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    Democracy Inc.: How Members of Congress Have Cashed In On Their Jobs
    Democracy Inc.: How Members of Congress Have Cashed In On Their Jobs
    Democracy Inc.: How Members of Congress Have Cashed In On Their Jobs
    Ebook142 pages2 hours

    Democracy Inc.: How Members of Congress Have Cashed In On Their Jobs

    By The Washington Post, David S. Fallis, Scott Higham and

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    An investigation into how legislators have taken advantage of their positions—and of weak financial disclosure laws—to make millions.
     
    After a historic financial crisis led Congress to unprecedented economic intervention, the Pulitzer Prize-winning Washington Post began an investigation that pierced the secrecy of the deeply flawed financial disclosure system that governs the 535 men and women who draft the nation’s laws.
     
    Members of Congress directed millions of dollars to infrastructure projects near their residences and businesses, in some cases paving roads in front of their houses. They made major trades in the stocks of companies pressing them for legislation. They wrote laws favoring industries in which they were invested. They sponsored bills on which their own family members were paid to lobby. All of it is legal under the rules Congress has written for itself. Democracy Inc. shows the consequences of this system.  
    LanguageEnglish
    PublisherOpen Road Integrated Media
    Release dateApr 14, 2013
    ISBN9781626810044
    Democracy Inc.: How Members of Congress Have Cashed In On Their Jobs
    Author

    The Washington Post

    The Washington Post has built an unparalleled reputation in its coverage of American politics and related topics. The paper’s circulation, prominence, and influence continue to grow.

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      Book preview

      Democracy Inc. - The Washington Post

      Democracy Inc.

      Democracy Inc.

      By David S. Fallis, Scott Higham, Dan Keating, and Kimberly Kindy

      The Washington Post

      Based on the Capitol Assets investigative series, winner of the Dirksen Award for Distinguished Reporting of Congress.

      Copyright

      Diversion Books

      A Division of Diversion Publishing Corp.

      443 Park Avenue South, Suite 1004

      New York, New York 10016

      www.DiversionBooks.com

      Copyright © 2013 by The Washington Post

      All rights reserved, including the right to reproduce this book or portions thereof in any form whatsoever.

      For more information, email info@diversionbooks.com

      First Diversion Books edition April 2013

      ISBN: 978-1-626810-04-4

      Introduction

      Across the nation, 33 members of Congress have helped direct more than $300 million in earmarks to dozens of public projects for work in close proximity to commercial and residential real estate owned by the lawmakers or their family members.

      Members of Congress directed millions of dollars to infrastructure projects near their residences and businesses, in some cases paving roads in front of their houses.

      They made major trades in the stocks of companies pressing them for legislation.

      They wrote laws favoring industries in which they were invested.

      They sponsored bills on which their own family members were paid to lobby.

      All of it is legal under the rules Congress has written for itself. And, the information about such potential conflicts of interest is largely obscured from the public.

      In a series of stories in 2012, The Washington Post pierced the secrecy of the deeply flawed financial disclosure system of Congress. Those stories showed how 249 lawmakers have taken public actions that aligned with their private finances. Lawmakers repeatedly said the alignment was a matter of coincidence.

      The Post investigation began after the nation’s financial crisis led Congress to unprecedented economic intervention. Reporters asked a simple question about the 535 men and women who draft the nation’s laws: Have lawmakers helped themselves while helping the country?

      Lawmakers come to Capitol Hill from a wide range of backgrounds, including farmers, entrepreneurs, oilmen and lawyers. In office, they pursue existing family businesses and explore new ones. Members of Congress direct the nation’s affairs while managing their own portfolios. Some invest in real estate. Others trade in stocks.

      For decades, congressional conflict of interest rules have given members broad latitude to take actions in office that not only benefit the nation, but may also benefit themselves. This freedom, they contend, is necessary so that the citizen’s legislature can fully represent its constituents.

      Lawmakers wrote the ethics rules they have today after the Watergate scandal in the 1970s. They prohibited members from engaging in legislative activities that directly enriched themselves - and then immediately carved out exemptions to the rule. The greatest latitude was provided to lawmakers whose business interests aligned with their home-state industries.

      Congress narrowly defined what would be prohibited as a conflict of interest. Lawmakers are only barred from taking actions in which they are the lone, direct beneficiaries.

      The annual financial disclosure process Congress imposed on itself was supposed to provide transparency to voters. Instead it has served mainly to obscure finances while providing the appearance of transparency.

      Members of Congress do not have to report the salaries of spouses, the jobs of parents or children, or the location and value of their personal residences. They can report assets and liabilities in broad ranges instead of specific amounts. No one verifies that their disclosures are completed correctly. In the digital age, the records are still maintained in a paper format and not electronically searchable.

      In addition, lawmakers are not required to publicly acknowledge when they take an action that may benefit themselves or their families. They do not, for example, have to disclose if relatives have been paid to lobby for bills they have sponsored.

