Members of Congress Shouldn’t Be Able to Trade Stocks While In Office--Plus, More on the College Football Playoffs

If you become an elected official, then put your assets in a blind trust and focus on serving the people, not enriching yourself.

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Too Many Politicians Spend Too Much Time Trading Stocks

Last week, Texas Republican Representative Dan Crenshaw went on a rant about a proposed law that would prohibit Members of Congress from trading stock. Crenshaw stated:

We'll just keep whipping ourselves. How about we don't make any money either? How about, just cut our paychecks; haven't gotten a pay raise since 2008.’ It doesn’t matter to me because I don’t have any f---ing money to put in the stock market, unlike the bullshit headlines that have been written about me."

Crenshaw must have been having a bad day. The fact is Crenshaw gets paid $170,000 per year, which places him in the top 25% of all Americans. On top of his high pay, Crenshaw gets topnotch government health care and a golden pension. He also gets housing and travel allowances, with frequent flyer miles going to his personal account. Beyond those perquisites, he gets access to private congressional dining facilities and gym (not to mention countless meals and CODELS to fancy resorts and foreign countries). Putting all of that together, I respectfully submit that Crenshaw should shut-up.

Keep in mind, being a Member of Congress is supposed to be a full-time job. The proposed ban on congressional stock trading is aimed at preventing them from using privileged information they get as Members to sell or to buy stock. It is similar to the insider trading ban applied to corporate executives who possess information on their companies not available to the public. As someone who owns a brokerage account and trades a handful of times per year, it is very difficult to successfully trade stocks even for people whose full-time job is to do so. Yet, countless Members of Congress are executing dozens to hundreds of stock trades every year AS IF THAT IS THEIR FULL-TIME job. To see who is trading and how often they are trading, visit this very informational website. The picture below shows the six most active congressional traders.

I find Crenshaw’s rant obnoxious on a personal level. When I worked for President George W. Bush and as a Visiting Fellow for The Heritage Foundation, I had to testify to Congress several times (see me testifying here in 2013 and see how very few Members attended the hearing starting at 1:21:40). I vividly recall the first time I testified to Congress. I spent two weeks preparing with staff and conducting a “murder board” that involved staffers acting like committee members to help me prepare for tough questioning. When the big day arrived, I was stunned to learn that Members don’t even attend the hearings except for the five minutes they get to ask questions in order to get C-SPAN clips they can share with constituents and donors; otherwise, they are back in their offices doing God knows what. Their preparation for their five minutes is also wafer thin, as their staffers do all of the work then hand them a script to use for their five minute segment. Think about that reality for a minute: we pay them a lot of money to be informed on issues and hearings provide them the opportunity to hear from experts and ask them key questions as they decide whether to support or to oppose a proposed law or reform. Instead of doing their jobs, they delegate it to staffers.

In terms of congressional stock trading, if you think it is limited to blue chip stocks or high-flying technology stocks like Nvidia and Apple, you are mistaken. As Quiver Quantitative reported, Republican Oklahoma U.S. Senator Markwayne Mullins bought shares of Axon Enterprises a year ago. Axon is based in Scottsdale, Arizona (i.e., not an Oklahoma company) with a few thousand employees and revenue of $1.5 billion (cf. Nvidia’s revenue surpassed $60 billion so Axon is very small). It also has offices in Seattle, Vietnam, Finland, Australia, Netherlands, and the United Kingdom. How does a guy working full-time as a U.S. Senator find out about an obscure Arizona-based company with little revenue compared to more well-known companies and learn enough about this company to wisely invest in it? Well, Axon just so happens to develop electroshock weapons as a government contractor for the defense industry AND Mullins just so happens to sit on the Senate Armed Services Committee. Since Mullins acquired Axon stock, its price has skyrocketed by 157% in less than a year (top stock Nvidia is up 181% in the same span).

For me, congressional stock trading is highly problematic. If you become an elected official, then put your assets in a blind trust and focus on serving the people, not enriching yourself via privileged information on publicly-traded companies derived from your elected position.