Earmarks gained by chairmanships don’t help firms

by
June 8, 2010

By Jim McElhatton, The Washington Times

New research is upending the idea that as a state’s congressional delegation grows more powerful, the windfall of increasing earmarks it’s able to secure helps grow private business in its home state.

The research from a Harvard Business School study, “Do Powerful Politicians Cause Corporate Downsizing?” examined earmarks and other federal expenditures over a 40-year span in states where members of Congress rose to powerful committee positions.

The researchers found that in the year after members of Congress assumed committee chairmanships, earmark spending in their home states increased up to 50 percent.

However, despite the influx of federal money, companies in the home states cut capital expenditures and reduced research and development, the researchers found.

“In the year that follows a congressman’s ascendancy, the average firm in his state cuts back capital expenditures by roughly 15 percent,” the study found.

“It was an enormous surprise, at least to us, to learn that the average firm in the chairman’s state did not benefit at all from the unanticipated increase in spending,” said one of the researchers, Joshua Coval, to the Harvard Business School Working Knowledge newsletter.

Lauren Cohen, another author of the Harvard study, said in a phone interview that one message from the study is that when gauging the increase in economic activity from government spending, “you have to see how the private sector responds.”

Scott Hodge, president of the nonpartisan Tax Foundation, a Washington-based research group, said he’s not overly optimistic that news of the study will change behavior in Congress.

To read more, visit: http://www.washingtontimes.com/news/2010/jun/7/earmarks-gained-by-chairmanships-dont-help-firms/

No comments yet - you can be the first!

Leave a Reply

Your email address will not be published. Required fields are marked *

Keep the Fake News Media in check.

Don’t let the MSM censor your news as America becomes Great Again. Over 500,000 Americans receive our daily dose of life, liberty and pursuit of happiness along with Breaking News direct to their inbox—and you can too. Sign up to receive news and views from The 1776Coalition!

We know how important your privacy is and your information is SAFE with us. We’ll never sell
your email address and you can unsubscribe at any time directly from your inbox.
View our full privacy policy.