Seattle Times: Congress hides $3.5B in earmarks

A year ago, Congress passed new ethics rules requiring lawmakers, for the first time, to disclose their earmarks - federal dollars they were quietly doling out as favors. But time after time, Congress exploited loopholes or violated those rules, a Seattle Times investigation has found.

An in-depth examination of the 2008 defense bill found $8.5 billion in earmarks. Of those, 40 percent - $3.5 billion - were hidden.

Congress pledged to cut earmarks in half, but lawmakers cut the dollar amount of defense earmarks by about a fourth and the number by 19 percent, according to The Times. The largest hidden earmark was $588 million for a General Dynamics submarine the administration doesn't want.

The newspaper's investigation of the $459 billion 2008 defense bill also found:

-The hidden $3.5 billion included 155 earmarks, among them the most costly in the bill. Congress disclosed 2,043 earmarks worth $5 billion.

-The House broke the new rules at least 110 times by failing to disclose who was getting earmarks, making it difficult for the public to judge whether the money is being spent wisely.

-In at least 175 cases, senators did not list themselves in Senate records as earmark sponsors, appearing more fiscally responsible. But they told a different story to constituents back home in news releases, claiming credit for the earmarks and any new jobs.

Lawmakers do not face penalties for failing to follow these ethics rules.

"The whole ethics bill was a sham," said Sen. Jim DeMint, a Republican from South Carolina, said when told of the findings. "It was written to create loopholes, to get around any transparency and our ability to cut out those earmarks. Neither leadership is committed to significantly changing the earmarking process."

People at companies that benefited from defense earmarks this year gave more than $60 million in campaign donations to incumbents in Congress over the past six years, the investigation found. In addition, companies getting earmarks in the 2008 defense bill spent $141 million lobbying Congress last year alone.

"The people who want the earmarks are the same people who we count on to raise us money for the campaigns," DeMint said. "It's just a little too cozy."

Last year, Congress also promised to shed light on the secretive process. But the lists of earmarks are still buried in obscure documents that are difficult to find and search. The Times spent months compiling this information - including campaign donations and companies' lobbying efforts - and put it in a searchable database at the Web site seattletimes.com/favorfactory.

The $588 million earmark went to "accelerate" buying a new submarine made by General Dynamics, which builds submarines in Groton, Conn. The military never asked for the project.

After the $588 million earmark was added, the Office of Management and Budget complained in a statement: "This funding is unnecessary and takes resources away from more urgent defense needs."

The Bush administration asked that the earmark be stripped from the bill. It stayed in. Although they don't list themselves as sponsors of the submarine earmark, independent Sen. Joe Lieberman and Democratic Sens. Chris Dodd of Connecticut and Jack Reed of Rhode Island did take credit for the new submarine program in news releases back home, highlighting their work to bring jobs to the region.

"The funding for a second submarine has been an extended battle for Connecticut, and today we declare victory," Lieberman said.

Under Congress' new rules and definitions, this $588 million in spending was not an earmark. For example, a Senate report describes situations in which no individual senator championed a request but instead it somehow arose through group consensus. In those cases, the add-on was not considered an earmark but a "committee initiative."

The common definition of an earmark is money that somebody gets from Congress because they cannot get it from a federal agency. Congress uses a far narrower definition: an earmark has to be "primarily at the request of a member," targeted to a specific company or location, with no competitive bidding.

This past spring during budget season, staffers at the House Appropriations Committee spent long hours going over the thousands of earmark requests hours. But they spent most of their time on deciding whether to term the pet projects an earmark, rather than vetting them on the merits, according to a congressional aide involved in the process. If they believed the project might enjoy broad support and pass a vote of the House on its own, then they decided not to list it as an earmark.

A pet project in Pennsylvania reveals how Congress tries to hide earmarks using the semantic loopholes. Latrobe Specialty Steel of Latrobe, 40 miles east of Pittsburgh, makes specialty steel for aircraft parts. In 2006, its parent company, Timken, spent $2.9 million lobbying Congress on various issues and persuaded lawmakers to ban the Defense Department from buying any products using foreign-made specialty steel.

As the sole U.S. producer of certain kinds of specialty steel, Latrobe saw its orders climb. Timken then sold Latrobe to a group of investors in a $250 million deal. But the buy-American restrictions for specialty steel caused serious problems for the Air Force, creating a 17-month lag in getting spare parts for aircraft used in the wars in Iraq and Afghanistan.

In May 2007, Latrobe said it needed to expand but complained of high electric bills and publicly threatened to build a new plant in Virginia or West Virginia instead. Pennsylvania offered grants and tax credits to the company worth $1.2 million. In Congress, lawmakers were quietly lining up a much sweeter package.

