Politicians love to spend other people's money. After term limits, perhaps their most hated institution may be a balanced budget requirement. In Michigan's Constitution, it's Article 5, Section 18:

"Proposed expenditures from any fund shall not exceed the estimated revenue thereof."

The Constitution also puts restrictions on borrowing for long-term capital investments like roads, sewers and bridges. Article 9, section 15 states, "The state may borrow money for specific purposes . . . by acts of the legislature adopted by a vote of two-thirds . . . and approved by a majority of the electors . . ."

Our political class may not be so good at solving real problems, but its members can be very creative at finding ways to evade restrictions on their ability to spend.

One example occurred in 2007 (www.michiganvotes.org/2007-HB-4851). Around $90 million left over from past borrowing ("bond sales") had accumulated in an entity called the "Michigan Higher Education Student Loan Authority," which subsidizes and guarantees college loans. A bill was passed transferring this to the general fund to pay for current spending in excess of expected revenues — that is, to avoid spending cuts.

If asked, most of the 137 lawmakers who approved that "fund raid" would say something like this: Because the source of the funds was unspent money from earlier borrowing for a specific purpose, and since "refinanced" at lower interest rates, somehow using it to pay for regular spending didn't count. False: The state's balance sheet took a $90 million hit, and future state college loan subsidies will have to be paid for in some other way - like with new borrowing.

That kind of ad-hoc raid on specialized funds isn't uncommon, but in 2005 our politicians discovered a mother lode when they created a way to borrow against future revenue from the 1998 tobacco lawsuit master settlement agreement (www.michiganvotes.org/2005-HB-5048). The settlement awarded Michigan nearly $300 million in annual "damages" through 2025. States can spend this any way they choose, and here it mostly goes to Medicaid and non-need-based college scholarships.

So isn't borrowing against tobacco lawsuit revenue covered by the same restrictions as other long-term debt — a two-thirds vote in the House and Senate, followed by a vote of the people? Not under Public Act 226 of 2005, the law that created the "21st Century Jobs Fund" business subsidy program (which also violated a 154-year-old Constitutional prohibition on the state owning private companies — state pension funds excepted — but that's another article: www.mackinac.org/7371).

Here's how they pulled it off: That 2005 law began with a magic wand — a legislative "finding and declaration" that the tobacco settlement revenue stream is actually an asset that can be sold or "securitized" by borrowing against it. But ignore that bond broker behind the curtain, it's really just an asset sale, like unloading surplus state cars or airplanes, so no messy supermajority or popular vote is required.

With that device in place, the Legislature extracted $400 million from future taxpayers. That's the present value: With interest included over the next 20 years, the debt service amounts to $800 million — $40 million each year that won't be available to pay for other state spending. What will replace that money? Either fewer government services or higher taxes and fees.

But wait, there's more! Actually that's just the beginning, because once the door was opened to borrow against future tobacco lawsuit revenues, it stayed open. The "21st Century Jobs Fund" was at least rationalized with a supremely misguided "economic development" argument; the next installment, in June 2007, was pure Washington-style "borrow-and-spend." 

The measure authorized $415 million in new borrowing to close the gap between how much legislators wanted to spend and how much tax revenue they expected to collect (www.michiganvotes.org/2007-HB-4850). This new debt burden added insult to the injury of a $1.4 billion tax increase that passed four months later as the next (temporary) "solution" to this state's (ongoing) over-spending problem — a.k.a. "the deficit crisis."

But that's not all. The next trip to this loan window happened just last year, when 37 senators and 86 House members voted to borrow another $60 million for a subsidy to tourism businesses in the form of state advertising, called "Pure Michigan" and related campaigns (www.michiganvotes.org/2008-SB-1224).

No doubt most of those 123 legislators who said "charge it" can hold forth at length on how valuable that program is. The same applies to the 137 who approved $400 million in debt for other business subsidies in 2005, and the 133 who used the credit card to avoid $415 million worth of spending reforms in 2007 long enough to pass a major tax increase.

Here's what they can't do: Make a moral case for robbing tomorrow's taxpayers to pay for spending that benefits today's politicians and select special interests.

Don't expect the borrow-and-spend to stop, either. Right now, legislation is before the House Tax Policy Committee that could be used to authorize another $250 million dip into your children and grandchildren's pockets, this time for electric car subsidies (www.michiganvotes.org/2009-HB-4719).

But don't worry — it's from the children.

The MichiganVotes.org vote tally for the aforementioned "borrow-and-spend" votes are located to the right. Each of these votes took place during the 2007-2008 session of the Michigan Legislature, and some of the lawmakers listed are no longer in office. Some of those no longer serving have moved on to other elected offices or are announced candidates for the same. Official Web sites and campaign Web sites that could be located for these politicians are provided below.

Jack McHugh is senior legislative analyst at the Mackinac Center for Public Policy and the editor of MichiganVotes.org. The author may be contacted at mchugh@mackinac.org.

A $188,000 appropriation for the Lobster Institute at the University of Maine checked in at number five on Time Magazine's "Top Ten Outrageous Earmarks" list for 2008. U.S. Senators John McCain, R-Arizona, and Russ Feingold, D-Wisconsin, made special mention of the Institute's contribution toward the creation of a "lobster dog biscuit" in a joint press release denouncing the practice of congressional earmarks. Citizens Against Government Waste also chimed in that U.S. taxpayers should not be forced to subsidize the "Lobster Institute for Better Dog Food." 

Yet when given the chance to strike this spending from the federal budget, every single U.S. Representative from Michigan voted to save it.

