EDA, NADO, & Appropriations Hearings

February 26, 2010

A couple weeks ago Orson Swindle, an assistant secretary of commerce for economic development in the Reagan Administration, was kind enough to send me news articles from his days battling policymakers over porky Economic Development Administration projects. In a 1989 Insight article, Orson gave a nice summation of one of the problems with special interest spending:    

The minute you fund a program you’ve just created a constituency group. Before long, they will be organized and have a staff here in Washington, which is paid from dues from the members who get their money from the federal government. And those go up and lobby to keep the money going. It’s a classic microcosm of what’s wrong with government. 
The National Association of Development Organizations is a perfect example of what Orson was talking about.
NADO says it “is an advocate for federal programs and policies that promote regional strategies and solutions for addressing local community and economic development needs.” It got started in 1967 when federal subsidization of state and local government was taking off. It’s headquartered in Washington and its dues come from members getting money from the federal government. According to USASpending.gov, NADO itself has received almost $1 million in federal money over the past decade.
Economic Development Administration funding is obviously a core interest for NADO. On January 8th it applauded a pro-EDA funding letter sent by twenty senators to President Obama. NADO’s concluding remarks are illustrative of the incestuous relationship between the special interests and members of Congress: 
NADO thanks those regional development organizations that contacted their Senators to urge them to sign the letter. Regional development organizations are encouraged to formally thank those Senators that showed their support for EDA. 
Exactly what does NADO mean by formerly thank? Regardless, “thanking” politicians for giving the gift of other people’s money is patently repulsive.
On February 3rd, the House Appropriations Subcommittee on Commerce, Justice and Science held a hearing on the EDA to discuss its budget. According to the subcommittee’s website, four of the five witnesses called to testify were NADO representatives. The fifth witness was the president of the Arkansas State University System, whose testimony sang the virtues of EDA grants. Talk about a stacked deck. 
For those unaware, this is how appropriations committee dog and pony shows hearings operate. There’s usually nary a word of criticism from testifiers for the simple reason that critics are generally persona non grata.
Former Yale University professor James Payne wrote an insightful Cato Policy Analysis entitled “Budgeting in Neverland: Irrational Policymaking in the U.S. Congress and What Can Be Done about It.” In it, Payne details how appropriations hearings are pro-government spending echo chambers. Payne recounts one exchange with a member of Congress that is rather ironic: 
In an interview with Rep. Allan Mollohan (D-WV), the congressman unconsciously revealed how extremely one-sided the environment was. I mentioned to him that as part of my research I would be coming to his appropriations subcommittee to testify against funding for the National Science Foundation. “You don’t want to fund the National Science Foundation?” he asked in disbelief. “I’ve never heard anybody say they didn’t think NSF ought to be funded.” 
There are many arguments against taxpayer funding of scientific research, including the points that it retards science, corrupts scientists, and hinders economic development, not to mention all the more obvious ones about opportunity cost, tax burdens, tax system overhead costs, waste, and perverse income redistribution. That Representative Mollohan had never heard any of these many arguments, despite his presumed expertise as a member of the NSF appropriations subcommittee, showed how complete the insulation of members of Congress had become. 
Congressman Mollohan is the chairman of the aforementioned House Appropriations Subcommittee on Commerce, Justice and Science.
In his study, Payne surveyed fourteen committee hearings. His finding speaks for itself: 
The comprehensive tabulation showed that in those 14 hearings, 1,014 witnesses appeared to argue in favor of programs and only 7 spoke against them, an imbalance of 145 to 1. 
With the release of the president’s bloated $3.8 trillion budget proposal, the appropriations season is under way on Capitol Hill. So while taxpayers will be hard at work for Congress, Congress will be hard at work for the special interests like NADO. A classic microcosm of what’s wrong with Congress indeed. 




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