Think Globally, Act Locally

While he was still President-Elect, Barak Obama made it abundantly clear that he wanted no earmarks to be part of the economic stimulus package.  While often perceived as a synonym to “Pork-Barrel spending,” earmarks can serve a useful role.  They are a way that congress can designate funding for specific work.  They are also a way for the congress to negotiate compromises, which, when done within reason, are actually a useful tool to move decisions forward.

But, there is also a reason that earmarks have earned a bad name.  As I mentioned in a previous blog post, TARP, the previous stimulus package, was earmarked for banks, despite the fact that banks were clear, in a very public way, that they had no intention of using it as directed.  Negotiating earmarks can also slow congressional decision-making to a halt.  The funding pie is never big enough, so not only are people scrambling for a slice, but arguing like little children over whose piece is bigger.

Both the House and Senate are getting very close to agreeing on a stimulus package that President Obama can sign.  Everyone involved seems to recognize the urgency of the situation and the need to get money flowing back into the economy.  At this point in time, it is looking like both the House and Senate will sign on to the idea of having the jurisdictions that receive the money decide how they will spend it. But not without some parameters from congress.  In HB1, the House economic stimulus bill that is currently being debated, there are dates by which the money needs to be released by the federal government (30 days for formula funding, 90 days for competitive funding and 120 days for funding for new programs).  In addition, the funds are released conditionally on a “use it or lose it” basis.  So if 50-75% of funds are not used by the recipient jurisdictions within a pre-determined time-frame, the money goes back into the pool to be redistributed.

What happens next?  Well, according to Sarah Binder of the Brookings Institution:

When this bill passes, a Niagara Falls of money will flow out of Washington and into the accounts of state highway commissioners, governors and legislatures, local school boards, county executives — even mayors

Then local jurisdictions, rather than national legislators, can decide how to best allocate the money to revivify their local economies.

I find the resistance to shifting the decision making to the local level very interesting.  From my perspective, localizing the spending decisions promotes greater local accountability because the locus of control is so much more accessible.  When funding decisions are made in Washington DC and they are poorly suited for a state, a county,  a city or a school district, it is way too easy to blame “those folks in Washington.”  The machinations of elected officials in our national capital are mocked as often, if not more so, than they are taken seriously.

However, having lived in two large east coast cities (New York and Philadelphia), a small Californian city (Santa Cruz), as well as our lovely medium-sized city of Portland, I have observed that ordinary people (as opposed to policy wonks like me) actually track funding decisions being made on the local level.  When city or county governments are debating whether to pave roads or increase park maintenance or whether to close a community center–citizens pay attention.  They pay attention because the decisions being made will impact their day-to-day existence.  They pay attention because the money being debated is at a scale that is comprehensible (thousands and tens of millions, rather than billions and trillions).  And they pay attention because it is much easier to write letters, call or testify to a legislative body that is driving distance of one’s home.

The opposition I have heard thus far to localizing the decision-making is centered around local jurisdictions’ inability to make sound funding decisions.  That will certainly be true in some cases.  But, what will also be true is that decisions will be made that align much more effectively with the needs of the local economy than any decisions that could be made at the federal level. My question is whether the stimulus funding that is being allocated by local jurisdictions will be spent more effectively than the TARP funding allocated by congress.

The good news is that we are likely to be able to answer that question within the next couple of years.  U.S. Rep. David Obey (D-WI), the chairman of the House Appropriations Committee explains it this way:

We have more oversight built into this package than any package in the history of man. If money is spent badly, we want to know about it so we can hold accountable the people who made that choice.

I am looking forward to this grand experiment in local control.  I not only strongly believe that it is the right decision for this time and this place, but I am also optimistic that we, as nation, will learn a lot about how to most effectively spend our public dollars.