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Transcript:

January 9, 2009

BILL MOYERS: The members of the new Congress now in Washington face a daunting challenge just to count all the zeroes after the dollar signs. A trillion dollars is a thousand billion dollars. And that's how much Washington says our government will be spending, beyond its means, for Barack Obama's economic stimulus program. So the corridors of Capitol Hill are filled with happy faces, because it's a lot more fun to spend billions than it is to pinch pennies.

Now, you may be concerned that so much spending invites a feast for the ogres of waste, fraud, and abuse. But on Tuesday, President-elect Obama promised a higher standard of accountability, transparency and oversight than we're used to getting at either end of Pennsylvania Avenue.

BARACK OBAMA: We are going to bring a long-overdue sense of responsibility and accountability to Washington. We are going to stop talking about government reform and we're actually going to start executing. We're not having earmarks in the recovery package. Period.

BILL MOYERS: No earmarks will be allowed and if you thought you hadn't heard him correctly, he repeated it in his big speech on Thursday. None of those hidden pet projects with multi-million dollar price tags that individual members of Congress sneak into bills for special interests or campaign contributors. Can it be true? Have we really crossed the bridge to nowhere for the last time?

Don't hold your breath. As a senator, Barack Obama himself was no slouch when it came to passing out earmarks. And many of the people in his incoming administration are accomplished practitioners. Take former Republican Congressman Ray LaHood, Obama's nominee to head the Department of Transportation. Last year, he helped steer $62.7 million dollars in earmarks to his Illinois district.

Members of Congress all together added almost 13,000 earmarks to legislation totaling more than 18 billion dollars in additional spending. That may surprise you, especially if you remember we were promised reform once before after the Democrats took over Congress in 2006. But never underestimate the ingenuity of legislators to throw the watchdogs off the scent.

We offer yet another case study of Houdini-like hijinks on Capitol Hill, from our colleagues at Expose. They revisit a crack investigative team from the "Seattle Times", whose award-winning journalism has revealed to the public the connection between campaign contributions and wasteful congressional earmarks. The producer is Marc Shaffer; the narrator, Sylvia Chase.

HARRY REID: America is so fortunate to have as the next Speaker of the House of Representatives Nancy Pelosi.

SYLVIA CHASE: Election night 2006, and change was in the air.

NANCY PELOSI: Today the American people voted for change and they voted for Democrats to take our country in a new direction.

SYLVIA CHASE: The Democrats were going to clean house, they promised.

NANCY PELOSI: And the Democrats intend to lead the most honest, most open, and most ethical Congress in history.

SYLVIA CHASE: For the first time, lawmakers would post the details of each congressional earmark, its sponsors and value. And they would be required to submit a letter for each of these pet spending projects — complete with its purpose, and the exact name and address of the beneficiary. In the letters, lawmakers would also certify that neither they nor their spouses had a financial interest in the project.

Across the country, in Seattle, one journalist was paying especially close attention.

DAVID HEATH: I thought now that we have reforms I'll be able to tell the whole story on the relationship between money and earmarks.

SYLVIA CHASE: "Seattle Times" investigative reporter David Heath turned his sights to the 2008 Defense Bill — the first passed under earmark reform. Just to be sure Congress was telling the whole truth, Heath cross-checked Congress's official list of earmarks against those he was able to verify on his own. And he made a disturbing discovery.

DAVID HEATH: Despite the reform, Congress is still hiding earmarks.

JIM NEFF: So it became a much better story. It wasn't about a corrupting process. It wasn't about wasteful earmarks that were local pork and local pet projects. It was beyond that; it was actually all of that plus, active deception and hypocrisy.

SYLVIA CHASE: Joined by his colleague Christine Willmsen, David Heath spent months following the money, painstakingly reviewing each disclosure letter, beginning with those from the House of Representatives.

DAVID HEATH: There was well over a thousand of these letters and we took these letters and we basically made a database out of them.

SYLVIA CHASE: Under the new rules, members must disclose the exact recipients of their earmarks — reporting only the federal entities through which the dollars get disbursed is not allowed.

DAVID HEATH: For people who obey the rules, the disclosure in the House is pretty good.

SYLVIA CHASE: But not everyone obeys the rules.

DAVID HEATH: We found over a hundred cases where a member of the House wasn't really honest. They said the entity getting the funding was the Department of Defense. Or the Office Naval Research, which doesn't really tell us anything. What we want to know is who's actually getting the money in the end. And this money is almost always going to a contractor, a vendor, a company.

