Insider Trading and the Republican Party’s Obvious Rot

For forty years, the Republican Party establishment has aimed to do one thing: raid the coffers of the American people for the benefit of themselves and their donors.

It’s been hard to call it that, though. The top tax bracket hasn’t been above 40% since 1987 (coincidentally, the year that saw the worst trading day in US market history). It’s hard to remember that from 1917 to 1981, the only time the top tax bracket dipped below 63% was for a ten-year period that led directly to the Great Depression.

But since the Reagan administration, the folks who can best scale their exploitation of American labor have gotten a free pass to grow their fortunes essentially unchecked. It’s absolutely no coincidence that while incomes grew consistently across income brackets during the 1970s, the chart of income growth since 1980 fans out wildly. (Here’s another chart that illustrates the point well.) Not coincidentally, charts of wealth inequality in the US illustrate the same.

This is, by itself, unacceptable. But it hasn’t been enough for those at the top. Not only did it take Obama four years to move the top bracket back from 35% up to 39.6%, but the rich immediately secured a cut back down to 37% with the 2017 tax bill, along with a bunch of corporate tax and other perks that will never meaningfully be seen by the middle class.

That’s not even what I’m talking about, though. Moneyed interests love the way that Trump’s refusal to follow traditional conflict-of-interest norms works in their favor. We’ve come a long way from peanut farms in blind trusts.

What I’m talking about happens to still be illegal, but Republicans have decided that they’re able to do it anyway. Why not give it a shot, right?

Let’s talk about insider trading.

Congress passed the STOCK Act in 2012. This law closed a loophole that allowed members of Congress and their staff to make stock trades based on nonpublic information they learn in the course of their job. This bill passed 417 to 2 in the House and 96 to 3 in the Senate. Overwhelming margins, and rightly so for a bill that seems like common sense. So who voted against?

Three of the five lawmakers are now gone. One of the two remaining, a senator, called it “ludicrous” and “wasted taxpayer time and money.”

That senator was Richard Burr.

Let’s fast forward eight years. On January 24, 2020, the Senate held a briefing on COVID-19 regarding American preparation and readiness. On February 7, Burr co-authored an op-ed on Fox News stating that the US was “better prepared than ever” and that public health officials were moving “swiftly and decisively” to face the threat.

On February 13, Burr sold 33 of his stock holdings, to the tune of somewhere between $682,000 and $1.72 million. Some of those holdings included stakes in hotel and hospitality companies, companies that have lost as much as half their value since then.

On February 27, despite not updating his February 7 stance, Burr was recorded talking about COVID-19 at an exclusive social club, and his predictions were quite accurate: he expected that travel would grind to a halt, that schools would close across the country, and that military hospitals would need to be set up to increase capacity.

Another public proclamation came on March 5, again focused on platitudes about American public health response capacity. Burr explicitly doubled down on his everything-is-fine stance from February 7.

Burr is not one of the wealthier members of the Senate (which is its own problem, if having over $1 million of stock you can unload makes you among the less wealthy of a group). The stocks he sold were likely a majority of the assets he owns.

But Burr came under intense scrutiny after his no vote on the STOCK Act. He knew, or clearly should have known, that this was improper. He should have known that he couldn’t have used information that he wasn’t sharing with the public.

His response, instead, was to deflect and to contest the exclusive nature of his February 27 remarks. And when the reporter breaking the story of the recording reached out for comment about the stock transactions, the response from Burr’s spokesperson was “lol” (although she later provided a substantive answer).

This is egregious. And yet, it might not be the most maddening insider trading a senator did in response to the COVID-19 outbreak.

Meet Kelly Loeffler. She’s a US senator, and even if you follow politics very closely, you might not know that. She was chosen in December 2019 to replace Johnny Isakson and sworn in this January. You may know Isakson because he was wheeled onto the Senate floor in a wheelchair in 2017 after two back surgeries in order to cast a decisive vote to take healthcare away from people.

Georgia governor Brian Kemp, he of massive voter suppression fame, settled on Loeffler as his pick to replace Isakson apparently because she possessed a singular qualification: she is egregiously rich, with an estimated combined net worth with her husband of over $500 million. (We say estimated because Loeffler has asked for an extension on her Senate-required financial disclosure forms.) She has never before run for public office, and her immediate prior job was as the CEO of Bakkt, a cryptocurrency trading market that is a subsidiary of her husband’s company, which itself manages the New York Stock Exchange.

