House ends its corporate earmarks
Mass. firms stand to lose millions; Action a response to ethics criticism
WASHINGTON — Small defense companies, energy firms, and other technology start-ups throughout New England could lose tens of millions of dollars a year because of a decision by House Democrats yesterday to abruptly halt budget earmarks for companies.
The decision follows a House ethics probe into an alleged pay-to-play system in which investigators followed a trail of campaign contributions and linked them to earmarks — a provision added to a bill that directs money to a specific project, in this case, a private company. Although the House Ethics Committee cleared members of specific wrongdoing, House leaders remained sensitive to the appearance of a rampant quid-pro-quo system that has stoked outrage around the country.
The decision, which exempts earmarks for nonprofit groups, could significantly affect Massachusetts because the House delegation has proved adept at the political horse-trading required to obtain funding for private companies.
“The New England region has a high concentration of for-profit technology firms that will be — not might be — negatively impacted by this ban,’’ said Christopher R. Anderson, president of the Massachusetts High Technology Council. “It seems like maybe a knee-jerk reaction to some poster-child issues in the past. We’re in a political year and there’s a political charge to this.’’
For the fiscal 2010 budget now in force, Massachusetts lawmakers secured 213 earmarks valued at $201 million, according to Taxpayers for Common Sense, a Washington-based watchdog group that has been critical of earmarks. It could not be immediately determined yesterday how many of those earmarks went to companies. In total, there have been 9,509 earmarks valued at $16 billion this fiscal year.
The House shift may not completely end earmarks for private firms: The Senate yesterday signaled it would continue to conduct business as usual. The Senate’s top budget writer, Senator Daniel Inouye, Democrat of Hawaii and chairman of the Senate Appropriations Committee refused to reject corporate earmarks, saying public records about them and lobbying provide enough disclosure to remove any hints of wrongdoing.
House leaders left it unclear whether they will seek to purge Senate earmarks from final budget bills during conference committee.
Members of the Massachusetts House delegation said they generally support the move, even if it means less money for them to direct into the state. They said it was appropriate to continue earmarking for nonprofits and projects.
“I’m going to follow the rules, and if they want to limit the numbers of earmarks, that’s fine with me,’’ said Representative James McGovern, a Worcester Democrat. “If that’s a cause of angst amongst my colleagues here, and if there’s a belief that the American people are worried about that, then I’m fine with reforming it.’’
Because the ban on earmarks will only affect companies, the Bay State — which reaps money for hospitals and transportation projects — may end up better off than other states.
“Most of mine are health care and transportation. I defend them,’’ said Representative Barney Frank, a Newton Democrat. “I think this is a good way to cut it. I’m very proud of all my earmarks.’’
Representative Niki Tsongas said she hoped companies in her district — including Polartec in Lawrence — would be able to continue competing for federal contracts through the Department of Defense instead of through earmarks. She said Democrats were told that a new program would be established by the Pentagon to allow small start-up companies and others to apply for federal funds, although details are still being developed.
“We’ll simply now convert to make sure our companies understand the new process, the new grant process, and we’ll be supportive around that as they go forward,’’ Tsongas said.
The Globe reported in November that 16 defense-related firms in Massachusetts had secured nearly $30 million in federal funding through a defense appropriations bill. The money was earmarked for a range of projects, including the development of new optical sights for rifles, and a new manufacturing process to make better-fitting ceramic body armor for troops.
“It’s a good idea,’’ Representative Stephen F. Lynch, a South Boston Democrat, said of the for-profit earmark ban. “I think in this economy, we’ve got to show a little bit of restraint here and transparency.’’
The changes come as Washington Democrats are reeling from a series of scandals. The House Ethics Committee recently investigated seven congressional members for providing millions of dollars in earmarks to companies that hired lobbyists and donated large sums to their campaigns. The lawmakers were cleared two weeks ago, although the Justice Department has reportedly been looking into some additional aspects of the case.
Last week, Representative Charles Rangel of New York stepped down as chairman of the House Ways and Means Committee for accepting corporate-financed trips. Representative Eric Massa, also of New York, resigned this week under allegations that he had groped members of his staff.
The controversies have made it difficult for Democrats to show progress on their pledge to bring greater levels of ethical behavior and transparency to government.
“The negative noise out there is at almost a deafening level,’’ House majority leader Steny H. Hoyer told reporters this week. “We have made some real progress.’’
House Speaker Nancy Pelosi said yesterday the earmark changes were “critical reform that addresses concerns that many Americans have’’ and would help “bring honesty back to government.’’
Representative David R. Obey, who as chairman of the House Appropriations Committee announced the ban on corporate earmarks yesterday, said they “began to severely damage the legislative process.’’
“With earmarks at stake, many members of Congress started asking first what a bill did for him or her at home rather than what that bill did for the country,’’ he wrote.
His office estimated that 1,000 projects would have been affected if the rules were in place this fiscal year.
Representative Michael Capuano, a Somerville Democrat who has been a strong defender of the earmark process, did not respond yesterday to requests for comment.
Top House Republican leaders last night called for halting earmarks of all kinds and plan to hold a caucus today to decide whether to do so. The move could put more pressure on the Democrats.
The immediate disagreement between House and Senate Democrats over how to proceed illustrates how reform is difficult to adopt unless all parties agree to enforce it.
“To me, that means who’s the arbiter?’’ said Steve Ellis, vice president of Taxpayers for Common Sense. “I put the ball in President Obama’s court. He could side with the House and say, “I’m going to veto any bill that has earmarks that go to for-profit companies,’ and call the Senate’s bluff.’’
White House spokeswoman Moira Mack did not say whether the president would veto such bills, although Obama has supported changing the earmark process.
“The president is a strong advocate for earmark reform and believes that any earmark for a for-profit company should be subject to the same competitive bidding requirements as other federal contracts,’’ she said.
Matt Viser can be reached at email@example.com.