Why are millionaire politicians so ridiculously wealthy?
Clever stock deals. Kickbacks. Financially favorable legislation. Base salaries. Speaking engagements. Insider info. Book deals. Could wealth among US politicians have such obvious causes? Or are such reasons only some conspirations? Or is it because some certain offices basically require massive wealth to run, hence limiting top candidates to those who already have the means?
For example, some recent data shows that a modern presidential candidate needs between $50 and $100 million to win in the primaries. Open Secrets states that $14.4 billion was spent during the 2020 presidential election.
While such figures are higher than ever, democratic societies have struggled with the influence of money in politics since ancient Athens, circa the 5th century C.E. For instance, Santa Clara University points out how certain Athenian offices required citizens to meet specific financial requirements in order to run.
That’s how elections devolved into a game of favors for favors among the wealthy and of flattering the public for votes. This led philosophical titans like the Greek Plato to assert that democracies inevitably turn into tyranny.
As it turns out, things really haven’t changed. Even more, nowadays there are more millionaire politicians than in the past. Several studies point out all of the above-mentioned reasons as having an effect on wealth among modern US politicians. Eventually, those rich enough to run largely get richer through insider connections when in office.
The greatest wealth is in the fewest hands
If millionaires in the US created their own political party, that party would make up just 3% of the country, but it would have a 5 to 4 majority on the Supreme Court, a filibuster-proof super majority in the Senate, a majority in the House of Representatives, and a man in the White House.
On the other hand, if working-class Americans—people with service-industry and manual-labor jobs—were a political party, that party would have made up more than 50% of the country since the beginning of the 20th century, but its legislators (those who previously worked in blue-collar jobs before entering politics) would never have held more than 2% of the seats in Congress.
Lots of different types of politicians
When we talk about “political office,” there are many different positions to consider, such as government departments (Department of State, Department of Treasury, Department of Energy, etc.), agencies (NASA, Department of Defense, Library of Congress, etc.), and three branches each with a large spreadsheet of hierarchical subdivisions. Not to mention the countless federal, state, local, etc., functionaries.
Just to give you an idea, a recent study counted over 19 million US government employees in 2022. They all work across 435 different departments and agencies.
In other words, it’s pretty challenging and hard to find the reason why millionaire politicians have so much money. So, who are we having in mind when we talk about extremely rich politicians?
As sources lead us, we’re narrowing our discussion area to what may be called “the highest offices” in the country. Basically, we’re talking about the Congress, the President, and some folks in the President’s inner circle. In other words, it’s more likely for millionaire politicians to hold a position in these offices.
We’ll exclude the Supreme Court because the nine current justices are only collectively worth between $24 and $68. Yes, the word “only” may surprise you, but you’ll understand why we use it when you’ll see how much money many individual Congresspeople have.
Let’s see how much money some millionaire politicians make!
Big short, big earn
According to recent data, Congresspeople in the Senate and House of Representatives boast very comfortable annual salaries. Politicians in both houses make about $174,000 per year, while those in positions like Majority or Minority Leaders get $193,400. Not so bad, isn’t it?
The Speaker of the House earns the most: $223,500 a year. Such wages are more than enough to cover expenses for a lifetime, especially if wisely invested. But are they enough to account for how much millionaire politicians are worth? Some examples would be Richard Blumenthal and his $86.2 million, Michael McCaul and his $125.8 million, and Rick Scott and his ridiculously high $200 million.
“Average” is the key here. To dive more into the subject, let’s take an unexpected detour through the 2015 movie “The Big Short,” which you can find here. It tells the story of what happened inside Wall Street in the run-up to and during the housing market’s disastrous 2008 collapse.
The main idea that the movie depicts is that various financiers “shorted” the housing market—that is, they bet against it because they knew it was going to crash. Once this occurred, some people made mountains of money.
The independent journalist Johnny Harris wanted to see how millionaire politicians ended up having so much money, and he focused on Republican Congressman Spencer Bacchus and his financial trajectory. It turns out that Bacchus made the exact same move depicted in the movie mentioned above. He shorted the market the day the NASDAQ Index collapsed.
Why did he do that? Because he knew this would happen. So those above-mentioned “average” earnings? They refer to investments, even inside knowledge. For millionaire politicians, information isn’t just power but also wealth.
Insider info equals millions
According to experts, it’s not that millionaire politicians expressively rig things to work in their financial favor (well, not always), but more, they’re mingling in places where they have foreknowledge of financially beneficial activities.
And if a Congressman buys stocks knowing that they will go up in a couple of days after such-and-such legislation gets introduced, That’s just one way through which millionaire politicians make even more money.
While this example mentioned above sounds illegal, it apparently isn’t—at least not for Congresspeople. They go into hearings and behind-door meetings with business interests, knowing new legislation is going to come out next week.
This is possible only because the types of insider trading laws that apply to ordinary citizens don’t apply to whatever is discussed in Congress. Meanwhile, experts say that insider trading among private citizens amounts to a $5 million maximum fine and a maximum prison sentence of 20 years.
Marriage, governance, celebrity
It may seem strange that so-called “public servants” become millionaire politicians while in their positions of servitude. Many people might not have a problem with US politicians that became obscenely wealthy, citing the same opportunisting money-making strategies that many others might make use of if given half a chance.
Now, we have to admit that some millionaire politicians are in the financial positions they are because of luck, like marrying into wealth or being born into a wealthy family. There’s obviously nothing wrong with that, but it’s more about the aforementioned challenges of obtaining political office without a massive amount of campaigning money or the issues related to insider information.
While this happens in real life, some parts of the Committee on Ethics’ Code of Conduct call out this type of behavior, stating that an employee of the House cannot accrue any compensation from any source, especially when it’s obtained through improper influence exerted from their position in Congress.
While this “improper influence” may be hard to prove in court, the truth may live in numbers. According to recent data, over 50% of Congresspeople are millionaire politicians, with a median salary of more than $1 million, while CNBC states that 8% of the Americans they represent are millionaires.
If you liked our article on millionaire politicians, you may also want to read 13 Surprising US Politicians Who Went Broke.