The GOP capitalizes on ethics failures by Democrats

Democrats—and newspaper editors—created preventable opportunities for right wing Republicans by embracing congressional conflicts of interest

[This post is also accessible as a podcast]

This week, Senator Josh Hawley (R-MO) introduced an important piece of legislation aimed to address the bipartisan conflicts of interest that pervade Congress. While his proposal to prohibit insider trading by policymakers is plagued by crucial deficiencies, it remains important for reasons that are both constitutional and political.

Hawley’s bill is called the Preventing Elected Leaders from Owning Securities and Investments Act, the PELOSI Act. It trolls Democrats by naming the former Speaker as a literal poster child for corruption, while appealing to a faux populism and claiming to care about ethics that Hawley & his colleagues have abandoned in the past. Republicans, after all, have historically promoted Wall Street’s interests even more aggressively than Democrats. And Hawley himself is so committed to democracy that he invited an attempted insurrection from which he was seemingly poised to benefit.

Ultimately, however, policy is more important than personality—and ethics more important than ideology.

Having spent the last six years calling out Nancy Pelosi’s track record on precisely this issue, I’m grateful to see this proposal emerge, regardless of the source. I’m frankly compelled to observe the absurdity of this saga after watching media outlets join Democrats, from “grassroots” political clubs to elected officials, who conspired in 2020 to insulate Pelosi & her corruption rather than stand by (any of) their own stated principles.

Recalling the Constitution’s Emoluments Clause

The Constitution includes a provision that explicitly prohibits public officials from enriching themselves through public office. Allowing policymakers to trade stocks, in contrast, effectively invites them to place their private portfolios before the public interest. Politicians from (former Republican Speaker of the House) John Boehner to (former Democratic Speaker of the House) Nancy Pelosi have done precisely that throughout their long careers.

Crucially, the Emoluments Clause was the key to removing Donald Trump from the presidency during the theatrical, half-hearted impeachment charades that Pelosi eventually supported in 2019 and 2020, after years of impeding executive accountability for presidential administrations ever since the Bush administration.

Half a year before the first impeachment, I wrote on Truthout in May 2019:

We need leaders in Congress who are ready and willing to rise to the occasion by checking and balancing the executive branch. Failing to impeach will only embolden our kleptocrat-in-chief.

Many supporters of impeachment proceedings have suggested that the House begin the process immediately. The potential grounds for impeachment seem endless: the president has obstructed justice, colluded with a foreign power, violated the emoluments clause by enriching himself through office, and made a litany of documented lies to the public, the press and policymakers themselves.

But Democratic Party leaders, including House Speaker Nancy Pelosi, have insisted that impeachment proceedings are not a priority. While impeachment is still technically on the table, Pelosi claims that Trump “just isn’t worth it.”

Pelosi, of course, did eventually show up for impeachment—like a boxer throwing a fight.

Even after finally conceding and accepting that impeachment was inevitable, Pelosi declined to accept the recommendation of Rep. Jamie Raskin (D-MD) to include charges based on Emoluments violations within the Articles of Impeachment. That reduced the impeachment proceedings in the Senate to largely partisan affairs. A focus on the former president’s self-enrichment at the public’s expense could have shined a light on bipartisan problems and unified a divided public behind ethics principles that remain, years later, in exile.

To what extent was Pelosi’s reticence to explore Trump’s corruption driven by her own dirty laundry? The strongest reason to water down the impeachment charges appeared to be because self-enrichment is such a thoroughly bipartisan practice in Washington that Democrats would have made themselves vulnerable to GOP claims of hypocrisy and selective enforcement had they proceeded.

Our nation continues to pay the price for Democrats who lacked the independence to do their constitutional duty, either when a criminal president inhabited the White House from 2016-2020, or over the decades since their colleagues started putting their private fortunes before human rights and the needs of working Americans.

Creating an attack surface for the GOP

The performance of Pelosi’s private stock portfolio consistently outpaces that of Wall Street investment professionals, so much so that some portfolios aim explicitly to mirror her holdings.

What explains the most powerful Democrat in Congress achieving the best investment returns of any policymaker in Washington, let alone beating Wall Street professionals? Her statistically inexplicable success indicates that the inside information to which she uniquely has access has influenced her investment decisions. To presume otherwise requires abandoning reason.

