• A.J. Manuzzi

Now More Than Ever, the Swamp Must be Drained

In Seattle, a young hospital worker wonders how much longer she has until there are no more masks and latex gloves left.

The President of the United States calls the Governor of Washington a snake and tweets rave reviews of his own handling of the coronavirus and the state of the U.S. stock market.

In St. Louis, a teenager wonders where his next meal, the only one he may eat all day, is going to come from with school (and therefore the free and reduced lunch and breakfast programs) out for the next month. He fears he will fall behind in his studies without wi-fi in his home.

In Sacramento, a single working mom is apprehensive that being out of work will mean she cannot pay her bills and will be evicted in the middle of a pandemic.

In SoHo, subway cars and city streets sit empty as the economy of the richest country in the history of the world is brought to a screeching halt.

The C.E.O. of United Airlines, who made an estimated $10.5 million last year while spending almost every dollar of profit his company made on stock buybacks, sends a letter to his 96,000 employees warning that, without the massive federal bailout he is asking of Congress, the company will cut 60 percent of its payroll.

In South Tennessee, nervous and exasperated parents and children with high fevers and low spirits wait for hours in line only to be told there is not a sufficient number of test kits, or left to realize that the cost of seeking treatment should they test positive would drive them into bankruptcy.

Four Republican U.S. Senators utilize non-public information arising from their role as elected officials to engage in the buying and selling of stocks in impacted industries, in flagrant violation of federal law regarding insider trading.

Even during the height of a pandemic, in the face of arguably the greatest transnational challenge the world’s premier superpower has faced since World War II, the grifting and moral bankruptcy of the Republican Party and its associated business elites does not cease.

In a damning indictment of Republican governance, American global leadership, and the state of American democracy, the United States is hurtling toward a recession and a public health crisis projected to kill hundreds of thousands to millions of its people entirely unprepared and woefully mismanaged. This is not to say that, with innovative science, a receptive public, and political will (as demonstrated most notably demonstrated in South Korea), this course could not in theory be corrected. But it is to say that, with a political party controlling the Senate whose sole ideological foundations are undying loyalty to a criminal president who has called the virus a hoax and enriching themselves and their donors in doing so, the incentive to kowtow to Trump and profit off of the crisis was certain to outweigh any sense of civic obligation on the part of Senate Republicans.

The most egregious example, of course, is the conduct of the four G.O.P. senators who sold not only their stocks but also their souls while their states’ small businesses shuttered and their constituents suffered. ProPublica and The Daily Beast reported that four Republican senators- Kelly Loeffler (GA), Richard Burr (NC), Ron Johnson (WI), and Jim Inhofe (OK)- sold equities after receiving private briefings on COVID-19. These sales preceded an international financial panic that decimated the stock market and preceded the American becoming aware of the scale and lethality of the virus.

Loeffler’s case reads like a cross between the actions of Marie Antoinette and Cruella de Vil, but with a Georgia twang. According to The Daily Beast, the very same day that her Senate Health Committee held a private briefing featuring the director of the Centers for Disease Control (CDC) and the National Institute of Allergy and Infectious Diseases on the coronavirus, she and her husband sold a stock in Resideo Technologies worth between $50,001 and $100,000. Since then, the company’s stock price has fallen by half and the Dow Jones Industrial Average overall has cratered. The Loefflers would make 28 more transactions through mid-February, with almost all of them being sales. But one of her two purchases in particular stands out. After a briefing that presumably warned of the possibility of many Americans being forced to work from home, Loeffler and her husband bought a stock worth between $100,000 and $250,000 in Citrix, a technology company that specializes in teleworking software and saw its price rise by 22 percent between late February and the time Loeffler’s transaction was reported to the public. It is impossible to ignore the contrast between Loeffler’s decision to seek out opportunities in public service to grow her family’s half-billion dollar fortune and the millions of Georgia families who may lose their jobs or loved ones. It is impossible not to wonder whether Loeffler will be thinking of the Georgia families who struggle to pay rent without a steady source of income while she looks out the window of any one of her million-dollar homes in three different states.

