Schuman is director of policy for Demand Progress. Olive is a writer and research assistant for the organization.
Last year, 57 members of Congress and 182 senior congressional staff violated the law requiring them to disclose their financial conflicts of interest, according to a thorough report by Business Insider. Asked about the violations for the first time, House Speaker Nancy Pelosi poop the idea of prohibiting members from trading individual stocks, saying, “We are a free market economy. [Members] should be able to participate. In the months that followed, Pelosi changed her public tone, asking one of her lieutenants to develop reform ideas behind closed doors.
What caused the reversal? A growing number of lawmakers have approved various proposals aimed at preventing members of Congress from using the inside information they regularly receive to make outsized gains by gambling in the market. Pelosi, whose husband’s trades in tech stocks won their family millions and who has long hesitated to advance this kind of reformwas the perfect vessel to spark public outrage at the right time.
The richest in the world cashed in on the pandemic; apparently some too members of congress. Senator Richard Burr is one of the most obvious examples. He unloaded millions of dollars worth of stock after a briefing on the development of the Covid-19 pandemic, apparently anticipating the stock market crash of March 2020. Burr is under investigation by the SEC and the FBI, and he has resigned as chairman of the intelligence committee — but saw no consequences from the ethics committee. (Ultimately, the Department of Justice did not file a complaint against Burr, though one can imagine that the DOJ must have considered the difficulty of proving such a case and was hesitant to go after high-ranking politicians.)
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In light of the members’ backlash and heaps of bad press, the speaker backtracked. New bills aimed at regulating or prohibiting stock trading have been pouring in; a bipartisan coalition called on Pelosi to introduce legislation in the House prohibiting members from trading stocks; and the House Administration Committee has scheduled a audience for Wednesday, March 16, to discuss the merits of the various proposals. The congressional base and the American people object to members benefiting personally from information they receive in the course of their public duties. Lest you think we’re being unfair to Pelosi, many other leaders in both parties and both houses have been hesitant to go that route.
Returning public money at public expense is far from the only unethical and self-serving behavior in Congress. The ban on congressional stock trading – if Congress indeed goes that far – is best understood as a small part of a larger set of reforms that must tackle the perverse incentives that distort the workings of Congress. and who it serves. Reform must mean creating structural barriers to avoid temptation for members and staff, empowering congressional watchdogs to investigate cases of possible wrongdoing, and quickly holding wrongdoers accountable.
Currently, the House’s independent watchdog, the Congressional Ethics Office, lack of power of subpoena and is sometimes undermined by the House Ethics Committee, which is made up of members of Congress. The situation in the “upper” chamber is more serious: the Senate does not have an independent watchdog (although it should), and 2020 marked the 14th consecutive year that the Senate Ethics Committee had not recommended a single disciplinary action for misconduct – not even for the aforementioned Burr.
The STOCK Act, which was an attempt to impose disclosure requirements on Congressional stock trading and which was undermined before it took full effect, was itself a narrow reaction to a larger scandal. This law was the result of a great ethical scandal triggered in large part by “A family matter», a report by Citizens for Responsibility and Ethics in Washington which served as the basis for a « 60 Minutes » report. In addition to apparent insider trading, the report found other unethical behavior, including the misuse of campaign and political action committee funds and favor deals for family members. legislators who are lobbyists, contractors or “campaign workers”. The STOCK law concerned the trading of shares, while other more general laws, such as the Merit Actdidn’t go anywhere.
A decade later, it’s time to close the ethical loopholes exposed in 2012 by enacting tougher stock trading laws for members of Congress and banning other forms of personal trading. It means pass one or more numerous bills prohibiting members of Parliament from hold individual shares – anything less can be easily circumvented. It also means moving beyond stock trading and passing other laws that address long-standing ethical issues. Dozens of such bills were introduced in the 117th Congress, including several bills regulating PACs and numerous others restricting or prohibiting foreign funding of electoral activities.
However, as the STOCK Act saga has taught us, stricter regulation is just the beginning. Even the best of the rule changes being considered won’t have much effect without ensuring public transparency and addressing enforcement issues in the House and Senate. This is because Congress is effectively allowed to self-regulate. Unless the public has a window into potential congressional conflicts of interest and an external watchdog is empowered to investigate wrongdoing and hold violators accountable, members will continue to act with little respect for the rules, with little reason to think there might be any consequences for their actions.
Instead of an appetite for reform, we have seen efforts in both houses to undermine the independent ethics process – the House tried to kill OCE a few years back, an effort at Demand Progress, we pushed back. Dozens of reform efforts have stalled in both chambers.
The House and the Senate must work for the American people and not for a special interest. When the incentives of those working in the engine of our democracy are geared towards self-development – especially when self-sufficiency is based on wealth derived from the success of giant business interests – the people’s business takes a back seat to the business affairs. We can do better.
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