How do politicians get so rich?

"They're not getting Hollywood-style briefcases full of cash. That's actually pretty darn rare. The real story isn’t quite as exciting … and YOU can decide about the ethics of it." – Ken

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How do politicians end up rich? We've all seen the stories. Them getting busted for bribes, or beating the stock market experts by miles, and retiring with millions. And poll after poll shows that Americans believe corruption is rampant in Washington, D.C. and that it's only getting worse. So, really, how common is it? And what are their paths to wealth? I'm Ken LeCourt, and the real elephant in the room isn't the Hollywood style briefcases full of cash. That's actually pretty darn rare. The real story, it's not quite as exciting, and it's rarely illegal. And you can decide the ethics on all of it. So here's where I'm headed. I'll start with how rich are they? What do the numbers actually show once you strip out all the noise? Then I'll describe how it actually works while they're in office, and the revolving door where the big money comes into play after they leave. Then the presidency, where the same game gets played at the highest level there is. And finally, what actually holds up to serious scrutiny. Now, for my foreign friends, this one's about America. The levels of corruption vary wildly from country to country, and it's just too much to get into in a single video. And for the Americans here, if you're someone who only sees the lack of ethics in the other party, that's just not a reflection of reality. It's a reflection of your news sources because it's all over the map. All right, so how rich are they? Let's start with some of the outliers and a pair of numbers. $602,000 and $10.7 million. That's the starting and ending net worth of one former Missouri Senator, Roy Blunt, after he spent about a decade in Congress. That's a 17-fold increase. Former Minnesota Democratic Congressman Colin Peterson is the same story, other party. His disclosed net worth went from roughly $130,000 in 2009 to nearly $1.7 million six years later. Now, I pick those two because they're clean stories, but the numbers behind them are soft because all of this is based on ranges, not really precise figures. That's how financial disclosures work. Now, zooming out to the institution, the numbers are clear. Congress as a body is wealthier than the country it represents by a wide margin at every level. And some members of Congress are super rich. Pennsylvania Senator Dave McCormick ran the biggest hedge fund on the planet before he ran for office, and he's worth somewhere between $120 and $290 million. Virginia Senator Mark Warner is also a former venture capitalist who built his fortune before going to Washington. He's worth over $200 million. Roughly half of Congress qualifies as millionaires today, compared to almost 20% of American households, which is actually pretty impressive. Now, for members of Congress, that doesn't include the value of their main residence. That does count for most people, but it's just something that disclosure documents don't look at. When you dig into it, you find that very little of this is illegal grift. But sometimes that does happen. Representative Randy Cunningham, he kept a written menu listing defense contracts and the bribe each one would cost. He netted about $2.4 million before he went to prison. Duncan Hunter, another California Republican, used over $250,000 in campaign funds for luxury vacations, even airfare for the family's pet rabbit. Louisiana Democrat William Jefferson hid $90,000 in bribes in his family's freezer. And New Jersey Democrat Senator Bob Menendez took cash, a Mercedes, and even gold bars to help Egypt. He was the first sitting U.S. Senator ever convicted of acting as a foreign agent. But here's the thing about these guys: they got caught. Now, Trump pardoned Hunter, but the rest went to prison. And while it's easy to say that all politicians are criminals, we're talking about a very small number of men. And there are a lot of politicians in America. There are over 535 members of Congress, another few thousand federal appointees, and over 7,500 state legislators. Add in city council members and local officials, and you'll see that the United States has about a half a million elected officials. That's a lot. When they get caught taking a bribe, we hear about it. Now, of course, we don't know the numbers who get away with it, but illegal corruption is pretty rare. And we also have to look at a couple other things that argue against the they're all corrupt notion. First, a lot of members of Congress were already rich when they got to Washington. They were lawyers, doctors, business owners, heirs. Congress skews towards high-earning professionals. I mean, a surgeon outowns the median American too, but nobody calls that suspicious. So just looking at high net worth on day one, that's not evidence of any wrongdoing. And also, as much as we often see them saying stupid things on social media, the average politicians who've succeeded, they're not dopes. I mean, I've met a lot of them in my career, and very few of them were handed a political office. And the ones that work their way up the ladder, they're usually smart, articulate, and driven. These are the same traits that make people wealthy in real estate or law or in any field. So here's what some researchers do to try to understand that. They stop comparing members of Congress to the average American and compare them to Americans who started their careers with the same wealth. Jonathan Click did it in 2017. He tracked members over a decade and found that their wealth grew roughly 25% more than someone who started in the same identical financial position outside of Congress. That number is smaller than it sounds. 