Two Central New York congressmen try to shuffle federal money to local companies despite their leader’s ban.
Rep. Dan Maffei has asked Congress to approve his spending requests for pet projects that benefit for-profit corporations, despite a House ban on such "earmarks" in the fiscal 2011 budget.Washington -- House Speaker Nancy Pelosi laid down the law this year: To prevent the appearance of Congress doing unethical favors for big campaign contributors, she told Democrats they could no longer steer federal money directly to corporations. The only "earmarks" members could seek in spending bills would be for nonprofits.
Pelosi in March called it a "critical reform that addresses concerns that many Americans have."
"It ensures that for-profit companies no longer reap the rewards of congressional earmarks and limits the influence of lobbyists on members of Congress," she said.
But not everyone is obeying Pelosi’s tough talk. A Post-Standard review of local earmark requests shows U.S. Reps. Dan Maffei and Michael Arcuri have found a way to work around the new orders: Simply pass the federal money to not-for-profit organizations and let them forward it to corporations.
House Speaker Nancy Pelosi, D-Calif., and leaders of both major parties banned congressional spending on projects that send money to for-profit corporations. Republicans want a total ban on member appropriations, or earmarks, in the fiscal 2011 budget. (AP Photo/Susan Walsh)
In one case, Maffei is asking for $1 million for the Manufacturers Association of Central New York. The purpose: To develop and build sophisticated devices that can detect trace explosives and hazardous chemicals. The money would come from the U.S. Department of Homeland Security.
MACNY, with 10 employees who work out of an office building in downtown Syracuse, offers consulting, lobbying and training services to businesses across 19 Upstate counties. The not-for-profit manufactures no products, nor does it offer bomb detection services.
Yet Maffei, D-DeWitt, included the MACNY money among almost $100 million worth of requests he made for 58 projects in his fiscal 2011 earmarks — the appropriations members of Congress make for pet projects in their districts.
MACNY President Randy Wolken, asked about Maffei’s request, referred comment about the project to Inficon, an East Syracuse manufacturer of devices that can detect explosives and hazardous chemicals.
A MACNY spokeswoman said the association’s role in the earmark request was simply for "administrative" purposes.
Inficon, a division of a multinational corporation with headquarters in Switzerland, confirmed it would receive the earmark money from MACNY. The company said it would use the money for research and development of its sensors, potentially creating more local jobs to add to the 220 it employs at the East Syracuse plant.
"If we do our job right here, and we get the appropriate product Homeland Security would want, that could produce more jobs," said Jerry Wander, manager of Inficon’s environmental sensors business line.
"It’s not like we develop a product and ship it off overseas to be built," Wander said. "I think that’s one of the reasons Rep. Maffei approved it, because it is a job creator."
Listed and unlisted
At least three other requests reviewed by the newspaper — two from Maffei and one from Arcuri — had similar arrangements between non-profits and for-profit companies:
-- A $2 million request from Maffei for nonprofit Syracuse University to develop "personal status monitors" for the Army to remotely monitor the health of soldiers in combat.
A review of previous earmarks shows former Rep. James Walsh secured at least three appropriations for the same project, but sent the money to Welch Allyn Inc., a Skaneateles manufacturer of medical devices. A Welch Allyn spokesman confirmed Maffei’s request is for the same project. SU has been a research partner in the product’s development.
--A $750,000 request from Arcuri for Tompkins County Area Development, a nonprofit economic development organization.
The money will be passed along to RPM Ecosystems, a for-profit Dryden company that has patented a process to make hardwood trees grow up to four times faster. It wants to plant up to 500 acres worth of trees as a demonstration project.
--A $1.5 million request from Maffei for the State University College of Environmental Science and Forestry in Syracuse.
The money is for a project with Source Sentinel LLC, a for-profit company that is trying to develop sensors to detect biological and chemical toxins in the air and water. The project includes two other for-profit partners, O’Brien & Gere Engineers and Sensis Corp., both of DeWitt.
The earmark request lists SUNY-ESF’s street address as 5000 Brittonfield Parkway, the headquarters for O’Brien & Gere and Source Sentinel.
House members have been required to publicly post their earmark requests — and describe why each is a valuable use of taxpayer money — on their websites since 2009. But in each of their requests, Maffei and Arcuri left out the names of the for-profit companies when posting the information.
‘Flipping the name’
A watchdog group in Washington, D.C., that has been a longtime critic of the earmark process said it’s not surprising that the Central New York congressmen are trying to find a way around the new rules.
"There are a lot of these university-private company partnerships and consortia," said Steve Ellis, vice president of Taxpayers for Common Sense, which tracked 9,499 congressional earmarks that amounted to $15.9 billion in this year’s federal budget.
