Congress

Are Members of Congress Too Rich?

For the first time, most members in the U.S. Congress are millionaires.

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Thomas Hawk/Flickr

A person can't open the newspaper these days without encountering a reminder of the plummeting value of the dollar. Sunday's New York Times was a perfect example. The lead editorial, about money in politics, reports, "As the money torrent rises, it's no coincidence that for the first time in history, most members of Congress are millionaires (268 of 534 House members), according to the Center for Responsive Politics."

This is indeed "no coincidence," but not in the way the Times intends. The rising number of millionaires in Congress is not some indication that the legislature has been overrun by the rich, but further evidence, as if it were needed, that a million dollars isn't what it used to be. The Center for Responsive Politics count the Times references makes no adjustment for inflation, so there's no way to tell, as measured by any real yardstick, whether today's Congress is richer or poorer than it used to be. In fact, the rising number of millionaires in Congress may be a sign that the chamber is more representative than it is plutocratic; CNBC reported recently that there are a "record number of millionaires living in the U.S.," an estimated 10.4 million of them, if one counts by assets and does not include the value of one's primary residence.

Elsewhere in the Sunday Times, a column about the uncertain fate of the Big Apple Circus, a non-profit entertainment organization that is a cultural treasure if there ever was one, reports, "In 1981, the year that the Big Apple Circus, which Binder founded with Michael Christensen, began to pitch its tent behind Lincoln Center, the price of a bagel at Zabar's was 35 cents. Now that same bagel was $1.66, the ad explained, and so by the logic of bagel math the average price of a ticket to the circus might have risen accordingly, from $25 in the early 1980s to $118 today. Instead it was $65." (The circus, or the Times article, might have used a different example: the price of a single copy of the New York Times at a newsstand in New York City, which soared to $2 in 2009 from 60 cents in 1999.)

The leap from confusion to clarity in each of these cases involves seeing them not as news about the rising prices of bagels, the rising wealth of Congressmen, or the rising price of newspapers, but as details in a single big story about the declining value of the dollar used to measure those things.

A useful new guide to this situation has just been published by Encounter Books in the form of John Tamny's Who Needs the Fed? What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank. Tamny emphasizes that this an issue where the blame is bipartisan. George W. Bush's Treasury Secretary John Snow once asked publicly, "What's wrong with a weak dollar?" During the George W. Bush administration the dollar plummeted in value, from being worth 1/266th of an ounce of gold at his inauguration in 2001, to a mere 1/940th of an ounce of gold in July 2008. In 1933, President Franklin D. Roosevelt devalued the dollar to 1/35th of an ounce of gold, from 1/20th of an ounce. Nixon delinked the dollar from gold altogether and unleashed a ferocious inflation that it took Reagan and Clinton to whip.

As  Tamny writes, "A truly strong dollar would be one that is unchanging in terms of value. A floating dollar robs money of its sole purpose as a measure meant to facilitate trade and investment."

Without understanding the dollar's definition as a unit of measurement, it becomes difficult to make much sense of the world. Are congressmen suddenly too rich, or is that complaint just class warfare by the left-wing press and its non-profit sources? Why is the circus in danger of going out of business?

Thinking this way about money doesn't mean the Federal Reserve is to blame for all of America's problems, or that a better monetary policy would be a panacea. It does mean, though, that an essential step to making sense of nearly any economic story in the news is, if there are dollars involved, to ask what they are worth, and how it compares to what they used to be worth.

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51 responses to “Are Members of Congress Too Rich?

  1. Make running for office a random lottery. Then cook some popcorn. Enjoy.

    1. Make it like jury duty. Every Monday a thousand people report to Congress, and 100 get picked to make the laws that day.

      1. ^Basically the system in Classical Athens.

  2. For the first time, most members in the U.S. Congress are millionaires.

    This is inspiring, actually, because it’s proof that even the dumbest among us can become wealthy.

    1. Sure, Through corruption and cronyism. Most of them become rich after winning office. They aren’t out in the private sector being productive to get rich.

