The new pork barrel

A little more than 20 years have passed since David Stockman's famous essay, "The Social Pork Barrel," appeared in The Public Interest.(1) For most of those years, Stockman's description of how the federal government spent our money remained true: Congress kept adding "a billion here" and "a billion there" for every imaginable do-good project the legislators could pack into their districts.

But this is an increasingly outmoded view of the way politicians favor their constituents or clients, and of the kinds of favors those clients have come to expect. The decline in real terms of federal discretionary spending in the 1990s has limited the supply of traditional lard in the budget. And even with the slight budgetary surplus projected for 1998, it will not be easy to find the loose billions to build more roads from nowhere to nowhere, or to justify B-2 bombers with no missions, or to promise a high-tech hospital for every county. A pork barrel persists, and always will, but more of it now makes use of unfunded mandates, regulatory programs, targeted tax breaks, and public facilitation of lucrative private lawsuits.

It's still your money

To understand this important change, we need to begin with an up-to-date conception of pork in American politics. Journalists and academics alike have mostly subscribed to narrow definitions. A typical example: "Pork-barreling [is] the traditional congressional practice of shoveling appropriations to your own district." There is more wrong with this statement than just inelegant grammar.

For a start, Congress is not the government's only distributor of selective benefits; the White House and executive agencies too relish the chance to say, "from me to you." A president running for reelection, for example, will need to secure the electoral votes of key states. He can do so by means of timely defense contracts, disaster relief, or trade deals beneficial to local industries. Likewise, an agency that has to shore up political support for its activities may well administer some of them strategically, skirting enemies but pandering to the requisite coalition of vested interests and congressional patrons. The game of distributive politics, in other words, is played by the executive as well as by the legislative branch.

Second, appropriations of funds offer only one method of distributing benefits. Countless policy decisions that are off-budget also parcel out rewards to particular groups. Expenditures for, say, irrigation projects in corn-belt states are pork for corn farmers. But so are requirements that reformulated gasoline be mixed with ethanol (a fuel made from corn).

Third, although politicians, in the words of Yale political scientist David Mayhew, love to "peel off" and attribute to themselves "pieces of governmental accomplishment," credit claiming is but one kind of motivation for the "single-minded seekers of reelection." Another powerful reflex is the desire to avoid blame or embarrassment. There are times when openly dispensing prizes and punishments might look too crass and "political." On these occasions, the trick is to get the job done indirectly. So, high-profile ribbon cutting gives way to stealth strategies like tucking strips of pork inconspicuously into omnibus legislation, delegating tasks to administrative bodies and special commissions, and turning individuals into the functional equivalent of "private attorneys general" with sweeping powers to sue for remedies. Whatever the method, the most clever ones are usually those that avoid the political risk of imposing a visible burden on taxpayers to cover the costs. A favorite technique for obscuring such taxation is to force third parties to pay the bill. Thus state and local governments, businesses, "unfair" foreign competitors, and numerous defendants shaken down by litigation frequently get stuck with the tab.

Fourth, resources need not be targeted geographically to yield a political payoff. Congressmen usually do welcome opportunities to divert federal dollars to their districts or states, but they also need to curry favor with outside constituencies that may be major campaign contributors or perk providers. In most Senate races, and many House contests as well, the network of political obligations to bring home the bacon extends far afield. "Home" is anywhere a candidate has left his or her IOUs. In other words, Tip O'Neill's aphorism, "all politics is local," is no longer apt. As links to local party organizations have eroded, the allegiances of legislators have moved increasingly beyond strictly parochial concerns to the agendas of national lobbies and pressure groups. This nationalization of influence is reflected in the pattern of congressional campaign finance. Whereas candidates once depended primarily on the backing of local constituents and state parties, they now rely heavily on external sources. The winners of recent House elections drew almost 40 percent of their contributions from political-action committees - that is, from the funding arms of national interest groups.

The result: Members of Congress serve up a rather different menu of social pork than the customary spoils that once nourished mainly hometown folks. Mounds of federal rules feed a preferred clientele at someone else's expense, and geographic differentiation is often beside the point; the main pitch is to political niche markets, the bases of which sometimes stretch from one coast to the other.

Pork by other means

One might think that those who profess to guard the environment, protect consumers, oversee international trade, or enforce civil rights are only looking out for the common good. In fact, a number of pollution-abatement standards, product safety rulings, trade laws, and nondiscrimination policies are vintage pork: They concentrate benefits on particular interests and spread costs to other groups or to the public at large.

