Web Note: No wonder we can't end the war! Members of Congress have made $196 million in personal profit since the war began! Think how rich they'll get if the U.S. invades Iran -- that country is four times bigger.
Kevin Zeese, Voters for Peace
When Gen. David Petraeus, the top U.S military officer in Iraq, comes to Capitol Hill next week to brief Congress, he will be addressing lawmakers who have more than just a political stake in the five-year war.
Along with their colleagues in the House and Senate, the politicians who will get a status report from the general and the U.S. ambassador to Iraq have as much as $196 million of their own money invested in companies doing business with the Department of Defense, the nonpartisan Center for Responsive Politics has calculated. From aircraft and weapons manufacturers to producers of medical supplies and soft drinks, the investment portfolios of more than a quarter of Congress-and of countless constituents-include holdings in companies paid billions of dollars each month to support America's military in Iraq and elsewhere.
The Investors: Lawmakers with the most money invested in companies with Department of Defense contracts
Member of Congress Minimum Value of Investment Maximum Value of Investment
Sen. John Kerry (D-Mass) $28,872,067 $38,209,020
Rep. Rodney Frelinghuysen (R-NJ) $12,081,050 $49,140,000
Rep. Robin Hayes (R-NC) $9,232,037 $37,105,000
Rep. James Sensenbrenner Jr. (R-Wis) $5,207,668 $7,612,653
Rep. Jane Harman (D-Calif) $2,684,050 $6,260,000
Rep. Fred Upton (R-Mich) $2,469,029 $8,360,000
Sen. Jay Rockefeller (D-WVa) $2,000,002 $2,000,002
Rep. Tom Petri (R-Wis) $1,365,004 $5,800,000
Rep. Kenny Ewell Marchant (R-Texas) $1,163,231 $1,163,231
Rep. John Carter (R-Texas) $1,000,001 $5,000,000
Includes investments in companies with DOD contracts of $5 million or more, according to 2006 data on FedSpending.org. Members of Congress must report their personal finances annually. Holdings shown here were as of December 31, 2006.
According to the most recent reports of their personal finances, 151 current members of Congress had between $78.7 million and $195.5 million invested in companies that received defense contracts of at least $5 million in 2006. In all, these companies received more than $275.6 billion from the government in 2006, or $755 million per day, according to FedSpending.org, a website of the budget watchdog group OMB Watch.
The minimum value of Congress members' personal investments in these contractors increased 5 percent from 2004 to 2006, but because lawmakers are only required to report their assets in broad ranges, the value of these investments could have risen as much as 160 percent-or even dropped 51 percent. It is also unclear how many members still hold these investments, since reports for 2007 are not due until May 15, 2008. In 2004, the first full year after the Iraq war began, Republican and Democratic lawmakers-both hawks and doves-had between $74.9 million and $161.3 million invested in companies under contract with the Department of Defense.
As the military operations in Iraq and Afghanistan have expanded and transformed, so, too, has the need for goods and services that extend beyond helicopters, armored vehicles and guns. Giant corporations outside of the defense sector, such as Pepsico, IBM, Microsoft and Johnson & Johnson, have received defense contracts and are all popular investments for both members of Congress and the general public. So common are these companies, both as personal investments and as defense contractors, it would appear difficult to build a diverse blue-chip stock portfolio without at least some of them.
Lawmakers' investments in these contractors yielded them between $15.8 million and $62 million in income from 2004 through 2006, through dividends, capital gains, royalties and interest, the Center found. Sen. John Kerry (D-Mass.) and Rep. James Sensenbrenner (R-Wis.), who are two of Congress's wealthiest members, were among the lawmakers who earned the most income from these contractors between 2004 and 2006, with Sensenbrenner making at least $3.2 million and Kerry reaping at least $2.6 million.
A spokesman for Sensenbrenner, who has supported the administration's policy in Iraq, said the congressman's stocks were left to him by his grandparents and are managed almost entirely by his investment advisors. There has been no conscious effort on Sensenbrenner's part to invest in companies that have received defense contracts, his representative said. Kerry, who has been particularly outspoken against the Bush administration's strategy and policies in Iraq, is a beneficiary of family trusts, which he doesn't control, the senator's spokesman said.
Overseers of Defense Hold Stock in Contractors
Owning stock in companies under contract with the Department of Defense could be more problematic for members of Congress who sit on committees that oversee defense policy and budgeting. Petraeus will speak on April 8 and 9 to the Senate Foreign Relations and Armed Services committees. In 2006, members of these two committees had between $32 million and $44 million invested in companies with DOD contracts. Foreign Relations member Kerry's investments accounted for most of it-between $28.9 million and $38.2 million. Members of the two committees held between $3 million and $5.1 million in defense-only companies.
Chairs of other defense-related committees are similarly invested. Sen. Joe Lieberman (I-Conn.), chairman of the Senate Homeland Security and Governmental Affairs Committee, had at least $51,000 invested in these companies in 2006. Rep. Howard Berman (D-Calif.), who heads the House Foreign Affairs Committee, had at least $30,000, including between $1,001 and $15,000 invested in defense company Raytheon, which has one of its major facilities right outside of Berman's district. According to Berman's office, that holding is in a trust the congressman inherited from his parents.