What did Loeffler do after that January 24 briefing? As it turns out, she unloaded between $1,275,000 and $3,100,000 of stock jointly owned between her and her husband over the next month, starting on the day of the briefing. Those stocks are now worth approximately a third less than they were when she sold them.

In addition to those 27 stock sales, she also made two stock purchases. One of those purchases was $100,000 to $250,000 worth of Citrix stock, a company that specializes in telework software.

Loeffler tweeted on February 28 that Democrats were misleading Americans on COVID-19 readiness and that a great plan was in place. She then tweeted on March 10 that people concerned about COVID-19 should remember that “the consumer is strong, the economy is strong, & jobs are growing.”

The dollar amount is more, but to me, that’s not even the evil here. It’s the fact that somebody with a net worth of five hundred million dollars is trying to squeeze more blood out of the stone in the first place. This is one of the people who least needs the money they would gain from the insider trading, and yet she was entirely unable to resist. This bodes well for her committee assignment that will have her overseeing an agency that directly regulates her husband’s company.

But again, we’re not playing by rules anymore. There’s no need when it’s clear that rules are only for normal people.

Jim Inhofe has mostly made a name for himself for two reasons: being unusually prejudiced and rejecting scientific evidence. But apparently, the January 24 briefing was enough evidence for Inhofe to be concerned: three days later, he’d unloaded between $180,000 and $400,000 of his own stock.

This number may pale in comparison to what Burr and Loeffler did, sure. But both of them voted for an aid package that guarantees free testing for COVID-19 and a limited amount of guaranteed sick leave for medium-size businesses.

Inhofe decided that this bill wasn’t friendly enough to small businesses, arguing that these businesses would fold while waiting for payments from the government. His reasoning seems to indicate that he will be interested in the worst provision of the next economic stimulus bill, one ostensibly aimed more at individuals.

That bill doesn’t go far enough. It’s primarily a bunch of corporate tax breaks, and the direct assistance is a one-time payment capped at $1200 per individual (and, inexplicably, less if you make less). It also rolls back at least some of the guaranteed sick leave protections from the last bill, the very same protections that Jim Inhofe was worried about. Never mind, of course, the financial strain people are being put under as it is right now.

Indeed, it doesn’t matter whether or not the Democrats can negotiate continuing aid. Inhofe, Burr, Loeffler, they’ve already cashed out more from this crisis than anybody will receive as direct assistance through any legislation that could possibly be passed. Even if we manage to get a $1500/month UBI for a full year, that’s only 30% of the losses Inhofe managed to avoid by cashing out early. And these are just the senators who’ve made it super obvious. Who knows who else is out there, especially given that over 5% of the Republican caucus is now implicated.

But however many there ultimately are? They’ve already won, and we’re waiting for the scraps they’ll so generously offer us. Scraps that will be insufficient to save millions of Americans from ruin.

But wait, you say. Didn’t we start out by clearly demonstrating that all of this is illegal? And we did. The question, though, is whether or not the insider trading laws will be enforced.

Perhaps they will. Martha Stewart went to federal prison, even if only for a brief time, during a Republican administration. Do you recall just how much Martha Stewart managed to make by selling her ImClone shares early?

Let’s recap:
Loeffler offloaded between $1,275,000 and $3,100,000 in stocks.
Burr offloaded between $682,000 and $1,720,000.
Inhofe offloaded between $180,000 and $400,000.

Martha Stewart went to prison, after a five-week trial, for selling $230,000 of ImClone stock. Yes, Burr’s trades might be eight times more than Martha Stewart, and Loeffler’s 14 times more.

I am a prison abolitionist. I don’t particularly care to send more people to a place that is virtually an automatic human rights violation. But I also am a prison abolitionist because I know that the severity of the punishment stops mattering pretty quickly. Deterrence is actually brought about by increasing people’s perceived chances of suffering consequences, not by the prospect of a harsher sentence.

But in the context of white collar crime, that calculus practically flips. What consequences, short of confinement, would get the attention of somebody who has $500 million and/or decades of personal connections with 100 of the most powerful people in the country? What consequences are there, that somebody cannot buy or call their way out of?

This is assuming, of course, that they are prosecuted in the first place.

Perhaps we should start with calling on them to resign. And perhaps they will. But perhaps they won’t. The rot runs deep, and what’s another norm among hundreds left along the side of the road? (This might be a good place to note that all three of these senators voted to acquit the president in February.)

We cannot expect them to do the right thing. They’ve spent 40 years showing us otherwise.

Our path forward must be chosen accordingly.

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