How Does A Speaker of the House Amass Personal Wealth?

In the wake of the horrible facts coming out about former Speaker of the House Dennis Hastert, one pops up at me. How does a person who was a teacher, then a politician amass massive personal wealth?

I used to know Mr. Hastert and have had lunch with him. He was my congressman when I lived in Geneva, IL. I never would have suspected. We like to think the best about government officials that represent us.

All I hear from teacher’s unions is that teachers are woefully underpaid. Hastert received $34,000 in pension from from the State of Illinois In 2012, watchdog group National Taxpayers Union estimated Hastert was receiving around $66,000 in federal pension per year. I did the math a few years ago and it doesn’t look like they are in Illinois at least. The real bonanza in teaching is the guaranteed pension benefits that increase every year. School districts also mess with the last three years of teacher’s contracts (and administrator contracts) to really increase the amount of pension they will receive.

Personally, I would like to see teachers get their entire compensation package changed. I think under a defined contribution method they would actually make more.

Still, the way things are currently structured won’t make them mega millionaires that can pay $3.5M in hush money.

Hastert made his money in government, and after government. When he left office in 2007, he was worth between $4 million and $17 million, according to financial disclosure filings. The bulk of it being real estate. Was he a wily real estate speculator? Hardly, he took advantage of the system to buy real estate knowing full well that government would use eminent domain or public planning to make it increase in value.

Lots of government officials do that. This isn’t an isolated incidence.

Did you know if you work in Washington it’s legal to inside trade? Some of what happens could make a new movie like The Big Short. Believe me when I tell you, it wasn’t just Hillary Clinton raking in an easy $100k in Live Cattle futures.

Heck, Hillary and Bill get paid millions for speeches.  Who wouldn’t want that?

After serving as Speaker, Hastert generated millions for himself as a lobbyist. Lots of people who were elected to office do that at both the federal and state level. The riches after being in office are so great it’s a decent incentive to get people to run.  Harry Reid is leaving office a very wealthy man. At a certain point, it’s probably better to lose a race, just ask Tom Daschle.

Glenn Reynolds has advocated for a surtax.  I agree.  There also ought to be some sort of moratorium on lobbying for a number of years.  Maybe equal to half the number of years a person was in public office.  The shenanigans also should bring up the topic of term limits for Representatives and Senators.  Maybe 6 terms for a Representative and 3 for a Senator. Presidents are term limited, why not them?

It is totally disgusting what Hastert did as a teacher and coach.   It’s also totally disgusting that many legislators view government as a way to ring the cash register.  Why do they want power?  Not to help people-it’s to help themselves.

thanks for the link Instapundit

37 thoughts on “How Does A Speaker of the House Amass Personal Wealth?

  1. I think their entire compensation ought to be tied to performance i.e. producing a better product. Use any measure you like. The product has gotten worse year over year, decade over decade. If a teacher wants to be rewarded as a professional (with which I have absolutely no problem) then produce as a professional. Produce a better outcome. Incompetent lawyers, engineers, architects etc. generally have to find other careers, like politics.

      1. Whoops! I new I’d lose the reference. I was referring to your 4th paragraph regarding teacher’s pay. Hastert’s situation is tragic, tawdry and all too commonplace. He lived a long time with that hanging over his head. That didn’t stand in the way of his making money however. Oh yeah! Through politics, not teaching.

      2. I would propose Congressional salary be adjusted upwards by GDP growth minus inflation and deficit increase. The problem is that most of their money comes from graft rather than salary anyway so this formula wouldn’t provide. You would also have to make them put their wealth in a blind trust for the time during which they serve.

