Did you know that there are two exchange traded funds, or ETFs, that track investments made by members of Congress and their spouses? They are Subversive Unusual Whales Democratic ETF (ticker symbol: NANC) and Subversive Unusual Whales Republican ETF (KRUZ). These investment funds are premised on the idea that even though the 2012 Stop Trading on Congressional Knowledge (STOCK) Act finally made it illegal for members of Congress to trade securities based on nonpublic information derived from their public position, they still do it pretty much all the time.
The existence of NANC and KRUZ, and a newer scandal concerning congressional expense accounts that don’t require a paper trail, are all the evidence you need that, even as Congress raises legitimate questions about the financial ethics of Supreme Court justices, legitimate questions can also be raised about the financial ethics of Congress itself.
The congressional ETFs are unable to mimic congressional trades with precision because members of Congress are given 45 days to report each trade publicly. For example, Senator Tom Carper, Democrat of Delaware, purchased between $1,001 and $15,000 worth of shares in Target on May 22 and didn’t report it until June 3. Representative Marjorie Taylor Greene, Republican of Georgia, may be the single most obnoxious person in Congress, but when she purchased six stocks on May 21, including between $1,001 and $15,000 worth of shares in Apple, she reported it, by golly, that same day. Give credit where it’s due.
If you’re going to invest in one of these funds, I recommend you choose the Democratic one, NANC, which pretty consistently outperforms the S&P 500. The Republican fund, KRUZ, does not. Does this mean that Democrats trade on inside information more than Republicans—that Democrats are more corrupt? Greene would probably say so. But a more plausible explanation is that Democrats favor tech stocks, while Republicans favor energy stocks. Tech stocks usually outperform energy stocks. I leave it to others to resolve whether these preferences show Democrats are smarter than Republicans or merely less weighted by a sentimental attachment to the oil and gas industries (“drill baby, drill”).
The larger question is why we permit members of Congress to perform stock trades at all. Senators Jon Ossoff, Democrat of Georgia, and Mark Kelly, Democrat of Arizona, introduced last summer the Ban Congressional Stock Trading Act, which would require members of Congress, their spouses, and their dependent children to put all their stocks into a blind trust (as Ossoff and Kelly have done). The bill has no Republican co-sponsors, even though, judging from KRUZ’s lax performance, they’d be better off putting their investments into more competent hands.
The expense-account scandal, exposed by The Washington Post on Tuesday, concerns a new policy Congress adopted last year that allows members to expense “meals, incidentals, and lodging” while they’re on official business in Washington, D.C. In principle, this seems a reasonable policy. The cost of living in the District is so high that dozens of House members were sleeping in their offices. Indeed, as of last November House Speaker Mike Johnson was still doing so. In Johnson’s case, put it down more to ostentation than poverty, since the speaker is paid $223,500 (as against the $174,000 paid most senators and representatives).
The scandal arose from one unfortunate aspect of the new policy: These senators and representatives are not required to submit receipts for their expenses. They’re on the honor system, and “honor” and “Congress” are not a stable combination. According to the Post, the new expense system was used last year by more than 300 lawmakers, who racked up $5.2 million in food and lodging expenses.
One of the top spenders was Representative Matt Gaetz, Republican of Florida.* This raises something of a red flag. As even many Republicans (especially former House Speaker Kevin McCarthy) acknowledge, Gaetz does not color inside the lines. Gaetz put in for nearly $30,000 in reimbursements for lodging and more than $10,000 for food. As The New Republic’s Talia Jane pointed out, Gaetz’s food tab was double the household average, and his lodging tab was twice the average cost of rent in Washington, D.C. (Mortgage payments aren’t eligible for reimbursement.)
Another big spender was Representative Nancy Mace, who, the Post reports, was told by her staff that she could not legally expense more than $1,800 per month for lodging but nevertheless expensed $2,000 and sometimes $3,000.
The root problem (at least in most cases; Gaetz and Mace are quite well off) is that Congress pays itself so little that members resort to furtive and often corrupt means of self-enrichment. I don’t want to overstate this, having lived four decades in the nation’s capital without ever getting within shouting distance of the standard congressional wage. But I’ll grant that members of Congress are required to possess two homes as against my one, and that’s probably a burden. Yet whenever Congress tries to give itself a modest pay raise—its last one was in 2009—some sanctimonious member steps forward to block it. “Membership in Congress is about service, not a paycheck,” said Representative Jared Golden, Democrat of Maine, when he killed off the latest attempt in March.
But if we paid members of Congress more, it would be less necessary for them to be rich when they got there. As it is, more than half of them are millionaires. More urgently, it would be less necessary for them to get rich when they got there, by trading on inside information and padding their expense accounts.
* An earlier version of this piece stated that Gaetz was the top spender. That was based on an erroneous calculation, since corrected, by The Washington Post.
