Cutting tariffs for political donors: pork or constituent service?
July 16, 2012By Emma Jacobs
Tariff suspensions and earmarks
• Tariff suspensions and other earmarks fall under the Washington truism: one man's pork is another man's vital constituent service.
Tariff suspension bills and campaign donors
• A couple gave $7,500 to Rep. Mike Fitzpatrick on March 30. A little over a month later, the Congressman submitted eight bills at the request of their company. Four area Congressmen who submitted tariff suspension bills have donors on their list of beneficiaries.
Reforming the process
• Three senators have backed proposals to reform the process by which tariff suspension requests get submitted for consideration. Sixty-four House Republicans have asked that tariff reductions be excused from the earmark ban.
Four Philadelphia-area Congressional representatives have submitted bills making obscure changes in U.S. tariff regulations to benefit campaign donors.
Thomas Nowakowski and his wife Carmella contributed $7,500 to "Fitzpatrick for Congress" on March 30, 2012, according to Federal Election Commission (FEC) filings.
A little after a month later, Rep. Mike Fitzpatrick (R-Bucks County) submitted eight bills for tariff suspensions and extensions of tariff suspensions in this cycle, at the request of Nowakowski's Newtown-based company, United Color Manufacturing.
In total, Nowakowski Sr., his wife and son, Thomas Jr. have contributed $25,683 to Fitzpatrick's campaigns since 2004.
Tariff suspensions reduce an existing tariff on a specific product without an American competitor.
"Tariff suspensions are about protecting jobs," Fitzpatrick's chief of staff, Athan Koutsiouroumbas said in an email. "Which is particularly pertinent in a weak economy with unemployment exceeding eight percent for over 40 months."
Tariff suspensions and traditional earmarks
Herein lies the classic conflict: one man's political pork is another's vital constituent service.
"[Tariff suspensions are] not that far away from the traditional earmarks that you see in say the transportation bills or appropriations bills," said Steve Ellis, Vice President for Taxpayers for Common Sense.
Earmarks, the nickname for funds set aside for pet projects in representatives' districts have fallen out of favor as a symbol of government waste. Ellis says tariff suspensions often seem crafted to benefit one local companies.
"Lawmakers are getting campaign contributions of thousands of dollars that turns into millions of dollars for these companies," Ellis alleges.
Four Philadelphia area members of congress submitted tariff reduction bills as part of a standard process repeated semi-anually. Not all went to donors, but Rep. Allyson Schwartz (D-Philadelphia and Montgomery Counties) submitted five bills. All went to donors who contributed a total of $50,500 to her campaigns since 2006, and spent additional money lobbying.
Rep. Congressman Jim Gerlach. a Republican who represents parts of Berks, Chester, Lehigh and Montgomery Counties, submitted 28 bills. Three were requested by past donors. His GOP colleague, Rep. Patrick Meehan, whose district includes parts of Delaware, Chester, Philadelphia and Montgomery Counties, was two for ten.
None of the four agreed to speak with WHYY for this story.
Rep. Bob Brady (D-Philadelphia) did not submit any tariff suspension bills this cycle. The Congressman's office said he had not received any requests.
To learn what these tariff bills mean to a company we turn to one business that is not a donor, but went through Rep. Fitzpatrick.
The impact on companies
Joe Ballantyne is founder and owner of Earth Savvy products, which imports the reusable tote bags you buy at the grocery store.
No one makes them in the U.S. They come from China. And as far as Ballantyne was concerned, the amount of the tariff he had to pay to import his product was prohibitively expensive.
"You have a low margin business right here as it is. You turn around and you have to pay another 17.6 percent on your goods coming into the country, there's just no enough margin to make it work," said Ballantyne.
The first time he applied for a lower tariff on reusable shopping bags, he hired a lobbyist, for a total cost of about $70,000.
In retrospect, he thinks he didn't have to. Joe is a believer in going to congressional representatives for these changes. He thinks this is a basic constituent service that elected leaders should be providing.
"My point is that here we are. We're a small business. We're Bucks County; we're in your district and we're in Doylestown, Pa. So why wouldn't you at least give us your ear?" Ballantyne asked. "Because that's why we voted you in is to help represent us."
But Ellis of Taxpayers for Common Sense thinks the practice inevitably leads to the perception that special interests are buying influence.
"It's just a concern and you know in Washington it's very hard to prove a quid pro quo so I'm not necessarily saying that is the case, but this is an instance where it's a really easy fix to not have that and not have that perception," said Ellis.
