Picture an umpire betting on a football match while making crucial calls. Sounds unfair, right? Yet, that’s essentially what’s happening with congressional stock trading—and it’s completely legal for now, at least. 

Recently, US President Joe Biden expressed his support for a stock trading ban among lawmakers, stating, “I don’t know how you look your constituents in the eye and know that the job they gave you provided an inside track to make more money.”

Profits Of War

The multiple flashpoints in the world — from the Russia-Ukraine war, the Israel-Iran conflict, and escalating tensions in Asia over Taiwan and Korea – have triggered a sharp rise in global defense spending, driven by growing insecurity.

The numbers tell a compelling story: According to USAspending.gov, the US Department of Defense (DoD) awarded US$466.3 billion in defense contracts in FY23, marking a 10% increase from US$424.3 billion in FY22.

The top 100 contractors accounted for US$290 billion, representing 62% of the obligated funds for FY23, compared to US$274 billion (65%) in FY22.

This trend has significantly benefited major defense contractors like Lockheed Martin, Raytheon Technologies Corp (now RTX), General Dynamics, Boeing, and Northrop Grumman Corp, all of whom have seen substantial growth in defense contracts.

The Congressional War Chest

In 2024, at least 37 members of Congress and their families traded stocks linked to the defense sector, using a list of the top 100 Pentagon contractors compiled annually by Defense Security Monitor.

According to data from ‘Quiver Quantitative,’ US lawmakers traded between US$24 million and US$113 million worth of stocks from these Pentagon contractors this year.

Notably, eight of these members held roles on the Armed Services and Foreign Affairs Committees, which oversee defense policy and foreign relations.

This access to intelligence briefings and defense bill oversight gives them a significant advantage in anticipating stock price movements.

Following The Money Trail

Congressman Josh Gottheimer, the Representative from New Jersey – emerged as the most active defense stock trader in Congress. He traded at least US$22 million worth of stocks from top Pentagon contractors, including Microsoft, Northrop Grumman, and IBM.

Gottheimer also serves on the Permanent Select Committee on Intelligence and the National Security Subcommittee in the Committee on Financial Services, placing him in a uniquely influential position.

Other notable traders in defense stocks include Rep. Nancy Pelosi, Rep. Suzan DelBene, Rep. Scott Franklin, Rep. Thomas Leam Jr., and Rep. Jonathan Jackson.

A Question Of Ethics

“I don’t know how you look your constituents in the eye and know that the job they gave you provided an inside track to make more money,” Outgoing President Biden remarked, finally taking a stand on this contentious issue before leaving office in 2024.

His words cut to the heart of the matter: How can lawmakers maintain objectivity when their personal portfolios might benefit from their official decisions?

Notably, Biden, who served as the 46th President of the United States, had so far avoided taking a clear stance on lawmakers owning defense stocks.

The ETHICS Act

A bipartisan group of senators has stepped up to tackle this challenge.

In July 2024, Democrats Jon Ossoff, Gary Peters, and Jeff Merkley, along with Republican Josh Hawley—introduced legislation to ban members of Congress from buying and selling individual stocks. The proposal also extends to spouses and dependents of lawmakers. Similar bills have also been introduced in the House.

The legislation imposes stiff penalties for non-compliance, including forfeiting a month’s salary or 10% of the asset value, whichever is greater. It also increases the penalty for failing to disclose stock holdings under existing laws from US$200 to US$500.

While the aptly named ETHICS Act (Ending Trading and Holdings in Congressional Stocks Act) cleared the Senate Committee on Homeland Security and Government Affairs in July, it faces an uncertain future awaiting a full Senate vote.

Power, Profit, And Public Trust

As global tensions continue to rise and defense spending follows suit, the intersection of congressional oversight and personal investment becomes increasingly problematic. The question isn’t just about legality—it’s about maintaining public trust in democratic institutions.

According to experts, Congress can begin to address conflicts of interest by passing a stock trading ban. The ETHICS Act would prevent Members of Congress from trading individual stocks. With public attention growing and increasing calls for accountability, the issue of congressional stock trading remains a hot-button topic in Washington.

The football umpire analogy becomes even more poignant when considering the stakes: billions in defense contracts, critical national security decisions, and the integrity of the legislative process.

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