      The extent of lawmaker’s private business dealings took on greater significance after the 2008 financial meltdown. The business of Capitol Hill and Wall Street converged in the bailout of auto companies and the creation of the stimulus package. Lawmakers met behind closed doors with the nation’s financial leaders in an effort to save the economy.

      During the Great Recession, the wealthiest one-third of lawmakers were largely untouched, The Post found. Their investments took the fewest hits and quickly recovered to new heights.

      The built-in congressional watchdogs — the House and Senate ethics committees — have been reluctant to discipline their own over lapses. Since 2004, they have moved to censure or reprimand just two lawmakers for improper use of office.

      Instead, the panels issue letters that generally give lawmakers support and justification to take actions that intersect with their financial holdings. Some critics have called the panels protection committees.

      Overall, The Post’s coverage found that an ethical double standard existed on Capitol Hill.

      The executive branch has far stricter ethics standards than Congress does — and Congress has set these standards, as Craig Holman of Public Citizen, a nonprofit government watchdog group, told The Post reporters. The executive branch can’t steer contracts or work to businesses where family members work. They can’t even own stock in industries that they oversee, unlike Congress. It’s complete hypocrisy.

      To investigate how Congress’ public actions intersected with their private interests, The Post identified and inventoried assets held by lawmakers and their family members.

      A team of reporters filled in the gaps in their financial disclosure forms, reaching into courthouses and other government offices across the nation to gather public records. The reporters examined property assessments, civil and criminal court filings, bankruptcy cases, liens and judgments.

      The Post then vetted lawmakers’ actions in office: Where did they direct funding? Who did they advocate for? Which bills had they pushed or sponsored?

      Patterns soon emerged.

      In February 2012, The Post reported that 33 members of Congress had directed more than $300 million in earmarks to public projects within two miles of the lawmaker’s property.

      In Alabama, Sen. Richard Shelby engineered more than $100 million in federal earmarks to make over downtown Tuscaloosa near his own commercial office building. In Georgia, Rep. Jack Kingston secured $6.3 million to replenish the beach where he owns a vacation cottage. And, in Mississippi, Rep. Bennie Thompson secured $900,000 that was used to resurface roads in Hinds County, including one residential loop where he and his daughter own homes.

      Another 16 lawmakers steered millions to corporations, colleges and nonprofit groups connected to their immediate family. This included funding for programs run by their children and colleges where their family members work or serve on boards of trustees.

      Sen. Timothy Johnson of South Dakota, for example, directed $4 million to a Pentagon program that his wife supervised as a contract employee.

      In June, The Post revealed that 130 members of Congress or their families traded stocks worth hundreds of millions of dollars in companies lobbying on bills that came before their committees.

      Sen. Tom Coburn of Oklahoma reported buying $25,000 in bonds in a genetic-technology company around the time that he released a hold on legislation the firm supported. Rep. Ed Whitfield of Kentucky sold between $50,000 and $100,000 in General Electric stock shortly Republicans announced a filibuster to kill legislation sought by the company.

      Reporters also found that 35 members of Congress took steps to recast their financial portfolios during the financial crisis after phone calls or meetings with the country’s top financial leaders. The lawmakers changed portions of their portfolios a total of 166 times within two business days of these contacts.

      Rep. John Boehner, for example, on Jan. 23, 2008, met with Treasury Secretary Henry M. Paulson Jr. for a breakfast. The Dow Jones industrial average had dropped more than 2,000 points in three months. The subprime mortgage industry was crumbling. That day, Boehner moved between $50,000 and $100,000 from a more aggressive mutual fund into a safer investment.

      The next day, the White House unveiled the stimulus package.

      In October, The Post reported that lawmakers sponsored or co-sponsored legislation that could benefit businesses or industries in which either they or their family members were invested. In all, 73 lawmakers did so.

      Rep. Dennis Cardoza of California helped secure tax breaks for racehorse owners — then purchased seven horses when the new rules took effect. Rep. Cynthia M. Lummis of Wyoming co-sponsored legislation to double the life span of federal grazing permits that ranchers such as her husband rely on to feed cattle. And, Rep. Mike Kelly of Pennsylvania co-sponsored a natural gas bill as Exxon Mobil negotiated a deal that paid millions for his wife’s shares in two natural-gas companies founded by her great-great-grandfather.

      In December, The Post revealed that many lawmakers’ relatives had been hired to lobby on legislation before those lawmakers.

      In the past six years, 36 congressional relatives — including spouses, children, siblings, parents and in-laws — have been paid to influence 250 bills passing through their family members’ congressional committees or sponsored by the members.

      Sen. Harry Reid’s son-in-law, for example, was paid to lobby on several bills that Reid, of Nevada, introduced. The father of Rep. William Lacy Clay, of Missouri, was hired to lobby on two bills his son shaped.

      The Post investigation was met with silence on Capitol Hill.

      A few lawmakers called for a more complete ban on earmarks, but broader calls for reform have been nonexistent. Watchdogs note there is no incentive to change laws. Congress writes its own rules.

      The Post’s Democracy Inc. shows the consequences of this system.

      —David S. Fallis

      PART ONE: Earmarks

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