Report: While American Families Lost a Ton of Wealth in the Crash, Members of Congress Did Just Fine
The Washington Post has a new multi-part investigation into the wealth of Congressmembers, including an in-depth look at how legislators personally benefit from laws that they pass. They dug into financial disclosure forms from all 535 members of the Senate and House of Representatives, looking at how many millionaires there are on Capitol Hill, who made money and who lost it during their time in office, and much, much more.
One of the key findings was that while Americans saw their median net worth fall a full 39 percent during the crisis years of 2007-2010, the median wealth of members of Congress rose 5 percent in that time, and the wealthiest third saw their riches increase by 14 percent.
Interestingly, the 253 millionaires in the current session of Congress, the Post noted, is the smallest group in eight years—though “The numbers are likely to be underestimated because lawmakers are not required to list their homes among their assets.” That may be a result of an influx of Tea Party freshmen in 2010 – many of them "outsiders" who bested more established canidates.
Seventy-two of those members may have doubled their estimated wealth between 2004 and 2010, though the Post's estimates are inexact because members of Congress don't have to report exact details. Eleven of them, including House Minority Leader Nancy Pelosi, may have added more than $10 million to their net worth. (The Post has statements by spokespeople for many of the members called out by name in the piece; Pelosi's explained that, “San Francisco is one of the places where the market has skyrocketed in terms of price per square foot and has been fairly insulated in terms of the 2008 financial crisis.”)
But leadership positions aren't a guarantee of stability. Steny Hoyer was the Dems' majority leader in 2007, but the Post estimates his wealth declined some 90 percent between 2004 and 2010. And at least one member of Congress declared bankruptcy after the financial crisis. Ruben Hinojosa (D-Texas) had guaranteed a loan for his family's business and wound up responsible for millions in debts—the largest of them to Wells Fargo, the bank that had gotten billions in taxpayer bailout dollars.
Some 73 members of Congress have helped push legislation that could benefit their family businesses or investments, the Post noted. And yet these apparent conflicts appear not to violate any of Congress' ethics rules.
In some cases, the public interest in a bill is obvious—for example, in the GOP's last round of attacks on public broadcasting, Rep. William L. Owens, a New York Democrat, was one of those who fought back, speaking on the House floor about his position and disclosing the fact that his wife is an executive at an upstate New York public TV station.
In other cases, members of Congress took advantage of laws after they passed them. Dennis Cardoza, a Democratic Representative from California, was instrumental in putting a provision into the farm bill that saved racehorse owners money in taxes on their horses. The next year, he purchased seven racehorses—and then, according to the Post, joined the Congressional Horse Caucus and started holding fundraisers at racetracks. (Cardoza resigned from Congress this summer, citing family issues, and joined up with a “law-and-lobbying” firm, according to the Fresno Bee, although he's prohibited by ethics rules from actually lobbying for a year.)
Many of the members who personally benefited from legislation they passed have financial interests that are close to those of their district. Senator Jeff Sessions, the Alabama Republican, makes big bucks from timberland, and timber production is, the Post notes, one of his state's largest industries. So his efforts to “revamp” and “reform” the tax laws (Republican-ese for tax cuts) pass ethics rules, which are pretty flexible. According to the Post, the rules “allow lawmakers to take actions that benefit themselves or their families except when they are the lone beneficiaries.” They also don't have to identify potential conflicts at the time that they take actions that might “intersect or overlap” with their financial interests.
As I reported last December, some of the richest members of Congress represent districts where their constituents are seriously struggling. Darrell Issa, the richest member of Congress, represents a California district where 14 percent of the population live below the poverty line. Issa took some hits during the financial crisis, but rebounded—somewhat amazingly:
Issa appeared to lose about $90 million in 2008, but his portfolio regained an estimated $197 million within two years of the financial meltdown. The rises were fueled by his commercial real estate ventures in San Diego and successful investments in mutual funds, bonds and other securities.
Eric Lichtblau, writing in the New York Times last summer, noted, “In Mr. Issa’s case, it is sometimes difficult to separate the business of Congress from the business of Darrell Issa.”
The real problem is that, while most Americans struggle, members of the body that purports to represent them remain largely separated from the problems of the general population. While millions of Americans face foreclosure, search for work, or labor in low-wage, zero-benefit jobs, a member of Congress's $174,000-a-year salary (plus excellent benefits) is out of reach enough; let alone a financial portfolio capable of dropping $90 million and then regaining more than twice that. It's easy for Sessions and others to argue that their personal interests dovetail with those of their state, but what happens when we're increasingly represented by a political class financially insulated from the consequences of so many of their actions—and able to make laws that make sure that stays the case?