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Politicians are among the world’s most skilled investors. It’s the only possible explanation for the off-the-charts wealth-building success that occurs in the District of DeeSee.
OK, you and I both know that’s a load of bull hockey, and there’s more at play, so let’s explore just exactly how those “public servant” salaries so frequently translate into untold millions. Spoiler Alert: It’s not from frugal living and careful investment of coupon savings.
One more thing… Documenting the antics of the political elite could fill the Library of Congress, so we’ll address their investment habits in multiple articles over the coming weeks.
Let’s start with some examples of fortuitous land investments. With no set price and no disclosure requirements for land deals, it’s relatively easy to work the system to benefit the value of one’s land holdings while avoiding testimony in front of the Ethics Committee. Then again, they’ve probably figured out how to monetize that, too.
If You Build a Parkway, Money Will Come
In 2005, Speaker Dennis Hastert purchased 264 acres near a planned parkway and real estate development. Months later, he pushed for a $207 million earmark into the Federal Highway Bill to fund the “Prairie Parkway,” sold 69 acres for a cool $4.9 million.
Can You Spruce Up My Office?
House leader Nancy Pelosi and her husband own an office building in her district in San Francisco. Over the years, different pork projects have had quite an impact on the building valued somewhere between $1 and $5 million. Between 2004 and 2011, Pelosi pushed for nearly $1 billion in federal dollars to build out the system, with one planned station being in prime distance of Pelosi’s property.
In 2006, another $20 million waterfront earmark benefitted the same property.
Let’s Keep It In the Family
Former Chairman of the Senate Budget Committee, Senator Judd Gregg, directed $66 million to convert Pease Airforce Base into an office park. Oh, the office park was developed by Gregg’s brother. Oh, and Gregg also invested in the project, turning a tidy profit.
A Bridge to Property Appreciation
The late Senator Harry Reid purchased a controlling interest in a 160-acre parcel of land owned by a lifelong friend’s lubricants business pension fund. He paid the princely sum of $10,000 or $166 per acre for land appraised by the tax assessor at ten times that value. Two years later, a similar adjacent parcel sold for $4,260 per acre—almost 26 times the purchase price of Reid’s property.
About six months later, the Senator introduced very specific legislation mightily favorable to the friend’s business interests—a proposed law to assist lubricant companies in their dealings with Big Oil. The bill didn’t go anywhere and was reintroduced several more times. Nothing ever happened, at least directly. But, Big Oil did get a loud and clear message that Congress was watching their dealings with the smaller lube companies.
Not surprisingly, this very same land turned out to be a gift that kept on giving. As if the purchase at a fraction of the appraised value was not enough, as it turned out, a “purely coincidental” earmark pet project drove some serious appreciation in the property’s value.
In 2006, Senator Harry Reid pushed for an $18 million bridge across the Colorado River between Laughlin, Nevada and Bullhead City, Arizona. Neither state had any apparent desire for the bridge, but at least the project drove up prices for Reid’s 160 acres. Previously valued somewhere between $250,000 and $500,000 on 2006 disclosure forms, the property was later tagged at somewhere between $1 and $5 million by 2010.
Expert Home Seller
Rep. Randall Cunningham of California was a member of the House Defense Appropriations Subcommittee. Interestingly, he ended up selling his house to a defense subcontractor for twice its market value. That’s some outstanding salesmanship, isn’t it? Better yet, the company provided living arrangements for Cunningham on a luxury yacht free of charge.
You probably won’t be surprised to learn that in 2005, Cunningham pled guilty to $2.4 million in accepted bribes, leading to an eight-year prison sentence.
These are just a paltry few examples of how your representatives game the system to line their humble servant’s pockets.
Stay tuned for a look at some of the other wealth-building strategies. It’s all at our expense, so we might as well know what’s going on!