It is equally ridiculous to bend over backwards in imaging that Pelosi’s ownership interests did not influence her work as the most powerful policymaker in Washington.

Pelosi infamously blocked legislation to protect consumers after purchasing stock in the initial public offering for Visa in 2008. She later profited handsomely from ownership positions in companies from Google to Tesla, and many others, before public announcements about government decisions impacting those companies.

For instance, Pelosi sold Google stock worth millions of dollars in December 2022, one month before the federal Department of Justice and eight states’ Attorneys General announced an antitrust suit earlier this week seeking accountability for Google’s anticompetitive practices leveraging monopoly power over a “wide swath” of online advertising tools while ultimately corrupting “legitimate competition in the ad tech industry.” Newsweek observed the curious serendipity of Pelosi’s timing.

Pelosi noted her personal commitment to capitalism in response to a question from an NYU student in 2017. Left unspecified was whether the “we” to whom she referred was the U.S. Congress or instead herself and her increasingly wealthy family.

While technically unrelated to insider trading, Pelosi has also violated the Emoluments Clause in other ways, particularly by benefiting from government programs crafted to help those in need. When the COVID-19 pandemic forced small business owners around the country into dire straits, Congress approved a Paycheck Protection Program to help offset the costs of payroll. Many of the bay area’s most desperate entrepreneurs and diverse communities never saw those funds, but one business that did receive them was owned in part by Pelosi’s husband.

Unpeeling layers of corruption

The market

Even after long overdue reports about congressional insider trading finally emerged in the past year, most of the critique came from voices concerned about the co-optation of financial markets by oligarchs using inside information to take advantage of other investors who don’t enjoy the same access.

The law has long prohibited corporate executives from making trades based on information not accessible to the public. That has been illegal for decades.

The obvious question is: why are policymakers exempt from a rule that already constrains executives? After all, executives are poised to wield inside information only about a particular enterprise, whereas policymakers have access to inside information affecting each and every one of them.

That obvious question has an equally obvious answer: Congress writes the laws, and nothing constrains the insider trading millionaires who dominate it from contriving the law to suit their craven, self-serving purposes.

But even all that is just the tip of the iceberg. Far more destructive than the corruption of investment markets is the corruption of the federal policymaking process.

Public policy

Corrupting Wall Street means that small investors get fleeced by richer ones, like the insider trading millionaires who dominate Congress. That’s bad for lots of people, from workers investing in 401k funds to retirees or people living on fixed incomes, who invest in stocks as part of a long-term plan for financial security, only to be preyed upon by powerful people using their elected offices as a lever to fill their wallets.

But corrupting Congress is worse, both because it harms everyone (not only investors), and also because it neutralizes the source of potential support best poised to alleviate the vagaries of the market: democratically accountable government.

The conflicts of interest across Congress hamstring public responses to corporate predation. They predictably encourage indefensible public policy outcomes—like, for instance, recurring tax cuts for millionaires alongside a federal minimum wage that has remained frozen for well over a decade, or repeated approvals for runaway military spending that inflate the profits of corporate contractors in which many policymakers have invested.

This pattern is a crucial part of why President Eisenhower warned our country in 1961 to fear the machinations of a military-industrial complex that has only tightened its grip around America’s throat in the years since then.

Elected officials

Members of Congress who are more interested in capitalism than democracy are free to build their fortunes through private enterprise. Those who subject the machinery of government to the enlargement of their own fortunes display a disqualifying disregard for democracy by openly embracing conflicts of interest.

Every one of them—including the senior leadership of both corporate parties in Washington—stands in open violation of a constitutional prohibition, despite swearing an oath to uphold that document and the principles it embodies.

Editors & journalists

As much as policymakers deserve criticism for failing to regulate themselves, another community deserves even greater blame for falling asleep at the switch: the newspaper editors whose primary responsibility was to expose corruption but instead chose to embrace it in plain sight. 

Congressional insider trading has never been OK. It’s absurd that it took until 2022 for the press to notice an obvious vector inviting conflicts of interest, and that even in 2023, few voices have acknowledged the profound institutional corruption resulting from it. It’s equally absurd that this issue has fallen to the GOP only because editors have so pervasively failed to ethically cover political news in real-time.

