How do public servants, especially those in Congress (of both parties), start poor and end rich – even while in office? The questions nags, and it should.
Average Americans – even those with equities and retirement accounts inequities – have no special access to information. Every member of Congress does. The time is now to stop pretending members of Congress do not trade on that information.
The time is now to ban all stock trades by all members of Congress in both chambers while they are serving, and for some period thereafter. Just as senior executive branch officials have a chilling period after office, and cannot profit from their knowledge in the office, members of Congress should be banned.
This issue has been one of the great untold stories of Congressional “behind the curtain” activities, like how unspent campaign funds are used, or going overseas and returning o-dark-hundred with booty, or countless other privileges and practices, seldom seen or reported.
A time of reckoning is here. As Americans struggle to pay bills with runaway inflation, massive energy costs, new security concerns, taxes, and business restrictions, less efficiency, Congress keeps profiting.
Enough! Old laws aiming to quiet the public ruckus over “insider trading” – often thinly shielded – have been of no use. The perception, if not the reality, is that Congress profits from knowing what we do not.
In 2012, Congress tried to get ahead of this issue, but to little effect. They passed the so-called “STOCK Act,” another tiring acronym, for the “Stop Trading on Congressional Knowledge Act.” Who pays for this gibberish? Oh yeah, the American taxpayer.
So, this act was supposed to stop the practice of using what members learn from a daily flow of documents, briefing, hearings, mark-ups, letters, interfaces with business and private donors, those seeking favors, and those giving them seeking a return – to line members’ pockets.
As happens in the bigger world, those who are ethical and honest did not trade on insider information, filed properly, and followed the rules. Those who would not in another venue did not here. Without naming names, the bottom line was – this well-intentioned act did little to stop the practice.
So, how serious is the practice? Since those who trade on what they learn from their official positions do not volunteer that, “oh yes, they did that,” we must draw inferences from public facts. Like Plato assessing reality from shadows on the cave wall, we must look at what we know, reason from there.
What do we know? We know, according to a recent Epoch Times summary, “lawmakers on Capitol Hill bought and sold an estimated $355 million worth of stocks in 2021.” This data point comes from stock transaction disclosure data, which only records – it should be said – what is disclosed. See, US Lawmakers Bought and Sold Over $350 Million Worth of Stocks in 2021.
According to the same report, “US representatives and senators or their immediate family members bought about $180 million and sold around $175 million worth of company shares in 2021.” Notably, Republicans and Democrats traded big last year, top trader a Republican with $35 million in stock sales, $31 million in buys; top Democrat was not far behind, with “total transacted volume of about $53 million,” including $19 million in sales, $34 million in buys.
Over the years, some members and their spouses have profited handily in the market, for whatever reason. By way of example, Nancy Pelosi, who has been in Congress 35 years, last year recorded a $12 million dollar volume in trades.
The real question is not who did what when, or whether there is proper reporting of all that was done – but something bigger, or deeper, or more obvious.
The real question is why any members of Congress are allowed to trade stocks while in public service, or immediately afterward, since they are all deluged regularly with stock-sensitive information, and even if not using that information improperly, the public perception is one of potential insider trading. See, e.g., 55 members of Congress have violated a law designed to stop insider trading and prevent conflicts-of-interest.
So, what is the right answer? As more than two dozen members of the House recently suggested, the right answer is a total ban on stock trading by members of Congress, period. If that is too much to ask of a public servant, then they should stay in the private sector. A bipartisan effort is finally underway. See, e.g., Sens. Ossoff, Kelly Introduce Bill Banning Stock Trading by Members of Congress.
Public service is about service to the public, not about getting rich off information to which the public does not have access, made possible by their official position. Is that so hard to see, too much to ask? The imperative should be just this – Ban congressional stock trading. Simple.