"What is clear," according to a report today in the New York Times, "is that members of Congress are getting richer compared not only with the average American worker, but also with other very rich Americans."
While the median net worth of members of Congress jumped 15 percent from 2004 to 2010, the net worth of the richest 10 percent of Americans remained essentially flat. For all Americans, median net worth dropped 8 percent, based on inflation-adjusted data from Moody’s Analytics. ...NYT
They have a base pay of $176,000 a year. Given that most of them have families living elsewhere, that's not a huge amount. It's what they accumulate in their personal portfolio by the time they leave Congress that concerns most Americans.
Where does it come from -- particularly at a time when most of their constituents have, since 2004, seen their incomes flatten out, drop, or disappear altogether?
The data analyzed by The Times corroborated the idea that incoming members are in fact richer than those in the past. The freshman class of 106 members elected last year, including many Tea Party-backed Republicans, had a median net worth of $864,000 — an inflation-adjusted increase of 26 percent from the 2004 freshmen.
Once in Congress, members benefit from many financial perks unavailable to most Americans. Beyond a base salary of $174,000 — an increase of about 10 percent since 2004, somewhat less than inflation — members get extra pay for senior posts and generous medical and pension benefits, as well as accouterments of power often financed by taxpayers or their campaigns. ...NYT
But what about their investments? Haven't the investments of members of Congress shown much greater growth than the investments of their constituents? The Georgia State study showed that yes, they were making a lot more off their investments than you and me.
However, a separate study last year by researchers at Yale and the Massachusetts Institute of Technology found that the portfolios of lawmakers actually performed somewhat worse than average investors. It found that members did do better when investing in companies in their home districts or associated with campaign donors — suggesting that they benefited from their political connections — but still not as well as the average investor. ...NYT
The Times looked at the situation of one member of the House, a Democrat from Arizona, who appears to be doing pretty well given his base salary. He seems to accumulated almost $1 million since entering Congress twenty years ago with $100,000 in savings.
Mr. Pastor, the Arizona congressman, said he never relied on fancy stock investments to make money. He said the key to his good fortune was watching what he spends, paying off debts and, at age 68, collecting Social Security and a pension from his days as a county supervisor.
“I don’t see myself as a man of great wealth,” he said. “To say that I’m enjoying a millionaire’s lifestyle — well, I can tell you, I guess a millionaire’s income doesn’t go very far these days.” ...NYT
The Washington Post, in an even more detailed report today, also points to the reason why members of Congress are richer: they start richer.
... Running a campaign has become much, much more expensive, making it more likely that wealthy people, who can donate substantially to their own campaigns, gain office.
Since 1976, the average amount spent by winning House candidates quadrupled in inflation-adjusted dollars, to $1.4 million, according to the Federal Election Commission. ...WaPo
And the Post goes into the effects on our politics of these changes in the character of Congress.
About a decade ago, academics studying the effect of income inequality on politics noticed a striking fact: The growth of income inequality has tracked very closely with measures of political polarization, which has been gauged using the average difference between the liberal/conservative scores for Republican and Democratic members of the House. The scores come from a database widely used by academics.
“The proximity of these trends is uncanny,” researchers Nolan McCarty, Keith T. Poole and Howard Rosenthal wrote in a a 2003 paper. “Remarkably, the trends of economic inequality and elite political polarization have moved almost in tandem for the past half-century.”
Exactly why this should be is a matter of ongoing research. ...WaPo
Having more money means having less awareness of and sympathy for those in need? Sometimes. But not always. Lack of care for others isn't about our wealth or poverty, it's about whether we're narcissists or we're healthy. And certainly, in this respect, America is not healthy. Behind polarization is the culture of extreme narcissism, a matter on which both the Times and the Post could well spend some research and reporting time.