SYLVIA CHASE: Without knowing who's actually "getting the money in the end", there's no way to track whether lawmakers are getting campaign contributions from the same people to whom they're funneling earmark dollars. The money trail goes cold.

The disclosure letters in the House may have been imperfect, but they proved far more informative than those the reporters found in the Senate.

When Heath and Willmsen checked, each senator's disclosure letter said virtually the same thing.

DAVID HEATH: All it says is that for all the earmarks I've done I promise you there's no conflicts of interest. That's all it says.

SYLVIA CHASE: How the Senate managed to hide the details of its earmarks while publicly proclaiming reform is a story of masterful parliamentary slight-of-hand. Watch closely — or you'll miss it.

As soon as he took over, new Senate Majority Leader Harry Reid pledged to come clean on earmarks as part of a massive new ethics bill.

HARRY REID: The underlying legislation that is bipartisan in nature, sponsored by the Democratic and Republican leaders, is good legislation. It is a significant step forward to anything that has happened in this country since Watergate: ethics reform, lobbying reform, earmark reform.

SYLVIA CHASE: But what Senator Reid wasn't saying was that the reform measure contained a caveat. Senators wouldn't have to disclose any earmarks that went to federal entities.

But in the Defense Bill, almost all the earmarks first go to federal entities before being passed along to private contractors. In effect, senators would be able to hide almost every earmark. And that prompted a challenge from Senator Jim DeMint — a champion of earmark transparency. The South Carolina Republican made a startling admission.

JIM DEMINT: Many in this Chamber know I don't often agree with Speaker Pelosi, but Speaker Pelosi has the right idea.

SYLVIA CHASE: And a stunning proposal.As an amendment to the Ethics Bill, the staunchly conservative Republican DeMint proposed that the Senate adopt word-for-word the House version of earmark reform marshaled through by the liberal Democrat Nancy Pelosi

JIM DEMINT: We proposed the DeMint-Pelosi Amendment. And I presented it on the floor. And the place was quiet.

JIM DEMINT: This is the language which the new Speaker of the House, Nancy Pelosi, has put in this lobbying reform bill in order to make it more honest and transparent.

SYLVIA CHASE: It was a brilliant tactical move. If the Democratic majority was to reject DeMint's amendment it would mean rejecting the much stronger earmark disclosure rules crafted under their own party's high profile Speaker of the House.

JIM DEMINT: Harry Reid did not want this to come for a vote. He made a motion to table it, which gives the members some cover because you're not really voting against the amendment. You're just voting to table it.

SYLVIA CHASE: "Tabling" the so-called DeMint-Pelosi Amendment would mean removing it from consideration — effectively, killing it.

HARRY REID: I would appeal to my friend from South Carolina. I repeat: I know you are doing this because you think it is the right thing to do. But take the opportunity to look at what is here. It is better than the House version - so much better.

JIM DEMINT: And Senator Reid assumed as most people did including me that he would get fifty-one votes to table it. And we had a few heroes on the Democrat side that joined us, Barack Obama, relatively new senator, bucked his party and voted with us.

SENATE PRESIDING OFFICER: On this vote the ayes are 46, the nays are 51. The motion to table is not agreed to.

JIM DEMINT: And we defeated the tabling motion. Well once the tabling motion failed by a vote or two, everyone knew they were going to have to vote on the real thing and it was like 98 to nothing. I mean this is the kind of thing that if, if senators know America can see what they're voting on, they were afraid not to vote for it.

SYLVIA CHASE: Indeed, with all eyes watching — 98 senators voted in favor of the artfully crafted DeMint-Pelosi Amendment; not one opposed it.

The junior senator from South Carolina had taken on the powerful Senate Majority Leader and won. Or so it appeared. Remember: this was an amendment to a wide-ranging ethics bill. And before a bill becomes a law, its final language must be worked out between both houses of Congress. Steve Ellis, a leading earmark reform advocate in Washington, explains how the game works.

STEVE ELLIS: So rather than doing what the House did which was simply change their rules. You're done the next day. Everything is changed and you have to abide by earmark reform, people could still modify it before it actually ended up becoming the rules of the Senate.

SYLVIA CHASE: Which is precisely what happened.

HARRY REID: Frankly, as we all know, we're going to have to do some work to improve this.

SYLVIA CHASE: Behind the scenes as the final language to the Ethics Bill was being hammered out, a mysterious new provision was slipped in.

There is it — paragraph 6, subparagraph A 5. Senators would submit letters to committee chairpersons containing all the earmark information. But they would tell the public only that they have no pecuniary — meaning financial — conflict in the projects they were sponsoring.

STEVE ELLIS: They essentially said that the public can only get this last little thing which says I'm not a crook.

