In a recent feature story on 60 Minutes, Steve Kroft detailed how many in Congress use their privileged access to information on pending legislation, investigations and regulations to line their own pockets. Much of the piece was based on research of Hoover Institute fellow Peter Schweizer from his book “Throw Them All Out”. Among the surprising revelations in the book – Congress is exempt from prosecution for the same kind of insider trading that would send the rest of us to jail.
Coincidentally, über-lobbyist and felon Jack Abramoff was saying much the same thing to anyone who would listen while promoting his new book “Capitol Punishment”. CNBC has been covering the story for a while and offers a succinct summary in the video linked here (I would have embedded it, but my Donk permissions don’t allow).
Abramoff asserts the practice is widespread and growing. Schweizer connects the dots between the increasing entanglement of the federal government in the private economy and the consequential exponential increase in opportunity for our congressional leadership and their staff to partake in the profitable practice of insider trading. Both Abramoff and Schweizer name names.
Kroft focused primarily on the specific examples of our most recent Speakers of the House. He reported John Boehner and Nancy Pelosi participated in investment activity that, at best, created the appearance of conflict of interest. Some have criticized Kroft and 60 minutes for focusing on two of the weaker examples cited by Schweizer, presumably because of their leadership roles. But even these examples are illuminating. More interesting than the exposure of the trading activity itself, was the response from their respective offices. While we already knew that they did nothing illegal, predictably both offices also emphatically denied they did anything wrong.
Kroft described purchases of Visa stock by Nancy Pelosi and her husband while she controlled the timing of legislation that would have hurt credit card companies. Her spokesman:
“Congress has never done more for consumers nor has the Congress passed more critical reforms of the credit card industry than under the Speakership of Nancy Pelosi,”
Current Speaker John Boehner purchased health care stocks when he was aware that the “public option” was about to be dropped from Obamacare. His spokesman:
“The idea that the Republican leader in the House opposed the ‘public option’ – policy favored by the left of the left – for personal profit is, frankly, stupid,” said a GOP aide.”
Note that neither the response of Boehner or Pelosi directly addressed the question of whether their profitable trades benefited from insider knowledge. In both cases they defend their consistent record on the policy issue (credit card consumer protection for Pelosi, opposition to the public option for Boehner), and take umbrage at the mere suggestion that their positions on these issues might be influenced by personal financial gain. Fine and good, but that is not the point. The issue at question is whether they used insider information not generally available to the public to make trades that benefited themselves.
When sorting through these fine gradations in the taxonomy of congressional graft, it is useful to have a guide. There is no better guide or greater authority on the subject than George Washington Plunkitt, who literally wrote the book on political graft.
At the turn of century, George Washington Plunkitt was a Senator in New York, and considered one of the most corrupt members of possibly the most corrupt political machine in our history – New York’s Tammany Hall. He is famous for (among other things) writing his own epitaph – “He Seen His Opportunities and He Took ‘Em.”
Yet – George Washington Plunkitt was not without a moral compass. He made a clear distinction between honest graft and dishonest graft. This distinction was a moral line in the sand that even he would not cross. Moreover he forthrightly defended this distinction in a series of public speeches, which were later compiled into a book: “Plunkitt of Tammany Hall: A Series of Very Plain Talks on Very Practical Politics, Delivered by Ex-Senator George Washington Plunkitt, the Tammany Philosopher, from his Rostrum—the New York County Courthouse Bootblack Stand.”
We’ve have had occasion to consult this valuable reference before, when in 2006 we explored the Speaker of the House Denny Hastert’s land deals and came to the conclusion that they perfectly fit Plunkitt’s definition of “Dishonest Graft”. The Speaker of the House of the United States of America in 2006, the man who was third in line for succession to the presidency of the United States, was engaged in activity that would not meet the moral standards of one of the most corrupt 1906 political participants of the most corrupt political organization in the history of the United States.
That was then, this is now.
Good news. Our last two Speakers are no longer participating in “Dishonest Graft”. They are simply engaging in good old, perfectly acceptable, “grab your opportunities where you see ’em “Honest Graft”. GW Plunkitt explains in Chapter 7:
“There’s the biggest kind of a difference between political looters and politicians who make a fortune out of politics by keepin’ their eyes wide open. The looter goes in for himself alone without considerin’ his organization or his city. The politician looks after his own interests, the organization’s interests, and the city’s interests all at the same time. See the distinction? For instance, I ain’t no looter. The looter hogs it. I never hogged. I made my pile in politics, but, at the same time, 1 served the organization and got more big improvements for New York City than any other livin’ man. And I never monkeyed with the penal code.”
There you go. Plunkitt’s criteria for honest graft is: Do nothing illegal (monkey with the penal code); serve your party’s interest (the organization); and serve your constituent’s interest (New York City and the US). If you do those things, and you happen to learn about money making opportunities along the way, no problem. You are entitled to that money. Go for it!
With Plunkitt’s criteria in mind, now go back and reread Boehner and Pelosi’s dismissive brush-off of the 60 Minute charges. Nothing illegal. Good for the party. Good for the country. Nothing to see here. Move along.
Of course, there are always a few spoil-sports who don’t appreciate the moral certitude of Plunkitt’s Razor. These misguided souls continue to introduce The Stock Act every year, where it gets no co-signers, is never brought to the floor, and goes nowhere. Reporter Eamon Javers of CNBC is on the case:
Eamon Javers: “As you know, we’ve been talking about this issue of congressional insider trading for a long time. there is a bill out there that would stop it and make it illegal. Congresswoman Louise Slaughter is a key co-sponsor of the bill, and she is with me now. Congresswoman Slaughter, why is it that this bill never passes? “
Congresswoman Louise Slaughter: “It not only never passed, it never had a hearing. i don’t think at any time we had more than six or eight co-sponsors. No Senate action at all. I’m really happy now that finally we’re getting some action here. What this bill would do, it would make it expressly illegal for members to trade on information they get on the hill.”
Javers: “You also want to register the folks downtown on K Street selling information to the hedge funds.”
Slaughter: “One of the things that was so distressing to me, the fact we had this political intelligence group springing up that was so lucrative. obviously they were getting good intelligence. that is just as bad as the insider trading. In fact, I think it is insider trading. Also we mentioned about the staffers, too. We want to make sure they understand that’s not to be done. And what we said is if you are going to make a trade over $1,000, you have to report it in 30 days. But mostly I do want the political intelligence people to be registered as lobbyists with both the House and the Senate.”
This one bears watching. It looks like Representative Slaughter’s bill might even get some action in the Senate. No one has a better nose for political opportunism than Sarah Palin. Palin jumping on the bandwagon may indicate this issue will have legs. Maybe even – dare I say it? – bipartisan support.
It could happen.
X-posted from Divided We Stand United We Fall.