      As for the title, no, no one is too rich. My objection is to the manner in which these particular leeches get fat.

      1. Way to shit on my little joke.

        1. *cracks fingers*

          My work here is done.

  3. The people in that Ivory Tower known as “The White House” are too rich.

  4. Surely there was inflation before Nixon.

    This strange article also completely ignores the reality that a lot of Congressmen are using their power to enrich themselves.

    1. Not much. Nixon ended the Bretton Woods gold exchange standard.

      1. There was much, actually. All they needed to do was print more paper than can possibly be redeemed in gold. And that’s exactly why they ended the gold standard, so the charade could continue for another couple generations.

    2. There can absolutely be price inflation with a gold standard. The price of a thing can certainly become inflated for many reasons. The cause of that inflation, however, will have nothing to do with the value of your dollar being diminished because the government keeps printing them.

    3. Lookee here.

      Notice how inflation was incredibly steady all the way up til after WW I; it wiggled a fair amount up and down, but overall held remarkably steady for 120 years, with rises during war and deflation back to the pre-war norm afterwards.

      Then the Fed dicked with things and did their best to prevent the standard post-war recovery deflation, primarily because Woodrow Wilson had had his stroke and the Fed was leaderless, and that set a new baseline, so to speak, until Hoover and FDR really made a mess of things with the Great Depression. Even so, inflation as a feature didn’t pick up any steam until after WW II, and then really took off due to the Vietnam War and the War on Poverty, and now it’s so standard that any return to a gold standard would confuse the hell out of econ wizards like Krugman.

  5. Thanks to Congressional overspending and Fed overprinting, a million dollars ain’t what it used to be.
    Being a millionaire (excluding inheritance) should be a requirement for running for Congress. Who wants people to be making the laws who don’t know what it means to succeed in the private economy first?

    1. Who wants people to be making the laws who don’t know what it means to succeed in the private economy first?

      Bernie Sanders?

    2. Who wants people to be making the laws who don’t know what it means to succeed in the private economy first?

      Bernie Sanders?

      1. Barack Obama?
        Hillary Clinton?
        The entire DNC?
        The entire RNC?
        Hitler?
        Marx?
        Every progressive douchebag in government ever?
        All of the above?

  6. I have a sneaking suspicion that it has something to do with insider trading laws that apply to the peasants, but not their betters in Congress.

    1. That is a large part of it alright, the personal charity foundations are the icing on top.

      1. I read a while back that legislators, whose official salary is a relatively meager sum, tend to experience high growth in their net worth after getting into Congress. Notwithstanding the financially retarded Bernie Sanders.

        1. Considering BS has literally only lived on the public teat his networth is pretty impressive.

  7. I have it on good authority that the real problem in this country is deflation. Why buy today when your dollars will buy more tomorrow?

    1. Savings and accumulated capital never built anything! The only thing that creates prosperity is the immediate consumption of any and all available resources. Deferring gratification is utmost challenge of our generation. /Krugtron

      1. /Krugtron

        Unikrug.

        “Oh shit, what do we do now?”

  8. Can the rise in wealth be tracked from year to year by individual congressman? If Cong. x’s assets rise by 25% in a year where the stock market is flat, maybe someone can look into the reasons behind it. There are actually some congressmen, with young kids, who barely get by on their salary but there are probably a ton who happen to buy useless real estate just before the announcement that a new ramp is going to be built from the interstate to their
    property where a mall will now be located..

  9. Let’s hear it for the Big Mac Index!

  10. Lets ignore the obvious that congress make a strong salary (well north of the $172,000 on paper when expenses are considered) and they hold these jobs for long periods. So even if the guy is a 5 term congressman, its not out of the norm to think he has put away $1M in surplus, not counting the power of cumulative interest. That and lets be honwst how many are “poor” when they start?

