Monday, November 14, 2011

How Congressmen Get Rich

Steve Kroft reports that members of Congress can legally trade stock based on non-public information from Capitol Hill.

Senator Releases Breathtaking Report On How The Government Showers The Rich With Free Money

Sen. Tom Coburn (R-OK), one of Congress' biggest deficit hawks, released a report on Monday showing that the federal government has paid over $9.5 billion in benefits to millionaires since 2003.

The memo is titled "Subsidies of the Rich and Famous" and addressed to taxpayers, and states that millionaires (those with an adjusted gross income greater than $1 million per year) receive benefits worth more than $30 billion from the government each year including tax giveaways and federal grant programs. And almost 1,500 millionaires paid no income tax to the federal government in 2009.

From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working. This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations.

The populist tenor could hardly be topped by an Occupy Wall Street protester — and this is coming from one of Congress' most conservative members.

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Members of Congress can legally make trades on non-public information they obtain during their official duties, CBS News' '60 Minutes' reported on Sunday night.

Branded 'honest graft,' lawmakers can use market-moving information that they learn in congressional committees to trade on the stock market — actions that likely would carry stiff jail and civil penalties if they did not hold public office.

In one example, Steve Kroft reports that Rep. Spencer Bachus (R-AL), now the chair of the House Financial Services Committee, bet against the market in the days before the 2008 financial crisis hit — after getting 'apocalyptic briefings' from Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson.

Kroft also raises questions about the trading patterns of Speaker of the House John Boehner and House Minority Leader Nancy Pelosi — and the real estate purchases of other senators and representatives.

The report relies heavily on the work of Peter Schweizer, a fellow at the conservative Hoover Institution, whose work '60 Minutes' independently verified.

"This is a venture opportunity," Schweizer told '60 Minutes.' "This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family."

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