Corruption Policy #1: Blind Trusts

Business Insider confirms it, politics is a racket. Now what?

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Jontay Porter will never again play in the NBA. The 24-year-old received a lifetime ban for betting on his own games. Porter would bet his under, then remove himself from games early, citing injury. Can’t do that. But barring someone from their lifelong dream and financial security for a single offense seems excessive, especially when compared to how we all choose to police our own employees.

Politicians siphon hundreds of millions of dollars each year from us. Thanks to excellent journalism, this open secret is front-page news. Business Insider spent 5 months compiling all non-income earnings from our elected officials and the results are damning. Their work culminated in a series of reports entitled Conflicted Congress. Insider even released the data! You're the real MVP.

You would think politicians wouldn't have had time to trade stocks during COVID, you would be wrong. Nancy Pelosi’s $25 million was only outdone by Washington’s Congresswoman Suzanne DelBene, who traded over $38 million dollars! 14 members of Congress even purchased either Pfizer, Moderna, or Johnson and Johnson. As we were determining whether to mandate novel, artificial, drugs our politicians had a clear conflict of interest.

Let’s build a hypothetical stock portfolio for Congress. Insider compiled stock purchases but didn’t include a sell date. Let’s assume stocks were held for the entire year to get an idea of potential returns. For reference, the S&P, which is difficult for professionals to outperform, returned 14.5% in 2020. The worst Congressional portfolio returned 65%. The top 23 members of Congress had portfolio’s that returned roughly 100% or more.

Our Senate is no better. Business Insider aggregated Senate trades slightly different, categorizing trades into full sales, partial sales, or purchases of stocks. On average, senators pocked $1.3 million from stock trades in 2020, not counting partial sales or other non-salary income.

At least our elected representatives aren’t betting against us, right? Catch up. Politicians make millions betting on our failure. Investor Place reported that representative Mark Green shorted the S&P in 2023 and sold his position only after his trade became public. Green is the Chair of the Committee of Homeland Security. The person responsible for protecting us against terrorist threats, invasion and cybersecurity attacks would get a huge payday if our economy crashed.

There’s no conceivable way people so bad with public funds can be this good trading without breaking the law, and it is breaking the law.

Obama made insider trading in politics illegal. In 2020, he signed the STOCK Act, which forbids congress from trading on insider information while also requiring public reports for all trades over $1,00. Excuse my saying so, but politicians wipe their ass with this law. The rub is that it’s near impossible to prosecute insider trading, even in private markets and especially in government.

Our Constitution’s speech and debate clause protects elected officials for speaking about sensitive aspects of their job. The Supreme Court has been favorable to the politicians in their interpretation of this clause in all instances barring bribery. So even when Richard Burr, the Senate Intelligence Chair, sold between $628,000 and $1.72 millions dollars in February of 2020, the DOJ and SEC couldn’t prosecute him.

Insider reported that 58 members of Congress violated the STOCK Act by failing to meet the reporting requirements. It’s not disclosed whether they even paid the $200 fine. Justifications range from, “I didn’t know” to “It’s an accounting error.” There's only one way to kick the money lenders out of the temple: a complete ban on trading.

Enter Abigail Spanberger. Congresswoman Spanberger, along with Chip Roy of Texas, reintroduced a bipartisan bill requiring a blind trust, barring politicians from making any trades, or even having visibility into their holdings while in office. So obviously the proposal failed both times it was brought to a vote. For a third time, the TRUST Act was introduced in 2023 and is pending a vote. Fingers crossed.

In a time when companies scrape your phone number and name with a click, it takes a team of professional journalists 5 months to uncover one year of our employees’ total wages. It’s in solving this information asymmetry that propelled the meteoric rise of a modern-day muckraker. Unusual Whales is an anonymous researcher who posts data on politicians' trades. Their logo of a grinning cartoon whale belies the serious work they do. Their work has been cited numerous times in Congress in hopes of reform.

In a recent interview with Medium, Unusual Whales mentioned that a pending Congressional ETF should be the 'nail in the coffin' exposing the sheer audacity of insider trading in politics. But as Unusual Whales mentioned, providing the data is step one, the real work is in passing meaningful legislation.

There are two approaches to economics: positive and normative. Positive economics is what is, "inflation is 5%." Normative economics is what should be, "inflation should be 2%." What should be is the domain of unelected people working monetary policy and often sparks debate due to its subjective nature. It's an odd reality when simply stating what is from someone as talented as Unusual Whales is concern to conceal their identity. (Possibly unwanted attention)

It’s an even stranger reality when the idea of holding politicians to the level we hold our professional athletes seems like a pipe dream. Without this accountability, there is no progress. As Spanberger says, “Our TRUST in Congress Act would demonstrate that lawmakers are focused on serving the interests of the American people—not their own stock portfolios.”