said, “Local individuals who pay federal taxes should have a say in where their money is being spent.”

Democrats Blow Off GOP's Debt Limit Demands: Report

Democrats and Republicans are sparring over whether they’ll spar over the debt limit this summer.

The debt limit, the statutory ceiling on government borrowing, is suspended until the end of July and will need to be raised once it takes effect again. Senate Republicans last month set the stage for a showdown over the issue by changing nonbinding, internal party rules to demand “an equal or greater amount” of spending cuts in return for any increase in the debt ceiling.

“Historically, the debt ceiling has proven the most effective lever point for enacting meaningful spending reforms and structural reforms,” Sen. Ted Cruz (R-TX) told Politico.

Sen. Lindsey Graham (R-SC), the top Republican on the Senate Budget Committee, said Thursday that he’ll look to condition any increase on budget reforms. “This is an opportunity to come up with some reforms that will structurally change our debt problem,” Graham told reporters. “But I want to be responsible about it. I mean, we're not going to play chicken here.” One possible reform: Withholding lawmaker pay until a budget resolution or annual appropriations are passed.

Senate Republicans tell Politico that there likely aren’t 10 votes in their conference in support of a clean debt limit increase, one that isn’t paired with spending cuts.

Democrats insist they won’t be drawn into such negotiations. “The last time Republicans held the debt ceiling hostage they nearly crashed the global economy,” Sen. Ron Wyden (D-OR), chair of the Senate Finance Committee, told Politico. “This is a page from the Obama-era economic sabotage playbook, and I’m not going to let Republicans play games with the economy for their political benefit.”

Democrats could try to raise the debt ceiling by again using a maneuver known as budget reconciliation, which would allow them to pass a bill with only a simple majority instead of 60 votes, or they could seek to address the debt limit as part of a spending package or infrastructure bill — but they’d need all their members to go along.

The bottom line:
Another debt ceiling showdown may be brewing, though Republicans may not want to play with the threat of a U.S. default. For now, though, it’s still a showdown over whether there may be a showdown.

White House Makes the Case for Increased Public Investment

Saying that the time has come for a new framework for fiscal policy, President Biden’s Council of Economic Advisers issued a policy brief Friday that lays out its argument for the multi-trillion-dollar investments the administration has proposed to make in everything from green energy infrastructure to childhood education.

“For the past four decades, the view that lower taxes, less spending, and fewer regulations would generate stronger economic growth has exerted substantial influence on U.S. public policy,” the paper says. “Over this period, the United States has underinvested in public goods such as infrastructure and innovation, and gains from growth have accrued disproportionately to the top of the income and wealth distribution.”

The tax cuts passed in 2017 reflected those ideas, the White House economists say, but failed to deliver the promised benefits of higher growth and income for ordinary workers. “There has been no evident impact on investment or growth: gross domestic product grew 2.4 percent in the two years leading up to the law’s passage and 2.4 percent in the two years following its passage. Instead, the tax cuts contributed to inequality by delivering disproportionate gains to the already well off without the promised wage gains for the middle class.”

As an alternative, the Biden administration is proposing “an engaged, effective public sector” to help support a more robust economy that works for the benefit of both businesses and workers. Greater federal involvement in research and development, infrastructure, education and health care can produce lasting benefits for the population as a whole, the economists said.

Looking for long-term funding: While the policy brief provides an overview of the Biden administration’s approach to government involvement in the economy, it says little about funding Biden’s plans. CEA member Jared Bernstein addressed the issue in an interview Thursday, telling Bloomberg’s Tracy Alloway and Joe Weisenthal that the White House wants to fully fund its proposed programs. “It is the president's view that a longer-term or more permanent proposals should be paid for,” Bernstein said.

While noting that the federal government may have more wiggle room when it comes to deficit spending than economists thought in the past — “There's more fiscal space and there's more political space to wield that fiscal space,” Bernstein said — he emphasized that dedicated funding is an important factor to consider when designing new programs. Programs that stick around tend to have clearly defined sources of revenue, he said.

“[T]he effects of not having funding sources for permanent programs show up all the time in their disinvestment and their insufficient upkeep,” Bernstein said. “By contrast, look at Medicare and Social Security, which have held up relatively well in that space because they have dedicated funding sources.”

Read the full White House policy brief here and Bernstein’s comments here.

Editorial of the Day: A Defense of Biden’s Revenue Plans

The Washington Post’s Editorial Board writes that President Biden’s proposed tax increases on corporations and high-income individuals may not have gone far enough in raising new revenue — but they “did strike a blow for two important principles: fiscal responsibility and distributional fairness.”

Republicans have pushed back on Biden’s proposals — a response the Post calls as predictable as it is hypocritical” — but some Democrats have raised objections as well, and the Post argues that Democrats “must not chip away” at Biden’s revenue plans:

“Mr. Biden has appropriately declared himself willing to negotiate, but he and congressional leaders must stand firmly against special pleading from within their own party, lest his plans become bogged down or fail altogether. This will be difficult, given the Democrats’ razor-thin majorities in both houses, which means tiny handfuls of lawmakers, or individual ones, can exercise decisive leverage.

“Mr. Biden’s best bet is to articulate broad principles, such as pay-as-you-go and tax-code equity, and reject any and all ideas inconsistent with them. … Mr. Biden has already said he is ‘not willing to not pay for’ his plans, useful pushback against the temptation among some Democrats to skip the tough politics of taxes altogether and put the entire spending boost on the national credit card.”

Read the full editorial at The Washington Post.

Just in Time for the Weekend: Budget Games and Quizzes

It’s game time. The Committee for a Responsible Federal Budget this week released a handful of budget-related games and quizzes. There’s a “budget personality” assessment that tells you whether you’re, say, a “big spender,” a “people pleaser” or a “futurist.” Or you can test your federal budget IQ (one of your newsletter authors took the quiz and got 10 out 10 10 questions right. Excuse us for a second while we brush this dirt off our shoulder.) You can check out all five games and quizzes here.

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