It’s well known that lawmakers, Cabinet members and their families have secured millions of dollars in federal funds to support their own businesses through programs like the Paycheck Protection Program, the federal loan scheme set up to support struggling employers during the coronavirus pandemic.
There’s just no way of really knowing when these high-ranking federal officials apply for the very government loans, subsidies or grants they had a hand in creating — and how much they’re getting. Outside of press reports and incomplete data reported by the Treasury Department and the Small Business Administration, there’s no law requiring those in government to disclose the federal funds they collect.
On Wednesday, the two lawmakers proposed a bill to require members of Congress, high-ranking staff and those in the judicial and executive branches who apply for a financial benefit from the government to report it — the same way current law requires them to report the sale of a stock.
“I think unfortunately many of my colleagues engage in this kind of corrupt activity and, whether it’s purposeful or negligent, it’s wrong and it needs to be clarified that they can’t be writing legislation and can’t be benefiting from legislation that readily undermines people’s faith in our democracy,” Gillibrand said in an interview. “It looks like self-dealing, and it looks like pocket lining.”
The bill, provided exclusively to HuffPost in advance, would expand on the STOCK Act, a 2012 law that Gillibrand co-authored requiring high-ranking federal government officials to report equities, bonds, derivatives and mortgages bought and sold within a month. The STOCK Act, which passed with bipartisan support and was signed by President Barack Obama, was intended to catch government officials engaging in insider trading.
“The intention of the legislation is to create transparency... so voters can decide whether their activities are corrupt or not.”
But Gillibrand and Porter say the law didn’t go far enough to root out other forms of corruption. The STOCK Act 2.0, as they’re calling it, would expand the reporting requirements and also establish a public website, which would be searchable, downloadable and easily accessible, showing any federal benefits going toward these officials.
“For the same reason that we have to disclose information about our income and our assets, for the same reason we have campaign finance disclosures, this is asking people the more important question, which is: Are you using your government position for the public interest or for you own self-interest?” Porter said in an interview.
This has taken on particular relevance during the pandemic. As HuffPost’s Molly Redden reported, there have been 20-plus loans that have been linked to businesses with ties to lawmakers — and nearly all of them happened within the first round of funding for the program. The Paycheck Protection Program, which Congress created as part of its $2 trillion stimulus package passed in late March, ran out of money by mid-April, two weeks after launching, leaving hundreds of thousands of small businesses in the lurch until Congress voted to pass additional funding.
But members of Congress didn’t seem to experience any delays in getting funds. On April 5, two days after the loan program got off the ground, Republican Rep. Kevin Hern’s group of McDonald’s franchises in Oklahoma secured a loan of $1 million to $2 million, and Rep. Vicki Hartzler (R-Mo.), who owns a tractor dealership with her husband, got a loan of between $350,000 and $1 million through the program.
Within a week of the program launching, Rep. Vern Buchanan (R-Fla.), one of the top 10 wealthiest members of Congress, received a loan of between $2 million and $5 million for his car dealership. Democratic Rep. Susie Lee’s husband received $5.6 million through two PPP loans for casino and resort businesses in Nevada and Colorado after the SBA decided to extend the loans to the small gaming industry.
Rep. Roger Williams (R-Texas), who is among the top 20 wealthiest members of Congress, secured a loan of between $1 million and $2 million. In a congressional hearing Tuesday with Treasury Secretary Steven Mnuchin, Williams referred to himself “as somebody on Main Street” and said the “economy is pretty good right now, and it’s getting better.”
“Roger Williams... was telling Secretary Mnuchin and Federal Reserve Chair [Jerome] Powell that small businesses are doing fine. Well, maybe yours is doing fine because you got a PPP loan while a whole bunch of other small businesses struggled to,” Porter, who sits on the House Financial Services Committee, told HuffPost, responding to Williams. “It also distorts members’ understanding of what it’s like to be an American trying to get help from these programs — how hard it can be to get through the application process.”
The economy hasn’t gotten better for many. Though unemployment claims have slowed since hitting historic highs in late March and April, tens of millions of Americans remain on unemployment assistance and the pandemic continues to take a toll on working-class Americans. Small businesses continue to close in the thousands. In an Economic Impact Report from Yelp, 163,735 businesses indicated they’ve closed as of the end of August — nearly 100,000 of which have reported they will not be reopening.
Porter has been out front in calling for the Treasury Department and SBA to release full data on who has applied for PPP loans, and exactly how much they’re getting. But the Treasury Department has been reluctant to do so; Mnuchin has argued the details are private information. Instead, the department released the names of recipients and a range of loan amounts they received, from $150,000 up to $10 million.
The STOCK Act 2.0, doesn’t stop at the coronavirus relief efforts. It includes any government program that distributes a benefit of value, such as subsidies or government contracts.
In 2017, the Environmental Working Group found that more than 30 lawmakers from both parties and their immediate family members collected upward of $15 million in federal farming subsidies, while farm bill negotiations were ongoing. Because of a lack of disclosure requirements, it’s impossible to know which members also collected crop insurance subsidies.
Gillibrand wants to be clear that the intent is not to prevent government officials from benefiting from federal funds altogether.
“If you’re doing it for good honest reasons — you have had a family farm for generations and would normally get subsidies — that’s not the kind of corrupt activity we’re looking for,” she said. “We’re looking for activity that is unfair, that is taking advantage of a position they have.”
“The intention of the legislation is to create transparency... so voters can decide whether their activities are corrupt or not,” Gillibrand added.
The fight to get more transparency around the financial dealings of elected officials, their administrations and their close aides is certainly not new to Congress. Richard Painter, who served as the chief White House ethics lawyer under President George W. Bush, said this is one measure that’s part of a much larger problem, including elected officials owning individual stocks and Trump’s refusal to separate from his own businesses.
“Now, all they do is require you to disclose that you own the company and then the company can roam around the place, apply for federal government loans or money from Vladimir Putin. We don’t know what they get,” Painter said. “I would kick them off their individual stocks, I wouldn’t kick them off their family farms, but we ought to at least be aware of the conflict of interest.”
“President Trump talks about Jefferson and Washington talking about their big plantations and farms and somehow that’s not a conflict, but of course it was. They used slave labor. It was a tragic conflict for our country.”
Painter added, “President Trump talks about Jefferson and Washington talking about their big plantations and farms and somehow that’s not a conflict, but of course it was. They used slave labor. It was a tragic conflict for our country. These financial conflicts have real consequences for our government.”
The original STOCK Act drew bipartisan support. But this revamped proposal does not have Republican support yet. Gillibrand said, however, that she expects to see Republicans get on board.