Some people collect stamps in their free time. Others play chess or go bird-watching. David Perdue, the senior senator from Georgia, trades stocks. An analysis by The New York Times earlier this month found that Perdue reportedly accounts for one-third of all stock trades made by senators in recent years, and that taken together, his trades exceed those made by the next five senators put together.
This wouldn’t be a problem if Perdue wasn’t a senator. Everyone needs a hobby, after all. But he is a senator, and his seat gives him access to nonpublic information that could affect stock prices, as well as influence over the fates and fortunes of businesses that could be affected by the Senate’s actions. To make matters worse, he appears to have bought and sold stocks in companies that deal with the committees and subcommittees on which he serves.
The Times reported, for instance, that Perdue bought and sold stock in FireEye, a cybersecurity company, while serving on a Senate cybersecurity subcommittee. The Daily Beast reported that he bought shares in a defense contractor shortly before joining the Senate subcommittee that oversees the Navy, then sold them for a profit after the company benefited from the defense spending bill he helped write. His investments with Cardlytics, a tech-banking company on whose board he once served, were so murky that they drew the scrutiny of federal prosecutors earlier this year, who reportedly declined to press charges.
Perdue’s history of murky stock deals, along with similar ethical questions about fellow Georgia Senator Kelly Loeffler, have redefined what’s at stake in the January 5 contests for both of the states’ U.S. Senate seats. The two races were already set to effectively decide control of the Senate and of Congress itself, and thus what the first two years of President-elect Joe Biden’s administration will look like. Now it is also a referendum of sorts on what amounts to corruption in the eyes of American voters—and whether they’re willing to tolerate it in high office.
Loeffler, who was appointed to the Senate in December 2019, has also been dogged by ethics concerns since taking office. Some of them stem from her own business dealings as well as her marriage to Jeffrey Sprecher, a wealthy financier and the founder of Intercontinental Exchange, which owns the New York Stock Exchange. The Atlanta Journal-Constitution presciently noted, when Loeffler took office, that she faced a potential “minefield” of ethical concerns if her financial holdings intersected with Senate business. Those predictions came true after news outlets discovered that she and her husband, along with a handful of other senators, sold off stocks in January as the Senate began to receive briefings about the emerging pandemic.
Perdue and Loeffler have noted in their own defense that the Senate Ethics Committee investigated their actions and cleared them of any wrongdoing. In most cases, they have said, their stocks were bought and sold by investment firms on their behalf, not directly by them. But this defense is less persuasive than it sounds. “In the first place, candidates not taking direct control of their stock trades does not actually remove the conflict of interest,” The Week’s Ryan Cooper recently noted. “If you are a senator, and you hire a bunch of asset managers to look after your investments without any kind of blind trust, you still know what those investments are. You can make decisions knowing that your Goldman Sachs lackeys will make the profit-maximizing move in response—which is the best-case scenario of what happened here.”
Some other senators who sold stock when the pandemic first struck the United States have faced consequences for their actions. North Carolina Senator Richard Burr, who was already planning to retire in 2022, was forced to give up his chairmanship of the Senate Intelligence Committee after the scandal broke this spring. But other lawmakers, including Loeffler and Perdue, emerged relatively unscathed. They faced neither sanctions nor criticism from their party for their misjudgments. Since they faced election and reelection in November, that silence may have been more strategic than anything. Ethical lapses take a back seat to raw political utility.
Some of the problem can be traced back to President Donald Trump, who has done more than any other president in history to normalize corruption in Washington. He refused to fully divest himself from the Trump Organization, then used its properties as extensions of the federal government and a source of income from people trying to curry favor with his administration. He defied federal ethics rules large and small by hosting partisan events on the White House lawn and wielding government power for political gain. So inescapable are his unethical behaviors that he’s now reportedly contemplating preemptive pardons for himself and his adult children to shield them from legal consequences after he leaves office in January. Along the way, he’s inculcated a fervent belief among Republican voters that what he’s done is normal and legitimate, and that his critics are the real crooks.
The presidency is not the only place where corruption has been defined downward in recent years. In 2016, the Supreme Court unanimously overturned the bribery conviction of former Virginia Governor Bob McDonnell, effectively rewriting federal bribery laws along the way. Federal prosecutors had charged McDonnell and his wife in 2014 for receiving more than $175,000 in luxurious gifts from Virginia businessman Johnnie Williams. At the same time, McDonnell used his office to grant Williams a wide variety of favors, setting up meetings and other forms of access as well as lending the businessman his influence among state officials.
This arrangement would likely be seen as corrupt by the average American. But the Supreme Court concluded that McDonnell’s conviction raised constitutional concerns, noting that constituents often press elected officials to intervene in matters on their behalf. Citizens typically don’t give Rolexes or tens of thousands of dollars in designer clothes to their elected officials, of course. Nor is a governor’s ability to influence public policy limited to signing legislation or issuing pardons. Nonetheless, the justices reasoned that setting up meetings or contacting other government officials could not count as an “official act” under federal bribery laws.
This naïveté has also shaped federal campaign-finance laws and how the Supreme Court governs them. Federal records show that Jeff Sprecher, Loeffler’s husband, donated more than $10.5 million to a super PAC called Georgia United Victory, which aired attack ads against Loeffler’s top GOP rival ahead of the November election. It has now pivoted to attacking the Democratic candidates in the January runoff. Sprecher’s hefty contribution reportedly amounts to two-thirds of the super PAC’s budget. The Supreme Court has signed off on expenditures from outside groups as long as they don’t coordinate with a campaign. While Sprecher’s donations don’t run afoul of the court’s guidelines, they do illustrate how absurd its understanding of campaign finance looks in practice.
Even the Supreme Court, however, can’t be fully blamed for the growing complacency about anti-corruption efforts. Some of the blame also falls on Congress, which hasn’t acted quickly enough to ban, among other things, its own members from buying, selling, and owning stocks while in office. And some of it even falls on the American people, who have turned a blind eye to unethical leadership from time to time in the interest of partisan advantage. On January 5, those voters will have an opportunity to decisively change course.