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EARMARKS IN PUBLIC FINANCE In public finance, an earmark is a requirement that all or a portion of a certain source of revenue (such as a Tax ) must be devoted towards spending on a specific Public Expenditure . Earmarking bypasses the normal procedure where tax revenue is pooled in a general fund which is then distributed among separate spending programs. For example, in the United Kingdom a tax on television licenses is directly allocated to the British Broadcasting Corporation (BBC). Governments are often fond of earmarking, while Public Finance experts often criticize earmarking since it provides an avenue for corruption including Kickbacks and because it reduces the discretion and flexibility of the government, which may lead to a loss in Economic Efficiency . EARMARKS IN US SPENDING LEGISLATION In the United States legislative budget process, Congress has the power to earmark (designate) funds it appropriates (revenue) to be spent on specific named projects. This differs from the normal practice where Congress grants a lump sum to an agency to allocate entirely at its discretion, according to the agency's internal budgeting process. Earmarks tie the hands of agency bureaucrats, obliging them to spend a portion of the budget on special projects chosen by politicians. Earmarking became notorious in 2005 when $223 million was earmarked to construct a bridge nicknamed the ''Bridge To Nowhere'' , to connect an Alaskan town of 8,900 to an island of 50 inhabitants (saving a short ferry ride). In the ensuing uproar the earmark was removed, but the Alaska government apparently still has the authority to spend the funds on the bridge if it so chooses. Total earmarks for 2005: 15,000, costing $47 billion. The House Appropriations Committee receives about 35,000 individual spending requests per year. Definitions Oftentimes, earmarks are contained only in reports issued by House and Senate Appropriations Committees before formal debate begins in the House or the Senate, rather than appearing in the actual legislation itself. This makes earmarking a non-transparent process that is difficult to quantify. The Congressional Research Service (CRS) notes that there is no widely agreed upon definition of an earmark, and that definitions tend to vary depending on the type of bill, "often reflecting procedures established over time that may differ from one appropriation bill to another. For some bills, an earmark may refer to funds set aside within an account for a specified program, project, activity, institution, or location. In others, the application may reflect a more narrow set of directives to fund individual projects, locations, or institutions." According to the CRS, the Office Of Management And Budget (OMB) "uses a different definition of earmarks, namely specified funds for projects, activities, or institutions not requested by the executive, or add-ons to requested funds which Congress directs for specific activities." Examples The CRS tracked earmarks from 1994 to 2005 in 13 categories, from Agriculture to Veterans Affairs. It did not provide a grant total of earmarks, since it applied a different definition for each category, and because of limitations in their methodology, most notably not taking into consideration earmarks contained only in reports from House and Senate Appropriations Committees. As an example, federal appropriations for agriculture in 2005 totalled $16.8 billion, of which CRS counted at least 704 earmarks that came to $500 million, or 3% of total appropriations. These numbers are double the 1994 numbers: 313 earmarks for $219 million, or 1.5% of the total appropriations of $14.5 billion. The New York Times reported on April 30, 2006 that $568.5 million of NASA 's $16.6 billion budget for 2006 has been earmarked for "198 special interest items", up from a decade ago when only $74 million was earmarked for 6 items. SEE ALSO REFERENCES
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