  2. In a basically honest organization, the honest people identify and drive out the crooks. But, in a basically crooked organization, the opposite happens: The crooks identify and drive out the honest people, because having them around is dangerous, they might expose what’s going on.
    Our government, at least at the federal level, and in many cases at the state and local, has been taken over by the crooks. Honest people are systematically obstructed from running for office, and if they get elected and can’t be corrupted, are somehow destroyed.
    It’s not the case that Hastert somehow managed to keep the dirty dealings that have finally come out secret. That he was horribly corrupt and apparently a pedophile was undoubtedly widely known, and responsible for him being entrusted with a leadership position.
    The other crooks could trust him, because he was at least as dirty and corrupt as they were.

    1. I generally agree with your post, but feel I must correct your characterization of Hastert as a “paedophile”. Paedophilia is the sexual attraction of adults to pre-pubecent children. From what I have learned about the case, the youngest boy that Hastert had relations with was 14 at the time. So Hastert is not a paedophile, strictly speaking, but a homosexual with a predilection for young men. As with the priest sex abuse scandals, people seem to go out of their way to avoid naming the activity by its proper name. We would never refer to a 30 year old male who had sexual relations with a 16 year old girl as a “paedophile”, would we?

      1. Yes, I find it interesting that I had to attend a Catholic-sponsored/led seminar about preventing child abuse when I was an assistant scoutmaster in a Boy Scout troop a few years ago. This was right after the big scandals regarding the abuse of altar boys by priests came to light. At the training session one of the Catholic leaders (lay person) made a big point of saying that the offending priests were NOT GAY, but pedophiles. It was very important to him to maintain the polite fiction that as long as they WEREN”T GAY, it was really not so bad. I was really struck by it at the time.

      2. The term for Hastert’s activity is “ephebophilia.” Making him an ephebophile. You’re welcome.

    2. never said he was anything. I don’t care if he is homosexual or not, he shouldn’t have been doing that to high school boys. I am ticked he used his office to enrich himself.

  3. Being from IL, I remember following Dennis Hastert’s parabolic political ascension. His big break came in 1999. Newt had to step down as news surfaced about his marital indiscretions. This is commonplace nowadays. But back then, we were still in transition. Hard to believe that everyone in the press knew about JFK’s affairs and were never tempted to air his personal dirty laundry. Anyways, I digress. Another dude was tapped to replace Newt. Livingston if I recall. Then just before he was sworn in, it came out that he too had been stepping out on his wife.

    The GOP was in full scale damage control. They basically held a closed door meeting. They didn’t care about seniority or qualifications. They just needed to find a member of the House who was not cheating on their wife. They found one. It so happened that this person had a history of raping young boys, but that’s a story for another day.

    He didn’t cheat on his wife and he was a former HS teacher. The kind of candidate that Democrats love. See Barack Hussein Obama. You basically have 2 types of politicians. Not Democrats and Republicans. Rich and poor. The rich ones go to Washington because they’ve experienced the gross deficiencies of bureaucracy and want to fix them. The poor ones go there to get rich. The Clintons and Obamas are great examples of this. Which do you want? Someone with real world experience who knows what it’s like to be on the wrong side of our corrupt government? Or someone who’s never achieved anything but sees the incredible economic opportunity at heading up our fundamentally corrupt government. Personally, it disgusts me that people use public service as a means to get out of debt and convert their political power into massive wealth. But, what do I know? Gotta get back to the month long unpaid labor that is “paying” my taxes.

    1. “Then just before he was sworn in, it came out that he too had been stepping out on his wife.”

      This was during the Clinton impeachment fight. Some of those Filegate files actually got used at that time, to convince the survivors that they had to take a dive on impeaching him. It was right after that, they dropped almost all the charges, and turned the Senate trial into a joke. Google “Ellen Rometsch strategy”: It’s no accident that several members of the Republican leadership had their dirty laundry exposed about that time.

  4. Term limits. And, Glenn Reynolds suggestion a 50% excise tax be applied to government workers and retired politicians who go out and get cush lobbying jobs, like Eric Cantor did, paying 3 million a year. Just apply it to those earnings above the median income for the USA, so they would not be penalized by getting a real job.

