The Senate voted 96 to 3 Thursday to prohibit members of Congress from using non-public information for personal financial gain but beat back a slew of amendments to further limit congressional perks.

The Senate action puts pressure on House Republicans to pass similar legislation to quell allegations of congressional self-dealing at a time when Congress’s approval rating is at an all-time low.

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Since the publishing of Breitbart editor Peter Schweizer’s book, Throw Them All Out, support for the STOCK (Stop Trading On Congressional Knowledge) Act to ban members of Congress from using private information for personal profit has jumped from four cosponsors to 131. Yet in the wake of yesterday’s Senate hearings on the subject, several Capitol Hill observers are asking: does the bill, in the present forms being considered, go far enough?

Hardly, say insider trading experts and Washington watchers.

UCLA Law Professor Stephen Bainbridge calls some versions of the bill under consideration “bizarre and toothless.” Equally unimpressed with the bill’s language is Atlantic Monthly senior editor Megan McArdle. “Will someone please guard the damn guardians?” writes McArdle.

One member of Congress who is pleased with the STOCK Act is Rep. Nancy Pelosi. Yesterday, Rep. Nancy Pelosi, who has come under fire for having acquired Visa IPO shares that resulted in a 203% profit while thwarting critical credit card reform bills, appeared to shrug off the urgency of passing the bill. “I would hope that it’s not as necessary as the whoop-de-doo over it makes it seem. But I do think that we all disclose what we do.” And Speaker of the House John Boehner’s comments yesterday seemed to leave open the question of whether such legislation is even needed. “The hearings are a step in the right direction to determine whether there’s a need for such a bill to move. We’ll let those hearings proceed,” said Boehner.

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The blockbuster revelations in Big Peace editor Peter Schweizer’s Throw Them All Out about Congressional insider trading have prompted vigorous calls for reform from various lawmakers. First, Texas governor and presidential candidate Rick Perry spoke out against the now-legal practice in a campaign ad. In the House of Representatives, a bill by Rep. Louise Slaughter (D-NY) to ban Congressional insider trading currently has 118 co-sponsors.

Today, Sen.  Scott Brown (R-MA) writes an op-ed to promote the STOCK Act, a bill he has recently sponsored in the Senate to “Stop Trading on Congressional Knowledge.” He explains his support for the legislation is based on Schweizer’s reporting.

From the Boston Herald:

I’ve always thought legislators should live by the same laws that govern everyone else. Unfortunately, that isn’t always the case. Recently a “60 Minutes” expose brought to light a glaring loophole allowing members of Congress to legally profit from trading stocks based on non-public information. It also revealed various ways that members may have used the powers of their office to benefit their personal financial and real estate portfolios. This is wrong.

For example, if a member of Congress on the Armed Services Committee were to learn through connections at the Pentagon that a major defense program was suddenly on the chopping block, then that member could sell his or her stock in the defense contractors affected and score a profit — or avoid losses — when the news breaks. Under current law, the congressman would likely walk away with a fatter investment account. For everyone else, it could mean you go to jail. (more…)

With the Senate Homeland Security and Governmental Affairs Committee set to begin congressional insider trading hearings today, Sen. Kirsten Gillibrand, whose husband trades stock options, has proposed a bill that would legalize, not ban, insider trading by members of Congress.

“This is just nuts,” says UCLA Law Professor Stephen Bainbridge.

The controversy surrounding Sen. Gillibrand’s version of the STOCK (Stop Trading on Congressional Knowledge) Act involves a curious omission of a conjunction that  CNBC.com editor John Carney calls “shocking” and a “scandal” because it would “gut the law” entirely.

In Sen. Scott Brown’s version of the bill, the law reads:

Not later than 270 days after the date of enactment of this Act, the Commission shall, by rule, prohibit any person from buying or selling the securities or security-based swaps of any issuer while such person is in possession of material nonpublic information relating to any pending or prospective legislative action relating to such issuer, if–

(A) such information was obtained by reason of such person being a Member or employee of Congress; or

(B) such information was obtained from a Member or employee of Congress, and such person knows that the information was so obtained.

