WASHINGTON — House Democratic leaders on Wednesday banned budget earmarks to private industry, ending a practice that has steered billions of dollars in no-bid contracts to companies and set off corruption scandals.
The ban is the most forceful step yet in a three-year effort in Congress to curb abuses in the use of earmarks, which allow individual lawmakers to award financing for pet projects to groups and businesses, many of them campaign donors.
But House Republicans, in a quick round of political one-upmanship, tried to outmaneuver Democrats by calling for a ban on earmarks across the board, not just to for-profit companies. Republicans, who expect an intra-party vote on the issue Thursday, called earmarks “a symbol of a broken Washington.”
Both parties are seeking to claim the ethical high ground on the issue by racing to rein in a budgeting practice that has become rife with political influence peddling. So far, though, the Senate is not joining in. House Democrats had tried to reach an agreement with their counterparts to ban for-profit earmarks, but the senators balked, Congressional officials said.
Had the ban on for-profit earmarks been in place last year, it would have meant the elimination of about 1,000 awards worth a total of about $1.7 billion, leaders of the House Appropriations Committee said in announcing that, as a matter of policy, they will no longer approve requests for awards to for-profit groups. Many of those earmarks went to military contractors for projects in lawmakers’ home districts.
Under the new restrictions, not-for-profit institutions like schools and colleges, state and local governments, research groups, social service centers and others are still free to receive earmarks. The new restrictions, for example, would still allow the type of award to local governmental agencies that became infamous in 2005 with Alaska’s “Bridge to Nowhere.”
Representative, the Wisconsin Democrat who leads the Appropriations Committee, said a series of criminal investigations, ethics inquiries and political embarrassments had prompted him to take stronger steps.
“The political reality right now is that the public has lost some confidence in this institution, and one of the reasons is the past abuses of the earmark process,” Mr. Obey said. Earmarks for profit-making companies are “the most vulnerable place” for abuse in the system, he added.
If the Senate does not follow the House’s lead, that would set up a confrontation between the two chambers, with the Senate including for-profit earmarks in its budget bills and the House excluding them. Negotiators from each body would then have to determine which earmarks, if any, would make it into a final bill sent to the White House for approval.
Senator, the Democrat of Hawaii who leads the Senate Appropriations Committee, said Wednesday that current restrictions were already working and that “it does not make sense to discriminate against for-profit organizations” by banning earmarks to them. He noted that many nonprofits had powerful lobbying operations to secure earmarks as well.
The House ban came less than two weeks after the public release of an investigation by the Office of Congressional Ethics laid bare the pay-to-play culture on Capitol Hill, particularly on the defense appropriations subcommittee. The report found that there was a “widespread perception” among the private-sector recipients of earmarks that giving political contributions to lawmakers on the panel helped secure the grants.
Even so, the House ethics committee on Feb. 26 cleared seven members of the defense panel — five Democrats and two Republicans — of accusations that they had improperly tied earmarks to contributions. The decision prompted protests from government watchdog groups, who said the standard the committee had set for ethical wrongdoing would open the way to further abuse of the earmark process.
The practice of inserting earmarks into spending bills, once used fairly sparingly by Congress as a way of imposing its budget priorities on the executive branch, has mushroomed, with lobbyists competing for the attention of committee members who control the money. Congress, which can award no-bid contracts at its discretion, doled out nearly $16 billion in awards last fiscal year.
House Democrats said the new restrictions, in addition to banning for-profit earmarks, would include greater public disclosure of other earmark requests, audits of 5 percent of nonprofit earmarks, and the establishment of a program directly financed by the Pentagon to promote awards for small, start-up military projects.
“This ban will ensure good stewardship of taxpayer dollars by the federal government across all agencies,” Speaker Nancy Pelosi said.
Mr. Obey announced the new restrictions in tandem with Representative Norm Dicks, a Washington Democrat who leads the powerful defense appropriations subcommittee.
Mr. Dicks’s predecessor on the panel, Representative John P. Murtha of Pennsylvania, who died in February, was renowned for his use of earmarks. The Federal Bureau of Investigation is examining the work of the lobbying firm known as P.M.A., which was run by a former aide to Mr. Murtha and helped secure numerous earmarks for its clients.
One of P.M.A.’s clients, a software intelligence company called 21st Century Systems, got several million dollars in earmarks requested by Representative Peter J. Visclosky, an Indiana Democrat now under investigation by the F.B.I., and executives at the firm credited their political contributions to the congressman in earning his favor.
Some analysts questioned whether the change in leadership on the committee after the death of Mr. Murtha, who had resisted past reforms, had led to the new restrictions.
Asked about the issue, Mr. Obey said: “I’m not going to comment on someone who’s gone. All I will say is that Norm Dicks understands the process.”
House Democrats in particular have been battered by accusations of earmark abuses, with a ethics scandals undercutting their pledges to end a “culture of corruption” in Washington after they took over Congress in 2007.
In the last three years, Congressional Democrats have taken actions that they say helped bring more transparency and competition to the earmark process, though outside critics did not always agree. But the ban drew quick praise Wednesday from both conservative and liberal groups.
“I think it’s a pretty big deal,” said Scott Lilly, a senior fellow at the Center for American Progress who has studied earmarks. “That was always the most questionable and problematic aspect of the whole process,” he said of the for-profit earmarks.
Stephen Ellis, vice president of Taxpayers for Common Sense, a nonprofit group, said that while he would prefer an all-out ban, “for-profit earmarks are ground zero for pay-to-play, and it makes sense to rein them in.”
Mr. Obey said that banning all earmarks would make Congress “a rubber stamp” of the executive branch.
“Where I come from, the Congress has a perfect right, in fact an obligation, to participate in the budget process, but we’ve got to try to do it in a way that protects the integrity of the system,” he said. “This strikes a reasonable balance.”