They call it Riding the Gravy Train

It recently came to every one’s attention that many members of congress are dealing with legislation while owning stocks that will soar depending on the results of that legislation.  We’ve even found out that Eric Cantor bet against the country while  stalling legislation designed to increase the US debt level.

In academic studies from the Journal of Financial and Qualitative Analysis, statistically significant results demonstrate that both Republican and Democratic politicians are outperforming the market, with the Democrats enjoying a whopping 9 percent annual outperformance. Senators were the biggest winners, displaying Houdini-like magic and beating the S&P by 12 percent annually. These results are not due to luck or financial acumen, but are rather the result of trades based on non-public information that these politicians are privy to in closed-door sessions. For the rest of us hard-working and investing Americans, this type of advantage is called insider trading.

Obviously, behavior that is criminal for everyday Americans should not be okay for lawmakers who have the power to gin up laws that affect companies while simultaneously keeping an eye on their own spreadsheets and brokerage accounts. Sadly, however, this is in fact the case.

Congressional immorality seems to extend beyond this insider debacle. Recent reports have revealed that Countrywide provided special VIP loans with publically unavailable discounted interest rates to representatives. There was even a rumor this past month concerning student loans given to congressional family members that are later forgiven. Further research by and others revealed that these forgiven student loans are just for a limited group of staff members who work for our elected officials. Well, there you go; finally some moral fiber. It leaves those of us struggling to get our retirement portfolios on track to wonder if there is a way to pick up one of these staff member positions, or better yet become a lawmaker to get to the real juice.

We now have additional news that the global recession seems to have eroded the net worth of every one but the congress.

Largely insulated from the country’s economic downturn since 2008, members of Congress — many of them among the “1 percenters” denounced by Occupy Wall Street protesters — have gotten much richer even as most of the country has become much poorer in the last six years, according to an analysis by The New York Times based on data from the Center for Responsive Politics, a nonprofit research group.

Congress has never been a place for paupers. From plantation owners in the pre-Civil War era to industrialists in the early 1900s to ex-Wall Street financiers and Internet executives today, it has long been populated with the rich, including scions of families like the Guggenheims, Hearsts, Kennedys and Rockefellers.

But rarely has the divide appeared so wide, or the public contrast so stark, between lawmakers and those they represent.

The wealth gap may go largely unnoticed in good times. “But with the American public feeling all this economic pain, people just resent it more,” said Alan J. Ziobrowski, a professor at Georgia State who studied lawmakers’ stock investments.

There is broad debate about just why the wealth gap appears to be growing. For starters, the prohibitive costs of political campaigning may discourage the less affluent from even considering a candidacy. Beyond that, loose ethics controls, shrewd stock picks, profitable land deals, favorable tax laws, inheritances and even marriages to wealthy spouses are all cited as possible explanations for the rising fortunes on Capitol Hill.

What is clear is that members of Congress are getting richer compared not only with the average American worker, but also with other very rich Americans.

The founders of this country came very much from the landed gentry and bourgeois merchant class that had a great deal at stake in the revolution.  Their businesses were severely restricted by government monopolies granted to royal favorites. They were forced to pay the costs to garret troops and were taxed on items to support favored businesses.  Yes, most of those patriots were exceptionally educated and wealthy by the standards of colonial America.  It wasn’t until much later that representatives found that they could use their offices and the legislation to their advantage.  We’ve had many scandals involving graft and congress.  We have not, however, seen congress become a systematic path to wealth until recently.  There is terrible injustice in this.

Between 1984 and 2009, the median net worth of a member of the House more than doubled, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity.

Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.

The comparisons exclude home equity because it is not included in congressional reporting, and 1984 was chosen because it is the earliest year for which consistent wealth statistics are available.

The growing disparity between the representatives and the represented means that there is a greater distance between the economic experience of Americans and those of lawmakers.

There are things that could be done to stop  this.  The problem, however, is tha the foxes are in charge of the hen house.  There is legislation proposed to stop insider trading by congress.  Creepy Eric Cantor is blocking this.  There is legislation to separate the political class from their corporate donor teats.  Bernie Saunders has proposed a constitutional amendment to remove the power of SuperPacs in his “Saving American Democracy Amendment”.

Something really needs to be done about this

13 Comments on “They call it Riding the Gravy Train”

  1. dakinikat says:

    Thank you Greater Ethos! Nebraska DINO and idiot Ben Nelson and his dead rat hair are retiring!!!

  2. northwestrain says:

    “Creepy Eric Cantor” — he sort of looks like an evil vampire.

    Evil vampire just might describe the majority of the congress critters. Even the poorest of congress critters are richer that most of the Nation.

  3. ralphb says:

    I recently read where riding the gravy train also goes in reverse, Select hedge fund managers and the like come to DC where they meet with Congress critters and buy information on future legislation etc. It’s just too incestuous to perpetuate itself once people find out what’s happening.

  4. northwestrain says:

    “There are some truths so hard to face, so ugly and so at odds with how we imagine the world should be, that nobody can accept them. Here’s one: It is obvious that a class system has arrived in America — a recent study of the thirty-four countries in the Organization for Economic Cooperation and Development found that only Italy and Great Britain have less social mobility. But nobody wants to admit: If your daddy was rich, you’re gonna stay rich, and if your daddy was poor, you’re gonna stay poor. Every instinct in the American gut, every institution, every national symbol, runs on the idea that anybody can make it; the only limits are your own limits. Which is an amazing idea, a gift to the world — just no longer true. Culturally, and in their daily lives, Americans continue to glide through a ghostly land of opportunity they can’t bear to tell themselves isn’t real. It’s the most dangerous lie the country tells itself.”

    Read more:

    • dakinikat says:

      wow, what a read

      • dakinikat says:

        The Great Outcry that has filled the country with inchoate rage is the bloody mess of this fundamental belief in the justice of American outcomes crashing headfirst into the new reality. The majority of new college grads in the United States today are either unemployed or working jobs that don’t require a degree. Roughly 85 percent of them moved back home in 2011, where they sit on an average debt of $27,200. The youth unemployment rate in general is 18.1 percent. Are these all bad people? None of us — not Generation Y, not Generation X, and certainly not the Boomers — have ever faced anything like it. The Tea Partiers blame the government. The Occupiers blame the financial industry. Both are really mourning the arrival of a new social order, one not defined by opportunity but by preexisting structures of wealth. At least the ranters are mourning. Those who are not screaming or in drum circles mostly pretend that the change isn’t happening.

    • ralphb says:

      That was simply a gorgeous rant!

  5. B Kilpatrick says:

    I wonder how much effort people would put into being elected for public office if, for instance, all of their income above, oh, 150% of the national median individual income were taxed away while they were in office and for the rest of their lives after that.