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Who stands to benefit from the return of earmarks?
- The use of earmarks will almost certain return to Congress in 2019, but it is likely to come with restrictions designed to improve transparency.
- Potential recipients include (but are not limited to) state and local governments, educational organizations, social service and housing agencies, charitable organizations, and museums and historical preservation groups.
- In particular, nonprofit hospitals and university medical centers stand to enjoy a potential windfall in targeted funding from earmarks.
As Grassroots Pulse reported last week, earmarks will almost certainly return to Congress in 2019 under the leadership of House Speaker Nancy Pelosi, D-Calif. Here’s a look at how companies, groups, and agencies stand to benefit from more pork coming out of Congress:
Entities to watch
While members of Congress have historically used earmarks to direct funds both to for-profit and nonprofit entities, the practice is likely to have new restrictions in the 116th Congress. Such restrictions, according to a recent report in Lexology from Sidley Austin LLP, could potentially include the following:
- Requiring lawmakers to publicly post funding requests and justifications online in order to provide public access to the process
- Narrowing the scope of earmark requests to specific interests such as infrastructure, flood control, or water resource development projects
- Requiring that the requests originate from a state or local government
- Prohibiting directives for the private sector
- Requiring directives to originate in the original, base bill (which would prohibit provisions from being added late in the process, such as in a conference report)
Many lawmakers have specifically suggested prohibiting earmarks for for-profit entities. Assuming such a restriction is implemented, potential recipients would be entities such as state and local governments, educational organizations, economic and community development groups, social service and housing agencies, land trusts, charitable organizations, and museums and historical preservation groups. Potential projects funded by the federal government through these entities would be wide-ranging, including everything from new roads and bridges to broadband projects to historical and artistic preservations.
Among these entities, the most likely to receive earmarked funding, according to a report in Lexology from K&L Gates, are those that can make a thorough and persuasive assessment of how their desired projects would affect their local community, congressional district, or state. If some degree of public accessibility and justification for earmarks is required in the upcoming Congress, potential earmark recipients will need to have a strong answer for the question of why their project is worthy of federal funding.
“Interested parties who begin working on their best answers to these questions are more likely to position themselves ahead of the competition — which, because of the limitations imposed by sequestration, coupled with the pent-up demand for earmarks, is anticipated to be strong,” the report concludes. “The sooner stakeholders formulate their requests and accompanying justifications, the more likely they are to be successful.”
Industries hoping for more earmarked money are also poised to benefit from having strong connections on the House and Senate appropriations committees. During the last legislative session before Congress banned earmarks in 2011, members of appropriations committees received 61 percent of all earmarked money despite only making up about 15 percent of all members of Congress, according to Citizens Against Government Waste, a nonprofit dedicated to eliminating waste and inefficiency in government.
A boon for hospitals
The return of earmarks is likely to be a boon for hospitals in particular, according to a report in Modern Healthcare earlier this month. Both hospitals with nonprofit tax designations and university medical centers stand to enjoy a potential windfall in targeted funding.
Such a change would be especially significant for hospitals in states that did not expand Medicaid and will be looking to fill in revenue gaps created by uncompensated care, the Modern Healthcare report explains. When earmarks were a regular part of dealmaking in Washington, the department of Health and Human Services used to score the second-highest amount of earmarks after the Defense Department, according to a former Senate appropriations staffer who worked on Capitol Hill prior to the earmarks moratorium.
This would mean a return to big business for Washington lobbying firms with connections to the House and Senate appropriation committees, according to a hospital lobbyist who spoke to Modern Healthcare. The lobbyist explained that before Boehner’s moratorium, firms lobbied lawmakers through the appropriations process to secure funding allocations for things like new cancer wings for hospitals or prevention and outreach programs.
Regardless of how new restrictions for earmarks pan out, the pattern of securing them through appropriations, it seems, is unlikely to change.
Photo by Martha Dominguez de Gouveia on Unsplash