There’s an interesting article at the Washington Post today looking at the net worth of members of Congress. The article has the usual hand wringing about how rich they are and how can such rich folk represent us poor folk and blah blah blah.
To me the REAL question is not why are people in Congress rich, but why are some apparently so broke? And, interestingly, a few of the really broke ones are among those most critical of the nation’s ability to manage its money. If net worth is a measure of how well you manage your money, these folks have some explaining to do.
Now, we need to be careful of definitions: Net Worth means their gross assets minus their debts. Someone with $1 million in cash but with debts of $1.1 million has a net worth of minus $100,000. Someone with $1 million but debts of $999,999.90 has a net worth of 10 cents. As long as income and outgo are reasonably balanced, even someone with 10 cents net worth is still nicely solvent.
So in a real way these numbers don’t mean much except as a broad measure of how well particular congress people handle their money and what sort of lifestyle they’re likely to think of as “normal.” (There are exceptions, however, as noted below. The extreme one would be the person with a billion dollars who lives in a homeless shelter, but I suspect nobody in Congress is like that.)
Someone in Congress with a net worth of $500 million obviously lives on a different financial plane than the rest of us — this is the argument of the article, that most of Congress lives on that plane — but someone in Congress with a net worth of $10,000 might still play with that kind of money, just not be very good at keeping much of it, or have most of it balanced by massive debt.
On the other hand, anyone who enters Congress poor and leaves rich is to be regarded with suspicion. People in Congress don’t make a huge amount, considering, and have high expenses what with two households to maintain unless they simply abandon their home state. In this regard, I always disagreed with former Rep. Jim Hansen but always knew he was honest because when he retired he was well-off, relative to his neighbors, but far from rich.
It should also be noted that it’s no trick to having a net worth of a million.
The book “The Millionaire Next Door”makes it clear that most of the millionaires in this country are really blue-collar folk who have that much cash for the simple reason they don’t live like millionaires. They live in paid-off houses, drive used cars and, in some cases, shop at thrift stores but certainly don’t buy Cartier watches. Many accumulated their wealth by selling a business, but others are just thrifty. If more people were like the folks in that book, Cartier would sell fewer watches but the nation as a whole would be a lot better off.
Some on this list are not surprising. Sen. John Kerry has a huge net worth, more than $200 million, because he married money and has been a senator a long time.
I note that Rep. Rob Bishop has a net worth in the $40,000 range. What his debts are, I don’t know, but he’s been a resident of Box Elder County for his entire life, and a school teacher.
I guess I’m surprised Rob hasn’t got a bigger net worth built up yet, just for having his house paid off and credit cards all paid off as I would expect a die-hard fiscal conservative to have done. Perhaps as his family grew he bought a bigger house, or when he was elected he bought a bigger house. Perhaps he spends a lot of money campaigning. I know he keeps households here and DC, and that can’t be cheap.
I’m surprised to see Sen. Mike Lee down there at $16,000 or so net worth. He’s right next to that other rabid Tea Party fiscal conservative, Sen. Jim DeMint, with a relatively prosperous $40,000 or so.
Both of these guys surprise me because they are Tea Party arch conservatives who scream that the federal government can’t manage its money because it borrows too much. Looks to me — using borrowing as a measure – as if they can’t manage their money either.
Lee’s been a corporate lawyer and lobbyist for a long time, someone with a pretty hefty income. What this tiny net worth tells me is that whatever assets Lee has are balanced by a large amount of debt.
This sort of leveraged position would be an interesting — dare one say hypocritical? — situation for someone who is so adamant that the nation should not have any debts. Sen. Lee is one who complains that Social Security is “broke,” for example, although Social Security actually enjoys a healthy net worth right now even though its current income does not match its outgo.
For Sen. Lee and Sen. DeMint to both so obviously have large debts also should raise an alarm signal: Someone who owes money is vulnerable to pressure. Who they owe money to would be valuable to know.
Sadly, that’s not disclosed in the forms they file.