For example, in order to preserve market share for producers of high-sulfur coal, the Clean Air Act of 1970 was subsequently amended to require that utilities install smokestack scrubbers even where power plants burn low-sulfur coal. The producers in three eastern states - West Virginia, Kentucky, and Ohio - have been the prime beneficiaries of this scheme while western states that produce cleaner fuel have had to forfeit their competitive advantage. The unnecessary drag on productivity in the electric utility industry forces rate payers to bear the cost of the regulatory subsidy to eastern coal.

In 1990, another round of revisions of the Clean Air Act called for the development of alternative automotive fuels. For a time, the Environmental Protection Agency and its congressional overseers interpreted these provisions to mean that gasoline had to be reformulated with ethanol. From the standpoint of sound environmental policy, the ethanol mandate was hard to understand. The production of this fuel distilled from corn is costly and, on a BTU basis, delivers less energy than it consumes. Its use would also worsen nitrogen-oxide emissions while offering only small reductions in volatile organic compounds and leaving unchanged the worst health-impairing pollutant: airborne particulate matter. But never mind this diffuse liability; the government's mandating the use of ethanol bolstered the feedstock's principal producers, most notably the Archer Daniels Midland Company, which had made large gifts to presidential and congressional campaigns.

Superfund, the federal government's strategy for correcting hazardous-waste disposal, has been expensive and disappointing. As of 1993, it had managed to decontaminate only 52 of its 1,320 designated sites, at an estimated median cost running to billions of dollars per cancer prevented by the removal of toxins. With that price tag, it is difficult to believe that such a program is a net benefit to society. Yet someone gains, or the sun would have set on Superfund long ago. One class of winners are the thousands of lawyers feasting on the liability litigation stirred up by the law. (Superfund relies on liability suits, replete with treble damages, to force the cleanup of waste sites.)

The situation is similar with respect to how consumer products are regulated. In other advanced countries, government certification, not civil litigation, normally decides the safety of merchandise. In the United States, a government agency's Good Housekeeping seal of approval, so to speak, often means nothing. Instead, judges and juries have the last word in thousands of tort cases, many of which purport to be punishing businesses for selling unsafe goods and services. Since these lawsuits are civil, not criminal, actions, they are seldom classified as a mode of social governance or regulation. In fact, however, that is exactly what they are. The line between public and private roles is hardly bright. "Bounty hunting" provisions, encouraging citizen suits over faulty products, have found their way into more and more statutes. A civil verdict against a maladroit company is addressing more than a personal matter. Much like an injunctive order issued by government regulators, the civil judgment supposedly serves the public purpose of deterring some perceived threat to society. Thus the ground rules of the tort system fall squarely within the purview of public policy.

But much tort litigation does not serve the public interest; rather, it ladles pork to the plaintiffs' bar. Worried that the nation's rampant liability suits might be delivering less of a deterrent against malfeasant firms than a net welfare loss for consumers, some lawmakers are again considering legislation that would cap punitive damages and limit the term of a manufacturer's liability exposure. But turning such bills into law is hard. The well-targeted political donations of trial lawyers, who depend on the existing legal system's gravy train of awards and contingency fees, appear to be part of the explanation. The fate of a modest tort-reform measure in 1995 was only the latest case in point. After more than 15 years of debate, a proposed Product Liability Fairness Act finally cleared both houses of Congress. President Clinton, evidently receptive to the tort-lawyers lobby, vetoed it.

Another part of the American regulatory regime abundantly larded with client-serving rules is the regulation of international trade. Even in this age of free trade, Congress manages to write commercial laws that contain provisions tailored to the interests of specific industries. For example, the Commerce Department can penalize imports it deems under-priced, even when the prices of these foreign products are identical to those of comparable products made in the United States. Where did this curious prerogative come from? Its origin seems to have been the offices of Senator Russell B. Long of Louisiana. As chairman of the Senate Finance Committee, which was marking up an omnibus trade bill in 1974, Long seized the opportunity to assist a Louisiana firm that claimed it faced unfair competition from Canadian sulfur exports.

