The "Permanent Political Class" Problem
I came across this book a while back:
Throw Them All Out: How Politicians and Their Friends Get Rich off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison
One of the biggest scandals in American politics is waiting to explode: the full story of the inside game in Washington shows how the permanent political class enriches itself at the expense of the rest of us. Insider trading is illegal on Wall Street, yet it is routine among members of Congress. Normal individuals cannot get in on IPOs at the asking price, but politicians do so routinely. The Obama administration has been able to funnel hundreds of millions of dollars to its supporters, ensuring yet more campaign donations. An entire class of investors now makes all of its profits based on influence and access in Washington. Peter Schweizer has doggedly researched through mountains of financial records, tracking complicated deals and stock trades back to the timing of briefings, votes on bills, and every other point of leverage for politicians in Washington. The result is a manifesto for revolution: the Permanent Political Class must go.Pretty serious accusations. Could it really be that bad? Apparently. The TV Program 60 Minutes eventually did a show about it. It generated so much outrage, that Congress had to pass a law forbidding themselves from participating in insider trading. But guess what? It didn't last long:
Congress Quickly And Quietly Rolls Back Insider Trading Rules For Itself
In November of 2011, the TV show 60 Minutes did a big expose on insider trading within Congress. While everyone else is subject to basic insider trading rules, it turned out that members of Congress were exempt from the rules. And, as you would imagine, many in Congress have access to market-moving, non-public information. And they made use of it. To make lots and lots of money. Of course, after that report came out and got lots of attention, Congress had to act, and within months they had passed the STOCK Act with overwhelming support in Congress to make insider trading laws that apply to everyone else finally apply to Congress and Congressional staffers as well. As that link notes:That was last year; so it just continues, "Business as usual." Disgusting. Visit the original article for all the embedded links.
The lopsided votes showed lawmakers desperate to regain public trust in an election year, when the public approval rating of Congress has sunk below 15 percent.
Of course, here we are in 2013 and, lo and behold, it is no longer an election year. And apparently some of the details of the ban on insider trading were beginning to chafe Congressional staffers, who found it hard to pad their income with some friendly trades on insider knowledge.
So... with very little fanfare, Congress quietly rolled back a big part of the law late last week. Specifically the part that required staffers to post disclosures about their financial transactions, so that the public could make sure there was no insider trading going on. Congress tried to cover up this fairly significant change because they, themselves, claimed that it would pose a "national risk" to have this information public. A national risk to their bank accounts.
It was such a national risk that Congress did the whole thing quietly, with no debate. The bill was introduced in the Senate on Thursday and quickly voted on late that night when no one was paying attention. Friday afternoon (the best time to sneak through news), the House picked it up by unanimous consent. The House ignored its own promise to give Congress three days to read a bill before holding a vote, because this kind of thing is too important to let anyone read the bill before Congress had to pass it.
And, of course, yesterday, President Obama signed it into law. Because the best way to rebuild trust in Congress, apparently, is to roll back the fact that people there need to obey the same laws as everyone else. That won't lead the public to think that Congress is corrupt. No, not at all.
There is a Question and Answer segment on the webpage for Peter Schweizer's book:
Editorial ReviewsCongress should be forbidden to pass any laws that do not also apply to themselves. If they had to get their own health care under the same laws that we do, the Affordable Care Act would not exist in it's present form; it would have been something better. The Healthcare.gov site might have actually worked, if they and their families had to use it themselves.
Amazon Exclusive: A Q&A with Author Peter Schweizer
Q:When did you realize that so many insider trading and sweetheart land deals were going on?
A: When I first discovered that members of Congress are exempt from insider trading laws, I didn’t believe it. Then, when I started to look at their stock trades and compare them with what they were doing in office, I was stunned.
Q: What do you mean by the "Permanent Political Class"?
A: I think politics in Washington has become a business opportunity. Republicans and Democrats are not so different as you think. They work together to enrich themselves. They have designed the system to work so that they can make lots of money doing things that would get the rest of us sent to jail.
Q: What do you mean by "honest graft"?
A: When people think of politicians making money in Washington, they think of bribery and other illegal activities. That’s small potatoes. The real money is made by doing stuff that’s legal, including insider trading on the stock market and land deals.
Q: Politicians are exempt from insider trading laws? You’re kidding, right?
A: No. They write the rules, and guess what: the rules that apply to us don’t apply to them. By the way, they are also exempt from whistleblower laws. If you see your boss committing a financial crime, you can report them and you will be protected. You can’t be fired. But if your boss is a congressman? You’re toast. You are not protected.
Q: What’s wrong with politicians who trade stock? Don’t we want them involved in the economy?
A: Yes, but they are doing exactly what corporate insiders get sent to jail for doing. It’s a double standard and it’s unfair. If Martha Stewart had been in the U.S. Senate, she would have been protected.
If congress had to actually live under the laws they pass for the rest of us, they would take greater care. But they don't, and they don't. That needs to change.
Congress is supposed to exist to serve us, not rule over us.
Jon Stewart Tears Up Congress For Quietly Scaling Back Insider Trading Law: The ‘F*cker Act’