Capitol entitlement
In his book, “Throw Them All Out,” Peter Schweizer of Stanford University’s Hoover Institution revealed that members of Congress made millions of dollars through an amazing string of prescient stock choices, especially during negotiations over the 2003 Medicare overhaul. He concluded that lawmakers routinely engage in what amounts to a legal form of insider trading, profiting from investment activity that “would send the rest of us to prison.”
The CBS newsmagazine “60 Minutes” picked up on the revelations in a well-publicized broadcast late last year, leading President Obama to acknowledge the problem during his State of the Union address. He called on congressional leaders to send him a bill that would block such profit-taking.
Actually, it turned out the Stop Trading On Congressional Knowledge Act had been introduced by Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., back on Nov. 19. Thursday, a sufficiently shamed Senate finally acted on it, voting 96-3 to explicitly prohibit members of Congress and their staffs from profiting from insider information. The Senate including a provision that would revoke the pensions of anyone convicted of insider trading and require that stock trades and financial disclosure statements be published online for executive branch employees.
In an interview with BigGovernment.com after the State of the Union speech, Mr. Schweizer said he believes the STOCK Act — which imposes a 30-day reporting requirement but would not actually bar a member of Congress from voting on an issue where he or she stands to gain financially — doesn’t go far enough. Mr. Schweizer prefers a new bill offered by Rep. Sean Duffy, R-Wis., called the Restoring Ethical Standards, Transparency, and Responsibility in Congressional Trading Act (RESTRICT), which would force members of Congress to either place all their assets in a blind trust or submit to a three-day public disclosure requirement.
Virtually all investors seek to obtain potentially profitable information ahead of others, whether it’s through a $1,000 newsletter or a conversation overheard at the barbershop. In the end, though, if average citizens can go to prison for insider trading, why should John Boehner, Nancy Pelosi, John Kerry and Spencer Bachus be immune?
The STOCK Act is a good start. Let’s hope the result isn’t just another shiny new sieve.