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Opinions/Editorials Title: Pelosi Risks Losing Support by Funding Pet Projects (Update1) Aug. 6 (Bloomberg) -- U.S. House Speaker Nancy Pelosi said last year that she would be happy to ``do away with'' the practice of funding members' pet projects, though she knew it wasn't ``realistic.'' This year proves how right she was. Thousands of so-called earmarks still adorn spending bills, including 15 from Pelosi in a defense measure. Their continued popularity shows how difficult it is to change a system that allows members to bring federal money home for their constituents. Polls show Democrats aren't getting credit for what they say is a major overhaul of the earmark system. Democrats, who never promised to abolish the practice altogether, say they have cut the number of earmarks and for the first time the names of the sponsors and the companies that stand to gain are all being made public. Ethics watchdog groups, pointing to spotty disclosure rules, say more needs to be done. ``They've made some steps forward, but we've still got a long way to go before we get to real transparency and earmark reform and really reining in the excesses of the last decade,'' says Steve Ellis, vice president of the Washington-based Taxpayers for Common Sense, which compiles databases of earmarks. Cutting earmarks and making the process more accountable is an issue not because of their effect on spending -- they accounted for less than 1 percent of the budget in 2005 -- but because the secretive system invites abuse. Pelosi came into office pledging to clean up a ``culture of corruption'' in which one Republican went to prison for trading secret earmarks for gifts and bribes. Many Republicans believe this was as an important issue as Iraq in losing control of Congress in the last election. New Laws The House and Senate passed measures last week requiring lawmakers to certify they have no financial interest in the request, as well as attaching their name to it and identifying the recipient. Until this year, Congress didn't require disclosure of earmark sponsors. The changes were spurred by the conviction of former Representative Randy ``Duke'' Cunningham, a California Republican who pleaded guilty in 2005 to taking $2.4 million in cash and gifts in return for earmarking millions of dollars for two defense contractors. In this Congress, Senator Ted Stevens, an Alaska Republican, is under investigation by the FBI over whether a $1.6 million appropriation he endorsed helped his son's business partner, the Washington Post reported last week. The new rules aren't uniform, and some congressional panels make it difficult to track down specifics about an earmark. Different Rules For example, the House Appropriations Committee provides the information in reports available online, although they aren't searchable by keyword. What's more, details about the projects are scattered throughout the documents. While the names of the earmarks and their sponsors are typically listed in the back of the reports, the amount of money provided for them is listed elsewhere, forcing inquiring minds to go on a laborious scavenger hunt. The House Transportation and Infrastructure Committee makes its earmark-request letters available only by appointment. Researchers must take notes, because the committee doesn't allow the public to make photocopies of the letters. The new rules haven't stopped lawmakers from funneling earmarks to specific companies, some of them political donors, as well as to public projects such as roads, schools and parks. `Biowarfare Agent' Some companies stand to gain from Pelosi's earmarks. The California Democrat has won funding for six companies in a 2008 defense funding measure. One is a $4 million request to develop a ``novel viral biowarfare agent'' for Prosetta Corp., based in her San Francisco district. Tom Higgins, the company's chief executive officer, says he talked to the Speaker's staff directly rather than hiring a lobbyist and hasn't given money to her campaign. ``We're just a little company,'' he says. Another of Pelosi's earmarks was $2.5 million to Bioquiddity, Inc., a San Francisco biotech company with nine employees, to continue developing drug-infusion pumps. Bioquiddity President Josh Kriesel, who ran unsuccessfully as a Republican for the state legislature in 2002, has donated $6,000 to the Democratic Congressional Campaign Committee since last September. The company received a total of $3.9 million in earmarks in the last two years. Kriesel declined to comment directly on the earmarks. Pelosi has said some earmarks are ``worthy.'' And she said there is a distinction between those for public projects, which she sometimes touts with press releases, and special interest earmarks. Pelosi's Response Asked about her company-specific earmarks, she says ``there are some things that the federal government wants that some of these companies can uniquely do.'' Some members of both parties are critical of the practice of designating federal dollars for the benefit of particular companies because it, in effect, sidesteps competitive-bidding rules. The House version of the annual defense-spending bill, for example, includes many such requests. Representative Peter Visclosky, an Indiana Democrat, has 28 earmarks in the bill. Five are for colleges or the Indiana National Guard. The rest are for companies, including 11 outside his state or district. He declined to comment. ``It baffles me how people can complain bitterly about Halliburton and no-bid contracts and then lard up a bill with literally thousands of earmarks to companies when that's all they are -- no-bid contracts,'' says Representative Jeff Flake, an Arizona Republican, referring to criticism of the Bush administration's sole-source contract with the Houston-based company during the Iraq war. Flake is noted for not requesting earmarks and publicizing those of his colleagues. `Circular Fund Raising' ``So many of these companies turn around and give campaign contributions right back to the sponsor of the earmark,'' Flake says. ``This kind of circular fund raising is unbelievable.'' Flake's dissatisfaction is reflected in public-opinion polls. A June 7-10 Bloomberg/Los Angeles Times poll found 62 percent of 1,056 registered voters said Democrats in Congress were governing in a ``business as usual'' manner. Thirty percent said Democrats were working to bring about fundamental change. Some Democrats would like to see more done to end the long-standing practice of earmarking money for companies. ``As a general proposition, I would look askance at earmarks for specific companies,'' says Oversight and Government Reform Committee Chairman Henry Waxman, a California Democrat and a leading congressional critic of Halliburton Co. ``It's better to have companies go out and compete with each other and let the Defense Department, if it's a military matter, make the decision as to what's needed and what's the best deal for the country,'' Waxman says. ``I would hope it happens less and less.'' To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net Last Updated: August 5, 2007 20:52 EDT
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