The sanctions against "unfairly" priced imports, originally crafted to aid a lone Louisiana constituent, subsequently became a favorite formula for protecting other enterprises, including every major U.S. steel company. Every few years, statutory refinements would be added, almost always at the behest of special interests. The price-regulating sections of the massive trade act of 1988 incorporate language specifically serving the needs of domestic outboard-boat-motor manufacturers, computer-chip makers, and, yes, the producers of pork products. Other portions of the law were designed to protect, subsidize, or open "market opportunities" for telecommunications equipment manufacturers, auto-parts manufacturers, processed-wood manufacturers, metallurgical coal producers, securities dealers, engineering firms, and even reapers of sunflower seeds. Of course, when trade regulators enforce these measures by imposing punitive duties on imported goods, a skewed distribution of costs and benefits unfolds: Consumers pay higher prices while a few protected domestic industries rake in extra profits.

The rights revolution

The pork barrel of trade protectionism remains more extensive than casual observers realize, but it has expanded less than another kind of distributive politicking: the special protections, preferences, loans, contracts, and jobs awarded to selected groups in the name of civil rights. To be sure, a spoils system was not the intent of the Civil Rights Act of 1964, which was passed to ensure equal opportunity for all Americans. Over time, however, civil-rights regulation has come to encompass a lot more than that. In federal courts, lawsuits against alleged violations of civil rights numbered only a few hundred in 1970. Twenty-five years later, the annual total topped 19,000. The Equal Employment Opportunity Commission (one of several federal bureaucracies established to carry out the law) logged 88,000 complaints in 1995, up 42 percent from 1990 and 150 percent from 1979. The soaring caseloads now included novel sightings of discrimination.

Companies have been hauled into court for prejudicial acts like discharging a truck driver prone to epileptic seizures or dismissing an employee who claimed chronic "poor judgment" as a manifestation of a disability. Managers that screen prospective hires for histories of arrests, alcoholism, or drug abuse have risked similar suits. An employer who encourages a fading elderly employee to retire might be docked for "ageism." A company that declined to supply insurance coverage for infertility treatments might be considered a discriminatory workplace. So could a firm that failed to censure e-mail jokes.

Alongside this litigious feeding frenzy are approximately 160 distinct federal programs of affirmative action and set-asides attached to government procurement, grants-in-aid, and financial regulations. The Office of Federal Contract Compliance Programs polices more than 100,000 companies and universities, or about 25 percent of private-sector employment, fostering "goals and timetables" for the hiring and promotion of particular minorities, women, and other protected classes. Recently, the EEOC has added to its traditional investigative functions the role of probation officer, monitoring corporate miscreants on an ongoing basis. Justice and Treasury Department bank regulators, among other enforcers of the Community Reinvestment Act, have leaned on lending institutions to allocate credit to minority businesses.

What explains such developments? It strains credulity to suppose that the United States is 150 percent more bigoted, sexist, and biased against the old and infirm than it was decades earlier. More plausibly, a regulatory juggernaut has gained momentum, even as nearly every major institution in American society tries to scale new heights of sensitivity.

Energized by innovative legal theories and by several bold enactments, such as the Americans with Disabilities Act of 1990 and the Civil Rights Act amendments of 1991, anti-bias law has fanned out to service a lengthening queue of claimants, promising them an increasingly plump rate of return on their claims. After 1991, for example, the burden of proof in cases of alleged discrimination was tilted from complainants to defendants. And the latter's liabilities multiplied as sweeping doctrines (about hostile work environments, disparate or adverse impacts, and so on) took hold. Traces of unintentional bias, which had previously elicited judicial skepticism, now became routinely actionable. The mere composition by race of an employer's payrolls, for example, could be used as prima facia evidence of racism, leaving the truth to the accused, not the accusers, to establish. Plaintiffs acquired incentives to file complaints: Not only would the fees of their attorneys and expert witnesses be reimbursed in multiples when prejudice was proved but compensatory and punitive damages became available, with the odds of collecting large sums significantly sweetened by the use of jury trials.

The ministration of remedies to the multitudes now classified as deserving victims has come to resemble the classic pattern of Beltway pork barreling. Hugh Davis Graham of Vanderbilt University has described this institutionalization plainly:

The original rationale for affirmative action stressed its temporary nature. But minority constituencies have followed the standard script for successful interest groups. To protect their programs and benefits, they have entrenched themselves deeply in networks of clientele groups, legislative committees, and program agencies.