As a swing state senator, one would anticipate that Richard Burr would be cautious to avoid even the perception of impropriety. His record, however, would beg to differ. As the chairman of the Senate Intelligence Committee, Burr and his colleagues received daily briefings on coronavirus. Already in hot water for characterizing U.S. pandemic preparation as, “better than ever before” in a Fox News op-ed while privately warning well-connected businesspeople that the virus was, “more aggressive in its transmission than anything that we have seen in recent history,” Burr sold off between $672,000 and $1.7 million in stocks shortly after the briefings and less than a week before the market tanked. Burr claimed that his transactions were not based on non-public information (in his case, Asian news reports), and thus did not violate federal insider trading laws but given that he received briefings every day on the topic owing to his role, this seems unlikely to be true.

Even if it were, the scandal, which included the transactions of Inhofe (a repeat offender now) and Johnson, raises questions about insider trading and public service. Indeed, the mere perception that Members of Congress prioritized their own personal financial interests over the physical health of their constituents would represent yet another black eye for the institutions of American government. To rebuild confidence in these institutions and send a message to those who are ethically unfit for office, Senate Democrats will need to push for structural change and utilize political hardball within the current framework.

First, let us begin with what should be done to hold Loeffler, Inhofe, Johnson, and Burr to account. If these senators, as it would appear they did, utilized non-public information acquired in their official capacity then their conduct would clearly be in violation of the S.T.O.C.K. Act. Adopted in 2012, this landmark bipartisan piece of legislation (it was originally introduced by Democrat Kirsten Gillibrand and Republican Scott Brown and the version that passed was introduced by Independent Joe Lieberman) prohibits the use of non-public information by Members of Congress and their staff for private gain, including insider trading. It is also worth noting that Sen. Burr was one of only three senators (all G.O.P.) to vote against the bill.

On the House side, the S.T.O.C.K. Act can tout a recent success with the successful insider trading prosecution of Rep. Chris Collins (R-NY), whose 26 month prison term begins next month. Collins was alleged to have relayed non-public information about drug trial results to his son to help him make timely trades of pharmaceutical stock. But that is not to guarantee that justice will be served in the Senate cases. This is because the House relies on an independent agency, the Office of Congressional Ethics (O.C.E.) to investigate corruption cases and recommend them to the Department of Justice (D.O.J.) while there is no such independent oversight in the Senate. Instead, ethics enforcement powers rest in the Senate Select Committee on Ethics, which is less transparent and lacks political independence as it is composed of senators.

To investigate these claims and future ethical conundrums in the Senate, there ought to be a parallel independent, transparent agency to the O.C.E.. Though O.C.E. lacks formal subpoena power, it has operated with surgical precision since its inception in 2008. The brainchild of then and current Speaker of the House Nancy Pelosi (D-CA), O.C.E. has issued numerous reports on congressional misconduct, including the one leading to Collins’s prosecution. As currently composed , the Senate Ethics Committee, with its three members from each party lacks the ability to transcend party politics (each party having a veto on every vote). By creating its own version of O.C.E., the Senate could finally have a transparent, effective, and independent means by which to report and investigate misconduct, improving the ability of the public and the Senate to hold senators accountable.

The second set of changes concerns building on the progress of the S.T.O.C.K. Act itself. At the present time, the executive and legislative branches are within the scope of the S.T.O.C.K. Act. The judicial branch is exempt from the S.T.O.C.K. Act. As three of the nine current justices on the Supreme Court own individual stocks, this means that there are routinely controversies about conflicts of interest and recusals. Recusals, especially on the nine person Supreme Court, can drastically change a case’s outcome while a lack of a recusal can call into question whether justice is truly blind to private self-interest. In other words, in the branch of government where consistency, transparency, and independence are most idealized, what we currently have instead is an omnipresent cloud of reasons to doubt that there will be impartial, transparent, and consistent justice. As such, the steps to remove this cloud are threefold. Frst, bar members of the judiciary from holding individual stocks as their interests may come before the court system and secondly, mandate that Supreme Court justices be held to the same Code of Conduct for United States Judges that every other federal judge is and therefore establish a set of common practices for recusals. Finally, mandate that justices publish their rationale for recusal when they do recuse themselves. These simple, common sense proposals will lift that cloud and push back on claims that justices are doing the bidding of industries that come before their courts.

