A few weeks ago I informed you that my teen-age daughter remained in Mississippi during Katrina. She worked through emotions and questionable information that continue to arise during the aftermath of that storm. One of her many questions concerned one financial answer to the question about how to rebuild the Gulf Coast. In our last conversation, Cora wondered where and what "pork" was hanging around, why people wanted to "cut it," and if any of this meat was headed her way. I wanted to know more about this pork myself, because I wanted to know how pork affects investors.

Wikipedia defines pork barrel as "a derogatory term used to describe government spending that is intended to benefit constiuents of a politician in return for their political support, either in the form of campaign contributions or votes. Typically it involves funding for government programs whose economic or service benefits are concentrated in a particular area, but whose costs are spread among all taxpayers. Public projects and agricultural subsidies are the most commonly cited examples, but they do not exhaust the possibilities. Pork barrel spending is often allocated through last-minute additions to appropriations bills (legislative motion which authorizes the government to spend money)."

The Wikipedia definition goes on to talk about several historical pork barrel projects, and it appears that highways and road projects receive the majority of padding. If you've listened to news programs lately - particularly CNBC's Squawk Box on Monday, 19 Sept. at 9am - you learned that several projects, including a parking lot and a smoking room at a private airport, received attention. One project in particular, the Ketchikan-Gravina Bridge in Alaska intended to connect the mainland to an island occupied by fifty people, currently is under fire.

While Squawk Box stated that Alaska bridge project alone will cost an estimated $223 million to complete, current estimates to rebuild the proposed flood control project in New Orleans comes to $2.5 billion. That's just flood control in one city, mind you, not the entire Gulf Coast area, which makes me wonder how much of that last figure is "porked." Before Katrina made landfall, the Anchorage Daily News published an article about "porked" documentaries that focus on transportation infrastructures. Between this article and the Wikipedia definition above, investors might wonder if they've made mistakes about where to parlay their money.

You might have noticed in the definition above that pork spending is "spread among all taxpayers." I may never see or use the Ketchikan-Gravina Bridge, but I will pay for it with my tax money. Since President Bush stated that he will not raise taxes to pay for Gulf Coast rebuilding, the money needs to come from somewhere, right? Politics aside, the only place to retrieve funds for proposed projects on the Coast is to cut spending elsewhere. Squawk Box challenged senators to decide where and how they were going to cut spending on their show, and it might be interesting to see just what will be cut and why. I'll be equally interested in what projects/bills were signed, as I still have no idea where my tax money goes. Do you?

One way to learn about how our government spends money is through a watchdog group called, "Citizens Against Government Waste," an arm of The Council for Citizens Against Government Waste (CCAGW). CCAGW recently unveiled a Hurricane Katrina No Pork Pledge that may illustrate which members of Congress are willing to "oppose any project or provision that is not directly related to the impact of Hurricane Katrina in any supplemental appropriations bill that provides funds for hurricane relief." In other words, Congressional members who sign this petition are supposedly willing to avoid padding the recovery effort - in effect, to avoid building pork barrel projects during the Gulf Coast recovery.

I don't know about your reaction to the CCAGW efforts, but I know that bad habits are hard to break. If you watched any news at all during the past few weeks, you might have learned that funds intended for 9/11 went to build several businesses in Grand Junction, CO. From the CCAGW Web site, you can learn that In April 2005, the $80 billion Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief (H.R. 1268) included $25 million for the Fort Peck Fish Hatchery in Montana, and that in April 2003, the $78.5 billion War Supplemental Appropriations bill included 29 unrelated projects, which cost more than $348 million, including: $110 million for the National Animal Disease Center in Ames, Iowa; $22.7 million for a Capitol power plant; and $200,000 for Light of Life Ministries in Allegheny County, Pa.

While I'm all for building and sustaining certain projects, I sure would like to know about these efforts. While you and I might be thrilled about a new smoking room in our private airport, I might begin to question exactly how much that project is needed and where the money came from. Additionally, I would like to know which companies are involved in the projects because I want to know how this work affects the stock market. Are some stocks on the rise because of new government contracts? How long do these contracts last, and what are the implications to their work (and budgets) if spending is cut? The answers to these questions and more will affect how I invest my hard-earned cash.

One way to discover what a company does behind the scenes is to investigate its budget. You can long onto some company Web sites to discover annual report financials, or you might need to write for annual or quarterly reports. Areas to investigate include construction, transportation, and communications. Another area to look into include the food sector - just how much money did bottled water companies make from the Katrina storm alone, and did they donate any money to disaster victims?

This sort of investigative research often deals with ethics, and individual investors will lean either toward a humanitarian or a financial bottom-line perspective. In the long run, it seems that we all will need to adopt a wait-and-see attitude about who will cut the pork, which way it will be cut, and how the meat will be spread around. If we all took my daughter's attitude to heart, this issue wouldn't be a question. Upon hearing my response to her question, she remarked that "If we were all vegetarians, we wouldn't want pork anyway." That's my daughter - lean and mean.

Until Next Week,
Linda Goin