January 26th, 2021


Congress finds a slush fund

Charles Lane

By Charles Lane

Published Nov. 9, 2015

Americans in 2014 were 75 percent less likely to be victims of violent crime than in 1993, and 66 percent less likely to be victims of property crime. These figures, from a Justice Department survey, do not include homicide - but murder, too, is down significantly despite a recent uptick in some cities.

So if there are fewer and fewer victims, why is the Justice Department setting aside more and more money for their exclusive benefit? Between 2000 and 2014, the Crime Victims Fund's balance grew from zero to $11.8 billion, about equal to Nicaragua's entire economic outputlast year.

This incongruity is the subject for today's lesson in How Washington Really Works. Along the way, you'll also learn why the Republican Congress and President Obama slapped together their budget deal as they did.

Mass incarceration is our criminal justice issue du jour. In the tough-on-crime days of 30 years ago, however, "victims' rights" was all the rage.

In 1984, a Democratic Congress passed, and President Ronald Reagan signed, a law that assigned federal criminal fines to a fund to compensate and otherwise assist crime victims, rather than to the Treasury, as before. No thought was given, apparently, to raising taxes or cutting other spending to pay for this worthy purpose.

To the contrary, a federal task force opined that, in view of federal aid to prisoners, it would be "only just that the same federal government not shrink from aiding the innocent taxpaying citizens victimized by those very prisoners" - using money wrung from the wrongdoers themselves.

At first, the law limited the amount of fines that could go into the Crime Victims Fund, up to $150 million per year in 1992. All of the money got spent.

Then two changes, unanticipated by the law's authors, occurred. In the high-crime year of 1993, Congress eliminated the cap on payments into the fund, so that all fines would flow into it. And federal prosecutors settled a number of white-collar criminal cases against big corporations, resulting in hundreds of millions of dollars in fines - which, under the 1984 law, had to go into the fund.

What to do with the windfall? In 1999, the fund managed to spend only half of the billion dollars it took in. Congress tried to smooth the cash flow, capping annual spending - $500 million at first - with any leftover money to revolve back into the fund.

That worked okay until the Obama administration's aggressive prosecution of banks and drug companies brought the fund nearly $9 billion in negotiated fines between 2009 and 2014, far more money than the fund could legally spend. An additional $5 billion will pour in by 2015's end, the Wall Street Journal reports.

Americans might be surprised to learn that negotiated fines on the white-collar likes of Citigroup or Barclays do not replenish government's coffers on behalf of everyone. Rather, they're earmarked for the shrinking portion of the population that got burglarized or assaulted. (Lately, the money's also been double-counted by government budgeteers as a gimmicky "offset" for other Justice Department spending, but that's another story.)

Of course, crime victims, especially the abused children and women whose medical and counseling needs the fund often meets, have a legitimate claim on public resources.

It's also true, though, that the definitions of "victim," and of "victim services," expanded as the fund's grantees in social service agencies multiplied and organized politically. Last year, they won a tripling in the annual amount the fund can spend, from $745 million to $2.4 billion.

Given today's lower crime rates and difficult budget constraints, it's not clear that crime victims, or agencies that aid them, should enjoy preferential access to so much money, rather than, say, medical researchers, poor children or the military.

Apparently, the authors of the bipartisan budget agreement agreed. They took $1.5 billion of the crime victim allotment for next year to help pay for spending that would have otherwise been restrained by sequestration.

That left $1 billion to spend on crime victims - a quarter-billion more than in 2014 - but advocates still decry a threat to the "integrity" of their program.

Of course, we could pay to help victims transparently, with tax revenue, rather than play "criminals pay," with all the unintended consequences that creates. Or, we could give half the fund to the Treasury, and use half to endow a new Crime Victims Aid Foundation, spun off from the Justice Department, that invests and makes grants like a private- sector philanthropy. Future fines would go to the Treasury, just as they did until 1984.

Either would be preferable to what's probably coming: repetitive fiscal raids on the fund, and exhausting "stakeholder" resistance to them.

In short, we could probably get the same benefits at less cost, financial and political. But that is not the way Washington works.

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