As a final legislative measure, while it is important to laud the successes of the S.T.O.C.K. Act, it is likewise pertinent to note that as long as Members of Congress are privy to more information than other investors, there will exist opportunities for abuse of power. As this scandal illustrates, any sort of trading by Members of Congress can erode confidence and public trust in our institutions. There are ethical issues concerning stock ownership by senators that go beyond the four senators caught in the insider trading scandal. Every day, legislators attend hearings involving companies and industries in which they may potentially have a personal financial stake. As Sen. Jeff Merkley (D-OR), a stalwart anti-corruption advocate argues, “We should not be in the position of thinking about legislation in the context of personal investment. As long as you own stocks, it’s hard to rule out of your mind. And the public sees it as a conflict of interest.” Additionally, an analysis of more than 60,000 stock trades made between 2004 and 2010 concluded that politicians performed more than 20 percent better than the market as a whole, with high-ranking Republicans’ portfolios besting the market by an astounding 35 percent. Clearly power and party membership tend to impact their decisions and results in the market. This leads to a natural conclusion: why not just ban legislators from trading stocks at all?

Banning legislators from trading stocks is an easy, concrete, and seemingly bipartisan way to combat corruption and restore trust in government. As senators have access to nonpublic information that could affect entire industries and are elected to serve the people, not their financial bottom lines, there is no room for overreaction to documented abuse of power. An all-out ban on trading by its very nature would reduce the incentive to game the system as much as any other potential measure. Furthermore, it is similar to the ethics policies adopted by major investment banks in America, which ban insiders from trading in questionable industries and mandate that trades be precleared by an ethics office. These banks, like Congress, often have access to material, nonpublic information. It is only natural that the same policies should apply to the legislature, and the Senate should take up Sen. Merkley and Sen. Sherrod Brown’s (D-OH) Ban Conflicted Trading Act, which orders all legislators to divest within six months of its passing or within six months of legislators taking office for the first time.

Beyond legislative fixes, assuming the Securities and Exchange Commission (S.E.C.), D.O.J., and congressional ethics probes conclude that the four G.O.P. senators violated the S.T.O.C.K. Act and their oaths of office, Johnson, Inhofe, Loeffler, and Burr should be expelled from the chamber by their colleagues in accordance with the rules of the Senate and Article I, Section V of the Constitution. They should be prosecuted by the federal government as Collins was as well to send the unmistakable message that no man or woman is above the law. Anything less is to retreat to the corner of cynicism that has dominated post-Watergate politics just when the moment demands courage the most. If today’s Senate Democrats and the few moderate Republicans occasionally posturing as mavericks if they think it will sell copies of their memoirs do not get that even as an increasingly anti-democratic and corrupt Republican Party asserts its will, then there is no opposition force apt for this moment and this era.

It is this open, unapologetic corruption that has fermented in the very same G.O.P. who had the gall to make Hillary Clinton’s email server front page news every morning while the planet burned and the gap between rich and poor grew. Once the party of Lincoln, time after time in the past century, the Republican Party has become one part cult of personality, one part shameless transnational crime syndicate, and one part bag man for Big Business. From their near-unanimous defense of the president’s solicitation of malign foreign interference in American elections to Loeffler voting on issues and personnel that impact the personal fortune of her CEO husband, shameless corruption is essential to the function of the Republican Party.

Each senator’s case differs slightly in its substance but each points to the same troubling conclusion: that, once confronted with the nonpartisan assessment of the federal government’s leading public health experts that warned that the U.S. was to be caught off-guard and overwhelmed by a novel pandemic, their first concern was not the constituents whose lives would be uprooted in the best of scenarios and lost in the worst. As any corrupt transnational arms dealer will tell you, if you cast aside any sense of moral or civic obligation (even apparently if your job is to represent the people of your state), if you can blind yourself to the horror of death, there is always a quick buck to be made somewhere. Rather than courageously serving their country and running into the flames of a humanitarian crisis like countless healthcare workers in their states, they ran to their checkbooks and served only themselves. If that does not merit expulsion, the Senate is not the world’s greatest deliberative body: it is a lawless playground for the rich and powerful to exploit the veneer of public service for private personal gain.

A.J. Manuzzi is a third-year Political Science major in the School of Public Affairs. He is an editor for domestic affairs for the Agora.

Image courtesy The White House

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