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Do Politicians live on a different planet?
Posted at: Jun/28/2012 : Posted by: mel
Related Category: Politics & Gov, Watching America,
There have been a lot of articles recently discussing the wealth of those we elect to Congress. As we continue to mire in recession, this becomes an important issue. Our Congress is intended to be a “representative body”; between their accumulated wealth and their acquired benefits many of our elected officials appear to have less and less in common with the citizens they are charged with representing. The other night as I was watching the news, I saw various Congressmen being stopped for comments or interviewed as they left some special event. When the political sound bite ended, the news cut to a commercial promoting the 2012 release of F. Scott Fitzgerald’s “The Great Gatsby”. We got to be dazzled by the opulence of Gatsby’s world. What caught my eye were the similarities between the two video clips. From a literary perspective, Fitzgerald showed us that Gatsby suffered from great personal tragedies. Nevertheless, the similarity I saw was that Gatsby lived a life without the day to day challenges most experienced and enjoyed a level of luxury most of us cannot relate to. In a similar vein, it appears that many of our politicians are too rich to understand or relate to the burdens we face on a daily basis. This is becoming the “age of austerity”, yet America appears to be run by people not faced with this same challenge. President Obama’s net worth is currently estimated at $8.3 million, while his Republican rival, Mitt Romney is reported to be worth in excess of $255 million. Being an election year, both men have tried making a character issue out of each other’s lifestyle and wealth. By modern standards, Obama’s $8.3 million is a fairly modest sum for a president. Most of this money was gained though book sales. On the lifestyle side, there is no doubt that our president seems to take a lot of vacations. Leveraging his family position, Mitt Romney has been able to position himself to turn a nice inheritance and family connections into a staggering sum that most of us can’t begin to comprehend. It would be easy to argue that Romney is virtually “living on another planet.” I don’t believe there are any planets for sale at that price point, but plenty of islands have sold for less. Closer to home, Romney has filed the applications to bulldoze his $12 million house in La Jolla California, with plans to build an even bigger one on top of it. I like to optimistically think of myself as middle class, but I doubt if I met either of these men we would have enough in common to have a conversation. How can either of these men empathize with the financial plight of America's middle class? During the early stages of the current presidential campaign, Rick Santorum made a very moving statement that he had also suffered in the credit crunch because his house had fallen 25% in value. I failed to tear up on this news because that meant it (his house) fell from $2 million to $1.6 million in value. We have all suspected for a long time that our politicians are rolling in money, but the research I did surprised even my most cynical side. It is amazing what you can learn looking at census data. The average 2010 annual income for a U.S. citizen was $49,445. In the same 2010, the average net worth of a U.S. senator was $13.2 million, and the average worth of a House of Representatives member was $5.9 million. Despite all the speeches implying otherwise, the wealth is spread across both parties. An interesting fact I also found was that seven of the 10 richest senators are Democrats. Many members of Congress earned their money the good old-fashioned way (including marrying and inheriting it), and we shouldn't necessarily hold their success against them. One politician who stands out for having a comparatively unsettled financial history is Obama. Yes, his $8.3 million is a lot of money, but he comes from an unusually impoverished background, including a period when he and his mother lived on food stamps. His contemporary wealth is built on a mix of his salary and royalties from his popular books. There have been many articles referencing the fact that “Congressional benefits are better than everyone else’s.” In our information age, virtually anything can be researched, especially if it pertains to the government; in that spirit here are some facts I learned. • The current congressional annual salary is $174,000. • All Congress members who were elected since 1984 have Social Security taxes withheld. • Congressmen are eligible upon retirement for a pension (something only available to a small percentage of private sector employees). • The average annual pension benefit paid out in 2010 was less than $40,000. • Congressmen are eligible for Social Security benefits at age 62. • Despite not being part of the government pay freeze, Congress voted to forgo an annual raise in 2009, 2010 and 2011. • Members who leave office before serving five years because of an election defeat or resignation are not eligible for a pension. • Members of Congress can only draw their full pension at age 62 if they have completed five years of service, at age 50 with 20 years' service, or at any age with 25 years' service. There are also rules for drawing a reduced level of pension. • There is also a "defined contribution" plan available to all federal employees. This plan is similar to the 401(k) plans in the private sector with one minor difference: Whether or not the employee chooses to save anything, the government contributes 1 percent of base pay to the savings plan. • Their medical care is virtually the same as any other Federal employee with one exception. For an annual payment of $503, members can receive routine care from the Office of the Attending Physician, which has facilities in the Capitol. ABC News reported last year that these services include physicals and other examinations, on-site X-rays and lab work, physical therapy and referrals to medical