Members of Congress take it for granted that they can do their states and districts a lot of good by ascending to the chairs of powerful committees. Indeed, a new study from the Harvard Business School finds that states receive 40 to 50 percent earmark spending when a senator from that state becomes chair of a major committee, while the increase for house chairs is about 20 percent.
At the same time, the researchers were surprised to find that a shift in chairs led to a significant decrease in corporate spending within a state. Companies reduced capital investments by 15 percent and also reduced research and development programs. These reductions continue so long as the senator or representative remains chair, and are only partially reversed when the senator or representative resigns. Both large and small firms reduce their spending, though the largest reductions were found in firms that are geographically concentrated (i.e., had a large share of their operations in a single state or district).
