Insider trading laws should apply to Congress

Seventeen years is a lifetime in politics, but mention the Contract With America and many Americans will at least dimly recall Newt Gingrich and Dick Armey and other reform-minded Republicans being swept into congressional power in the off-year election of 1994.

Some progress was made. But reading their “bold plan to change America” today is an exercise in might-have-beens.

Congressional term limits, the balanced budget amendment and the line-item veto — “loser pays” tort reform and a rollback of regulations? Still the stuff of pipe dreams.

Few recall, though, that the very first proposal of the Contract with America was, “First, require all laws that apply to the rest of the country also apply equally to the Congress.”

It never got done. And so the subject now comes up again.

On Nov. 13, “60 Minutes” reported former House Speaker Nancy Pelosi bought stock in initial public offerings that earned hefty returns while she had access to insider information about pending legislation likely to impact those values.

In a piece relying on data collected by the conservative Hoover Institution, “60 Minutes” revealed that elected officials including Ms. Pelosi have exempted themselves from insider trading laws — regulations that carry prison sentences and fines for any other citizen who trades stocks while benefiting from otherwise secret information.

In response, a Senate committee Wednesday approved a bill that would supposedly prohibit members of Congress and their employees from using non-public information to enrich themselves. A similar bill is pending in the House .

In fact, there are inherent problems with laws that criminalize “insider trading.” If investing private capital in other people’s business ventures is meant to be a straight-up game of chance, like throwing darts while blindfolded, why not ban investors from telling brokers which stocks they want to buy? Make them take pot luck.

In fact, while fraud is already illegal, every investor seeks information that will help predict future outcomes. There are some fuzzy lines, here.

But surely behaviors that are criminal for everyday Americans cannot be OK for lawmakers who have the added power to gin up unnecessary laws — or sidetrack good ones — with an eye on their personal spread sheets and brokerage accounts. The fact that we even have to codify this in writing shows just how fetid a swamp of corruption Washington has become.