within two days. Why not apply the same standard to Congress? Members should disclose all transactions above, say, $5,000 within two days. The disclosure should be detailed, including the price and number of shares, and then placed online in a database. That will make potential insider trades easier to identify.
Members of Congress should not be allowed to trade stock in companies that are overseen by their committees. If you sit on the Senate Banking Committee, for example, you should not be allowed to trade bank stocks. If you serve on the Senate Armed Services Committee, you should not be able to buy and sell defense stocks. Does your subcommittee deal with health issues? No pharma stock. This is the area where insider trading is most likely to occur, and where lawmakers are most likely to obtain market-moving information from which they or their friends can profit.
Apply whistleblower laws to Congress. If it's good enough for federal workers and corporate employees, it should be good enough for Congress. We should encourage congressional staffers, when they see financial irregularities like insider trading, to report them. But they will report them only if they know they will be protected from retaliation. They should be afforded that protection.
Disallow 'sweetheart' IPOs. One of the fastest ways for a member to make a quick buck is through an IPO. You can't legally hand a congressman $10,000 in cash, but you can arrange for him to participate in a lucrative IPO that is worth far more. 'Special-friend' IPOs should be disallowed. Unless the initial public offering goes through a public auction, in which people can openly compete for shares in a bidding contest, members of Congress should not be allowed to participate.
Review, revise, and enforce existing conflict-of-interest laws. Restricting stock trades based on committee assignments is a start, but not an end. Another possible way to avoid conflicts of interest would be for members either to abstain from voting when a conflict exists or to place their assets in mutual funds rather than individual stocks. Also, enforce the conflict-of-interest laws for senior White House officials and political appointees. Cronyism is cronyism, and political appointees should not be allowed to steer taxpayer money to former employees or business associates.
Earmarks in which a member of Congress will receive a direct financial benefit should be disallowed, period. Taxpayer money should not be used as a resource to boost your property values.
Family members of legislators should not be allowed to become lobbyists.
Don't allow campaign contributions when Congress is in session. Twenty-eight states place restrictions on politicians receiving campaign contributions when the state legislature is in session. Extending this prohibition to Congress will make it harder for politicians to extort money from businesses.
The federal government needs to get out of the business of offering grants and taxpayer-backed loans. It's a nice idea in theory, but in practice it's a disaster. The process is rife with corruption, favoritism, and cronyism. Don't let our lawmakers or political appointees in the executive branch pick winners and losers based on who their friends are. Today we have a form of socialism for the very poor and the very rich. It's unfair, and we can't afford it.
The problems we face today are not the result of the individual failings of a few leaders. What we face is a system that is compromised by the perception that U.S. public policy is a marketable commodity. It's time to fix it. Let's relegate the Government Rich to the ashbin of history. If you want to get rich, do it the legitimate way. Go out and produce a useful good or service that you have a right to sell.
NOTES
INTRODUCTION: THE GOVERMENT RICH
1 Matthew Mosk, 'Lawmakers Cashing In on Real Estate, Financial Reports Reveal,'
2 Roger Scruton, 'Politics as a Profession,'
3 Sean Wilentz, 'Striving for Democracy,'
4 http://www.senate.gov/CRSReports/crs-publish.cfm?pid='*2%404P%5C%5B%3A %22%40%20%20%0A.
5 Andrew Biggs et al., 'Are Taxpayers Getting Their Money's Worth? An Analysis of Congressional Compensation,' Taxpayer Protection Alliance, July 2011.
6 Gabriel'S. Lenz and Kevin Lim, 'Getting Rich(er) in Office? Corruption and Wealth Accumulation in Congress,' http://papers.ssrn.com/Sol3/papers.cfm?abstract_id=1450077, July 2009.
7 http://www.reuters.com/article/2008/03/13/us-usa-congress-wealth-idUSN1330776120080313.
8 http://chartingtheeconomy.com/?page_id=27.
9 http://www.cbsnews.com/stories/2009/02/12/national/main4798225.shtml.
10 Kevin Drawbaugh, 'Get Elected to Congress and Get Rich: Study,' Reuters, March 13, 2008.
11 Alan J. Ziobrowski et al., 'Abnormal Returns from the Common Stock Investments of the U.S. Senate,'
12 Alan J. Ziobrowski et al., 'Abnormal Returns from the Common Stock Investments of Members of the U.S. House of Representatives,'
13 Andrew Eggers and Jens Hainmueller, 'Political Investing: The Common Stock Investments of Members of Congress, 2004–2007,' http://www.gsb.stanford.edu/facseminars/events/political_economy/ documents/pe_10_10_hainmueller.pdf.
14 http://www.bloomberg.com/news/2010-12-21/u-s-lawmakers-top-market-with-home-district-companies- stocks-study-says.html.
15 Jiekun Huang and Meng Gao, 'Capitalizing on Capitol Hill: Informed Trading by Hedge Fund Managers,' http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1707181, April 18, 2011.
16 Ahmed Tahoun and Laurence Van Lent, 'Personal Wealth Interests of Politicians and Government Intervention in the Economy: The Bailout of the U.S. Financial Sector,' http://papers.ssrn.com/sol3/papers.cfm? abstract_id=1570219, December 31, 2010.
17 Gerald W. Scully, 'Congressional Tenure: Myth and Reality,' Public Choice, no. 83, 1995, and http://www.usatoday.com/news/washington/2009-01-05-new-congress_N.htm.
18 John P. Foley, ed.,
19 Richard Painter, 'Bailouts: An Essay on Conflicts of Interest in Ethics When Government Pays the Tab,'
20 George Washington Plunkitt,
21 Plunkitt,
22 Robert A. Caro,
23 Ziobrowski et al., 'Abnormal Returns from the Common Stock Investments of the U.S. Senate,'
24 Thomas Peter Lantos, Financial Disclosure Statement, 2007, Schedule III—Assets and Unearned Income.
25 Timothy P. Carney,
26 Carney,
27 Daniel Michaels, 'As Boeing Hits Turbulence, Uncle Sam Flies to Its Aid,'