Reforming the process
Democrats and Republicans have both promised to ban these limited tariffs as part of earmark moratoriums. The house rules even spell out that if a limited tariff ban will benefit ten or fewer companies, it's an earmark. Supporting documentation submitted with some bills does list ten companies.
Not a single bill submitted by a Philadelphia-area congressperson named ten companies in its paperwork.
"Our job is just to present it for our company, not others," said Jerry Prout, the Vice President for Government and Public Affairs at FMC Corporation, which submitted requests for tariff reductions through Reps. Schwartz and Meehan.
The company donated to both's congressional campaigns, including $12,500 to Rep. Schwartz since 2007. Prout said the company's relations to candidates are "related to the candidate's positions on a range of business and pro-trade activity," and completely unrelated to the tariff measures.
Prout argued the priority should be on keeping manufacturing facilities viable by passing a combined tariff bill this year.
Sixty-five freshman Republicans have signed a letter to the Republican leadership to consider permitting limited tariff benefits to pass this year despite the earmark moratorium.
Virtually no one argues against tariff suspensions as such. They're widely welcomed by manufacturers and business groups. However, Ellis asks why Congress has to get into the act.
Senators Claire McCaskill (D-Missouri), Rob Portman (R-Ohio) and Jim Demint (R-South Carolina) have reform proposals pending in the Senate.
Senator Demint, a favorite of the Tea Party, appeared with a giant pink pig mascot at an event for Citizens Against Government Waste in April.
"Instead of fixing how we do tariff suspensions, fixing that process, they want to redefine what an earmark is so they can do it," said Demint.
The proposed change to the process is this: The International Trade Commission, a federal agency that advises on trade policy, already vets every application for a tariff suspension. Congress would still vote on whether to approve tariff changes. But companies would bring their request directly to the ITC, which would assemble the combined legislation, know as the Miscellaneous Tariff Bill, before submitting it to Congress.
Only one of the Philadelphia-area representatives, Rep. Schwartz, would comment on the proposed changes.
Her chief of staff said the Congresswoman would support a bill if one came to the House floor.
All four representatives delivered statements through their press staff, saying that tariff reductions help American companies stay competitive and have bipartisan support. More than one donor company said the same.
Ron Sorini is half of a Democrat-Republican lobbying team in Washington who thinks there isn't anything underhanded going on here. He worked with tote bag importer Earth Savvy on its first application for a tariff suspension back in 2008.
"I'm a Republican. I respectfully disagree with Republicanss that consider it an earmark," said Sorini. "If a tariff suspension is passed it's open for everyone to use."
He doesn't oppose the proposed changes, but asked why complicate a system that isn't broken.
"The process is highly transparent and these are highly vetted," Sorini said.
Right now the International Trade Commission is reviewing more than 1,200 tariff suspension requests submitted by members of Congress, including the 55 from greater Philadelphia. Last cycle, 900 tariff relief bills combined to save companies, and cost the federal treasury, $300 million.
Below, you can read statements from each of the Representatives' offices.
Congressman Pat Meehan:
“Republicans and Democrats agree that these job-creating, tariff-relief bills are needed to keep costs down for American manufacturing and help keep jobs in our region. There has long been bipartisan support for these bills both past and present and in the House and Senate, and these bills are reviewed and considered through an open and transparent process. Passing these bills to keep American manufacturers competitive against foreign competition will help keep jobs here.”
Congressman Mike Fitzpatrick's chief of staff, Athan Koutsiouroumbas:
"The owner of Earth Savvy Products simply picked up the phone and asked his Congressman for help, which we did, to help keep his employees employed [...] Tariff suspensions are about protecting jobs, which is particularly pertinent in a weak economy with unemployment exceeding 8 percent for over 40 months."
Congressman Jim Gerlach:
“Congressman Gerlach has submitted tariff-relief requests for several local companies that provide hundreds of manufacturing jobs to local workers. Tariff relief will make these Pennsylvania companies more competitive in the global marketplace against their foreign competitors who receive considerable subsidies from their home governments. Tariff relief helps lower the cost of importing raw materials that our companies rely on to remain competitive. That’s why there's bipartisan support for the tariff legislation in the House and Senate.”
Congresswoman Schwartz's chief of staff, Rachel Magnuson:
"Pennsylvania businesses put people to work every day manufacturing products here in the Commonwealth. For these companies to compete in an increasingly complex and competitive global economy, the right policies matter. That includes ensuring American companies don’t have to pay an unfair premium for parts or items essential to complete manufacturing of their products in the U.S., if those parts or items aren’t available domestically. America’s economy is strengthening, but we need to do more to support manufacturing, especially in a state like Pennsylvania were it’s a linchpin of our economy."