Observing the impacts of institutional media failure

Hawley’s proposal is neither the first to curtail congressional conflicts of interest, nor the most demanding.

Two years before he introduced the PELOSI Act to curtail insider trading by policymakers, I proposed ending the practice through a more aggressive solution that most voters never heard about.

My proposal would have reached not only policymakers and their spouses, as Hawley’s would, but also their children, extended family, and staff. No policy that leaves congressional family members or staff free to leverage inside information would suffice to stop conflicts of interest from subverting the policymaking process.

Unlike Sen. Hawley, I also proposed to prohibit policymakers, their families and their staff from trading not only stocks and other financial instruments, but also from investing in private equity vehicles that are even more insidiously opaque and unaccountable. Private equity has wrought remarkable havoc on housing markets, healthcare (even according to Wall Street apologists) and public health, as well as journalism (coincidence?), and indeed, our economy writ large.

Any so-called “reform” that would leave in place opportunities for policymakers to launder their conflicts of interest by simply making them less visible—as Hawley’s would—is more cosmetic than meaningful.

We produced this advertisement supporting my 2022 congressional campaign to highlight the issue and summarize my proposal: 

Shahid Buttar (find me on Substack) @ShahidForChange

Congressional insider trading is an open invitation to corruption. It entrenches corporate influence, ensuring that Congress serves Wall Street before the rest of us. Pelosi continues ducking debates. RT to help expose the contrasts between our city's options on the ballot!

Unlike most congressional races, our’s did not suffer from a dearth of press coverage. Whether because we raised over $1.6 million, or instead because my voice attracted support from every state across the entire country and every county in California, many press outlets around the country—from Rolling Stone and Salon to The Intercept and the Los Angeles Times—found our race newsworthy.

Yet, in spite of all the attention, most voters never heard about my ideas or policy proposals. First, nearly every local broadcast outlet ignored us. Only two English-language local media covered us at all. KPFA, the local Pacifica Radio affiliate, covered our campaign the morning after I won the primary. And KTVU, the local Fox affiliate, posted a story and video segment in the waning weeks of the election. But aside from viewers of those two specific broadcasts, most San Franciscans had no idea that Pelosi was even up for re-election in 2020—let alone how the candidates differed, or that the November 2020 ballot included our city’s first contested congressional election since 1987.

But even among the outlets that did cover my campaign, the policies on which I ran—like banning congressional insider trading, or adopting universal healthcare during a global pandemic, or nationalizing the fossil fuel industry that continues to threaten humanity and life on Earth—appeared far less interesting to editors than racist lies contrived by Democrats loyal to Pelosi.

The corruption of policymakers enriching themselves, in other words, has been insulated by the corruption of writers and journalists who failed to ethically practice their profession and instead abandoned independence to publish partisan propaganda entrenching corruption.

That’s among the reasons why I continue to wage a lawsuit in federal district court against the San Francisco Chronicle. Beyond recklessly and maliciously publishing racist disinformation fabricated to undermine a-once-in-a-generation-election, journalists from outlets including The Intercept, Mission Local, 48 Hills, the Bay Area Reporter, Current Affairs and others all enabled the continuing corruption of an intergenerational oligarch who continues to fleece the public while shamelessly filling her pockets.

(Feel free to mark your calendar and join us for our next hearing before U.S. District Judge Chen, on February 2 around 1:30pm PDT, about which I’ll share more details soon)

In the same way that America continues to pay a price for Democrats who can’t be bothered to show up for work, we have also been abandoned by newspaper editors whose abdication of independent reporting has given cover to corrupt Democrats whose recurring failures in turn create opportunities for corrupt Republicans.

We should all demand better, regardless of our ideology or political preferences. Ethics and corruption, like any constitutional issue, offer the opportunity to unite warring factions of voters around common sense principles.

Stopping policymakers from profiting from their office is the very least we can do to start restoring faith and trust in government.

Paid subscribers can access below a social media exchange from earlier this week in which I had an opportunity to correct a factually inaccurate statement by a Member of Congress about U.S. history and the first Black woman elected to Congress.