President Harry Truman once said “No young man should go into politics if he wants to get rich.” Maybe that was true once upon a time. Today, lots of people get rich in public service. In this week’s cover story, we investigate some wealthy members of Congress— past and present. Some are self-made. For others— their road to riches is paved with controversy.
As we’ve fallen further into debt as a nation our members of Congress have collectively grown richer.
Baumgart: We found that 60 percent on average of members have grown their net worths upon arriving in Congress at a rate that is faster than the American public than the average household, members of Congress lost less money during the recession.
Alex Baumgart is a researcher at the watchdog Center for Responsive Politics. We asked him to crunch jthe latest financials for 435 members of the House of Representatives and 100 Senators. The richest member overall and for the past decade is car alarm mogul Congressman Darrell Issa whose net worth is estimated at more than $323-million dollars. Next is Democrat Jared Polis, a tech guru, at 308 million. The richest Senator is Democrat Mark Warner. He made a killing as a venture capitalist. And rounding out the Top Ten are: John Delaney, Dave Trott, Trey Hollingsworth, Don Beyer, Tom Rooney, Dianne Feinstein, and Chris Collins.
Some were rich coming in. Many have gotten a lot richer while in public office.
Baumgart: For the years that we’ve been keeping track of the data from 2004 to 2016, the median net worth of Congress has grown from $619,000 to one point 2 million.
Sharyl: And how does that compare to ordinary Americans?
Baumgart: Average Americans have seen their median net worth stay about the same, sitting at about $90,000.
Among the current members of Congress who have gained the most wealth since they were elected: Polis has seen a $132 million dollars increase since 2007. That’s attributed to a tech company he founded that’s rebounded since the recession. Issa’s investments have netted him a $119 million dollar increase since 2004. And Republican Tom Rooney has gone from owing money in 2013 to $107 million dollars after inheriting family trusts and ownership stake in the Pittsburgh Steelers. Delaney has gained $80 million dollars since 2011 due to business dealings and investments.
But how do so many members manage to accumulate millions on $174-thousand dollar a year public salaries? The answer is a mixed bag of honest work, luck and *sometimes* as it turns out – temptation.
Sharyl: Do you know what kinds of opportunities come the way of members of Congress just because they’re members?
Baumgart: Right. Members of Congress are routinely privy to nonpublic information. They are bombarded on a daily basis by lobbyists and industry insiders talking to them, upcoming legislation that might benefit them in certain ways.
In 2008, Congressional leaders got a secret briefing from the Treasury Department about the impending bank collapse. Some of them left the meeting and almost immediately made stock trades in their own best interests.
Baumgart: Both sides of the aisle traded stocks, effectively dumping their stocks, preparing for a recession.
Sharyl: So some members of Congress profited off the recession and profited off knowing these banks were going to have major problems?
After much controversy, Congress passed a law in 2012 preventing members from trading stock based on nonpublic information they come across. But the law has proven hard to enforce and doesn’t apply to their families. We spoke to two former members of Congress… Republican Tom Davis….
Davis: I took a pay cut to come to Congress.
Sharyl: And Democrat Jim Moran…
Moran: I really didn’t have much money to be honest with you
They did not get rich in office but agreed to reveal inside secrets that entice some to travel down a crooked path.
Sharyl: Can either of you describe any anecdotes of opportunities that were offered to you?
Davis: I had several people say, “If you make this introduction we can give you a piece of this action,” those kind of things.
Sharyl: What kind of ‘action’?
Davis: You get a piece of the action, if you can introduce this or this, introduce us two, get us together and if a deal comes forward you can have two, three percent.
Moran: Both of us represented districts with a lot of Federal contractors.
Sharyl: But would somebody call your staff and try to imply that if you help them out you could get something?
Moran: Where you would run into situations more often than not, people who are used to dealing internationally and in a lot of countries, bribes are kind of a way of doing business. And they expected things under the table and you just had to make it clear that that’s not the way we do it in the United States.
Sharyl: Did you know or at least suspect there were certain members who were compromising themselves or were enriching themselves?
Moran: Somebody buys a brand new automobile, a Porsche let alone an Aston Martin, you raise your eyebrows. We had a guy who was very smart and I liked but he was putting money in his freezer. I was shocked. Call me naïve, I couldn’t believe it of him.
He’s talking about Democrat William Jefferson seen taking a bribe in 2005 in an undercover FBI video. Investigators found $90,000 hidden among the Boca burgers in his freezer from foreign interests in Africa.
There was California Republican Duke Cunningham who accepted millions in bribes.
And Democrat Jim Traficant also convicted of taking bribes. More recently there’s the case of Republican Chris Collins. His net worth skyrocketed by $20 million to $86 million from 2012 to 2016. In the last two years he bought at least four million shares of a biotech company where he’d served on the Board. And he brought other members of Congress and staff on board as investors.
Baumgart: Chris Collins had been overheard saying that he was making a lot of people millionaires, you know, with this stock.
In August, Collins, his son and his son’s future father-in-law were indicted on charges of insider trading related to that biotech firm. They’ve plead not guilty.
Rep. Chris Collins: The charges that have been levied against me are meritless and I will mount a vigorous defense in court to clear my name.
Davis told us that constant temptation requires a lot of policing.
Davis: Look, I was campaign chairman for the Republicans, and word would get around when a member was going out on other people’s dimes, and you’d call them in and say “you better stop this.”
Sharyl: How often did you have to do that?
Davis: More times than I would have liked, but it wasn’t… I mean most members are pretty straight and they’re here for the right reasons, they’re here for three or four days a week then they’re back home working very hard.
Both Davis and Moran insist most members of Congress do an honest job and come to Washington to serve the public, not make a fortune. Davis – a lawyer says he took a pay cut to come to Congress in 1995 and left 13 years later with about as much money as he came with.
Sharyl: What about you Mr. Moran?
Moran: Well, when I left the Congress I didn’t own a house or an automobile, even. I do now, so I do a little better off.
Baumgart: The American public expects their member to go to Washington to do one thing and that is to represent them. When they’re doing side deals on biotech companies or making investments on a daily basis, moonlighting as a day trader, that is effectively a betrayal of an expectation.
Baumgart advocates for more transparency. Problem is: Congress makes its own rules. They decide what they are and aren’t allowed to do.