"All they are doing is flipping the name on the shingle," said Ellis. "But it’s an attempt to manipulate or exploit the system to make sure they are going to be successful with the earmark."
Ellis said his group does not know if the tactic is a larger trend emerging among House members to get around the new rules. He knew of no other reports of House members disguising their corporate spending requests as nonprofits.
"It’s too early to say if this is working," Ellis said of the tactic. "I don’t think we’re going to squeeze this out completely. But when people have to game the system and resort to trickery to get things done, you know we are making progress."
The nonpartisan Sunlight Foundation in Washington, a group dedicated to transparency and accountability in government, has paid close attention to earmarks in the past year. So far, it has found no examples of House members finding ways around the corporate ban, said spokeswoman Gabriela Schneider. When told of the attempts by Maffei and Arcuri to continue steering money to corporations, Schneider said, "That’s exactly what we thought would happen."
When the for-profit ban was put in place, House Appropriations Committee Chairman David Obey, D-Wisc., requested the inspector general of each federal agency to audit at least 5 percent of all earmarks to make sure appropriations were not sent to shadow nonprofit groups.
Projects are ‘defensible’
The majority of earmark requests from Maffei and Arcuri appear to be for legitimate nonprofits or government agencies. A review of earmark requests by Rep. Bill Owens, D-Plattsburgh, found no apparent violations of the House rule.
Maffei declined to comment for this article. Michael Whyland, his chief of staff, said the congressman makes no apologies for trying to bring home federal dollars especially since New York taxpayers receive back only about 70 cents on every dollar they pay in federal taxes.
"We need to still find ways to stimulate the local economy and create jobs," Whyland said. "We’re going to advocate for every project. Congressman Maffei is proud to advocate for each and every one of those earmarks. I think all of those projects are defensible."
Whyland said the ban is unfortunate for many local companies without non-profit partners, such as Defenshield Inc., a veteran-owned company in East Syracuse that has received earmarks to sell blast shields to the military.
U.S. Rep. Michael Arcuri defends his earmark request that benefits a Tompkins County corporation.
Arcuri, D-Utica, also defended his request for Tompkins County Area Development. The money would be passed on to RPM Ecosystems of Dryden, a 3-year-old company that has helped reforest the Gulf Coast by planting 175,000 of its fast-growing hardwoods in a separate government contract.
"My goal is to direct funding to projects that focus on job creation and improving quality of life while following both the letter and spirit of the guidelines set forth by the Appropriations Committee," Arcuri said in a statement.
‘Corrupting element’
Critics of earmarks, including Pelosi, say such for-profit projects should have to stand on their own merit in a competitive bidding process run by government agencies. President Barack Obama has called corporate earmarks the "single most corrupting element" of the congressional budget process.
The push for earmark reform followed a series of high-profile ethics and criminal investigations into connections between members of Congress and campaign donations from lobbyists, or employees of firms that received federal money.
Maffei and Arcuri accepted campaign contributions from the same Syracuse-based lobbyist, Michael Brower, who advocated for three of the earmarks that would benefit corporations. Brower represents Inficon, RPM Ecosystems, SUNY-ESF-Source Sentinel and its corporate partner, O’Brien and Gere, according to federal lobbying disclosure reports.
Brower donated $3,200 to Maffei’s campaign in 2009 and $4,600 (the legal maximum) in 2008, according to the disclosure reports. He donated $1,600 to Arcuri’s campaign in 2008, before Arcuri chose in 2009 to decline contributions from lobbyists who contact him.
Daniel J. French, a Syracuse lawyer and former U.S. attorney for the Northern District of New York, lobbied for Syracuse University and Welch Allyn, which would both benefit from the same earmark, the federal records show.
French made campaign contributions to Maffei totaling $4,800 last year and $4,600 in 2008, according to Federal Election Commission records.
Brower and French complied with federal rules requiring them to report on their lobbying activity and their political donations.
Republicans, who supported earmarks in the past, now say such spending should be stopped altogether. The GOP House caucus followed Pelosi’s ban on corporate earmarks by saying its members would seek no earmarks in fiscal 2011.
Since the announcement, at least four House Republicans have said they will not abide by their party’s ban.
The House ban does not apply to the Senate, but New York’s two Democratic U.S. senators, Charles Schumer and Kirsten Gillibrand, say they will follow the House rules.
Schumer initially said he would make an exception for defense-related projects, but later endorsed the total corporate ban.
Gillibrand has been an advocate for posting all earmark information online. On Tuesday, she was among four senators to introduce legislation that would create an online, searchable database for all earmark requests.
Contact Post-Standard Washington correspondent Mark Weiner at mweiner@syracuse.com or 571-970-3751.