Sen. Gillibrand’s version, however, contains a critical difference:

Not later than 270 days after the date of enactment of this Act, the Commission shall, by rule, prohibit any person from buying or selling the securities or security-based swaps of any issuer while such person is in possession of material nonpublic information relating to any pending or prospective legislative action relating to such issuer, if–

(A)(i) such information was obtained by reason of such person being a Member or employee of Congress; or

(ii) such information was obtained from a Member or employee of Congress, and such person knows that the information was so obtained;

(B) the person acted with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information.

As UCLA Law Professor Stephen Bainbridge notes, while the omission of the conjunction “And” between clause A and B appears to be a typo, Sen. Gillibrand’s insertion of clause B would mean that a member of Congress would be free to make stock trades using material, nonpublic information so long as they didn’t also help another person make a similar stock purchase.

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From The Hill:

Politically vulnerable lawmakers are lining up as co-sponsors of legislation that would ban congressional insider trading.

A “60 minutes” report earlier this month indicated that members of Congress have been trading stocks based on knowledge gained from their positions, a practice that does not violate the law.

Before the report, a House bill that would outlaw the practice only had nine co-sponsors. In the week following the “60 Minutes” segment, that number jumped to 92. Of the 83 additions, 19 are facing competitive reelection races as defined by the Cook Political Report.

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When Scott Brown upset the Massachusetts Democratic establishment by winning the Senate seat held by Ted Kennedy for a generation, he ran as a Republican. This cycle, facing the “founder” of the Occupy Wall Street movement, Elizabeth Warren, he appears to be running away from conservative principles.

Brown’s most recent capitulation is his support for a floor vote for President Obama’s nominee for the uber-regulatory agency known as the Consumer Financial Protection Bureau (CFPB). Brown’s announcement undercuts not only his Republican colleagues who are fighting to limit the power of this new government agency but of the principles of limited government he professes to support.

Unfortunately, Brown may not be alone. Sen. Rob Portman (R-OH) is purportedly seeking a deal with the White House to get fellow Ohioan Cordray confirmed despite ethical questions about his behavior as the state’s Attorney General. Insiders are always concerned about the Maine Senators and Alaskan Lisa Murkowski. If a chain is only as strong as its weakest link, Portman, Collins, Snowe and Murkowski need to buck up and support their colleagues.

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Prior to the release of Breitbart editor Peter Schweizer’s blockbuster book, Throw Them All Out, legislative efforts to pass a bill banning insider trading by members of Congress had floundered.

But all that is changing—and fast.

Congressman Tim Walz (D-MN) says that before the 60 Minutes report on Schweizer’s book, his STOCK (Stop Trading On Congressional Knowledge) Act, H.R. 1148, had only garnered four cosponsors in Congress since he and Rep. Louise Slaughter  (D-NY) re-introduced the legislation on March 18, 2011.

In the two days since the 60 Minutes program aired, Walz says the number of House members supporting the bill has shot up to thirty-five, and climbing.

“I’m coming from the perspective of ‘Are you kidding me?  This isn’t a law already?’” Walz told Minnesota’s Mankato Free Press. (more…)

Wall Street Journal opinion writer Holman W. Jenkins, Jr. has cavalierly dismissed the explosive congressional insider trading scandal uncovered this week by Breitbart editor Peter Schweizer and 60 Minutes.

Jenkins calls the fact that members of Congress are abusing their political power and knowledge to make millions trading on Wall Street a “non-scandal”–and then concedes the point:

What’s right about the furor over congressional “insider trading” is the sense that congressmen let themselves behave in ways they wouldn’t permit for the rest of us, indeed would denounce as greedy.