How are these networks mutually advantageous to the participants? Pecuniary considerations and political back scratching play a part. The victors in multi-million dollar court settlements and the recipients of billions in earmarked business return the favor by striving to keep their benefactors securely ensconced.

Here to stay

Interestingly, the mutual-support networks attached to social regulatory institutions often have proven more durable than were the antediluvian "iron triangles" that handled the old pork. Part of the reason might be that the unearned income created by regulatory regimes can be more proprietary and less easily dissipated than the pickings from budgetary outlays. In the latter instance, logrolling spreads money around, often assuring a little something for everyone and no exclusive jackpot for anyone. Government regulation, by contrast, is often a cartelizing device. As the late George Stigler observed more than 25 years ago, it enables a coterie of rent-seekers to corner the market by fencing out new entrants. To the insiders, the value of delimiting entry can greatly exceed the share of booty they would be likely to receive by being mere members of a broad logrolling coalition. High stakes for the cartel motivate an enduring defense of the regulatory status quo.

Stigler's insight falls short, however. The past two decades have witnessed the deregulation of several once-cartelized industries. The Stiglerian theorem would not have predicted the revolution in airlines, railroads, trucking, telecommunications, and now electric utilities, all of which formerly had been subject to rigid restriction of entry and rates. Where regulatory cartels seem most permanent now, paradoxically, is not within economic sectors but inside the social-policy agenda. Here, examples keep accumulating.

One of Washington's seemingly immutable unfunded mandates, for instance, is the Individuals with Disabilities Education Act, which compels state and local governments to spend some $30 billion a year to mainstream pupils with disabilities while the federal government reimburses a paltry 8 percent of the added expense. However imbalanced this program has become, formidable cadres of certified "special ed" teachers, therapists, and counselors give it ongoing reinforcement.

In higher education, private institutions, no less than public ones, have to cope with federal directives. Federal law, for instance, requires every university to make detailed annual reports on their male and female sports programs. Thanks to the added administrative costs imposed by such requirements, families pay higher tuition bills to send their children to college. Families are being forced, in essence, to cross-subsidize a handful of aggrieved athletes and the university administrators who manage the red tape.

Or think about who gets what in health-care regulation. Scratch the surface of the 1980 budget reconciliation's Boren amendment, which dictates state Medicaid reimbursement rates for hospitals and nursing homes, and you find primarily protection for these licensed providers rather than a benefit for Medicaid recipients. Similarly, the Mental Health Parity Act of 1996 was not just intended to promise employees with psychiatric disorders the same insurance coverage available to persons with other medical conditions; the law guarantees market share ("parity") for mental-health professionals. Likewise, the marketplace for labor rights has long been rigged. Who collects rent under the Davis-Bacon Act, that indestructible New Deal law that basically stipulates the payment of union wages for contractors on federal projects? The answer is not non-unionized start-ups (including, incidentally, many fledgling minority firms struggling to win business by tendering low bids) but organized labor and established contractors.

The anti-competitive practice of pushing racial and gender preferences in labor markets is also hard to shake. Notwithstanding recent judicial misgivings, and a flurry of state initiatives like California's Proposition 209, this much seems likely: Binding quotas for slots and contracts may be out, but less formal "benchmarks" and "sheltered bidding" will continue indefinitely. At a minimum, firms deemed by the Labor Department to lack the requisite diversity "targets" and "timetables" may well remain ineligible for federally funded work.

In the public interest?

The staying power of social regulatory pork is fortified by appeals its advocates make to "social justice." The movements for consumer safety, environmental protection, affirmative action, health-care regulation, tort damages, or trade protection invoke notions of fairness or rights. By comparison, railroads, air carriers, telephone companies, generators of electricity, and other traditionally regulated industries have had less success enshrining a God-given entitlement to regulatory succor. Their shibboleths ("assuring dependable service," "avoiding ruinous competition," "redeeming stranded assets," and so on) sound boring and, sooner or later, ring hollow.

The trump card played by champions of anti-pollution regulations is that all citizens have an inherent right to a pristine environment. For each newly designated class of oppressed people, emancipation is advanced by summoning the Fourteenth Amendment, rather than voicing a plea for government funding. The clinching argument in many product-liability suits seems to be that buyers should bear no responsibility for the risks they run since consumers are entitled to absolute safety. The time-honored defense of anti-dumping duties is that they redress aggrieved firms and workers victimized by foreign predators employing pauper labor. Even health-care providers secure their regulatory rents by framing them as constitutional rights. How did the Supreme Court uphold the Boren amendment's mandated reimbursement rates? By ruling that failure by the states to pay the requisite rates violates (of all things) the civil rights of medical facilities.

