Iowa's primacy pays off in dollars and influence
WASHINGTON - Iowa, whose first-in-the-nation caucus is vital for politicians who want to be president, has reaped a windfall of federal spending in recent years, collecting billions of dollars in subsidies for ethanol production and a disproportionate share of federal funding, according to a review of government records.
Although it ranks 30th among the states in population, Iowa was slated to receive the seventh-highest amount of earmarked money - $37 million - in a congressional appropriations bill passed earlier this month. President Bush vetoed the bill on the grounds that it was filled with wasteful spending. Separately, Iowa has been awarded $50 million in taxpayer funds for a controversial project called Earthpark, an indoor rain forest to be constructed in the middle of the farm belt, contingent on collecting an identical amount in local funds.
Meanwhile, a new study on ethanol production by the Cato Institute says that Iowa gets a $2 billion benefit annually as a result of subsidies and trade barriers for the fuel, which is made from corn, Iowa's largest crop.
Critics say the subsidies are wasteful be cause it takes too much energy to create ethanol and that there won't be enough of the gas substitute to reduce dependence on foreign oil. But most of the presidential candidates have pledged during their campaigns in Iowa that they will maintain and even increase the subsidies.
"There are sacrosanct Iowa-oriented policies . . . because of presidential politics," said Stephen Ellis, vice president of the nonpartisan Taxpayers for Common Sense, which studies earmarks.
"Anybody who wants to be in the White House has got to have an extensive familiarity with Iowa, which helps it get more attention and funding."
By contrast, New Hampshire, which has joined Iowa in fighting to maintain its early status in the presidential selection process, has not fared nearly as well. New Hampshire, which is 41st in population, ranked 39th in earmarks in the recent appropriations bill, even though the state's senior senator, Judd Gregg, is a member of the appropriations committee and thus in a strong position to designate more funds for the Granite State.
Indeed, when all federal spending is tallied, Iowa got back $1.10 in federal funds for every tax dollar it sent to Washington in 2005. By comparison, New Hampshire got back only 71 cents per dollar, according to the study by the Taxpayer Foundation, a nonpartisan group that analyzes federal spending.
Iowa's success is a result of a combination of factors. The state's two senators have used their seniority on key committees to win support for earmarked projects such as Earthpark. Analysts say that Iowa's first-caucus status has been crucial in winning support for ethanol subsidies because so many presidential candidates back the idea. At the same time, many presidential candidates are eager to embrace projects suggested by Iowa politicians in order to win favor in the state.
Iowa's success in winning federal dollars is playing a role in decisions by other states to advance their own primaries, in some cases challenging Iowa's and New Hampshire's positions at the head of the pack. Some critics wonder whether Iowa's determination to hold the first caucus stems as much from a devotion to federal dollars as it does to the stated ideal of small-state retail politics. Now, other states want a piece of the power - and a bigger piece of the pie. Political leaders in Michigan, for instance, have scheduled an earlier primary, in part, to focus more attention on legislation affecting the auto industry.
John McCain of Arizona, a Republican presidential candidate, is one of a handful of senators who refuses to request earmarked funds and opposes ethanol subsidies. He recently began running an ad in New Hampshire that touts his "guts to stand up to wasteful government spending."
The ad cites examples of wasted funds in Alaska, Montana, and New York. But the ad is not running in Iowa and it does not mention earmarked projects that go to the state. Still, McCain's opposition to earmarks and ethanol subsidies is well known in the state and may help explain why he is at 4 percent in Iowa in a recent CBS/New York Times poll.
Senator Charles Grassley, the highest-ranking Republican in Iowa, bristled at McCain's characterization that earmarked funds are a result of a wasteful and corrupt system. He also defended the ethanol subsidies.
"My constituents would say to me, 'We pay taxes. Why are you going to let these other senators get all the money?' People come to us and they want these things," Grassley said in an interview, calling his advocacy of the funds "ethical and legal."
Grassley also is the prime backer of the $50 million grant for Earthpark project, which critics have dubbed "Earthpork." It is slated to be built near Pella, a town of about 10,000 people located about 45 miles from the capital of Des Moines.
McCain has been critical of the project, saying in Iowa earlier this year, "Do you think that even the people of Iowa would think that we need an indoor rain forest in Iowa?" Separately, McCain reiterated his opposition to ethanol subsidies in a speech earlier this month.
Ethanol production is subsidized by US taxpayers at a rate of 51 cents per gallon; it is also protected by trade barriers and other measures. Stephen Slivinski, a scholar at the Cato Institute who believes the subsidies are wasteful, completed a study which found that Iowa farmers and refiners get a $2 billion annual benefit from the subsidies and trade barriers. He said Iowa gets about one-third of the nation's ethanol subsidies because of the size of the state's corn crop and refining capacity.
"It shows you how you can create an entire industry based on a date in the political calendar," Slivinski said, referring to the caucuses.
"It is hard to believe the ethanol industry would exist in its current form without the favoritism showered on it by Congress."
Grassley acknowledged that the huge growth in subsidies for ethanol is helped by Iowa's first-caucus status, noting that most presidential candidates back the program. He defended the subsidies on environmental and national defense grounds.
Iowa's influence was also evident in the spending bill vetoed by Bush. The bill was written by a powerful Senate Appropriations subcommittee that oversees funding on projects related to the federal departments of Health and Human Services, Labor, Education, and related agencies. The bill gave Iowa $37 million worth of earmarked projects, more than all but six states. The projects included $300,000 for an art exhibit in Des Moines, another $300,000 for an art exhibit in Davenport, and millions of dollars for a variety of health and education programs.
Iowa's success in the subcommittee is due partly to the fact that one of its senators is its chairman. Senator Tom Harkin, Democrat of Iowa, did not respond to a request for comment on earmarks and related projects.
"It is terribly easy to put earmarks [in a bill] if you are a member of the committee," Grassley said. "It is almost like you don't even need to try."
Bush, in vetoing the bill, accused Congress of "acting like a teenager with a new credit card." Nonetheless, Bush remains an enthusiastic supporter of ethanol subsidies, which he vowed to continue when he campaigned in Iowa. 