Jenkins goes on to argue, in elitist tones, that “CBS and Mr. Schweizer are taking advantage of the audience’s naivete” and that he is “nonplussed” and “mildly contemptuous over the newest fuss” about the nation’s outrage.

Yet Jenkins’s response should come as no surprise; he is a well-known opponent of insider trading laws, and apparently has a soft spot for those accused of the crime.

In a November 24, 2010, Wall Street Journal column, Jenkins made clear his disdain for insider trading statutes:

Beating a dead horse in argument is frowned upon, but sometimes it takes a good thrashing to reveal the absurdity beneath the surface of reasonability.  So it has been with the evolution of insider trading law…Insane is what happened to insider trading law over the past generation…Insane is treating the information as the offender.  Insane is seeking serially to expand the circle of people who can be criminalized for trading on it, as if it were desirable to keep accurate information out of stock prices.

At times, Jenkins’s skepticism of insider trading law reaches near-alarmist proportions:

The day is coming when a plumber will be prosecuted for trading on what another plumber heard through the wall when fixing the pipe in an apartment neighboring the apartment of somebody who knows somebody who works at an investment bank.

During the insider trading trial of Galleon hedge fund group founder Raj Rajaratnam, Jenkins wrote an April 2011 piece that was dismissive of the prosecution’s case.  The next month, Mr. Rajaratnam was found guilty on all 14 counts of conspiracy and securities fraud. (more…)

From CBSNews:

A bill to stop “insider trading” in Congress is gaining momentum with two new Senate sponsors.

Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., today are introducing the Stop Trading on Congressional Knowledge (STOCK) Act of 2011, which would prohibit members or employees of Congress, as well as executive branch employees, from using nonpublic information obtained through their public service for investing or any attempt at personal financial gain.

Like everyone else, members of Congress are subject to current insider trading laws. However, current insider trading laws do not apply to nonpublic information about current or upcoming congressional activity — that’s because members of Congress aren’t technically obligated to keep that information confidential.

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Elizabeth Warren might just be the motivation that conservatives need to get behind the re-election campaign of Sen. Scott Brown (R-MA). Until now, the Tea Party activists that helped push Brown to an historic victory in 2010 had been grumbling about Brown’s leftish voting record. But Warren’s embrace of tax-and-spend policies, and her disregard for constitutional checks and balances, are giving conservatives new reasons to care.

I once admired Warren–and told her so. I was a student at Harvard Law School when she was plucked from her teaching job to serve as the congressional “oversight czar” for the Troubled Asset Relief Program (TARP). In that role, Warren stood out for her unique willingness to criticize Obama administration appointees, notably treasury secretary Tim Geithner, for failing to comply with basic transparency and reporting requirements.

Warren had also been extremely popular among her students–so much so that our graduating class awarded her the Sacks-Freund Teaching Award in 2009, even though she hadn’t taught since the previous fall. I hadn’t had the privilege of being in one of her classes, but I congratulated her on the award, and told her that as a conservative, I felt she was speaking for me, too, in holding the Obama administration accountable.

But something seemed to change once she joined the administration. (more…)

Republican Bob Turner’s win in New York’s 9^th Congressional District is a story the Frank Sinatra hit song, New York, New York, was written for. The GOP can now sing this tune about itself, specifically these lines:

If (we) can make it there, (we’ll) make it anywhere

It’s up to you, New York, New York

It was up to New York, and New York delivered big time. Just like Senator Scott Brown’s “unlikely” win in liberal Massachusetts, Turner’s election in a historically Democratic stronghold signals a sea change in politics. If Republicans can win this seat – considered untouchable for 90+ years – then how tough will it be for them to win in places considered toss-ups or GOP-leaning?

Of course, the Democratic Party is in denial, at least publicly. Debbie “Downer” Wasserman-Shultz dismissed any concern about Turner’s win, saying that the 9^th District is a difficult district for her party. Really?

Turner’s win, like the rise of the Tea Party and the 2010 Republican election victories, are also rebukes of the mainstream media and nearly every political pundit. Let’s take a walk down memory lane and revisit some of the obituaries written about the GOP a mere three years ago.

