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Earmark is a term that dates to the 16th century, originally referring to cuts or marks in the ears of cattle and sheep made to show ownership. Today it is commonly used to refer to an institution's ability to designate funds for a specific use or owner. Earmark has different meanings in the fields of public finance and politics.

Earmarks in public finance

In public finance, an earmark is a requirement that all or a portion of a certain source of revenue, such as a particular tax, be devoted to a specific public expenditure. For example, in the United Kingdom a tax on televisions (known as the television licence) is directly allocated to the British Broadcasting Corporation (BBC).

Earmarking bypasses the normal procedure by which tax revenue is pooled in a general fund and then allocated among various government spending programs as opposed to a specific program.

Earmarks in U.S. politics

Definitions

An earmark refers to congressional provisions directing approved funds to be spent on specific projects (or directs specific exemptions from taxes or mandated fees). Earmarks can be found in both legislation (also called "Hard earmarks" or "Hardmarks") and in the text of Congressional committee reports (also called "Soft earmarks" or "Softmarks"). Hard earmarks are binding and have the effect of law, while soft earmarks do not have the effect of law but by custom are acted on as if they were binding.[1] Typically, legislators seek to insert earmarks which direct a specified amount of money to a particular organization or project in his/her home state or district.

The federal Office of Management and Budget defines earmarks as funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents Executive Branch merit-based or competitive allocation processes, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to manage critical aspects of the funds allocation process.

Attempts have been made to define earmarks in ethics and budget reform legislation. However, due to the controversial nature of earmarks and the effects these definitions would have on Congressional power, none of these has been widely accepted.

Despite the lack of a consensus definition, the one used most widely was developed by the Congressional Research Service, the public policy research arm of the U.S. Congress:

"Provisions associated with legislation (appropriations or general legislation) that specify certain congressional spending priorities or in revenue bills that apply to a very limited number of individuals or entities. Earmarks may appear in either the legislative text or report language (committee reports accompanying reported bills and joint explanatory statement accompanying a conference report)."[2]

In the United States legislative appropriations process, Congress is required, by the limits specified under Article I, Section 9 of the United States Constitution, to pass legislation directing all appropriations of money drawn from the U.S. Treasury. This provides Congress with the power to earmark funds it appropriates to be spent on specific named projects. The earmarking process has become a regular part of the process of allocating funds within the Federal government.

Earmarking differs from the broader appropriations process, defined in the Constitution, in which Congress grants a yearly lump sum of money to a Federal agency. These monies are allocated by the agency according to its legal authority and internal budgeting process. With an earmark, Congress has given itself the ability to direct a specified amount of money from an agency's budget to be spent on a particular project, without the Members of Congress having to identify themselves or the project.

Controversy

Critics argue the ability to earmark Federal funds should not be part of the legislative appropriations process [3]. Tax money should be applied by Federal agencies according to objective findings of need and carefully constructed requests rather than being earmarked arbitrarily by elected officials. Supporters of earmarks however, feel that elected officials are better able to prioritize funding needs in their own districts and states and that it is more democratic for these officials to make discreet funding decisions than unelected civil servants. Critics counter that elected representatives have too much of a vested interest in their own districts and do not have the Nation's interests as a whole in mind when making these decisions with taxpayer money.

Congress' year-end budget passed in December 2007 contains nearly 10,000 Congressional earmarks worth $10.4 billion, according to a comprehensive database compiled by Taxpayers for Common Sense.[4] In addition, the Department of Defense appropriations bill, passed earlier in the year, contains nearly 2,200 earmarks worth $7.9 billion. The total Congressional earmarks for fiscal year 2008 numbered 11,780 worth $18.3 billion. This is a 23% cut in earmarks from the high in FY 2005, but falls well short of the 50% reduction House leadership set as its goal earlier in the year.[5]

Citizens Against Government Waste identified 2,658 of the FY08 earmarks representing $13.2 billion as "Pork Projects", significantly lower than the numbers and dollar amounts of recent prior years: 13,997 "Pork Projects" for a total of $27.3 billion in 2005, and 9,963 projects for a total of $29 billion in 2006.[6]

See also

References

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