With a seemingly unending torrent of negative stories piling up in the inboxes of Americans daily, it’s easy for some big stories to go unnoticed. From the catastrophe on the southern border to President Biden’s illicit business dealings while he was vice president and the ousting of soft-on-genocide plagiarists at Harvard, there’s an overwhelming amount of information. Some stories prompt us to action, like the discovery of pornographic materials in public school libraries and curricula, for example. And some stories force us to rethink some of the basic assumptions we’ve held about our nation and its leaders, like a recent report highlighting the amazing returns congressional Democrats have had in the stock market in 2023.
The Standard & Poor’s 500 Index (S&P 500, for short) is a list of the top 500 publicly traded companies in the United States, by market capitalization. When someone “beats the market,” that means they were able to choose investments for themselves or a client that outdid the returns of some stock market index, like the S&P 500. Very few investors can do this.
It’s a very different story, however, for congressional Democrats. According to the study, the returns calculated by estimating current stocks held by congressional Democrats shows House Democrats yielded annual returns for 2023 of 31%, beating the S&P 500’s returns of 24%. Republicans, on the other hand, fell short of the S&P 500 with 18% returns.
Rep. Brian Higgins, a Buffalo-area Democrat slated to retire from Congress next month, posted a jaw-dropping 239% gain on his stock investments in 2023. Higgins made many of these gains by purchasing stock in just two companies, one of which is Nvidia, a popular technology company that designs computer chips and hardware used for artificial intelligence. The computer chips Nvidia designs are produced in Taiwan. You may recall in 2022, when she was Speaker of the House, Nancy Pelosi (D-Calif.) jetted off to Taiwan to meet with Taiwan Semiconductor Manufacturing Company’s (TSMC) Chairman Mark Liu. Two months later, Pelosi and her husband bought millions in call options of Nvidia stock (which she disclosed the Friday before Christmas weekend in 2022). Last year, Pelosi beat the S&P 500 by 65%.
In the interest of fairness, it is possible Pelosi’s trip to Taiwan was just about reinforcing the foreign policy commitments of the United States — including the national security implications around the manufacturing of computer chips. The fact that Pelosi met with Chairman Liu and then a few months later bought millions of dollars worth of call options in a company that designs the chips built in TSMC factories doesn’t necessary mean there’s a connection — but the appearance of impropriety is hard to escape. Furthermore, many members of Congress are wealthy and created their wealth before they entered Congress, so it’s safe to assume many of them understand the markets and know when to buy and sell stock and options. Still, the public is justified in being concerned about the possibilities of members using information privy only to them to make investment decisions.
Members of Congress are immensely powerful. They can approve or disapprove multi-trillion-dollar budgets, wield investigative powers, and pass laws. Some sit on powerful committees that shape the marketplaces we all transact in; others sit on committees that allocate billions in government funds. With so much at stake, we want our members to have the best information available to make the best decisions possible. At least, that’s how it’s supposed to work.
With year-over-year inflation above 20% since 2020, $34 trillion in national debt, and Americans struggling to make ends meet, is it too much to ask members of Congress to avoid the appearance of improperly trading in stocks? In fact, an unlikely bipartisan coalition is asking this very question. Progressive New York Democrat Alexandria Ocasio Cortez, firebrand Florida Republican Matt Gaetz, and others have introduced the Bipartisan Restoring Faith in Government Act to ban members from owning or trading individual stocks. Nothing in this bill prevents a member of Congress from saving for retirement through a managed retirement plan, various bonds, or thrift savings plans. It just prohibits members from trading individual stocks.
In King Solomon’s day, dishonest merchants would use measuring stones of differing weights to deceive their trading partners. This sort of deception was detested by the Lord (see Proverbs 20:10). Today, instead of relying on the weight of a stone or the size of an ephah, it is information that we all rely on to transact in. Literally tens of millions of Americans store their wealth in stocks — they don’t go to the center of town with physical coins and barter over goods, they open brokerage accounts and buy securities and other investments based on the information available to the public.
Members of Congress should do all they can to avoid the temptation of trading on information not available to the broader public.
Matt Carpenter is the director of FRC Action.