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The Hill has a month-by-month recap of 2010:

The grassroots conservative political movement made its clout felt the entire year, from the healthcare reform debate to GOP primaries and the general election last month.

Senior Democrats, ranging from Democratic National Committee Chairman Tim Kaine to Democratic Congressional Campaign Committee Chairman Chris Van Hollen (Md.), aggressively attacked the Tea Party in the lead-up to the midterms, hoping that doing so would soften losses to the GOP. House Minority Leader John Boehner (Ohio) and other Republicans embraced the movement, believing its energy would benefit their party at the polls.

In the end, the Tea Party was in many ways a net asset for the GOP as Republicans grabbed control of the House and cut into the Democratic majority in the Senate.

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From Michael Barone’s in the Washington Examiner:

It is a source of continuing fascination for me to watch the interaction between public opinion, as measured in polls and election results, and the actions of members of Congress, elected in one political environment and looking in most cases to be re-elected in one that may be quite different.

Eleven months ago, after the Massachusetts Senate election, I was convinced that Democrats could not jam their health care bill through because voters had so clearly demanded they not do so. But Pelosi proved more determined and resourceful than I had imagined, and found enough House Democrats who were willing to risk electoral defeat to achieve what Democrats proclaimed was an historic accomplishment.

Pelosi and Obama predicted that Obamacare would become more popular as voters learned more about it. Those predictions were based on the theory that in times of economic distress Americans would be more supportive of or amenable to big government policies.

That theory has been disproved about as conclusively as any theory can be in the real world, and most of the Democrats who provided the key votes for Obamacare were defeated on Election Day.

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“There is,” Shakespeare’s Brutus said to Cassius, “a tide in the affairs of men.”

Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.

Such, I suspect, were the musings of Hillary Rodham Clinton last night as she watched the election returns from a safe and distant perch in an East Asian hotel, and her thinking was no doubt in accord with what was going through the mind of William Jefferson Clinton as well.

As expected, judgment day came on the first Tuesday in November, and the Democrats suffered an historic defeat. In the House, they lost at least sixty seats, and they lost at least six seats in the Senate as well. Their share in the overall vote fell well short of that accorded the Republicans.

Of course, the liberal media will go to great lengths to deny the obvious – first, that this constituted a fully conscious repudiation of the agenda pursued by the administration of Barack Obama and by its Democratic allies in Congress and, second, that William Daley – former Secretary of Commerce, brother of the Mayor of Chicago, and mastermind of the Daley machine – was correct when, on Christmas eve, he warned his fellow Democrats that “the political dangers of this situation could not be clearer,” explaining, “Either we plot a more moderate, centrist course or risk electoral disaster not just in the upcoming midterms but in many elections to come.” But no one will credit their spin, and Democrats everywhere will quietly and privately begin to rethink their relationship with Barack Obama.

Those Democrats who survived the Republican tsunami and retained their House seats this year may be apt to suppose that they will survive in 2012 as well. But Senators up for re-election in that year will be inclined to think other thoughts.

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Over the last twenty-two months, Barack Obama, Rahm Emanuel, Nancy Pelosi, and Harry Reid have sown the wind. Today – if the polls are any indication – they will reap the whirlwind.

The portents have been there for a very long time. It all began on 19 February 2009 with a rant on CNBC on the part of Rick Santelli, which struck a nerve and occasioned the birth of the Tea-Party Movement. That the tide might be beginning to turn was made evident in mid-April of that year when the adherents of that movement successfully mounted demonstrations across the entire country, and the Democrats and their minions in the media began denouncing them as Astroturf, Nazis, racists, and tea-baggers. And to anyone who cared to notice, the seriousness of the opposition and the depth of their concern was made manifest that August when constituents confronted their Senators and Congressmen in town halls throughout the land and shouted them down. It was on 2 August 2009 that I first suggested that, if the Republicans embraced the Tea-Party Movement and articulated the grievances that had occasioned its emergence, a genuine political realignment might be in the offing.

