The Wall Street-Congress revolving door turns again

So Eric Cantor, after having faithfully protected the interests of Wall Street while pretending to serve the public as Majority Leader in the House of Representatives before losing his primary to a Tea Party candidate, decided to quit his job early and go straight to Wall Street at a high salary even though he has no financial background. It is no surprise that his role will be to provide access to congress to serve his company’s needs.

As The Daily Show says, these people don’t even bother to hide anymore who their real masters are. It used to be that they would try to hide their subservience by letting a little time lapse between jumping from government to Wall Street. Even Timothy Geithner waited about ten months. But Cantor couldn’t wait to even finish serving his time.

Serving in congress is just a stepping stone to making big money from the very same elements in the private sector whose interests they protected while in office.

(This clip aired on September 2, 2014. To get suggestions on how to view clips of The Daily Show and The Colbert Report outside the US, please see this earlier post. If the videos autoplay, please see here for a diagnosis and possible solutions.)


  1. moarscienceplz says

    I know this looks slimy, and it is, but in a way I can’t blame him. He was one of the leaders of the largest economy and the greatest military might the planet has ever seen, and yet he got a salary of less than $200K/yr (plus medical and other goodies). The CEO of my employer, a mid-level semiconductor manufacturer, makes $6 million/yr. And nobody thinks it wrong to pay multi-million dollar salaries to NFL players or A-list movie actors and what do they contribute to society, except for a few hours of mindless distraction?
    Maybe if we gave Congress a 10-fold salary increase (and added some real teeth to anti-revolving door laws) we could get some representatives who could focus more on the real people of America, instead of corporate-persons.

  2. flex says

    moarscienceplz wrote @1,

    … and yet he got a salary of less than $200K/yr (plus medical and other goodies).

    1. He knew that when he ran for the position. By quitting a job he committed to he clearly feels no duty toward his constituents. Public service is not the same as private industry.
    2. Many people do think that the salaries paid to NFL players, A and B list actors, collage football coaches, Wall Street bankers, and even CEO’s is too high.

    The median net wage in 2012 in America was $27,519.10, per the SSA.
    As House majority leader, Representative Cantor received a salary of $193,400.
    Seven times the median salary.

    Representative Cantor also received >$200,000 to spend on office expenses and about $1,000,000 to hire staff. As well as health care, pension, and other benefits.

    I wouldn’t suggest that he, or anyone in congress, is underpaid.

  3. flex says

    Note: I just noticed that I compared net median income of $27,519.10 with gross (pre-tax) income of the House majority leader.

    That was a mistake. I don’t know what Canor’s net salary is. If he paid a normal level of tax on that level of income for married, filing jointly, he should have a net income of about $152,000. It could be higher depending on other sources of income, deductions, or changing filing status.

    So it’s only 5.5 times the net for a median American. Which is significantly more.

  4. moarscienceplz says

    So flex, we should just keep doing business as usual? Pretty much only people who are already millionaires, or who expect to get deals like Cantor’s are becoming Congresspeople now. So, what’s your solution?

  5. flex says

    There are plenty of proposed solutions, on the same subject over on Dispatches someone suggested a 5-year waiting period between leaving a high-level government position and working for any firm as a lobbyist in Washington.

    My solutions are of a somewhat different nature. There are three changes I’d like to see to the tax code to encourage behavioral changes.

    1. Return to a progressive tax code where a 90% bracket exists, like existed throughout the greatest economic expansion in American history. The exact level for which the 90% bracket starts is up for discussion, but it needs to exist at some level. The incentive which this change creates is that many CEO’s, celebrities, sports figures, wall street financiers, and even personal injury lawyers will limit their income to that level in order to “prevent the government from taking their hard-earned money”. But the money will go somewhere, and likely into increased consumption, increased wages for other employees, investment in education, and infrastructure, and probably even re-starting a lot of R&D projects. Even if the government doesn’t get a dime from such a tax change, the stimulus effects on the economy is significant.

    2. Tax capital gains as regular income; tax dividend income at half rate, or even make it tax free. The result is an immediate reduction in the volatility of the stock market. The long term effect is that the rich will be more interested in investing in companies which pay decent dividends. CEO’s and corporate board members will not be interested in manipulating the stock market price because they won’t be getting a tax break on buying and selling stock. They will be interested in building a strong business which pays good dividends.

    3. Remove all inventory taxes. (Actually I’d love to see a move to a value-added tax code, but that’s even more of a pipe-dream than these three suggestions.) Inventory taxes are part of (although certainly not the entire) the reason companies move production and assembly off-shore. One of the justifications for just-in-time manufacturing is the cost of inventory, both the cost of storage and the cost of taxes on product which is just sitting around. There is a cost for long supply chains too, and by reducing the cost of maintaining inventory you can encourage manufacturers to locate manufacturing and assembly locations close to the markets.

    The second and third of the above suggestions shouldn’t be too hard to change. The first is probably something I won’t see in my lifetime, although it would probably do the most good for our economy.

    Pretty much only people who are already millionaires, or who expect to get deals like Cantor’s are becoming Congresspeople now.

    Which isn’t fixed by giving congresscritters a pay raise. That incentive is in the wrong direction and will encourage even more people who want to be millionaires to run for congress, not people who want to be public servants.

    So, what’s your solution?

    See numbers 1and 2 above. Reduce the incentive for obscene levels of income across the entire society. I am not suggesting that the above suggestions would eliminate the occasional money-grubbing Cantor, willing to abandon his constituents for financial rewards. But the frequency of this happening should reduce.

Leave a Reply

Your email address will not be published. Required fields are marked *