by Dick Morris
A number of House members have a negative net worth and at least ten have a net worth of $0.
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POOREST MEMBERS OF THE HOUSE
House Member: Laura Richards (D-CA)
Average Net Worth: –251,498
House Member: Nydia Velazquez (D-NY)
Average Net Worth: –159,499
House Member: Louis B. Gohmet (R-TX)
Average Net Worth: –150,001
House Member: Gregory Meeks
Average Net Worth: –87,500
Source: http://www.opensecrets.org/pfds/overview.php?type=W&filter=H&sort=A&ptysort =A&year=200931
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Executive Branch
The net worth of the highest level employees in the executive branch is also available in that section. Click on “Executive” and choose “Richest.”
Hillary Clinton was the richest member of the executive branch in 2009, with an average net worth of $31,243,506. Next was Rahm Emanuel, former White House chief of staff, with an average of $10,995,042. President Barack Obama was number five with an average net worth of $4,960,505 as calculated by OpenSecrets. Vice President Joe Biden is number sixteen, with an average net worth of $89,512.32
In 2008, United States Ambassador to the UN Susan Rice was the richest member of the executive branch. There is no 2009 disclosure for her in the database.
REVIEWING FINANCIAL DISCLOSURE REPORTS
You should still be in the “Net Worth” section. To look at individual disclosure forms that are reprinted on opensecrets.org, go to the small screen on the right and type in a last name. As a case study, we’ll look at Democratic congressman Maurice Hinchey of New York. His financial disclosure statement, earmarks, wife’s occupation, and travel data provide an insight into how vague and inadequate the reporting requirments are, how they need to be changed, and exactly why we need to keep track of these folks. It’s not that Congressman Hinchey has clearly violated the rules, it’s that the rules are meant to leave the voters with insufficient information to monitor their representative and make important voting decisions.
To get to copies of Congressman Hinchey’s disclosure statements and summaries of his financial data, go to the right side of the “Personal Finances Overview” page to the search box. Fill in the first three letters of the member’s name—in this case, HIN. Click and it will bring you to the Maurice Hinchey page.
Click on 2009 for the most recent disclosure information. You will see that Hinchey’s net worth for that year ranged from a low of $407,017 to a high of $1,080,000, ranking 224th in the House. The reason for this wide variation is that the congressional rules do not require disclosure of the exact value of an asset—only a category.
Below his net worth, you can click on “Assets” and see a description of each one. In 2009, his assets included cash and mutual funds, but his biggest holdings were two properties in Saugerties, New York, his hometown—one on Partition Street and the other on Echo Hill.
The history of Hinchey’s reporting of the value and ownership of these properties reveals why there needs to be regular audits, to ask obvious questions and verify the information provided by members of Congress. The first time that Congressman Hinchey listed the two properties as assets was in 2004. His initial filing failed to include the Partition Street property, but he wrote a letter of explanation and filed an amended form.33 At the time, the Partition Street property was valued at $15,001 to $50,000, and the Echo Hill property was valued at 0. Both properties have realized a stratosphoric increase in value. Here’s why—
HINCHEY’S EARMARK: HELPING HIMSELF?
In 2010, Maurice Hinchey sponsored an earmark for $800,000 to the Department of the Interior for water and wastewater infrastructure improvements in the Town of Saugerties.34 In a 2009 press release announcing the grant, Hinchey took credit for helping the town in its new economic development project, Partition Street Project: “Congressman Used Position on House Appropriations Subcommittee on Interior to Obtain Funds, Which Will Help Promote Economic Growth in the Village” and called the project “critical to the village’s commercial future, providing adequate wastewater service to more than 30 retail businesses….”35 The press release specifically mentioned a portion of Partition Street that would be involved in the infrastructure upgrade.
This upset a number of people in Hinchey’s district. Why? Because Hinchey owns a quarter of the land that is to be developed in the Partition Street Project. He and town officials have changed their tune on the reach of the earmark. Although no one corrected the 2009 press release, now Hinchey and the town deny that the earmark will in any way benefit the land owned by Hinchey.36 The earmark may or may not have benefited Hinchey and raised the value of his Partition Street property, but something sure did. Between 2004 and 2009, his own disclosure forms reflect an increase in the value of the property from $15,001–$50,000 in 2004 to $250,001–$500,000 in 2009. And this in one of the most economically depressed parts of the nation!
During the last campaign, Congressman Hinchey became a little touchy when the issue of Partition Street was raised. When questioned about a possible conflict of interest, he told the reporter to “shut up” and then jabbed him in the chest and shoved him.37 Hinchey has repeatedly denied any personal gain from the earmark, and it is impossible, at this time, to determine if that is true. But the entire Partition Street Project and Hinchey’s involvement in it demonstrate the need for ethical reforms. We need to know who members of Congress are in business with and what the nature of any such businesses are. And, of course, we need to ban earmarks so there’s no opportunity for self-dealing by any congressmen.
We have no idea how Mr. Hinchey came up with the funds—he may have a very simple and legal explanation. His disclosures, however, do not provide any answers and underscore the need for oversight of all Congressional filings.