    1. Wait, which is it?

      That and lets be honwst how many are “poor” when they start?

      even if the guy is a 5 term congressman, its not out of the norm to think he has put away $1M in surplus

      1. Both.

        Lets say I am a moderately successful businessman who becomes debt free (except for house) when I am 40 and I have a scant $200,000 in assets. 5 terms of congress later there is no reason my wealth couldn’t have grown by $800,000 just by keeping my personal spending under $100,000 per year.

        When you make $172,000 and have a hefty expense budget (i understand its $1M for senate, not sure what it is for a representative), its not hard to imagine just in raw terms $80,000 per year couldn’t be saved.

        The point is even when they start in the position of debt free middle class, its not hard to see that needle moving over $1M quickly. If they are truly “poor” they should still be able to turn it around rapidly with that size income.

        Honestly it is kind of mind numbing that Bernie Sanders is worth so little! Feelin the Bern in your pocketbook?

        Given the recidivism rate in congress its surprising more of them don’t have $1M in assets.

        And yes all of this is in the proper context that $1M “just ain’t what it used to be”. I would be interested in a histogram of congressional wealth in $200k increments… How rich is say Nancy Pelosi compared to the rest of the house, etc.

        1. Sorry bud, no deal, you can’t argue both sides at once unless you’re a politician.

          1. I am considering it.

        2. Oh how I long for the days when Congresspersons were “public servants”.

          /sarc

  11. From the linked article:

    Experts estimate that campaign spending, which has risen inexorably in recent years, will easily surpass the $6.28 billion record set in the 2012 federal elections and could conceivably reach $9 billion, much of it for political advertising.

    Inflation guarantees that the sheer dollar amount will rise from year to year.

  12. Um…534 House members? We have enough already, don’t just arbitrarily add 100 more.

    1. Well, if we add enough maybe they’ll start killing each other.

  13. RE: Are Members of Congress Too Rich?
    For the first time, most members in the U.S. Congress are millionaires.

    Of course not.
    Our socialist slavers in the Politburo and the Soviet Supreme Senate cannot have enough of our money.
    Just look what a wonderful job they are doing enslaving us and destroying our beloved country.
    You simply can’t put a price on that.

  14. I’d be more interested to see how much they make in the decade after leaving congress. I don’t think anyone in congress should be able to take a lobbying job for a decade after leaving. Their aides also would have to agree to a similar restriction.

  15. No one is too rich unless they got it through coercion or fraud. The problem is that there are too many opportunities in government that should be considered coercion or fraud and aren’t. Let’s not look at how much they have but how they got it. (And I deliberately did not say “earned”.)

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  17. Hey, it’s great that congresspeople are financially well off. Great for them. As far as representing the people, if your figures are correct and there are 10.4 million millionaires in the USA, which has say 330 million residents, then that works out to about 3% of the populace. 50% of the congresspeople are millionaires? Yeah, that’s representative government alright. For about 3% of the citizens. I begrudge no one wealth earned or inherited, but don’t piss on my back and tell me it’s raining. The people in congress have a very narrow group they actually share circumstances with. Certainly some of them have acquired wealth the old fashioned way, but I’d be a lot more sympathetic if they got off their asses and addressed things like the magic property that makes insider trading legal for congresspeople and no one else. Or eliminated the pure bullshit of “equitable sharing” in asset forfeiture cases and returned to due process. The list goes on… I’m sure my interests and some of the congress people’s interests align, but probably not nearly as often as I’d want.

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  19. Of course, it isn’t the money they have, but rather how they got it. Increasingly, surviving in the cesspool of politics involves trading favors for financial backing. Some of that “backing” inevitably ends up in the pols’ pockets, which is how many become millionaires. Our choices to combat the political gravy train are limited. Withholding support for incumbents is an option which I have chosen for about 15 years. If you believe, as I do, that political philosophy and the issues of the day are little more than fodder for the masses to those in power, it is an easy choice.

  20. It’s not that there are millionaires in Congress, it’s the fact that some of them are millionaires BECAUSE they are in Congress.
    Usually by methods that would land you or me in prison.

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