It is corrupt that a representative or senator can use insider knowledge to make money on the stock market. It is corrupt that he or she may regularly buy or sell stocks in companies that will be directly affected by regulations, subsidies, taxes, and loopholes being created on Capitol Hill.
The corruption is legal because Congress is the only body that could outlaw it, but it has not chosen to do so.
Sens. Josh Hawley (R-MO), Gary Peters (D-MI), Jon Ossoff (D-GA), and Jeff Merkley (D-OR) are trying to put an end to this. They are crafting legislation to ban members of Congress from buying and selling stocks. Peters, chairman of the Senate Homeland Security and Government Affairs Committee, said the bill will receive a hearing this summer.
Lawmakers in both chambers and parties should work with this group and, at this time when trust in government is appallingly but understandably low, pass a bill to end congressional stock trading.
Congress appropriates more than $1.5 trillion every year, but even that vast number understates the body’s impact on the economy. Congress also sets tax rates and creates loopholes and carve-outs in the tax code. It also mandates some products such as ethanol and health insurance and prohibits others.
An act of Congress, even a single word added to or removed from a bill, can spell fortune or ruin for a business. That is why companies and industries spend billions of dollars lobbying. It’s also a reason representatives and senators shouldn’t be day trading.
Members of Congress also get access to nonpublic information, including top-secret military intelligence and corporate trade secrets. This access is not meant to be a fringe employment benefit but is necessary information in aid of sound lawmaking and oversight of the executive branch.
This is why Peters, Hawley, Merkley, and Ossoff want to ban stock trading by members. Their proposal, as drafted, would require members to sell all shares in individual companies but leave them free to roll that money into mutual funds. Similar proposals have prescribed that members’ investments get put in blind trusts.
Determining exactly how to handle members’ current holdings or those of members-elect will not be simple. Peters’s committee should study and debate that question as it takes up the bill. But members should pass something out of committee this fall, in time to put the presidential, Senate, and House candidates on the spot in the November elections.
The public overwhelmingly supports this reform. Merkley points to a University of Maryland poll showing 85% agreeing with the general idea. This should become a campaign issue.
The chief opponent of reform is former House Speaker Nancy Pelosi (D-CA), who regularly buys and sells hundreds and thousands of dollars worth of stock in politically sensitive companies such as Google and Apple.
While she was speaker and held $500,000 in Apple stock, she took a personal phone call from CEO Tim Cook, who lobbied her to block antitrust legislation. The legislation never made it out of committee.
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Pelosi doesn’t call the shots now, at least not officially, and her desire to get even richer should hold no sway.
A healthy democracy demands serious sacrifices from those entrusted with power. Taking a few years off from playing the stock market is hardly too much to ask.
