Republicans sabotaged their own bill to prevent people in Congress from trading stocks. Why?

By Brett Arends

There are two possibilities. Both of them are bad.

U.S. Speaker of the House Mike Johnson inserted a poison pill into the bill, knowing that would sink it.

Republicans just proposed a new law that would have cracked down on stock trading by members of Congress, and then deliberately sabotaged it by inserting a so-called poison pill on voter IDs that they knew Democrats couldn't support.

The question is: Why?

There are two possible explanations, neither of which is good.

The first is that Republicans wanted the bill to fail because they are just making too much money trading stocks. That's not me saying that. There is an actual exchange-traded fund on the stock market, the Congressional Republicans Trading ETF GOP, that does its best to mimic the stock trades of Republicans on Capitol Hill.

Since President Donald Trump took office 20 months ago, this fund has been absolutely crushing it. During that time it has beaten the S&P 500 SPX by an absolutely stellar 4 percentage points per year. It's earned an annualized 21%, while the S&P 500 has earned just under 17%. Actually, as the fund charges fees of 0.73% a year, you could say that before fees, this fund, by buying and selling what Republicans in Congress are buying and selling, has beaten the index by nearly 5 percentage points a year.

In the world of fund management, that is an absolutely extraordinary performance. I can't think of a fund manager who has beaten the S&P 500 by 5 percentage points over time, apart from Warren Buffett (now retired) and the legendary, secretive geniuses at hedge fund Renaissance Technologies.

During the same period, the fund following congressional Democrats, NANC, has also beaten the market, but by a more modest 1 percentage point a year, or about 1.6 points before fees.

What's especially remarkable is that before Trump took office, these Republicans on Capitol Hill were absolute chumps at trading. In its nearly two years in existence before the inauguration, the GOP fund, by following their stock trades, trailed the S&P 500 by an average of 8 percentage points a year. (That's 7 percentage points before fees.)

From 7 points a year behind the S&P 500 to 5 points ahead. A 12-percentage-point turnaround. Booyah!

(Incidentally, in the nearly two years before the change of presidents, NANC trounced the S&P by an average of 4 percentage points a year, or nearly 5 points before fees. That was while there was a Democratic president, although Republicans controlled Congress.)

Republicans have somehow managed their turnaround during a period of unprecedented turmoil. At a time when a sudden presidential social-media post or announcement can send the market crashing or soaring, they have somehow, somehow, managed to keep ahead of the game.

Brilliant!

So maybe this is why Republicans deliberately sank their own Stop Insider Trading Act.

An alternative explanation is simply electoral gamesmanship. They introduced a bill to crack down on insider trading on Capitol Hill, but added a poison pill - which is a change to legislation added to ensure the bill fails - on voter IDs that they knew the Democrats couldn't support, in order to put their opponents in an impossible dilemma. No wonder Trump and Republicans in Congress are making political hay over the bill's failure.

If I were a member of Congress, I could introduce a bill with two clauses: one a statement supporting America's moms, and another forcing everyone to eat kale. No matter how my opponents voted, I could then ding them in campaign ads. "My opponent voted against America's moms!" Or, "My opponent wants to force you to eat kale!"

Lest I be accused of cynicism: House Speaker Mike Johnson admitted way back in July that he knew the voter ID poison pill would sink the bill.

"The Stop Insider Trading Act bans members of Congress from purchasing individual stocks from publicly traded companies and it helps prevent public officials from profiting from inside information," he said at the time.

"It's a very logical thing to do," he added. But he also included the provision on voter IDs, which Democratic politicians oppose. "Watch, I bet you, not a single Democrat in the House or Senate will support these measures," he said.

These comments are what Johnson's office sent me when I asked them to explain the maneuver over voter IDs.

Johnson argues that the voter ID clause is "common sense" and "popular." Democrats say it is a Trojan horse for voter suppression and gerrymandering, especially of voters of color.

What you (or I) think about this issue is irrelevant. If the Republicans were serious about cracking down on stock trading on Capitol Hill, why would they sabotage the bill by including a clause they admit the Democrats cannot support? There is no connection between voter ID laws and congressional stock trading.

We have to conclude they were not serious.

-Brett Arends

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10-01-26 1658ET

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