Both properties were purchased in 2004, when Hinchey showed cash assets of $1,000–$15,000.38 Yet, somehow, that year, he was able to buy real estate with a combined value of from $30,000–$100,000. And within a year, the properties had drastically increased their value. The Partition Street plot surged to more than five times its original value:
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PARTITION STREET PROPERTY VALUATION AND TRANSACTION
2004 purchased @ 15,001–50,000, March 1, 200439
2005 disclosed value 100,001–250,00040
2006 disclosed value 100,001–250,00041
2007 disclosed value 250,001–500,00042
2008 disclosed value 250,001–500,00043
2009 disclosed value 250,001–500,00044
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The Echo Hill property also had a substantial increase in value. In just one year, it more than doubled its value. Two years later, it doubled again:
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ECHO HILL PROPERTY VALUATION AND TRANSACTIONS 2004–2009
2004 purchased @ 15,001–50,000, May 15, 2004
2004 sold @ 50,001–100,000, December 20, 200445
2004 capital gain: 5,000–15,000, December 20, 200446
2005 disclosed value: 50,001–100.00047
2006 disclosed value: 100,001–250,00048
2007 disclosed value: 100,001–250,00049
2008 disclosed value: 100,001–250,00050
2009 disclosed value: 100,001–250,00051
Source: opensecrets.org, http://www.opensecrets.org/pfds/CIDsummary.php?CID=N00001222&year=2009
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So what’s wrong with this picture?
Well, first of all, the 2004 disclosure form reports both the purchase and sale of the Echo Hill property before the end of 2004. In addition, the report indicates a value of “NONE” for the Echo Hill property in December 2004 and a capital gain from the sale of between $5,000 and $15,000.52 So, according to all of the statements filed and certified as true, the entire property was sold and a substantial gain was made in 2004. Had only a portion of the property been sold, there would have been a remaining value that should have been rep
orted on the disclosure form. There was none.
So why did Congressman Hinchey continue to list the property as an asset on every disclosure statement from 2005 to 2009? Voters will have to ask him because there is no obvious explanation.
The 2004 report suggests that the property was flipped in less than seven months from the time of purchase, but nevertheless generated a substantial profit. It was not even held long enough to qualify for a capital gains tax instead of ordinary income tax. Because of the absurd rules of reporting, we do not know the actual price of either the purchase or the sale. But we do know that he sold it for between a gain of $5,000–15,000. Not bad for a short-term holding.
Congressman Hinchey’s financial statements, like those of many other members of Congress, make it obvious that reform is needed. Until recently, no one’s been watching, but it’s time for us to take on that job.
Note: Members of Congress are not required to disclose the value of their personal residences or any mortgages attached to them.
Let’s see what else is available. Of course, you can look back at the summaries starting in 2004 and at his actual filings since 1998.
By clicking on “Transactions,” we can see all of the mutual funds that he bought and sold in 2009. He sold funds in the range of $33,000 to $145,000, and he bought other funds.
Finally, we can look at “Travel.” Congressman Hinchey went on two trips sponsored by the Aspen Institute—one to Amman, Jordan, and the other to Dubrovnik, Croatia, for about a week on each one.
Hinchey lists no gifts and no honoraria.
After viewing Congressman Hinchey’s 2009 disclosure, what questions are raised? What do we learn about him?
After checking all of the available disclosures, it’s clear that Congressman Hinchey likes to travel. Throughout his Congressional career, he’s had the opportunity to see the world—for free, of course. His wife accompanied him on a few of the trips.
From 1998 through 2009, he’s been on fifty trips—about four each year. Forty of the trips were to foreign countries. He’s visited the following places:
Ft. Meyers, Florida
Naples, Florida (3)
Miami, Florida
Memphis, Tennessee
Newport, Rhode Island
St. Louis, Missouri
Zion National Park, Utah
Alaska
Cancún, Mexico
Punta Mia, Mexico
Costa Rica
Liberia
Honduras
Montego Bay, Jamaica
Madrid, Spain
Moscow
Vienna, Austria
Hamburg, Germany
Taipei, Taiwan (3)
Beirut, Lebanon
Frankfurt, Germany (2)
Berlin, Germany
Düsseldorf, Germany
Israel
Athens, Greece
Rome, Italy
Baden-Baden, Germany
Havana, Cuba
Egypt
Vancouver, B.C.
Jordan
Grand Cayman
Germany
St. Petersburg, Russia
Helsinki, Finland
Prague, Czech Republic
Madrid
Lichtenstein
China
Brataslava, Slovakia
Budapest, Hungary
Kazakhstan
India
Amman, Jordan
Dubrovnik, Croatia
Source: Maurice Hinchey financial disclosure statements 1998-2009, at http://www.opensecrets.org/pfds/CIDsummary.php?CID=N00001222&year=2007
CONGRESSIONAL SPOUSES
There is another area that needs reform and emerges from a review of another of Congressman Hinchey’s disclosures. We need to know much more about the business activities of spouses of members and how much money they make. More and more Congressional spouses are working in areas regulated by Congress. Many are suddenly invited to join lucrative corporate boards once their spouses are elected. Right now, all that is required is a disclosure of who the spouse works for and that they are paid “more than a thousand dollars.”
