Tuesday, March 11, 2008

Earmarks here and there 

I was invited by Gary Gross to submit a couple of questions to his interview of Pat Toomey of the Club for Growth. One of the questions I asked was about earmarks.
Q: Do you believe that earmark reform is an issue that will resonate with American voters this November? Why or why not?
Yes. Grassroots conservatives are fed up with ridiculous wasteful spending that goes on in Congress and you are beginning to see that grassroots sentiment reflected in congressional activity. Last year, only eighteen congressional members eschewed earmarks. Only two months into the new year, a growing number of congressmen are taking an earmark moratorium, with the list currently at twenty-five House members and six Senators, including Rep. Henry Waxman, the first House Democrat to reject earmarks. The Club for Growth maintains a list of these congressmen, updated as appropriate, which you can see here. It is clear that congressional members are beginning to realize that this is an issue that is important to voters.
The latest issue of the Minneapolis Federal Reserve's FedGazette highlights pork-barrel spending. From the cover article:
In a classic 1981 paper in the Journal of Political Economy, Washington University economists Barry Weingast, Kenneth Shepsle and Christopher Johnsen used public choice theory to explain why politicians don�t insist on economic efficiency.

They developed an economic model of public choice mechanisms comprising a representative legislature to explain �distributive or pork barrel projects,� defined as projects whose benefits �are geographically concentrated and whose costs are spread through general taxation.�

The economists first set a benchmark for efficient expenditure of taxpayer dollars and then compared that to results from a model in which legislators were elected by geographically defined districts but financed expenditures through taxes raised from the public at large. They found systematic bias toward inefficiently large projects. �The districting mechanism in conjunction with the taxation system provides incentives to increase project size beyond the efficient point by attenuating the relationship between beneficiaries and revenue sources.�
The article goes on to note additional research that the amount of pork requested falls as the share borne by the local district increases. You will note that many local leaders complain when an earmark contains a requirement to "raise taxes" to match or supplement the earmark. But this is a perfectly good mechanism to keep earmark requests down. Smaller places have greater incentives to impose the cost of their pork on others, as the map below shows.

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