The practice of lawmakers using insider knowledge to make money on the stock market is a glaring example of corruption. Representatives and senators can buy and sell stocks in companies that will be directly affected by regulations, subsidies, taxes, and loopholes being created on Capitol Hill. This is not only unethical but also legal, as Congress has not chosen to outlaw it.
Four senators, Josh Hawley, Gary Peters, Jon Ossoff, and Jeff Merkley, are taking the first step towards ending this corruption by crafting legislation to ban members of Congress from buying and selling stocks. Peters, chairman of the Senate Homeland Security and Government Affairs Committee, has announced that the bill will receive a hearing this summer.
The impact of congressional actions on the economy is immense, with lawmakers appropriating over $1.5 trillion every year. They also set tax rates, create loopholes, and mandate certain products. This gives companies and industries significant incentives to lobby, which is why lawmakers should not be allowed to day trade.
Members of Congress also have access to nonpublic information, including top-secret military intelligence and corporate trade secrets. This information is meant to aid sound lawmaking and oversight, not to be used for personal gain.
The proposed legislation would require lawmakers to sell all individual company shares, but allow them to roll that money into mutual funds. Similar proposals have suggested placing investments in blind trusts.
Determining how to handle current holdings or those of members-elect will be a complex issue, but lawmakers should pass something out of committee this fall to put presidential and congressional candidates on the spot in the November elections.
The public overwhelmingly supports this reform, with 85% agreeing with the idea, according to a University of Maryland poll. This should become a campaign issue.
The chief opponent of reform is former House Speaker Nancy Pelosi, who regularly buys and sells hundreds and thousands of dollars worth of stock in politically sensitive companies. While she was speaker, she took a personal phone call from CEO Tim Cook, who lobbied her to block antitrust legislation. The legislation never made it out of committee.
A healthy democracy demands serious sacrifices from those entrusted with power. Taking a few years off from playing the stock market is hardly too much to ask.
