Jewish World Review Dec. 30, 2004 / 18 Teves, 5765
And it's all legal ...
Orientation week can be a daunting and confusing process for any freshman,
particularly for the nine new senators and 38 new House members of the 109th
Congress. During the recent orientation week on Capitol Hill, one freshman,
Representative-elect Al Green, D-Texas, noted "as a neophyte trying to find
his way, you need as many people to direct you as you can."
Indeed, that education is about to begin in earnest, starting with the
ethics book included in their orientation kits. On their face, the ethics
rules would seem to bar any self-dealing or profit-taking by members. In
reality, they actually legalize conduct that would be viewed as grossly
unethical or corrupt in the other government branches. For Green and the
other neophytes, therefore, the following are four easy lessons on how to
earn millions on a government salary.
Rule No. 1
You can make more in a single stock trade than in a lifetime of public
service. Congress has excluded investment income, such as stocks, from
ethics limitations on income. The result is that members routinely make
killings in the market in areas where they legislate. One study by the
University of Memphis found that 75% of randomly selected members had "stock
transactions that directly coincided with (their) legislative activity."
Members have the unique ability to predict or even manipulate stock prices.
Another recent study by Alan J. Ziobrowski of Georgia State University and
three colleagues showed that U.S. senators beat the market handily by 12
percentage points in their investments ‹ outperforming "corporate insiders"
by eight points from 1993 to1998. This may have less to do with their market
skills than their knowledge of upcoming bills or regulations benefiting
Rule No. 2
"Profit-take" before you legislate. It is better to keep profiteering on a
strictly quid pro quo basis: The member gets government contracts or
legislative deals for a lobbyist, and the lobbyist delivers windfall
investments for the member. Take Sen. Ted Stevens, R-Alaska ‹ the ultimate
rags-to-riches story in Congress.
Stevens came to the Senate with modest means, particularly after heavy
investment losses in the 1980s. In 1997, he had a Scarlet O'Hara "I'll never
be hungry again" moment. According to a Los Angeles Times investigation, he
decided to get "serious about making money" and contacted lobbyists about
Real estate developer Jonathan Rubini arranged for Stevens to get into a
deal in which he turned $50,000 into as much as $1.5 million ‹ and Stevens
was the only investor not liable for any debts, the Times said. In the
meantime, he muscled through a $450 million contract for Rubini from the
military, despite the view of Air Force officials that Rubini "lacked
capacity and adequate funding."
Of course, one does not actually have to invest to take money from
lobbyists. Rep. Jim Moran. D-Va., took an unsecured $25,000 loan from a
drug-company lobbyist and then pushed a bill that benefited the company.
Rule No. 3
Your children are your security. One way to reap the benefits of public
service is for lobbyists to employ your spouse or children at huge salaries
‹ despite their lack of experience.
Consider Karen Weldon, the 29-year-old daughter of Rep. Curt Weldon, R-Pa.
The Pittsburgh Post-Gazette reported that despite her lack of foreign-policy
experience, Karen was given a lobbyist contract of a quarter-million dollars
from Serbian interests allied with accused war criminal Slobodan Milosevic,
as well as a $20,000-a-month contract with a Russian aerospace manufacturer.
Rep. Weldon later pushed to get visas for the Serbians and deals for the
Chet Lott ran a Domino's Pizza chain in Kentucky and played polo. Yet he was
given a huge salary representing telecommunications and other interests,
according to the Times stories. His father, Sen. Trent Lott, R-Miss., was
majority leader. The Times also reported Stevens' wife, Catherine, is paid
by a law firm representing business interests to "monitor appropriations
issues," a task made a bit easier by her being married to the chairman of
the Appropriations Committee.
Rule No. 4
You can never have too much "education." While ethics rules prohibit gifts
and speaking fees, members routinely accept thousands of dollars in expenses
and travel from lobbyists and business associations. These paid vacations
are billed as "educational" for members of Congress, and they are clearly
eager to learn.
For example, in 2002 Rep. Richard Burr, R-N.C., was "educated" at the
expensive Bellagio Hotel in Las Vegas with first-class airplane tickets, an
open bar for poolside drinks and other "educational" expenses paid for by
the National Association of Broadcasters, according The Washington Post .
The trip's purpose: a public policy conference. Burr later wanted to learn
about the nuclear site in Nevada's Yucca Mountain. Not content to simply
visit the Nevada desert, Burr and Rep. John Boehner, R-Ohio, arranged for a
lobbyist to "educate" them and their spouses in Barcelona and Seville.
Former representative Tom Bliley, R-Va., then chairman of the Commerce
Committee, had a tobacco company send him and his wife on the Concorde to
London at a cost of $24,000 and then put them up at the famous Savoy Hotel
at $1,000 a night. National Public Radio also said that they were then
"educated" at the Wimbledon tennis finals with tickets costing roughly
For the new members, it is never too early to create a properly diversified
financial plan with a few insider tips, a couple of well-placed stocks, a
lobbying job for the unemployable child and maybe a few educational trips
for you and your spouse to swank vacation spots.
So, to the Freshman Class of 2005, welcome to Washington, where public
service can truly serve the public servant.
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JWR contributor Jonathan Turley is a law professor at George Washington University.
Click here to visit his website. Comment by clicking here.
© 2004, Jonathan Turley