In the defense bill passed in December, someone had inserted language that ultimately directed $18.4 million for "domestic expansion of essential vacuum induction melting furnace capacity and vacuum arc remelting furnace capacity." Latrobe was the only domestic steel producer fitting that requirement, an Army general said at a hearing.

No one in Congress has admitted sponsoring the Latrobe earmark. Latrobe sits in the congressional district of Rep. John Murtha, a Democrat who chairs the subcommittee that drafts the defense bill and wields the most power over defense earmarks. Murtha had talked about giving taxpayer dollars to Latrobe at a subcommittee hearing in April 2007. "I've talked to that producer. And what I'd like to see is them put some money in, us put some money in, and reduce the time it takes to get those spare parts out."

This spring, the Air Force carried out the earmark by asking companies to submit proposals for a $16.6 million research grant that would expand production of specialty steel made through "vacuum induction melting and vacuum arc remelting." Latrobe has tentatively won the research grant, a Pentagon spokeswoman confirmed. The company would not comment on any discussions it had with Murtha. A spokeswoman defended getting the grant, saying it had been competitively bid. Through a spokesman, Murtha said the project was not an earmark because the contract was competitively bid.

Last year at a hearing, however, Murtha noted that Latrobe was the only U.S. company that could make that steel.

At first, the Senate seemed gung-ho about eliminating the secrecy surrounding earmarks. Last year, senators voted 96-2 to force themselves to reveal the names of those getting earmarks. But leadership stripped that rule out before the bill's final passage. So this year, for example, Sen. Maria Cantwell, D-Wash., listed 28 earmarks. A typical entry reads: "Mobile Objects for Net-Centric Operations, $2.4 million." No company or names are listed. She disclosed far more before the widely publicized reforms, through news releases that identified who received the favors. Cantwell's office would not explain why the senator no longer identifies companies that benefit from her earmarks.

The House has stricter rules, requiring members to sign letters naming the intended recipient of their earmark. But in 110 cases, lawmakers didn't follow the rules, the Times found. Some House members merely said their favors went to the Department of Defense or a military branch or unit. For example, Rep. Mike Conaway, R-Texas, said a $1.6 million earmark he co-sponsored would go to the "Office of Naval Research." Yet other co-sponsors tagged the money for Global Delta, a young company created by two longtime lobbyists.

John Albertine and his brother James, past president of the American League of Lobbyists, formed Global Delta in 2003. Several months later, the two lobbyists, with no background in engineering, landed a $4.1 million contract with the Office of Naval Research to study and develop advanced, cost-effective radars. The company hired a couple of engineers to do research. The company snagged a defense earmark in 2006 for $3 million and another in 2007 for $1 million. Their concept was to build a low-cost radar system to track ships. A prototype was never built, Albertine said.

Other than a little embarrassment, there's no cost to lawmakers for failing to disclose earmarks. Last year, as public cries for reform grew louder, Congress did enact civil and criminal penalties for lobbyists who failed to detail their activities on federal disclosure forms. Yet lawmakers included no penalties for themselves if they failed to disclose earmarks. If Congress were serious about reform, it would close the loopholes, said Steve Ellis of Taxpayers for Common Sense.

Norm Ornstein, a political scientist at American Enterprise Institute, said lawmakers "are going to do whatever they can get away with....We need another wave of reform."

A new administration could bring that. Sen. John McCain, R-Ariz., vows to veto any bills with earmarks, arguing that pork-barrel spending is not only wasteful but leads to corruption.

"We Republicans came to power to change government, and government changed us," McCain said during the first presidential debate.

Sen. Barack Obama, D-Ill., pledges he'd scrutinize earmarks more closely as president, eliminating those that are wasteful.

But Congress shows no inclination to give up on earmarking and has shot down recent reform efforts. In March, both McCain and Obama voted for a one-year moratorium on earmarks, but the measure failed in the Senate, 71-29.

President Bush this year ordered federal agencies to ignore any earmarks that were not written into the clear language of a bill. Many of the pet projects are buried in "conference reports," often vague, lengthy fine-print attachments to bills. In response, Congress wrote language into the bills that in essence told federal agencies they had to honor the earmarks buried in the conference reports.

Perhaps nothing shows more how entrenched earmarks are than the recent $700 billion financial bailout. At first, the bill failed because lawmakers were deluged with calls from angry constituents who didn't trust Congress to put the interests of the country ahead of the special interests of Wall Street.

The bill to ease the credit crunch and avoid a severe recession passed only after the Senate included favors for the makers of wooden arrows, NASCAR racetrack owners, the rum industry and makers of wool - in all, more than $100 billion in targeted tax cuts and earmarks.

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Seattle Times researchers Gene Balk and David Turim contributed to this story.

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On the Web:

Searchable earmarks database: http://www.seattletimes.com/favorfactory

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Information from: The Seattle Times, http://www.seattletimes.com