As it happened – and it was by and large an accident – the Republicans were well-positioned to take advantage of this political opening. In January, 2009, many of the House Republicans and not a few of their colleagues in the Senate would have been willing to cooperate with the Democrats in promoting the agenda of the Obama administration. In 2008, they had received a drubbing at the polls, and they were appropriately cowed. But, campaign rhetoric aside, no one on the Democratic side was seriously interested in bipartisan accord. They had won the election; they persuaded themselves that they had a mandate; and though President Obama had presented himself to the voting public as a moderate, he and his fellow Democrats had not the slightest intention of seeking the middle ground. In the House, it would not have taken much to swing a sizable group of Republicans behind the Democrats’ program, but Nancy Pelosi was intent on revenge. So, when the so-called “stimulus” bill came up for a vote, she made sure that there were within it no earmarks for the Republicans, and out of pique nearly all of them voted against the measure.

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Scott Rasmussen now predicts that the Republicans will pick up fifty-five seats in the House. Larry Sabato at the University of Virginia still has the pick-up at forty-seven but says that, if forced to tweak the numbers right now, he would increase his estimate of Republican gains by single digits – which is to say, he agrees with Rasmussen.

There are pollsters out there who are playing games, as a glance at the polls for the Senate race in West Virginia should make clear – and, of course, it is easy to play games. If one wants to encourage the Left and discourage potential Republican voters and donors, all that one has to do is to base one’s poll on the presumption that the percentage of self-described Democrats within the voting public in 2010 will be equal to the percentage in 2008.

Sabato and his associates and Rasmussen are not, however, among the gamesters. Both are aiming at accuracy. Sabato and company have a reputation to uphold (and, in the academic world, that is all-important), and Rasmussen is a nonpartisan pollster who attracts clients by way of demonstrated precision. Neither outfit can afford to make a fool of itself.

I nonetheless think that both are greatly underestimating the size of the Republican surge. Both have reason to be cautious. For understandable reasons, neither is going to climb out on a limb; and both are basing their estimates on recent electoral history. If something is in the offing that exceeds the range of political oscillation in recent decades (including, notably, 1994), if we in American live in something other than normal times, they will miss the size of the surge.

It is good to remember that not a single Sovietologist predicted the collapse and dismemberment of the Soviet regime. History has a way of lulling us into sleep. What has been in recent times we tend to think will be in the foreseeable future. Then, every once in a while, suddenly, out of nowhere, a political earthquake arrives – and only in the aftermath do the experts notice that there were ample warning signs.

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On Thursday, in Detroit, a federal district judge named George Caram Steeh ruled Obamacare constitutional. On Friday, Mike Pence, a Republican Congressman from Indiana, expressed his confidence that the Supreme Court will declare key sections of the bill unconstitutional.

I believe that Pence is right – and for three reasons: one principled, one personal, and one practical and political. The first is easy to grasp.

At stake, Pence asserts, is “whether or not the Constitution of the United States permits the government to order the American people to purchase goods or services, whether they want them or need them or not.” With this description of what is at issue, Judge Steeh, who was appointed to the court by William Jefferson Clinton, is in wholehearted agreement. As he puts it in his ruling,

The decision whether to purchase insurance or to attempt to pay for health care out of pocket, is plainly economic. These decisions, viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers, and the insured population who ultimately pay for the care provided to those who go without insurance.

It is his view that – since our “decisions” to buy or not buy insurance have an impact on the market – the federal government can make these decisions for us.

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Many observers believe that the turning point in Scott Brown’s inspiring Senate win in January was when he was able to shake-loose the Democratic narrative that somehow he was trying to take away “Ted Kennedy’s Seat” from the Democrats.  His brilliant response, “It’s the PEOPLE’S seat” became a campaign slogan and, eventually, the theme of his victory speech.