SYLVIA CHASE: As for who's actually getting the earmark money, that remains a Senate secret.

STEVE ELLIS: The Senate leadership that was behind gutting this bill were really evil geniuses. This is a provision where I looked specifically at it as soon as it came out. Other people in Washington who work on earmark reform looked specifically at this provision to make sure that we were going to get the information that we were promised and we missed it.

JIM DEMINT: And they did exactly what I was afraid of - they killed earmark reform, it is a stunning disappointment and a huge missed opportunity.Once they got the loophole created behind the scenes they figured that no one was going to pay attention.

SYLVIA CHASE: But someone did pay attention. After months of work, David Heath and Christine Willmsen had tracked down every hidden earmark they could find in the 2008 Defense Bill. There were 155 of them.

DAVID HEATH: And those hidden earmarks were worth three and a half billion dollars. So that was forty percent of the earmark money in the Defense Bill.

SYLVIA CHASE: Among those Congress failed to reveal, according to David Heath, 588 million dollars to accelerate the construction of a submarine the Defense Department hadn't even asked for in its appropriations request — the largest earmark in the entire bill.

The reporters tracked the earmark to the giant defense contractor General Dynamics. They also discovered that the Office of Management and Budget had opposed the earmark, saying it would take resources away from more urgent defense needs.

DAVID HEATH: 588 million dollars on a submarine the Pentagon did not want. And in fact that the administration said please take this out of the bill.

SYLVIA CHASE: Then there was the 18 million dollars for Latrobe Specialty Steel, courtesy of Democratic Congressman John Murtha — powerful chairman of the Defense Appropriations Subcommittee and one of Capitol Hill's leading ear markers. Latrobe, which sits in Congressman Murtha's Pennsylvania district, had made political donations to Murtha.

CHRISTINE WILLMSEN: There was a dotted line between Congress, who they received campaign contributions from and who got earmarks.

SYLVIA CHASE: When the reporters asked why the congressman hadn't disclosed the Latrobe Steel earmark, they were told through a Murtha spokesman that the measure was competitively bid. And according to the congressman, that meant it wasn't an earmark at all.

DAVID HEATH: They said oh that can't be an earmark because it says right in the bill that it's supposed to be competitively bid. Which by the way, all earmarks are supposed to be competitively bid. But, it turns out that in this particular case there wasn't a competitive bid because the company was the only company in America that could actually qualify for this earmark.

JIM NEFF: We found that Congress played word games almost something straight out of George Orwell. About what is, and is not an earmark, and if it looks like an earmark it, it acts like an earmark, an average person applying common sense would say it's an earmark, it's an earmark.

CHRISTINE WILLMSEN: I think we could have investigated for years to attempt to try and find all the earmarks that were hidden. It's just incredibly difficult to find them, and there's still mysterious ones out there today, that we can't track.

STEVE ELLIS: Congress are the ones who determine whether or not earmark disclosure has been met. They're essentially your ultimate "homer" referees that are deciding these games.

SYLVIA CHASE: That means, as the "Seattle Times" would report, even if lawmakers break the earmark rules — they face no punishment.

CHRISTINE WILLMSEN: Just don't disclose. Nothing's going to happen. Right? Nothing's happened so far. I mean, we've found people that haven't disclosed, and they're not necessarily facing discipline or getting investigated by the Ethics Committee.

DAVID HEATH: Joe Citizen can't figure out what's not being disclosed. I mean you have to go through the bill and analyze each and every line item to see whether or not it's been disclosed or not and that's just not something the average person can do.

BILL MOYERS: Hope, they say, springs eternal. So once again reform is in the air. Just Tuesday, the Chairmen of the House and Senate Appropriation Committees announced some rule changes to discourage earmark abuse, including a requirement that requests be publicly disclosed. And on Wednesday, a bi-partisan group of senators introduced new legislation to take earmark reform even further. Oklahoma's Republican Senator Tom Coburn said it's all about the public trust.

SENATOR TOM COBURN: This is an issue about confidence. We're in the deepest recession in fifty years. And the answer to getting out of a recession is competency and the confidence in the consumer that tomorrow is better, the day is brighter. And the problem is, as long as earmarks exist the way they do today, we're never going to have the confidence of the American people that we have their best interests at heart.

BILL MOYERS: We'll see. Fortunately we have some help. Two public interest groups, Taxpayers for Common Sense and the Sunlight Foundation, have joined forces to dig deep into the data bank to create Earmark Watch, a website that allows you and me to keep track of what our senators and representatives are up to. You can find out more about Earmark Watch at our site on PBS.org.

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