December 27, 2011
A new report out this week shows that the gap between the wealth earned by elected members of Congress and their constituents has grown considerably over the last 10 years.
That report, published in part by the Associated Press, shows that nearly half of Congress — 250 in all — are now millionaires, an illustrative example of how the wealth gap between lawmakers and their constituents appears to be growing quickly, even as Congress debates unemployment benefits, possible cuts in food stamps and a "millionaire's tax."
The report was conducted by the Center for Responsive Politics, a nonprofit research group and analyzed by the New York Times, shows that even as much of the nation sinks deeper into debt and red ink, Congress is growing richer.
''But with the American public feeling all this economic pain, people just resent it more," said Alan J. Ziobrowski, a professor at Georgia State who studied lawmakers' stock investments.
While the median net worth of members of Congress jumped 15 percent between 2004 and 2010, the net worth of the richest 10 percent of Americans remained essentially flat. For all Americans, median net worth dropped 8 percent during that period, based on inflation-adjusted data from Moody's Analytics.
Rep. Darrell Issa, R-Calif., a former auto alarm magnate who is worth somewhere between $195 million and $700 million tops the list.
And while the world of personal Congressional financial disclosure is one painted in very broad strokes and filled with veiled responses on government documents, in southwest Georgia the wealth gap is a bit of a different story.
Rep. Sanford Bishop, D-Albany, for instance, ranks 429th out 435 House members in terms of total net worth according to non-profit Congressional watchdog group Opensecrets.org. Based on his most recent personal financial disclosure, Bishop's total net worth ranges between -$430,000 and $111,000 with his net worth for 2010 at -$159,000.
That figure is actually down from a high of $668,000 in 2006, the site explains.
Austin Scott, the Tifton Republican who is one of the newest faces of Georgia's Congressional delegation, enjoys a net worth considerably higher than Bishop's, but one that is still significantly lower that many in the House.
<p>Opensecrets.org lists his total net worth at somewhere between $1.1 million and $ 2.4 million which puts him at number 139 in the House. His net worth for 2010 was around $1.8 million.Scott's net worth for 2010 was up from 1.7 million in 2009 -- his first year in Congress.
On the Senate side, Senator Saxby Chambliss, R-Moultrie, ranks 91st in net worth in the Senate with his average 2010 net worth listed at $337,000. His total net worth is somewhere between $164,000 and $511,000.
Georgia Senator Johnny Isakson, R-Atlanta, is a much different story, ranking 22nd in the Senate with an average net worth in 2010 of more than $12 million. His total net worth is listed as between $6.4 million and $17.5 million.
There is wide debate about just why the wealth gap appears to be growing. For starters, the prohibitive costs of political campaigning may discourage the less affluent from even considering a run for Congress. Beyond that, loose ethics controls, members' shrewd stock picks, profitable land deals, favorable tax laws, inheritances and even marriages to wealthy spouses are all cited as possible explanations for the rising fortunes on Capitol Hill.
What is clear is that members of Congress are getting richer compared not only to the average American worker but even to other very rich Americans.
Their wealth has created occasional political problems for Congress's richest.
Issa, for instance, has faced outside scrutiny because of the overlap of his congressional work and outside interests, including extensive investments with Wall Street firms like Merrill Lynch and Goldman Sachs, as well as land holdings in his San Diego district. In one case, he obtained some $800,000 in federal earmarks for a road-widening project running along his commercial property.
Sen. John Kerry, D-Mass., who is married to Teresa Heinz Kerry, set off a firestorm last year when it was disclosed he had docked his $7 million, 76-foot yacht not in his home state but in neighboring Rhode Island, which has no sales or use tax on pleasure boats. (Kerry, worth at least $181 million, voluntarily paid $400,000 in Massachusetts taxes after public criticism.)
Rep. Nancy Pelosi, the House Democratic leader, was challenged about her wealth, as much as $196 million, by a member of her own party a few weeks ago. Rep. Laura Richardson, D-Calif., who is among the poorest members of Congress with as much as $464,000 in debt, attacked Pelosi at a closed-door Democratic caucus meeting for endorsing a congressional pay freeze, according to a report in Politico confirmed by other members.
