Wayne O'Leary

The New Millionaires' Club

One of the enduring historical images from the Gilded Age of the late-19th century, the age of the "robber barons," is that of the transformation of the American Congress, more specifically its upper chamber, from a servant of the public at large to a handmaiden of large business interests. Best-selling 1930s historian Matthew Josephson painted a memorable, if unflattering, portrait of the fin-de-siècle US Senate as a body representing not geographical units (states) but "one representing economic entities such as lumber, oil, sugar, silver, copper or steel." The Senate of that era, Josephson pointedly reminded his readers, was known, because of its domination by wealthy and self-aggrandizing members, as "the Millionaires' Club."

The contemporary uproar over the Senate's unsavory reputation eventually led in 1913 to the 17th amendment to the Constitution, which provided for the direct popular election of senators. (They had previously been chosen by state legislatures easily manipulated by special interests.) That action ended the more egregious aspects of Senate corruption -- seats were no longer to be had simply by outright bribery or crude political arm-twisting -- but it didn't end the great deliberative body's susceptibility to periodic takeover and misuse. Today, we are living through a modern reprise of the Gilded Age, complete with a comparable corruption of governmental institutions by big money, and the people's Senate has once more become, in every sense, a millionaires' club.

To some extent, the US Senate has always been an unrepresentative body. Newsweek International editor Fareed Zakaria, in his excellent recent study The Future of Freedom: Illiberal Democracy at Home and Abroad [Norton, 2003], calls it "the most unrepresentative upper house in the world." Zakaria is referring mainly to the selection of two senators by each state, regardless of population -- Arizona's 3.7 million citizens have the same numerical representation as California's 30 million -- and he notes the supreme irony of an essentially undemocratic US government (the unelected lifetime Supreme Court being another example) advocating unrestrained democracy overseas. But the unrepresentative nature of the Senate goes beyond constitutionality; it extends to the body's basic composition and to its policymaking function.

According to the most recent available data, based on financial-disclosure forms released in 2003, there were then at least 40 millionaires (22 Republicans and 18 Democrats) among the Senate's 100 members. Since the disclosure forms did not include the value of federal salaries, primary residences and pensions, the list probably erred on the conservative side, leaving out several likely nominees. Nevertheless, after factoring out the four millionaires who departed after 2004 (and however many replacements may have been added by last year's election), there remain 36 elite senators whose voting behavior in the new Congress can be readily analyzed.

It's not a pretty picture. What is immediately apparent is that with some outstanding exceptions (Democrats Corzine, Kennedy, Kerry, Boxer, Dayton and Lautenberg, in particular), the Senate's millionaire members have so far voted, by and large, against the public interest and in their own interest. Their own interest has included legislation backed by big business, the source of much of the Senate millionaires' wealth.

Three bills voted on since Congress came into session are illustrative. One was the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," the so-called reform successfully pushed by the White House and the financial-services industry that makes filing for bankruptcy more difficult for ordinary Americans while protecting the assets of wealthy filers. The Senate's millionaire contingent voted in favor of this class legislation by 26 to 10, and 7 of those "yes" votes were Democratic. Then, there was the "Class Action Fairness Act of 2005," which largely ends cooperative class-action lawsuits of the sort that brought the healththreatening tobacco and asbestos industries into line. The Senate millionaires, including 8 Democrats, voted 28 to 8 to pass this restrictive amendment to existing law. Lastly, when the Senate voted not to repeal a tax subsidy for domestic corporations that move manufacturing operations offshore, the majority of millionaire members were on board, voting 22 to 14 to retain the subsidy.

Non-millionaire senators voted against the interests of their constituents as well, to be sure; the aforementioned examples of class-based legislation couldn't have passed with the votes of rich senators alone. Regardless, in a millionaires' club, the millionaires wield undue influence, and besides, many less affluent senators would probably like to join their ranks. This desire has shown up for several years in the eagerness with which sitting senators have fallen all over themselves to invest in the stock market. The identification of Senate members with Wall Street was especially marked during the great bull market of the 1990s, when, according to Washington Post investigators, impressive numbers of them were speculating heavily in dotcom equities. Is it any wonder the Senate has been more worried about the Dow Jones average than about unemployed and underemployed Americans, or the export of jobs?

More troubling still is data published recently in the University of Washington's Journal of Financial and Quantitative Analysis that implies senators may have used their positions to acquire insider investment knowledge. An analysis of the five years ending in 1998 revealed that Senate portfolios not only beat market averages by 12% annually (compared to 5% for those of corporate CEOs and under 2% for those of common investors), but outperformed the market by 29% during the first year. The study's author, Professor Alan Ziobrowski of Georgia State University, concludes that "the results clearly support the notion that members of the Senate trade with a substantial informational advantage over ordinary investors."

These statistics suggest we have a Senate engaged in its job with one eye focused, laserlike, on the main chance. Most members of the millionaires' club are not bad people; they undoubtedly feel their interests coincide with the public interest. A legislative body composed of millionaires is naturally going to operate, directly or indirectly, on behalf of millionaires, believing the economic policies that benefited them must be universally correct -- or, to borrow the philosophy of one-time General Motors CEO Charles E. Wilson, that what's good for GM is good for the country. How to counteract this class bias is the question of the hour. The floor is open to suggestions.

Wayne O'Leary lives in Orono, Maine.

Home Page

Copyright © 2005 The Progressive Populist