If the benefits of regulatory programs are presented not as special favors but as means of honoring solemn legal warrants, it is not surprising that the warrantees are often given a direct hand in the enforcement. Many social mandates, in other words, gain momentum because they deputize vigilantes. The empowerment takes various forms. Sometimes it is statutory. Almost all federal environmental laws, for example, establish private rights of action to enforce compliance. Many consumer laws do too. Statutes such as the Truth-in-Lending Act guarantee groups who successfully sue violators full recovery of attorneys fees. Because the fee-shifting rules in these laws are asymmetric, they create an incentive to sue: Defendants have to compensate plaintiffs who prevail, but plaintiffs who lose are off the hook. And because companies often cannot afford to devote months of managerial time to court proceedings, the heat is on them to settle. This pressure plows back additional rewards for the citizen suit specialists. With the government's blessing, cases commonly close when businesses simply confer on their public-interest adversaries tax-deductible gifts (a remedy called "credit projects").

Pollution-abatement cases have had a long tradition of such side payments. Of late, a doubling of class actions under the employment laws has opened another rich lode to mine. Here, too, various interests can become parties to the implementation process, and cash in on it. In addition to awarding significant sums to non-profit advocacy groups, settlements have dispensed a bevy of purchasing contracts and franchises to designated for-profit organizations, and produced a billable-hours bonanza for the contingency lawyers. The booming industry of diversity management consultants, spooning sensitivity training to corporate personnel, may owe its existence to precisely the loss of civility that follows in the wake of such litigation.

From a political standpoint, there is something magical in all this. Lots of money changes hands, depriving those outside the charmed circle but enriching some pivotal constituents. And the transfer has the appearance of a self-enforcing private transaction where the fingerprints of government coercion are faint.

Pigging out

Although the contemporary pork barrel no longer overflows with profligate appropriations, it is enormously expensive. The best recent estimate has the total cost of federal mandates and regulations approaching $700 billion. That figure is larger than the entire national output of Canada and more than the sum of U.S. personal income taxes collected each year. Extrapolating the trend in federal rule-makings, total regulatory expenses seem likely to exceed $720 billion by the year 2000. The era of big government, in other words, continues famously, only off the budget books.

Is this a problem? Surely a prosperous, civilized country should be expected to regulate harmful types of economic fraud and abuse, to reduce socially corrosive inequities, to bar morally repugnant forms of discrimination, and to protect the health and safety of its citizens. Despite the mounting costs of the policies produced by these exertions, their net worth is often impossible to measure. Even though many of them advantage certain groups while disadvantaging others, society may have decided that such uneven outcomes are just. And the fact that politicians pull in campaign funds and votes with the decisions does not, in itself, invalidate them. Pork, courtesy of other people's tax payments or of regulatory exactions, is a staple of politics. Without it, democratic government would lose some muscle as well as flab.

What is a bit unsettling, however, is the seeming ease or insouciance with which current political arrangements seem to crank out directives that invoke high principle to conduct, in Ambrose Bierce's phrase, "public affairs for private advantage." The old pork barrel, stuffed as it was with bricks, mortar, and macadam, at least had to be paid for with tax dollars or with deficit spending. The favoritism was explicit, concrete (often literally), and plainly priced. Even the subtler fiscal delicacy, preferential tax relief, has obvious budgetary implications, which could alert deficit hawks. Whatever else might be said about these measures, they clearly bore the signatures of elected officials, who occasionally might be asked to answer for the consequences of their actions.

The new system is murkier. Its contents consist typically of selective legal sanctions that appear budget neutral and "tax free" and that are partly under the management of unaccountable private custodians. The social regime they help enforce is presented as something close to a birthright. In contrast to spending and tax bills, no consistent effort is made to score the economic impacts of the voluminous mandates, especially those that do not emanate directly from Congress. In short, barrel after barrel of regulatory pork is being wheeled out, whetting big appetites, compliments of a corpulent government whose excess weight remains unchecked.

1 David A. Stockman, "The Social Pork Barrel," The Public Interest, Number 39, Spring 1975.

PIETRO S. NIVOLA is a senior fellow at the Brookings Institution in Washington, D.C.

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