Richardson told Pelosi that, unlike her, some members needed the raise. Members now make a base pay of $174,000 and would get a cost-of-living adjustment automatically unless they were to decide, for a third straight year, to pass it up. Sheila Krumholz, executive director of the Center for Responsive Politics, said the rising congressional wealth fuels public doubts about whether members are more focused on their constituents' interests or their own investment portfolios.
''There's always a concern that they can't truly understand or relate to the hardships that their constituents feels — that rich people just don't get it," she said.
In an effort to gauge how directly the country's economic problems affected lawmakers, The New York Times contacted the offices of the 534 current members (one seat is vacant) for an informal survey. It asked if they had close friends or family members who lost their jobs or homes since the 2008 downturn.
Only 18 members responded.
Half the respondents said they had close friends or relatives who lost homes, while the other half said their personal contact was limited to constituents who came for help.
Two-thirds said they had close friends or relatives who were laid off or shut down a business during the downturn. The rest knew no one in that category personally.
Rep. Anna G. Eshoo, D-Calif., who took part in the survey, said several cousins in their 40s and 50s — people she considers like brothers and sisters — lost their jobs recently. Without college degrees, none has found work, and they have stressed to her the importance of unemployment benefits .
''Personal stories are very powerful because it's not a theory," Eshoo said. "It's not talking points of a party. These are people experiencing the harshness of what is an economic depression for them."
Multimillionaires in Congress "view life through a different lens," she said.
Eshoo herself has escaped the economic worries weighing on her cousins. While she reported being in debt in 2004, she is now worth an estimated $1.8 million, her financial reports show. She said the rise came mostly from the profitable sale of a family home where she lived for 40 years.
''I was fortunate," she said. "I've lived from paycheck to paycheck most of my life, and I'm a single mother."
The data analyzed by The Times corroborated the idea that incoming members are in fact richer than the past. The freshman class of 106 members elected last year, including many Tea Party-backed Republicans, had a median net worth of $864,000 — an inflation-adjusted increase of 26 percent from the 2004 freshmen.
Once in Congress, members benefit from many financial perks unavailable to most Americans. Beyond the base salary of $174,000 — an increase of about 10 percent since 2004, somewhat less than inflation — members get extra pay for senior posts and generous medical and pension benefits, as well as accoutrements of power often financed by taxpayers or their campaigns.
While many Americans have to scrimp, for instance, to pay for travel or fine dining, members routinely take "fact-finding" trips to Hawaii, Mexico or Europe courtesy of private sponsors or the federal government, and they dine regularly at Washington's best restaurants for fundraisers at campaign expense.
While the housing collapse nationwide has hurt many Americans, lawmakers still find the real estate sector the most popular place to park their money, statistics from the Center of Responsive Politics show, and members of Congress continue to profit from their investments there. Perhaps the most tantalizing but hotly debated factor in the rising wealth of Congress is lawmakers' performance in the stock markets — and the question of whether they are using their access to confidential information to enrich themselves.
In a study completed this year, Ziobrowski at Georgia State and his colleagues found that House members saw the stocks they owned outperform the market by 6 percent a year. Their research from several years ago found that senators did even better, at 12 percent above average. The researchers attributed the performance to a "significant information advantage" that lawmakers hold by virtue of their positions and the fact they are not bound by insider-trading law.
However, a separate study last year by researchers at Yale and the Massachusetts Institute of Technology found the portfolios of lawmakers actually performed somewhat worse than average investors. It found that members did do better when investing in companies in their home districts or associated with campaign donors — suggesting that they benefited from their political connections — but still not as well as the average investor.
The Associated Press Contributed to this story.
Comments
msa651 1 year, 2 months ago
Not on paper is right, those financial disclosures are so misleading. Take the 500k Bishop shows as a liability for Law fees. The payments of 50k per quarter are coming out of his campaign funds. No skin off his back. Might be another scandal here, There is a limit by law about how much he can use from campaign monies to pay for the bill, but I'm sure, he's got his bases covered on it by the amount of quarterly payments. Legal but skirting the letter of the law. The fact that disclosure doesn't require property in the name of the spouse is another. Between himself and his spouse, they own 4 houses, a condo in DC which property records value at 250k with a 25k parking spot, plus a lake front property lot. Bishop isn't hurting....... His real worth is more than 5 million.
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