  5. While it may be legal for elected officials to trade on insider information, I can assure you that for the average civil service employee that is emphatically not the case. In my years working in DoD’s procurement world, I saw several instances where this kind of activity led to everything from dismissal to jail time.

    1. Maybe for the little guy…but clearly the politicians and the politically connected are not held to the same standard.

      1. Congress has a carve out. I regret if I implicated every civil employee. Also, what about the civil employee that knows nothing, but uses their observation to ascertain something? It’s tough, but as an elected official I would force them all to go into a blind trust.

    2. Yeah, the little guy is too afraid of the consequences to take a chance on losing a solid retirement. The real grifters have big imaginations, big ambitions, and big egos. They are willing to roll the dice.

  6. How does Susan Rice, National Security Advisor, amass a fortune of $20 million as a lifelong academic-political appointee? Don’t think she did a stint with Fannie Mae, the usual corruptocrat path to easy millions. Let’s see…Her parents were prominent but not wealthy. She married a tv producer. She claims her wealth derives from “inheritances and investments.” Yeah, that’s it! Investments! Who bought whom, Ms. Rice?

    1. Yes, the salaries paid to the Fannie/Freddie boards of directors were typically 7 or 8 figure amounts, per year, with bonuses. One of the early scandals with regard to the housing crash of 2008 was the fact that the board members finagled the standards and the way that they reported loan activity to justify ever bigger bonuses. Led also to lowered lending standards. Read Gretchen Morgenson’s “Reckless Endangerment” for the tick-tock details. Prominent members of these boards included Rahm Emmanuel, Jamie Gorelick, Franklin Raines, and a few others, mainly Democrats. Funny, that.

  7. There are only two kinds of politicians–crooked ones, and those who are not crooked yet.

    To see how fast the latter become the former look up Marco Rubio…

  8. Complete exemption from insider trading laws is pure unadulterated corruption.

    Its not “might be” or “possibly” it is illegal for anyone outside the magic bubble to do so.
    And its also a genuine “pox on both their houses” issue.

    “….So… with very little fanfare, Congress quietly rolled back a big part of the law late last week. Specifically the part that required staffers to post disclosures about their financial transactions, so that the public could make sure there was no insider trading going on. Congress tried to cover up this fairly significant change because they, themselves, claimed that it would pose a “national risk” to have this information public. A national risk to their bank accounts.

    It was such a national risk that Congress did the whole thing quietly, with no debate. The bill was introduced in the Senate on Thursday and quickly voted on late that night when no one was paying attention. Friday afternoon (the best time to sneak through news), the House picked it up by unanimous consent. The House ignored its own promise to give Congress three days to read a bill before holding a vote, because this kind of thing is too important to let anyone read the bill before Congress had to pass it.

    And, of course, yesterday, President Obama signed it into law. Because the best way to rebuild trust in Congress, apparently, is to roll back the fact that people there need to obey the same laws as everyone else. That won’t lead the public to think that Congress is corrupt. No, not at all….”

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  10. Yes, also football & basketball players shouldn’t be able to become coaches, commentators, or agents after their careers. Pro golfers shouldn’t become course designers or consultants. Fighter pilots shouldn’t be able to work for airlines. In fact, military officers should not be able to work anywhere that involves providing services to the government they spent a lifetime building skills and understanding.

    They point is this: in a free country we let people do what they are good at. The fact that some are good at and have skills around government is a good thing. It allows ordinary Americans to hire competent help when they need to use their constitutional right to petition government for redress of grievances.

    If former government employees make money, great! This is America we are not communists, we wish them all success.

    Jealousy makes for bad policy.

    1. Football players becoming coaches makes a heckuva lot of sense. It doesn’t affect anyone. Politicians using the power of their office to lobby so policy can be made to spur crony capitalism makes no sense. Public policy effects everyone. Look up Professor George Stigler and read his research on lobbying.

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