Hinchey reveals that, in 2009, his wife was paid more than $1,000 by Patricia Lynch Associates and DKC Government Affairs, both Albany, New York, lobbying firms.53 The wife’s name was not disclosed. But a Google search indicates that in 2006, Hinchey married Allison Lee, who had worked in his district office. After they married, she became a lobbyist in Albany with one of the most powerful firms in the New York capital. More recently, she left to head up the lobbying arm of DKC.
One of Lee’s clients was a Landsman Association from Texas that was trying to buy up land/or leases in anticipation of drilling for natural gas in shale in New York. Hinchey testified that the federal government, not states like New York, should regulate the drilling at a time when New York’s governor was considering a moratorium on drilling. When questioned about his wife’s work, he claimed that he did not know that she was lobbying on the issue.54
Is ignorance bliss?
Regardless of whether there are potential conflict of interest issues, and it is not clear that is the case here, voters have a right to know exactly who a member’s spouse is working for, who spouses’ partners are, what exactly they are working on. It’s becoming a trend.
Once Barack Obama was elected to the Senate, Michelle Obama was invited on a corporate board in Chicago. Former senator Chris Dodd’s wife, Jackie Clegg, had the same good fortune. Once her husband ascended into leadership positions in the health and banking committees, corporations with business or potential business before these committees suddenly sought out Ms. Clegg, who had no office, employees, or even a business phone. It’s been quite profitable. Since her marriage to Dodd, her income has quadrupled, as she has been appointed to well-paid positions on boards of corporations that do business in the financial, insurance, health care services, and housing fields—almost all of which had concerns that fall under the jurisdiction of committees where her husband yields influence. These board appointments, along with valuable stock that came with it, suddenly turned the Dodds into comfortable millionaires.
For example, in 2007, Clegg disclosed stock assets from the various boards of $530,000–$1,353 million.55
There are members who disclose a spouse’s position and salary, even when it is for an institution that seeks money from Congress. Chuck Schumer, for example, reports that his wife works for the City University of New York, which obviously lobbies for federal money. Others should follow his example.
THERE’S MORE OUT THERE!
There’s lots more information available, but here are a few important things to look at:
Donor look-up on opensecrets.org.
Go to the home page, click on politicians, click on Congress. The last item in the left-hand column is the donor look-up.
Also, check out the Sunlight Foundation at http://sunlightfoundation.com/. They have numerous projects dedicated to transparency and open government.
And try CREW: citizensforethics.org. They are ethical watchdogs who litigate on transparency and corruption issues.
There’s much to be done. Join us in this journey of necessity.
ETHICAL REFORMS THAT ARE NEEDED IMMEDIATELY
We’ve described just some of the many abuses that are commonplace in Congress today. There’s no question that there is a need for serious reforms—and now is the time to demand them.
We’ve made some proposals in the past that we’ll repeat here and we’ve added a few new ones:
Establish an independent Office of Congressional Ethics, with a full-time staff and prosecutorial powers to receive and investigate complaints, initiate its own investigations, subpoena documents, compel testimony, and monitor and carry a mandate to randomly audit all financial disclosure filings by members of Congress and lobbyists.
WHY: because currently there is no regular monitoring or any other serious oversight of the mandatory financial disclosure forms. Members simply file their dis
closure statements and no one ever checks to see if they are accurate—or if they even make sense. There should be random audits. A review by us of many of them raise many questions. Someone needs to look at them.
In the rare instances when a complaint is filed against a member by an outside party, it is reviewed in secret without any explanation to the public of how the conclusion was reached that there was no violation, which is the usual resolution.
To instill any kind of public confidence, the entire process must be open and transparent, and there have to be serious penalties—including, when warranted, criminal prosecutions. Right now, the process is an absurd whitewash. For example, the House Ethics Committee recently found Congressman Charles Rangel guilty of eleven counts of violations, including failing to report income on a rental property, filing inaccurate financial disclosure statements, using a rent-stabilized apartment as a campaign office, and improper solicitation of charitable contributions for a public policy center named in his honor. The punishment: a censure vote on the House floor and a recommendation that he pay the IRS for his delinquent taxes. A slap on the wrist!
And even then, seventy-seven House members voted against the resolution. The House and the Senate ethics committees have conclusively demonstrated that they are incapable of policing the behavior of the members of Congress. A full-time, well-staffed, and empowered Office of Congressional Ethics is a vital necessity. Until it is created, there will be no real reform of Congressional ethics.
2. A ban on all earmarks
WHY: earmarks are increasingly used as bait for bribes. Between 25 and 50% of the campaign chest of the typical incumbent senator comes from campaign contributions from lobbyists and employees of companies who receive earmarks. Earmarks are also used by some members to feather their own nests and increase the value of property they own. As noted above, concerns of this sort have been raised in connection with Congressman Hinchey and, as we reported in our previous book, 2010: Take Back America—A Battle Plan, similar questions have attached to earmarks made by Senator Harry Reid that appear to have increased the value of his property.