Lawmakers Heavily Invested In Defense Companies

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San Diego Union-Tribune
April 4, 2008 Study: Democrats have more holdings
By Anne Flaherty, Associated Press
WASHINGTON – Members of Congress have as much as $196 million collectively invested in companies doing business with the Defense Department, earning millions since the onset of the Iraq war, according to a study by a nonpartisan research group.
Not all the companies in which lawmakers invested are typical defense contractors. Corporations such as Pepsico, IBM, Microsoft and Johnson & Johnson have at one point received defense-related contracts, notes the study, by the Washington-based Center for Responsive Politics.
The center's review of lawmakers' 2006 financial-disclosure statements suggests that members' holdings could pose a conflict of interest as they decide the fate of spending for the war in Iraq.
Several members earning money from these contractors have plum committee or leadership assignments, including Sen. John Kerry, D-Mass.; Sen. Joseph Lieberman, I-Conn.; and House Minority Whip Roy Blunt, R-Mo.
The study found that more Republicans than Democrats hold stock in defense companies, but that the Democrats who are invested had significantly more money at stake.
In 2006, for example, Democrats held at least $3.7 million in military-related investments, compared with Republican investments of $577,500.
Overall, 151 members hold investments worth $78.7 million to $195.5 million in companies that receive defense contracts that are worth at least $5 million. Those investments earned them somewhere between $15.8 million and $62 million between 2004 and 2006, the center concludes.
It is unclear how many members still hold such investments and exactly how much money has been made. Disclosure reports for 2007 are not due until May. Also, members are required to report only a range of their holdings.
According to the report, presidential hopefuls Barack Obama and John McCain did not report any defense-related holdings on their filings; Hillary Rodham Clinton noted holdings in companies such as Honeywell, Boeing and Raytheon, but she sold the stock in May. All three are senators.
Earning dividends from companies tied to the military “could be problematic” for lawmakers who oversee defense policy and budgeting, said the center's Lindsay Renick Mayer. Avoiding every company with a military contract, however, would not be easy for an investor.
“So common are these companies, both as personal investments and as defense contractors, it would appear difficult to build a diverse blue-chip stock portfolio without at least some of them,” Mayer wrote.
 
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