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Members of Congress profit from Earmarks

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Michael Bastasch Contributor
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Last week the Senate passed the Stop Trading on Congressional Knowledge (STOCK) Act, legislation aimed at curbing concerns, first explored by “60 Minutes,” that lawmakers were using their privileged positions to enrich themselves with inside information about public companies.

The bill, sure to reach President Obama’s desk in the near future, would require lawmakers and executive branch officials to disclose securities trades of more than $1,000 every thirty days. An amendment introduced in the Senate that would permanently ban legislative funding earmarks was defeated by a 59 to 40 vote.

The earmarks controversy will not be put to rest when the STOCK Act becomes law. The Washington Post recently published results from an ongoing investigation that examined the holdings of all 535 members of Congress and compared them with earmarks that members had sought for their pet projects.

The Post found that thirty-three members directed more than $300 million to projects within two miles of property they owned. The report also identified 16 lawmakers who sent federal dollars to organizations where their family members were salaried employees or board members.

Its surprising to most observers that this is completely legal: Federal legislators are not required to disclose the addresses of their personal residences or the names of their children’s and parents’ employers.

Lawmakers are required to confirm that they do not have a financial interest in the actions they take, but congressional rules loosely define what a financial interest might consist of.

In March 2007 the House Ethics Committee defined “financial interest” as a “a direct and foreseeable effect” on members’ assets, noting that “[r]emote, inconsequential or speculative interests” don’t count. If lawmakers and their families aren’t the sole beneficiaries of an action, there is, officially, no conflict of interest.

The two chambers of Congress have slightly different rules. The Senate’s conflict of interest policy extends to “immediate” family members (defined as parents, spouse, children, and fathers- and mothers-in-law). House rules cover only members and their spouses.

The Post highlighted some of the most egregious cases of members of Congress benefiting from earmarks.

“Rep. Bennie Thompson (D-Miss.) secured a $900,000 earmark that was used to resurface about two dozen roads in Mississippi in 2010,” the Post said. “One of those was LC Turner Circle, a quarter-mile residential loop in the small town of Bolton, where Thompson and his daughter own two homes.”

In response, Thompson argued, “The earmark went to the county. It had no designation on it whatsoever, and that was it.” This earmark, like many others, was perfectly legal because House conflict of interest rules don’t require members to disclose the proximity of their personal property that would be affected by earmark-funded projects.

A follow-up Post story reported that Alabama Republican Sen. Richard Shelby directed more than $100 million in federal earmarks toward the renovation of Tuscaloosa’s downtown area, where Shelby owns an office building.

“I have nothing to hide,” Shelby insisted. “I make no money out of it and don’t want to. … Somebody is going to appropriate the money, and you want to do it for the right reason, whether it is defense or whether it is urban renewal in my home town.”

Shelby denied involvement in the planning of the urban renewal project, but when the city unveiled its plans, Shelby’s block was not chosen to be condemned, bought out or razed.

The House recently put a two-year moratorium on earmarks, and the Senate extended its ban by another year, but this is a proving to be a weak protection. Six months into the moratorium, Missouri Democratic Sen. Claire McCaskill identified more than 100 special spending provisions, which she claimed were earmarks, in a House defense bill — totalling a whopping $834 million.

 

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