"It's a couple thousand dollars," Berman's spokeswoman said. "We're not talking about hundreds of thousands of dollars. It's a teeny investment, and he inherited it. He didn't make it."
In the case of Sen. Jay Rockefeller (D-W.Va.), chair of the Senate Select Intelligence Committee, his stock in Pepsico, which is worth at least $1 million, is actually held by his wife, who is on the food and beverage corporation's board of directors. Pepsico received $187 million in defense contracts in 2006, according to OMB Watch. "His wife's separate holdings have no influence," Rockefeller spokeswoman Wendy Morigi said. "Sen. Rockefeller, out of an abundance of caution to ensure there's no conflict of interest, has held all his assets in a blind trust since he was the governor of West Virginia."
Members of Congress who want to make a public statement about their opposition to the Iraq war don't have to divest from businesses that may be profiting from the persistent conflict, some financial planners say. As the Iraq war continues and companies supporting the effort continue to make money, lawmakers will have an easier time justifying their investments in corporations that are known for producing food and clothing-companies whose defense contracts represent a tiny fraction of their overall revenue.
Many of the Defense Department's contracts "will likely be there whether you're in a war or not," said Cheryl Smith, executive vice president and senior portfolio manager at Trillium Asset Management Corporation, a firm that screens companies' policies for socially responsible investors. "A standing army still needs soft drinks, toothpaste and clothing. If [the lawmaker's] position is there should not be a military at all, then you might want to exclude anyone with a defense contract, but if they want to stand up against the war," they should avoid investing in companies with weapons contracts, specifically.
And there are members of Congress invested in those companies-major defense contractors such as Lockheed Martin, Boeing and Honeywell. Forty-seven current members of Congress (or 9 percent of all members of the House and Senate) were invested in 2006 in companies that are primarily in the defense sector, for a total investment of between $4.2 million and $8 million. The average share price of these corporations today is nearly twice what it was in 2004.
Hawks and Doves Are Similarly Invested in Defense
While Democrats are more likely to advocate for ending the Iraq war sooner than Republicans, as a group they have more of their own money invested in America's military efforts. In 2006 Democrats had at least $3.7 million invested in the defense sector alone, compared to Republicans' $577,500. More Republicans, however, held stock in defense companies in 2006-28 of them, compared to 19 Democrats.
According to a spokesman for one of these investors, Rep. Roy Blunt (R-Mo.), who held at least $15,000 in Lockheed Martin stock in 2006, it's "insulting" to make a connection between personal investments and a lawmaker's job. "Congressman Blunt does not consider his personal finances when voting for legislation, especially on issues as weighty as sending our troops into harm's way," Blunt spokesman Nick Simpson said. (Update: After the posting of this story, Simpson added that the stock is an investment held by Blunt's wife, who received it from her mother as a gift.)
Rep. Sam Farr (D-Calif.), who has spoken out against the administration's policy in Iraq and belongs to the Out of Iraq Congressional Caucus, had at least $50,000 invested in Boeing in 2006. Farr's office did not respond to Capital Eye's inquiries about this investment and whether he still holds the stock.
Other lawmakers have decided to sell their shares in defense companies. In 2006, Sen. Orrin Hatch (R-Utah) had $1,000 in Honeywell and $1,000 in United Technologies but has since gotten rid of those holdings, which represented a tiny percentage of his net worth, according to his office. According to her presidential personal financial disclosures, Sen. Hillary Clinton (D-N.Y.) had stock in some defense companies, such as Honeywell, Boeing and Raytheon, but sold the stock in May 2007. Neither of the remaining presidential hopefuls, Democrat Barack Obama and Republican John McCain, reported such holdings on their filings.
Smith of Trillium Asset Management said that lawmakers who plan to divest could consider putting that money into community rebuilding, such as in hurricane-damaged New Orleans, or alternative energy projects to reduce U.S. dependence on oil. "There's a lot of opportunities to make a double statement by taking [the funds] from one place and putting them into another," she said.
Lockheed Martin declined to comment for this article, and a Honeywell spokeswoman said lawmakers should be free to do as they choose, but that the company provides necessary services to the military. "Honeywell provides support to develop products, services and technologies to meet the needs determined by the U.S. government and its entities that appropriate the funding, and elected officials and taxpayers who elect them into office," said Cathy Gedvilas, media relations manager for the defense aerospace company. "We support the spirit of the U.S. democracy and free enterprise system, and in keeping our nation and our troops safe from harm."
CRP Personal Finances Researcher Dan Auble contributed to this report.
*This growth isn't necessarily due to appreciation in these investments. Some members of Congress have bought and sold stocks within this time, and members have been elected or left office. The Center's calculations are not limited to stocks held consistently by the same lawmakers over the three-year period.
Source: Center for Responsive Politics