25% over a 10-year career is 2.5% a year, not 25% per year. They were a lot wealthier than the average American, and they got wealthier, but not by appreciably more than other similar people outside of Congress. All right, so I've talked about some of the outright criminals and overall numbers, but let's see how it actually works, the legal ways that they do increase their wealth. Sitting members can't accept speaking fees anymore or any of the obvious professional side hustles. They can't work in most outside jobs like law or even sit on a corporate board and collect a check. They can have small gigs like teaching or serving on a nonprofit board, and that is capped at 15% of their yearly salary, which is $174,000 a year. That's actually been frozen since 2009. The remaining things they can do include writing books and trade stocks. And then there are also adjacent things they can do, like employing family members on their campaigns or somehow profiting from insider knowledge. So book royalties. They're one of the things that aren't banned or even capped. Congress carved them out an exception. Some examples. In 2024, former Georgia Congresswoman Marjorie Taylor Green made $178,000 in book royalties, more than her salary. Bernie Sanders made $800,000 a year in each 2016 and 2017. Elizabeth Warren made nearly a half million in 2022 alone. There's nothing wrong with being a paid author, but it does get into a gray area for politicians, because a lot of people aren't buying the book, they're helping the author. And book advances, that's different than royalties. Advances are checks written before a single copy sells, which makes it one of the easiest ways in the world to hand someone a big chunk of money. One of the earlier scandals on this was decades back when my former boss Rupert Murdoch, his HarperCollins company, offered Newt Gingrich $4.5 million for a book right as he was about to become Speaker of the House, with power over communications law. It blew up so fast that he gave the whole thing back and took a symbolic $1 instead. The House banned advances outright after that, and the ban still in place. The Senate, though, they didn't adopt it. Which is how six years later, incoming Senator Hillary Clinton walked in with an $8 million advance for her memoir. Indu Cuomo's first memoir got a $780,000 advance in 2014, and it sold only 3,000 hardcover copies in the first five months. His second, written mid-pandemic, paid him more than $5 million up front. New York's Ethics Commission told him to give it back, but he never did. So why does anyone pay this kind of money for a book that may or may not sell? Well, one answer is that famous people are more likely to sell more books. That's true, but only about one in four books ever earns back its advance. And political books, they do worse. Another more realistic answer is that it's valuable for every business person to have the phone numbers to rich and powerful people, especially when those people pick up the phone. And it's just good PR for a company and personally their executives. Alright, so next up, family on the payroll. I also want to be fair here because campaigns can sometimes be family affairs, with spouses and kids doing some of the work, often cheaper than a firm would. That by itself isn't a scandal, until it is. Campaign funds and leadership packs, they can pay a member's relatives fair market value for consulting, event planning, whatever you want to call it. But nobody enforces it, and many go overboard with it. Maxine Waters has paid her daughter over a million dollars since 2003 to mail out campaign pamphlets. A 2022 bill to ban it, that went nowhere. Then they're stock trading. Members of Congress are required to disclose their trades within 45 days, but they're not banned from trading. Now, most people have heard of Nancy Pelosi's wild success in the market. She's picked up a nickname, the Queen of Investing. Her portfolio, officially it's her husband Paul's, has beaten the stock market so consistently that somebody built an investment product around it, tracking her and other Democrats under the ticker NANC. There's a Republican tracking ETF too with the same premise. Wall Street has built legitimate sellable investment products on the idea that Congress members trade better than everyone else. One stock market platform estimated that her return since she started Congress in 1987? 17,000%. The Dow over that same period with dividends, around 5,000%. So here's what it's often almost impossible to know. If you're a plugged-in politician, it's reasonable that you would have some great insight into how businesses and markets might change. That helps you predict the future. It helps you make money in the stock market. But when that information comes from meetings that aren't open to the public, that's something else altogether. In 2020, four U.S. senators, Burr, Loffler, Inhoff, and Feinstein, they started selling millions in stock right after closed-door briefings on COVID. The market crashed days later. All four of them were later cleared. And there are a lot of other ways to profit from information that most people aren't aware of. Advanced knowledge of a federal project, a zoning change, a highway route, that can be worth more than any bribe. Because nobody calls it a bribe, they call it a real estate deal. Former House Speaker Dennis Hastert earmarked federal highway money for a road near land he owned, then made about $2 million selling it. Former Senate Majority Leader Harry Reid transferred land to a friend's company, watched that friend get it rezoned with his own help, and collected $1.1 million when it sold. Neither was ever charged. Those were nice paydays, and they were in the gray area. But for a whole lot of politicians, the biggest payoffs come after they leave office. If none of that worked out for them while they were in office, on the other side of the revolving door is where the real money's waiting. Because if you're a corporation or a cause and you want to influence Congress, hiring a former member is a great way to do it. They understand how things work and they have lots of contacts. Studies show that about 60% of former members of Congress end up at lobbying firms, consulting shops, or trade groups working to influence the federal government. About half of those become official lobbyists, which requires registration, disclosures, and a waiting period of one to two years before a former member can do that kind of direct lobbying. Now, the case for that's a little sleazy, is that they're asking favors from their former colleagues and friends. But the case for it is that somebody who spent 20 years on a health committee actually understands how Medicare works. That's real expertise, and there's nothing sinister about a company wanting to hire