McCain and Feingold define earmarks as "wasteful spending on pet projects that members of Congress may try to sneak into legislation," and "an abuse of taxpayer money" that "we can't afford as we work to get our economy back on track." U.S. Sen. Tom Coburn, R-Oklahoma, asserts that earmarks are the "gateway drug on the road to spending addiction," because they allow lawmakers access to the gargantuan federal piggy bank, thus providing a powerful financial incentive for politicians to place parochial spending interests ahead of the general taxpayer's welfare. Coburn believes the result is a Congress that continually votes to approve much larger budgets than they might otherwise support, with the byproduct of a runaway federal debt. In voicing these concerns, he echoed Thomas Jefferson, who warned that giving members of Congress the power to appropriate for local spending interests would create "a scene of scramble among the members" for the money and that this would mostly be won by those who were the "meanest."

Like Coburn, who led the fight to kill funding for the infamous "Bridge to Nowhere" in Alaska, Congressman Jeff Flake, R-Arizona, and his allies in the U.S. House of Representatives regularly attempt to break the spending addiction by offering amendments to strip out individual earmarks, such as the one for the Lobster Institute. Eighty-seven members of the U.S. House, including Flake, voted to cancel the Lobster Institute's federal earmark, but 328 members voted to keep it. Flake, the most frequent sponsor of these amendments, usually comes up on the losing side of these votes, and members of the Michigan congressional delegation often vote against him — and with the majority — to protect the pork.

In a press release announcing the product launch of a doggie treat made with lobster, the Lobster Institute describes itself as "an industry-driven organization focusing on research, technical assistance, communications, and educational outreach." The release begins by announcing that "Your dog can now be a lobster connoisseur," and then notes that bringing to market a "nutritious and flavorful lobster-based pet treat" is the result of a two-year collaboration between the Lobster Institute and its partners in the private sector.

"Our product development work here at the Lobster Institute is geared toward creating a more efficient and profitable use of the lobster resource," said Dr. Bob Bayer, executive director of the Lobster Institute. "Working with Saltwater Marketing and now Blue Seal Feeds, we were able to get this product out of the lab and into the commercial market." 

In addition to the Lobster Institute's federal funding, Flake and his allies in Congress also targeted for destruction two more of Time Magazine's 10 most outrageous earmarks.

Time's second most outrageous was a $1.9 million appropriation for the Charles B. Rangel Center for Public Service at City College of New York. The earmark was inserted by none other than Congressman Charles B. Rangel, D-New York, the chairman of the House Ways and Means Committee, which is where federal tax laws are drafted. According to Time, the project's total price tag is $30 million, and it has been dubbed the "Monument to Me" by its critics. The magazine notes that a more junior member of Congress questioned Rangel about the propriety of members using taxpayer dollars to sponsor projects bearing their own names. "I would have a problem if you did it," Rangel replied, "because I don't think that you've been around long enough."

Only 108 members voted to cut federal taxpayer subsidies for the Rangel Center. Five Michigan Republicans and four Democrats were among the 316 who voted to save the earmark.

Time's number seven most outrageous earmark for 2008 was a $50,000 appropriation to help establish the National Mule and Packers Museum in Bishop, Calif. Time says that Bishop is the "mule capital of the world" and sponsors a "Mule Days" celebration each year that draws "30,000 people, and 700 mules." Flake's amendment to cut the funding received only 69 votes, against 352 to continue the spending. Nearly every member of the Michigan Congressional delegation voted in favor of protecting funding for the museum. The lone Michigan member voting to kill the earmark was former Congressman Tim Walberg, R-Tipton.   

An attempt by Flake to kill another, more expensive museum earmark fared only slightly better. His proposal to erase a $1.18 million taxpayer subsidy for the Kansas Regional Prisons Museum in Leavenworth, Kan., failed when only 112 votes were cast in favor of cutting it. Four Michigan Republicans and six Democrats were among the 317 votes cast in favor of protecting the earmark.

There was one noteworthy success: Flake and company chopped down federal funding for the Perfect Christmas Tree Project in North Carolina. A proposed $129,000 appropriation for the consortium of artisans who produce Christmas crafts and decorations died when 249 members voted to remove it. Three Michigan Republicans and three Democrats were among the 174 votes to save funding for the Perfect Christmas Tree Project.

Flake's crusade to kill earmarks — which dates back to 2004, when he began spotlighting an "Egregious Earmark of the Week" — may have come with a personal cost. After the Republicans lost control of the House following the 2006 election, many committee assignments had to be pared back to make room for the Democrats assuming the majority of the posts. Flake's primary committee assignment was the House Judiciary Committee, where his seniority exceeded other Republicans on the panel and should have placed him beyond reach.

However, the Republican Steering Committee voted to remove Flake anyway. Syndicated columnist Robert Novak speculated afterward that the reason was that the GOP Steering Committee was "dominated by Appropriations members who resent[ed] Flake's vigorous campaign against earmarks."

"I was told that I was taken off the Judiciary Committee because of 'bad behavior,'" Flake told the Christian Science Monitor. "I guess to be a team player you only challenge Democratic earmarks. I don't think that's right."

The votes of Michigan's congressional delegation on the five earmark amendments noted in this article are below. Please note that these votes took place only in the United States House of Representatives and thus were not presented to Michigan's two U.S. Senators. Additionally, two members no longer serve in Congress: Joe Knollenberg and Tim Walberg.

Ken Braun is the senior managing editor of Michigan Capitol Confidential. He may be reached at author@mackinac.org.