There are, essentially, four ways that the Federal government obligates money tied to grants. Broadly ("everyone gets a car"), through a formula (defined by law or through rulemaking), through competitive applications, and by giving it to whoever they want.
Broad-based grants are almost always expensive or wasteful. Formulas are almost always gamed and never transparent. The Administration can introduce non-transparent policy choices to the competitive applications. And when Congress doesn't earmark either directly or indirectly, the Administration’s decision on who to give the money to is far from independent of the political process.
A major problem historically with earmarks is that Members used them in a positive-sum environment where Member “X” would vote for everyone else's spending if they also voted for his/hers. Another problem with the earmarks is that the well-connected can slip them into the bills. However, the Administration does this last bit anyway in a much less transparent way under the earmark moratorium.
But earmarks in a zero-sum environment make some sense. That is, where you have strong spending caps and an open process in place that forces Members to transparently defend their earmarks against one another.
Under this environment, Members would be forced to defend their earmarks against one another and Congress would decide which projects are worthy depending on the budget. The problem is, of course, that Congress cannot be trusted to either defend a strict budget or implement an open process right now.
Bringing back earmarks will increase the pressure more than ever on the discretionary spending caps (i.e., “if we just get rid of the caps, everyone will get a car!”). And sure, growth in discretionary spending isn’t the problem (as I’ve written about here). But why should Congress be trusted with more money until they can demonstrate how serious they are about doing something the address the underlying causes of budget sustainability (more here)?
It’s also unlikely that we’re going to get an open process. For instance, the Chairman of the House Appropriations Committee wants Members to submit earmarks to his Committee for review. In other words, Leadership and the Appropriators will be picking the earmarks. That sounds like a terrible idea.
The President sees the earmark moratorium as a net negative because he wants Congress to grease its own wheels. But the earmark moratorium could, under its current construction, give the President a tremendous amount of power.
As I’ve written about in a previous post, there’s a potential loophole in the earmark moratorium that would allow for the practice if the request comes from the President. In other words, if the President formally requests the earmark (through an open letter to Congress or the annual budget) Congress can fund it at whatever level they choose.
This loophole doesn’t stop the gamesmanship. But it does increase the transparency of the process while adding an additional hurdle. That is, two branches of government have to explicitly agree that the earmark is a good idea. That’s not so easy.