specialists. This special medical benefit does not pertain to their families. While Congressional retirement and health care benefits are generous by the standards of most workers, they are far less than the lavish full and early pensions reported by many political pundits; clearly more urban legend than fact. Despite the fact versus fiction revelation about retirement benefits, clearly the Washington elite have little in common with the average American citizen. American democracy is saturated with cash. Recently Wisconsin, Gov. Scott Walker spent $30.5 million to beat Tom Barrett. Many of the donations to this race exceeded $100,000. Records indicate that 14 billionaires gave to Gov. Walker’s campaign despite the fact that only one of them even lives in Wisconsin. Similar spending levels are common in Senate races. People and organizations just don’t spend that kind of money without expecting something in return. Influence and money have been best friends for a long time. While my initial research indicates that Congressmen are not benefiting from lobbyists, I don’t know how to look at the families or what gains they might experience shortly after retiring. Clearly, the lobbyists are going to be better at hiding their gifts and rewards to Congressmen than I would be at finding the money. Discussion about the role of money in politics invariably centers on campaign donations. But with such gigantic sums flying around, there has to be a cultural impact as well. Politics has become so saturated with cash that its protagonists have started to feel surreally detached from everyday life. I would like to believe that influence is not pedaled in our nation’s capital, but while I can’t directly trace the cash, the evidence is to the contrary. Lobbyists are one of the biggest industries in Washington, and one way or another; nothing seems to happen without leveraging their ability to encourage a specific legislative outcome. One of the best and highest profile examples of the lobbyist impacts on Washington business is Senator Orrin Hatch and Microsoft. By the late 1990’s Microsoft had grown to prominence as one of America’s new and big firms. Microsoft employed thousands and helped to spin up an entire industry. There is no doubt that many of Microsoft’s business practices were predatory and monopolist, especially during the “browser war”. During this same period of time Bill Gate went out of his way to focus on business and not doing business with lobbyist, ultimately he got called before the Judiciary Committee and its chairman Orrin Hatch. Since that spanking, Gates has learned to play the Washington game. Microsoft has now contributed over $100 million to Political Action Committees and made indirectly, numerous maximum $10,000 campaign donations. Clearly, our elected representatives live in a world of influence and benefits that the rest of us have no access to. I guess the days of the citizen legislator are long gone. The intensity and temptations of luxury and wealth has to impact the ability of lawmakers to empathize with voters on very low salaries or none at all. It's easy to imagine that the debate over health care reform or the Bush era tax cuts is affected by the fact that, for many people on the Hill, the health care debate is an academic question and the Bush era tax cuts are obviously, personally advantageous. Without showing any political bias to one side of the aisle or the other, it appears that regardless of political affiliation, the average profile of a Congressman is a rich (or soon to be rich), white, middle-aged, male lawyer. Despite their speeches, there is a clearly very little if any experience at running a business, making payroll or trying to survive on welfare payments in Congress. A simple example of Congresses lack of real business experience came in January 2012. Congress proposed and passed a 60 day payroll tax relief bill for business. Since businesses need to send quarterly tax estimates to the IRS, this meant adding a significant level of complexity and related time by each businesses finance departments. This happens because the withholding rules are different for the first 60 days of the quarter than for the last 30. I can’t believe if anyone in congress had any real business experience that this would have been allowed to pass. Imagine how much this ultimately cost to implement for small businesses distributing the cost of this special accounting effort over a small block of employees. Clearly, Government is increasingly being run by people who, financially, have little in common with their constituents. I understand that there is a difference between the policy side of business or government and the operational side. Clearly, Congress’ role is the policy side of government. Nevertheless, why are they allowed to leave Washington and go home or take vacations while there are still significant issues left on their agenda? For most of us, our bosses or managers would never let us just stop work and leave with that much stuff left undone. When the calendar says vacation, they pack up and leave town with no repercussions to their pay or benefits. Between 1984 and 2010, the average net worth of American families decreased by just under 0.7%. During the same period of time the next worth of members of Congress, on average have seen an increase in their net worth of approximately 159%. Clearly there is a benefit to being in Congress that the rest of us can only watch with envy and disdain. Just as important is that despite all the rhetoric along party lines, it appears to be very financially lucrative to be a member of Congress. Just about 149 years ago a dedication speech was made in which a noted American used the phrase “government of the people, by the people, for the people.” As I look at the growing chasm between the accumulated wealth and lifestyle that Congressmen and other elected officials enjoy and the people they are charged to represent; I am hard pressed to believe those words are more than a historical footnote.
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