Constituent policy

The Pelosi portfolio is another example of why Congress should be making policies, not investments

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House Speaker Nancy Pelosi is arguably the most powerful person in the world. President Joe Biden has failed, internationally and domestically, to keep Americans safe or help us succeed. Seventy-five percent of Democrats want him out in 2024. Vice President Kamala Harris is less popular than Biden (only 6% support her as Biden’s replacement in 2024) and she is seen as incompetent, per a Biden administration that we all regard as incompetent. Consequently, the American political agenda is set and implemented by President Pelosi, second in line but undoubtedly the true leader of the ruling Democratic Party.

The person who directs the economic policies of the largest economy in the world should not trade individual stocks, nor should the other 534 members of Congress.

On July 26, Pelosi’s husband sold more than $4 million in shares of semiconductor company Nvidia (NASDAQ: NVDA). He acquired the shares using a derivative instrument that allowed him to buy up to $5 million from NVDA if the price of the stock underlying the instrument reached a certain level. Meanwhile, on July 28, the US House passed the CHIPS and Science Act to incentivize companies to manufacture semiconductors in the United States. Although NVDA will not directly benefit from the incentives, the bill is designed and expected to grow the entire US semiconductor industry. The derivative instrument he used to access the shares was exercised during the previous week while the bill was under deliberation, and when the transaction came under public scrutiny, the shares were sold at a loss before the bill was passed.

RICH SENATOR FOR RE-ELECTION REFUSED TO SUGGEST HE TRADED SHARES BASED ON CURRENT LAW

On any given day, many policy initiatives are floating around Capitol Hill, each of which can affect industry outlook and the outlook of individual companies in different ways. Any member of Congress would be acutely aware of the effects of a bill, if only for no other reason, as industry advocates communicate the effect directly to members when lobbying for or against legislation. . Members of Congress know the likelihood of legislation passing, when it will pass, and the impact on businesses. Information reaches members through professional staff, advocates, voters and party leaders. Knowledge can be used to buy shares in companies with promising prospects, sell shares in companies with gloomy prospects, etc.

House Speaker Nancy Pelosi resisted calls to restrict stock purchases by members of Congress. (AP Photo/Patrick Semansky, File)
(AP Photo/Patrick Semansky, File)

Despite the potential for insider trading, Pelosi opposed the ban on individual stock trading. She told reporters in December ‘because it’s a free market and people – we’re a free market economy’. “They should be able to participate in that.” It’s laughable. Aside from the fact that no individual has done more to undermine the market economy than Pelosi, the argument fails because members’ participation in the economy is already limited in many ways. For example, members are prohibited from earning more than approximately $30,000 above their salary of $174,000 with certain exceptions.

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I’m not saying corporate aid, corporate harm, or insider trading is ubiquitous in Congress. I argue that members’ stock trading adds to a perception of corruption in Congress. A recent poll initiated by Convention of States Action found that 76% of voters believe members and their spouses have an “unfair advantage” in the stock market. The poll found that 70% of Democrats, 78% of Republicans and nearly 80% of independents say members of Congress should not be allowed to trade stocks.

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Pelosi’s reluctance to ban stock trading seems especially suspicious given that she has one of the best-performing stock portfolios on Capitol Hill. With stock holdings in Big Tech giants like Google and returns that beat the S&P by nearly 15% in 2020, she may have missed her true calling here as a hedge fund manager.

Members of Congress can participate in the free market economy as Pelosi suggests, but they should do so through investment vehicles like mutual funds and blind trusts that eliminate temptation and eliminate advantage perceived unfairness that concerns so many Americans.

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