The New York Times reported this week that 97 members of Congress “bought or sold stocks, bonds, or other financial assets that intersected with their congressional work or reported similar transactions by their spouse or a dependent child” between 2019 and 2021. The investigation revealed potential conflicts of interest in almost every area of policymaking, with more than 3,700 trades in just three years.
The same goes for defense policy. At least 25 members served on committees that shaped national security policy and traded financial assets with companies that could create competing interest in their work, such a defense stock. Republicans and Democrats may have found rare ground, despite a near-even split within their respective parties.
The majority of these members sat on the House and Senate Armed Services Committees — the committees responsible for the budget and oversight of the Department of Defense.
James Inhofe (Republican), the former chairman of the Senate Armed Services Committee, is on the list. He bought and sold shares of technology firms as they fought for a better deal. $10 billion The Pentagon signed a cloud computing contract that eventually went to Microsoft. Rep. Pat Fallon, a member of House Armed Services Committee (R-Texas), cancelled the contract when the Pentagon decided to cancel it later. sold Two weeks before it was made public, Microsoft stock could have been worth as high as $250,000 Fallon served The subcommittee responsible for the deal was represented by a spokesperson said at the time that he had “absolutely no prior knowledge the Pentagon intended to cancel” the contract.
It also includes Rep. Ro Khanna, D-Calif. reported There are more trades than any other member. Though they were “made by trusts in the name of his wife and young children,” these trades spanned all of the top five weapons contractors — Lockheed Martin, Raytheon, Boeing, General Dynamics, Northrop Grumman — which could conflict with his role as a member of the House Armed Services Committee. Khanna was an opponent Overspending at the Pentagon is a sign that there isn’t always a straight line between stock ownership, votes on the budget, and stock ownership. However, this is not the case for many members who cash in on defense stocks and use power to support larger defense spending.
Members of the Foreign Affairs, Homeland Security, Intelligence, Appropriations, and Intelligence committees reported trades that could create a conflict.
John Rutherford, R-Fla.), traded for example Lockheed Martin, Microsoft, BAE Systems stock while sitting on the House Appropriations subcommittee responsible for determining the Department of Homeland Security’s funding. All three of those companies were awarded contracts by the Department of Homeland Security. Rutherford is now bought Raytheon stock on the day Russia invaded Ukraine, a company also being awarded Contracts by Department of Homeland Security
The New York Times analysis focuses on stock trades in companies related to committee assignments. It is difficult to compile such a comprehensive list. Therefore, it is limited to a three-year period. As a result, it doesn’t include instances like Earl Blumenauer (D-Ore.) picking up Raytheon stock the day of Russia’s invasion of Ukraine, or Marjorie Taylor Greene (R-Ga.) buying Stock of Lockheed Martin the day before. By the Times’ own admission, “the analysis is surely an undercount.”
Although all of these lawmakers deny any wrongdoings, it is obvious that Congress continues its approval of defense budgets. beyond What even the Pentagon asks for more than half The rest goes to private contractors, such as Lockheed Martin or Raytheon. This could in turn benefit Congress members who invested in those stocks.
This could create a perverse incentive system, considering that defense stocks tend to rise when there are rising global tensions. War is often good for defense companies’ bottom line; Jon Schwartz noted in the Intercept last year that “defense stocks outperformed the stock market overall by 58 percent during the Afghanistan War.” Some members of the defense industry even acknowledge This connection, as Raytheon CEO Greg Hayes demonstrated during an earnings conference earlier this year.
“We are seeing, I would say, opportunities for international sales. You only have to look at last week’s drone attack in the UAE. They have also attacked other facilities. There are also tensions in Eastern Europe, South China Sea and other issues that are putting pressure over defense spending. So I fully expect we’re going to see some benefit from it.”
The pressure is growing for Congress to seriously contemplate self-regulation in stock trading. Seventy percent of Americans agree. support Banting stock traders from lawmakers, including the majority of Democratic and Republican voters. At least ten people have been banned from trading stocks to this point. six different bills to limit the ability for members of Congress to trade stock.
Despite the popularity these measures enjoy, self-regulation is still a difficult task. Senator Tommy Tuberville (R-Ala.) went on record saying that limiting lawmakers’ ability to trade stocks would be “ridiculous” and that “it would really cut back on the amount of people that would want to come up here and serve.” Tuberville himself traded stock of major defense contractors such as Honeywell and General Dynamics while sitting on the Senate Armed Services Committee.
Confidence in Congress sits at the single digitsAs a result, the Pentagon’s overinvestment has been a problem underinvestment In healthcare, education, as well as addressing the climate crisis. Even if lawmakers defend their trades and call them routine, the goal should always be to eliminate conflict both in the appearance and the reality of it when setting national security priorities.
