WASHINGTON D.C. — In terms of Congressional compensation, many may ask: Well, how much do they make? The baseline Congressional compensation for Congressmen and Congresswomen –– and senators, for that matter –– are $174,000 per year. This number has remained unchanged since 2009.
The Fiscal Facts and Figures
There are a few exceptions to this number, however: the Speaker of the House –– currently Paul Ryan –– is paid $223,500, and the Majority and Minority Leaders –– Kevin McCarthy and Nancy Pelosi respectively –– are paid $193,000 per year.
The Treasury of the United States pays Congressional compensation to Congressmen and Congresswomen, which is governed and adjusted through use of the Ethics Reform Act of 1989 and the twenty-seventh amendment of the U.S. Constitution. Members of Congress do not make additional money for serving on Congressional committees, and are only permitted to receive Congressional compensation during their elected terms.
Congressmen and Congresswomen are also ineligible for per diem allowances for housing and other expenditures in Washington, D.C., and cannot accept honoraria for public speaking. In lieu of receiving honoraria, a charitable donation may be given on the Representative’s behalf, but this donation cannot exceed $2,000.
Furthermore, if a Congressmen or Congresswomen wish to bring in what’s called “outside earned income” concurrent with their Congressional compensation, they may as long as the income from this job is no more than 15 percent of their Congressional salary. For all members of the U.S. House of Representatives except Ryan, McCarthy and Pelosi, this means that the maximum “outside earned income” they may receive is $27,495.
Certain jobs are completely off-limits too. Congressmen and Congresswomen are prohibited from receiving income from fiduciary relationships –– that is, jobs that require the management of another person’s wealth or assets. Examples of this include lawyers and bankers.
The reasoning here is that barring U.S. Representatives from earning income from fiduciary relationships will minimize conflicts of interest, so that members of Congress do not try and pass laws that may benefit them personally, but are detrimental to their constituents.
It is no secret that many Congressmen and Congresswomen are millionaires –– as they are required to disclose their finances –– yet they are not allowed to earn more than $27,495 in “outside earned income.” While Congressional compensation towers over the average American’s income, they do not make up the majority of many members of congress’ wealth.
The reason: “outside earned income” does not actually mean all money Representatives make besides their Congressional compensation.
In 2014, analysis of the financial disclosure forms provided by members of Congress showed that the richest Representative, Congressman Darrell Issa of California, had a net worth of nearly $360 million, triple the net worth of the next richest member of Congress Michael McCaul. House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell also had net worths in the tens of millions –– over $74 million for Pelosi and about $12 million for McConnell.
Outside Earned Income
The fact of the matter is that personal investments, interest, rent, inheritance and money made off of the stock market are all considered “unearned” and are not “outside earned income.” For example, Congressman Issa’s wealth comes primarily from his business in manufacturing car alarms, yet his wealth has been moved into bonds, and is therefore considered investments rather than income.
Other Representatives, like Congressman McCaul, have little to no assets listed in their own name, but many listed under their spouse’s name.
Considering the clever tactics employed by Representatives to avoid “outside earned income,” it is no wonder that there has been controversy and debate over Congressional compensation for years. Congressmen and Congresswomen are entitled to federal health benefits, and are even able to write-off $3,000 per year in taxes for expenses incurred in Washington, D.C.
When Democratic Congressman Jim Moran complained in 2014 after the House voted to deny an increase to Congressional compensation, he was met with public censure.
Congress at least appears to understand the American frustration with Congressional compensation and benefits, and have rejected increases to their own salaries even when permitted by law. Also, the Ethics Committee reserves the right to determine whether wealth is “outside earned income” or not, and may even disagree with the way wealth is reported on a Representative’s financial disclosure form.
Undeniably, the American people must put a lot of trust in the Ethics Committee’s honor and decisiveness to appropriately deal with Congressional compensation.
– David Mclellan