Sunday, October 14, 2007

Invest Wisely

In politicians who are in a position to direct money your way:

Tucked away on Seattle's Portage Bay, a sleek, 85-foot speedboat sat idle for years — save for an annual jaunt to maintain its engine.

The Navy paid $4.5 million to build the boat. But months before the hull ever touched water, the Navy gave the boat to the University of Washington. The school never found a use for it, either.

Why would the Navy waste taxpayer dollars on a boat that nobody wanted?

Blame it on Sen. Patty Murray and Congressmen Norm Dicks and Brian Baird. All three exercised their political muscle to slip language into a 2002 spending bill to force the Navy to buy the boat from Edmonds shipbuilder Guardian Marine International.

Year after year, the Washington lawmakers did favors for the tiny company, inserting four "earmarks" into different bills to force the Navy and Coast Guard to buy boats they didn't ask for — $17.65 million in all. None of the boats was used as Congress intended.

The congressional trio say they were helping Guardian Marine because it had a great product. But each has also received generous campaign donations from the company's three executives, its sole employees: $14,277 to Baird, $15,000 to Murray, and $16,750 to Dicks.

The article goes on to describe many more products the military was forced to purchase at the behest of Pacific Northwest politicians, both Republican and Democrat; polyester shirts that couldn't be used in combat because they might melt and burn the wearers, computers attached to helmets that had the side effect of blocking the vision of the soldier.

Which isn't a surprise to students of Public Choice Economics--certainly not to Nobel laureate James Buchanan. But, the article does a nice job of matching practice to theory when it says:

People who benefit from earmarks generally give money to those who deliver them: Of the nearly 500 companies identified as getting 2007 defense earmarks, 78 percent had employees or political action committees who made campaign contributions to Congress in the past six years.

....The 2,700 earmarks Congress put in the 2007 military spending bill cost $11.8 billion. The Pentagon didn't ask for the money in its budget and, because its budget is capped by law, cuts had to be made to find room for the favors.

Nearly all members of Congress dole out earmarks. Rep. Jeff Flake of Arizona, an earmark critic, calls the practice "circular fundraising" because of the perception that tax dollars given out as favors come back as campaign donations. ....

Winslow Wheeler, formerly a congressional aide who dealt with defense earmarks for years, said no one in Congress asks for campaign donations in exchange for earmarks because they don't have to; everyone understands the process.

....Murray, Dicks and Baird say emphatically that their favors to defense contractors never come with strings attached. The distinction is critical because soliciting a campaign contribution in exchange for an earmark is a crime.

No comments: