US Senators and Congressional Representatives commonly refer to their positions as “Public Service.” Perhaps the annual salaries of $174,000 for Senators and Representatives may seem to be self-sacrificing to them, but a deeper dig tells a different story.
Congress is a club composed of millionaires. The average net worth of our 535 lawmakers is $1,000,000. To be fair, that is a statistical average. A few Senators and Representatives arrive in Washington as wealthy people who have earned or inherited their fortunes before assuming office. And a few, at the other end of the income spectrum, are still paying college loans. But most stay in Congress for multiple terms and become millionaires.
A more interesting statistic, however, is the average annual growth rate of a lawmaker’s net worth. Regardless of their starting level, how much does his or her net worth grow per year? Does it grow at the same rate as the rest of the country?
The average American citizen saw his or her household net worth decrease from 2004 to 2012 at about one percent a year. Meanwhile, members of Congress experienced an annual net worth increase every year. While the net worth of most Americans shrank the net worth of Congressional members increased by more than 25 percent for the same period.
For the top 20 members of the “Congressional Millionaires Club,” the increases were much sharper. They ranged from a net worth increase of 93 percent a year to 1,707 percent a year. Representative Chellie Pingree (D-ME) had a much higher percentage of net worth growth, at more than 73,000 percent. Congressional statistics exclude her annual net worth increase because it resulted from a multi-year marital settlement. Also excluded are increases in the value of homes and other non-investment real estate.
No matter how we position the statistics, nearly all members of congress significantly increase their net worth during every year that they serve. The increases are usually much more than they could save or have invested for them at an annual salary of $174,000. For example, a congressional member with a net worth of $1,000,000 will have an average increase of nearly $16,000 a year after taxes. So an average senator who serves two terms will increase his or her net worth by $192,000 while serving. Some, however, accumulate an increase of $1,000,000 or more during their multiple terms.
What is the source of that additional wealth? Required public disclosure forms don’t answer the question. Until recently, a legal loophole provided Congressional members immunity from “insider trading” laws. For example, they might be privy to information unknown outside of government circles that would impact the stock markets. Examples might include an impending decision that would crush a company’s stock values or accelerate them based on a huge defense contract funded or canceled.
Sixty Minutes investigated this practice and showed how Minority Leader Nancy Pelosi had profited by $100,000 on one stock transaction. This was based on her advanced knowledge of a change in banking laws. Ms. Pelosi and her husband also profited from eight IPOs that year, based on inside information. The Minority Leader is among the richest members of Congress. Her estimated net worth of approximately $58 million makes her the twelfth wealthiest member of the “millionaires club.
Generally speaking, members of Congress use devices like “blind trusts” to eliminate conflicts of interest. However, laws in this area appear to be open to interpretation. The wide range of Congressional member contacts with outsiders—especially lobbyists and their staffs—makes it impossible for potential investigators to follow thousands of communications threads.
Moreover, there are many ways for a Congressional member to help people who are willing to pay handsomely. And there are many ways to pay for favors, without money directly changing hands. For example, the sensitive information mentioned casually to a friend or relative may be repeated to a “blind trust” administrator. If the information isn’t classified by a government agency, those conversations may not break any laws.
Few Americans know or care about these practices. They don’t respect Congress, because of many other things, such as failure to improve economic conditions or broken promises. The “Congressional Millionaires Club” depends on voter apathy to hold onto its seats.
When we vote for a new member of Congress, we seldom if ever elect the mythical, hard-working champion of the people we expect. In fact, Congressional members don’t work full-time. They are usually in session less than four days a week. Moreover, they take numerous long breaks, bringing the average number of days in session per year to 139. Stated another way, Congress is idle for 226 days a year. If we don’t count the usual 104 weekend days, and 11 national holidays, Congressional members still have an additional 111 days off or about 20 weeks of free time. Every sixth year, Senators use some of that time running for re-election. Representatives must run every second year of their term. Most members miss additional weeks of in-session work to attend to this electioneering.
In addition, many junior Senators and Representatives spend more than half of their time, “dialing for dollars.” Administrators from both parties escort these members to non-government locations, from which they must perform telemarketing to lists of potential donors they don’t know. House and Senate leaders support the parties in ensuring that members meet their time, call volume, and donation quotas. If members rebel, they risk the loss of their committee positions and party funding and support for their next campaigns.
Many concerned Americans believe that the answer to improving the performance of Congress is to impose term limits. Perhaps term limits would force some Congressional members to be more productive. Nevertheless, these institutions require a major overhaul. Conscientious media people should expose the process. And frustrated voters should demand reforms.