Trump Admin’s Proposed Grant Reform May Lead To Earmarks

The Trump administration proposed a federal rule earlier this year that would give the executive branch more control over federal grants. The comment period on the rule recently closed, but if it gets finalized, it will have significant implications for the federal government.

The changes would drive accountability for decision-making in grant programs back to political players and away from the unelected bureaucracy. However, they could also lead to an increase in congressional earmarks, which are associated with higher spending and institutional corruption.

In addition to making some minor and clerical alterations, the rule proposed by the Office of Management and Budget (OMB) contains several significant policy changes to the grant-making process. To start with, political officials would have the final sign-off on all grant approvals. In addition, grant recipients would be required to acknowledge that an administration can terminate a grant without warning due to a change in policy priorities.

The first change is in line with a series of Supreme Court rulings in recent years, which have attempted to take decision-making powers away from the institutional bureaucracy and restore those powers to the political (i.e., executive and legislative) branches. The second change responds to the numerous lawsuits the second Trump Administration faced after it terminated various grants upon taking office last year, and seeks to make it easier for future administrations to align their spending goals with their policy priorities.

The OMB proposal has generated predictable outrage from leftists, who believe that requiring political officials to sign off on grants will undermine “science.” But another possible ramification came when OMB Director Russ Vought recently testified before a House Appropriations Committee hearing that the congressional earmarking process would be unaffected by the proposed rule: “sometimes you have an earmark to a specific person or a specific organization, and that would probably be at the top of the list that needs to be funded.”

Having worked for Vought in a past life, I would characterize him as skeptical (at best) of earmarks in general. But his admission that OMB will continue to honor earmark requests raises an obvious question: Will the rule, if finalized as proposed, lead to an explosion of congressional earmarks, with competitive grant programs replaced by long lists of congressionally-directed spending projects, so that lawmakers can ensure the projects they want to get funded do so?

While I haven’t spoken with Vought about the proposed rule (and the views in this article are, as always, my own), the rule’s supporters might view this scenario as both a potential feature and a potential bug. The summary says that the rule “would improve transparency, accountability, and oversight for federal awards across the federal government.” Requiring politically appointed officials — whom the president can fire at will — to approve or deny grants will ensure that all spending decisions are made by individuals who (through the president) are ultimately accountable to the electorate.

In this vein, converting grant programs into congressional earmarks would also improve transparency and accountability. If Congress wants to spend money on Bridges to Nowhere — or even grants for things like transgender clinics — in specific lawmakers’ districts, they should have that right. But then those lawmakers would, and should, face accountability to the voters in the next election for wasting taxpayer dollars on questionable and/or harmful projects.

The latter option comes with a risk, however. Conservatives have often called earmarks a “gateway drug” to higher spending — that, for instance, a wavering member of Congress will vote for a porked-up spending bill he otherwise would not have supported because his earmarks are included within it. If the rule leads to an increase in earmarks, this type of scenario could well happen.

That said, neither Congress nor this administration have exactly set the world ablaze when it comes to fiscal responsibility. Even before the rule takes effect, annual deficits remain near $2 trillion. Moreover, few entitlement reform proposals made it into this year’s OMB budget, suggesting this failed status quo won’t change any time soon. Assuming the proposed rule gets finalized, it should accomplish its objective of increasing transparency and accountability regarding where and how federal spending gets allocated. (That is, before the next Democratic administration significantly modifies or repeals it outright.) But it won’t solve the larger problem of the federal government spending far too much money to begin with. To fix that problem, voters need to hold lawmakers of both parties accountable — and the sooner the better.