Are we now witnessing another such moment in Orange County California?

Democratic Rep. Loretta Sanchez appeared on Spanish-language Univision to appeal to her most important voting base:  Latino voters.  Perhaps with a false assumption that only Latinos from the left were listening, she let slip an offensive and patronizing charge:  The Vietnamese are trying to take the seat from Latinos.

Rep. Sanchez district has seen an enormous influx of Vietnamese immigrants over the past two decades.  There have often been tensions between the Latino population and the new arrivals from Asia.  Because the vast majority of Vietnamese immigrants arrived here seeking refuge from a communist, totalitarian regime, they tend to lean more to the right than their Mexican counterparts.

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Et tu, Karl?

Only Miles Monroe, Woody Allen’s character in Sleeper, could have missed the firestorm Karl Rove touched off during his appearance on Fox News’ Hannity show on Tuesday night. But for the benefit of Mr. Monroe and other hypnophiles out there, here it is:

It’s unusual to witness the typically even-tempered Rove go ballistic like this, but it’s downright discouraging to see the so-called “Architect” of so many successful Republican campaigns hell-bent to sabotage one of his own party. With architects like this, who needs building inspectors?

To make matters worse, with subsequent unrepentant appearances on Neil Cavuto’s Your World program and The O’Reilly Factor, the proudly obdurate Mr. Rove has become for the Democrats (and particularly for Delaware Senate hopeful Chris Coons) the proverbial gift that keeps giving. Rove only ever-so-slightly mollified his O’Donnell caveats on those appearances, more out of self-preservation than a spirit of selflessness. I guess we should be grateful that at least unlike Bill Ayers—the unrepentant Pentagon bomber and Weather Underground terrorist—Rove didn’t say he wished he’d done more to damage O’Donnell.

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On Wednesday, if all goes as planned, President Barack Obama will sign the financial-reform bill crafted by Senator Chris Dodd of Connecticut and Congressman Barney Frank of Massachusetts, sponsored by the Democratic Party in both houses, and supported by three Republican Senators – Scott Brown of Massachusetts and Susan Collins and Olympia Snowe of Maine. When the bill is signed, we will be told, as we have repeatedly been told in the last few months, that the measures included within it will prevent future financial crises of the sort that we have suffered from over the last two years.

By now, of course, most Americans have become skeptical of such claims. We were to told that the so-called “stimulus” bill would bring unemployment down, and we learned that its main function was to reward constituencies favoring the party in power. It increased dramatically the salaries of those within the federal civil service, it expanded that civil service massively, and it enabled the state governments and the localities to continue to pay those who worked within the public sector at those levels. Similar lies were told during the healthcare debate. We were told that no one would lose his coverage, that no one would be forced to acquire health insurance, that the cost curve would be bent downward. It is proper to ask whether we are being lied to now and whether Senators Brown, Collins, and Snowe have sold us down the river.

The answer depends – to a considerable degree – on what were the causes of the recent financial crisis. Was it caused by a market failure? If so, is it likely that governmental regulation will prevent such failures in the future? These are the claims advanced by Paul Krugman and the like; these are the claims put forward by President Obama, Senator Dodd, and Congressman Frank. And, on the face of it, they would appear to be true. There was, after all, a bubble in the real estate market. Goldman Sachs and the like marketed junk bonds, made up of mortgages, on a gigantic scale and managed to get for them a triple-A rating from S&P and from Moody’s, and insurance against default was purchased from outfits like AIG that had no idea of the risks involved. The Securities and Exchange Commission and the Federal Reserve could and should have intervened.

But one must be cautious about calling what happened “a case of market failure,” for the real-estate market was not a free market. One could, of course, reply that no market is a genuinely free market. The “free market” is an ideal type. It does not exist in reality. The government interferes and gives shape to virtually every market through taxation, regulation, and laws detailing how contracts are to be enforced.

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