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More On the Cost of Earmarking

April 16, 2007 - by Donny Shaw

There are a lot of problems with the growth of earmarked spending — lawmakers’ pet projects get funded at the expense of tax payers, massive amounts of spending go forward without the possibility of anyone being held accountable, peer review and other spending safeguards are bypassed in the process, etc… But as earmark spending has quadrupled in the past 10 years, a new downside of earmarking has emerged: it is costing the government itself more money to operate.

Recently, when the OMB was gathering information from federal agencies to prepare its online database of earmarks in the FY2005 budget, it was noticed that agencies had begun charging an earmark fee. That fee, which is used to “to cover costs related to grant peer review as well as unexpected costs.” may be as high as 1.3 percent of the cost of the earmarks — about $146 million from the 2005 budget, though the actual cost remains unknown. Comparatively, this is not a lot of money. However, it is too much to pay for a process designed to keep citizens, who are paying for it, out of the loop.

Senator Ben Nelson (D, NE) (pictured above) is leading the investigation of the new earmark fees:

>The Nebraska Democrat queried OMB Director Portman about it last week, calling the situation “unacceptable.” Armed with a memo from the Congressional Research Service, Nelson said some agencies are taking administrative and other fees out of amounts earmarked for projects, and offered various reasons for doing so. The memo was requested by Nelson and is based on a survey conducted by CRS.
>Nelson wants to know if agencies have the authority to assess a fee on earmarks. He called it bad budgeting to not know what type of cost, if any, will be taken from projects. “As a former governor, I can tell you my agencies never assumed any authority that they didn’t have and get by with it,” he told OMB Director Portman at an April 11 hearing on OMB’s budget. “And it’s skimming,” Nelson said. Nelson said that regardless of how “well-intentioned” the practice may be, it should be done only under guidelines or specific authority granted by OMB. Nelson’s spokesman said their office became interested in the issue when following up on projects for which the senator had secured funding, noticing a funding discrepancy.

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