Why Many Earmarks Violate the Public Trust

Part III: Earmarks and “Circular Fundraising”

By Zach Swartz

 Editor’s Note:  Parts I & II of Mr. Swartz fine series “Why Many Earmarks Violate the Public Trust” can be found at A Line of Sight.

 In the late 1990s in Edmonds, WA, Richard Martinson founded Guardian Marine International – a small shipbuilding company that developed a “fast patrol boat.” Like many new small business owners, Martinson struggled at first. His plan was to sell the $4 million boats to foreign governments, but the former Coast Guard commander was unable to find any takers. It wasn’t until just after Martinson made his first ever recorded campaign contribution when Guardian Marine’s fortunes began to turn around.

 In June 1998, Martinson contributed $500 to Rep. Norm Dicks’ (D-WA) reelection fund. A little over a year later, Dicks and Rep. Brian Baird (D-WA) slipped a $4 million earmark into the annual defense appropriations bill requiring the Navy to purchase Guardian Marine’s patrol boat. Reps. Dicks and Baird did this in spite of the fact that the Navy hadn’t asked for the boat and had no use for it. In spite of Congressman Dicks’ urging, the vessel never saw combat action.

 Undeterred by this initial failure, Congressman Dicks and Baird were joined by U.S. Senator Patty Murray (D-WA) to push for more earmark money for Guardian Marine. In 2001, Murray added a $4.65 million earmark to the 2002 defense appropriations bill, forcing the Coast Guard to purchase Guardian Marine’s second patrol boat. After evaluating the boat, however, the Coast Guard determined that it had no use for it. A year later, Dicks, Baird, and Murray joined forces to obtain a $4.5 million earmark forcing the Navy to purchase another boat from Guardian Marine. Once again, the Navy determined that it had no use for the vessel, and ultimately gave it to the University of Washington.

 When all was said and done, Guardian Marine International was the beneficiary of four earmarks worth $17.65 million. But why would Members of Congress continue to seek taxpayer dollars for this company when none of the boats were being used for their intended purpose? Dicks, Baird, and Murray have claimed that it’s because Guardian Marine had a great product. However, as an October 2007 piece by The Seattle Times points out, it’s much more likely that this egregious waste of taxpayer dollars was a quid pro quo – Baird ($14,277), Murray ($15,000), and Dicks ($16,750) have all received significant campaign contributions from Guardian Marine’s three executives.

 The case of Guardian Marine highlights perhaps the most abusive and corrupt earmarking process that Members of Congress engage in: obtaining earmarks for organizations that subsequently donate money to those Members’ reelection campaigns. Rep. Jeff Flake (R-AZ) has dubbed the process “circular fundraising,” and the Guardian Marine debacle is, unfortunately, not uncommon.  

 Incredibly, as they are currently constituted, House ethics rules actually allow the practice of circular fundraising to continue. While Representatives who request earmarks “must certify that neither the Member nor the Member’s spouse has a financial interest in the provision being requested,” the House Ethics Manual provides that “[a] contribution to a Member’s principal campaign committee or leadership [Political Action Committee (PAC)] generally would not constitute the type of financial interest referred to in the rule.” Such a rule operates in direct violation of Speaker Nancy Pelosi’s (D-CA) 2006 promise that Democrats would “drain the swamp” in Washington and “create the most honest, most open, and most ethical Congress in history.” In fact, several House Democrats have taken advantage of this rule to pad their campaign finances.

 For example, in Fiscal Year (FY) 2010, Rep. Melissa Bean (D-IL) sought a $1.2 million earmark for Northrop Grumman for “large aircraft podded infrared countermeasures systems” for the Air Force Reserve. Northrop Grumman’s PAC returned the favor by donating $10,000 to Bean’s reelection campaign. Similarly, Rep. Frank Kratovil (D-MD) obtained a $1.6 million earmark for Alliant Techsystems, and was rewarded with a $7,000 campaign contribution from Alliant’s PAC. Reps. Gary Peters (D-MI), Earl Pomeroy (D-ND), Allen Boyd (D-FL), Sanford D. Bishop, Jr. (D-GA), Gerry Connolly (D-VA), and Bobby Bright (D-AL) all engaged in similar quid pro quo earmarking in FY2010 spending bills.

 Perhaps the most offensive example of the practice of circular fundraising is that of the Paul Magliocchetti Associates, Inc. (PMA) scandal. Earlier this month, Magliocchetti was indicted on 11 counts for using straw men and other illegal methods to hide the sources of campaign contributions to Members of Congress. In 2007, a joint report from Roll Call and Taxpayers for Common Sense revealed that, in the first half that year, the PMA Group and its clients gave more than $542,350 to three Democrats on the House appropriations defense subcommittee: James Moran (VA), Peter Visclosky (IN), and the late John Murtha (PA). Meanwhile, Murtha, Moran, and Visclosky obtained $100.5 million in earmarks for PMA clients in FY2008 appropriations bills.

During the 2009 federal investigation into the PMA Group, Rep. Flake offered nine privileged resolutions that would have required the House Ethics Committee “to investigate the relationship between earmark requests already made by Members on behalf of [PMA] clients…and the source and timing of past campaign contributions related to such requests.” However, Democrats voted to table (or kill) the resolutions each and every time. (See Roll Call Votes: 87, 105, 113, 141, 155, 163, 175, 243, and 605). The Ethics Committee did eventually conduct a probe into the PMA scandal, but the panel has refused to provide even basic details concerning that investigation, such as how many subpoenas were issued.

 With the midterm elections fast approaching, Democrats in Congress have taken hollow steps to end the practice of quid-pro-quo earmarking, including the implementation of an easily circumvented ban on earmarks for private, for-profit corporations. Meaningless political posturing like this simply is not enough; our elected officials should take true steps to ensure that this abusive practice comes to an end.  

 ***Zach Swartz is a research analyst with Market Street Consultants. Before joining Market Street, Zach spent two years working on immigration policy. He holds a bachelor's degree from Juniata College and is currently enrolled at The Catholic University of America's Columbus School of Law.