it. And while it's easy to paint all lobbyists as bad, I've seen new laws cripple industries entirely accidentally by passing regulations without really knowing how things work. There are lots of good reasons why industries and causes have advocates making their case for them. And if the rule is that serving in Congress means you can never work in the field you know best, you've just told every talented person in the country that public service is a career dead end. But then you get a case like Billy Tozin. As a House Committee chairman, Tozin helped write the 2003 law that created Medicare's prescription drug benefit, a bill worth hundreds of billions of dollars to the pharmaceutical industry. His term ended in 2005, and within a month, he was running Pharma, the industry's top lobbying group. In his final year there, he brought home $11.6 million. For him, the gap between leaving office and cashing the industry's checks was measured in weeks. Chris Dodd ran the same play in entertainment, leaving the Senate for the Motion Picture Association at about a million and a half dollars a year. Hey, as always, if I screwed up on any of my important facts here, let me know in the comments, I'll address it in a pinned comment. My sources, my research docs, they're down in the description. So there's actually a job in the federal government where the conflict of interest laws don't apply. And it's the biggest one, the presidency. The main federal conflict of interest law, the one that stops a government employee from ruling on something that they have a financial stake in, that explicitly exempts by name the president and the vice president. The theory is that the job's just too encompassing to recuse yourself from. And so in practice, the two most powerful people in government are the two people the ethics law doesn't reach. Now look, there are shelves full of books written about the history of presidential corruption, and I could easily spend the rest of this video talking about any number of scandals. But know that for most of American history, when a president's administration went bad, the rot tended to happen around him, more than to his own bank account. Where it didn't, it usually stayed small, personal, and largely out of court. That's true going back to Grant and Harding, and it stayed true for most of American history. So let's skip ahead and look at a few modern presidents who were criticized by opponents or at least had some very noticeable paydays. But first, give some serious thought to whether that's really a problem, or maybe whether it's just fine. Now, I'm not talking about doing something in the presidency and then getting a check for it years later. None of these examples are really about that. But if you're famous in America, you can make money. I mean, the Hoktua girl, she made an entire career out of one sexual comment in an interview. And I still really don't know what the Kardashians do for a living, but they're worth billions of dollars. Should we really have a problem with a president who cashes in on fame? Alright, so starting in my lifetime, let's first look at Ronald Reagan. Less than a year after leaving the White House, he gave two short speeches in Tokyo and made $2 million for about 40 minutes on stage, more than his entire eight-year presidential salary combined. He also signed a $5 million book deal for his memoir and a collection of his speeches. Bill and Hillary Clinton, they've earned over $150 million in speaking fees since 2001. Not to mention the Bill Hillary and Chelsea Clinton Foundation, which has raised billions of dollars. Now, that's a nonprofit, but there are lots of personal perks to running a foundation like that. I mean, it spent $50 million in travel expenses alone. Barack and Michelle Obama signed a book deal that was said to be worth $65 million. And a Netflix deal estimated to be worth over $50 million, although those numbers aren't officially confirmed. He gets about $400,000 per speech, and Michelle, she gets $200,000. Joe Biden left the vice presidency in 2017 worth about $2.5 million. Over the next two years, he made more than $15 million in speaking fees and book money. His son Hunter did pretty well during his dad's vice presidency through entities who wanted his family name to help them out. And then there's Donald Trump, whose personal and family fortunes have been a gold mine during the presidency. His family's crypto venture has pulled in over $2 billion, some from Arab investors who later got access to advanced American computer chip tech. Regular retail investors in the crypto coins, which had his and Melania's name, they lost about $4 billion, while early investors in it made $1.2 billion in profits. He's selling gold watches, sneakers, and mugs stamped with a presidential seal. The latest? His own media company wants to sell Wall Street trading firms early access to his social media posts for reportedly up to $100,000 a month. So those hedge funds could trade well before the rest of the country on the words of the President of the United States. None of this is proven illegal, and again, the exemption I mentioned earlier means that almost none of it can be. Still, I'm probably giving you a preview of upcoming hearings and court cases to come. So what actually holds up? Almost all of it, and that's the part that surprised me. Every number in this video is real, and the wealth edge, the trading returns, the book advances, the lobbying jumps, they're all well documented. But if getting rich fast is your goal, politics really isn't the easiest path to do it. I mean, much less talented people are on Wall Street or in boring companies, and they're making much, much more. It's easy to tweet out that all politicians are corrupt, but Congress, it just isn't a criminal enterprise. There are ways that they profit, and they profit more as they rise up the ladder, and their exits, they're definitely lined with money. And there's always another bill promising to fix it. But history says don't hold your breath. The people who have to vote to close whatever loopholes they are are often the same people planning on using those loopholes. And for the ones that go overboard, prison is pretty common. Hey, thanks for watching. I value your time, and I hope this is worthwhile for you. See you in the comments.