If the U.S. Defaults, Eric Cantor Makes Money

If the U.S. defaults, Eric Cantor will make some money.

According to the Wall Street Journal, House Majority Whip Eric Cantor stands to gain financially from a U.S. default on the debt ceiling.

Putting his money where his mouth is? Eric Cantor, the Republican Whip in the House of Representatives, bought up to $15,000 in shares of ProShares Trust Ultrashort 20+ Year Treasury ETF last December, according to his 2009 financial disclosure statement. The exchange-traded fund takes a short position in long-dated government bonds. In effect, it is a bet against U.S. government bonds—and perhaps on inflation in the future.

You may recall that last week, Cantor pulled out of debt ceiling talks, increasing the possibility of default. And why shouldn’t he? If the U.S. defaults, he’ll make money on his investments. He’ll still have a job because he’s in a safe seat. And an economic collapse makes it more likely that a Republican wins the White House in 2012, which would make Eric Cantor more powerful.

In short, every conceivable incentive is aligned for Eric Cantor to allow the U.S. to default except an altruistic desire to not cause suffering to his fellow citizens.

This is deeply troubling.

FILED UNDER: Congress, Deficit and Debt, Economics and Business, Government, US Politics
Alex Knapp
About Alex Knapp
Alex Knapp is Associate Editor at Forbes for science and games. He was a longtime blogger elsewhere before joining the OTB team in June 2005 and contributed some 700 posts through January 2013. Follow him on Twitter @TheAlexKnapp.

Comments

  1. James Joyner says:

    Alex: Surely you’re not going to trust that liberal rag, Wall Street Journal!

    I’m surprised that Cantor is allowed to invest in the market, period, given his policy clout and the resulting appearance of impropriety. Certainly, some officials are expected to put their portfolios into a blind trust. I don’t know how far the chain of responsibility we’d take this–it would be inane for junior military officers or the average GS-12–but would think any executive appointee, Member of Congress, or federal judge would be required to do so.

  2. george says:

    The WSJ has always been the Democratic Party rag, so they’ll say anything …

    And I agree, why isn’t his portfolio in a blind trust?

  3. mantis says:

    It has certainly seemed like Republicans are happy to see the economy get worse for political gain. For instance, they finally found a tax cut they don’t like: one that would actually help the economy right now.

    It’s nice to know they are also going to personally profit off of the economic suffering of American citizens they aim to exacerbate. Just so there’s no doubt about their motives.

  4. Steve Verdon says:

    C’mon Alex, this is just good government. Or good enough government. Please stop this complaining there is nothing at all inappropriate about this.

  5. Drew says:

    That’s the ticket. See, what we do is, we get elected to Congress. Then we place our financial bets AND FORCE A US DEFAULT!! BRILLIANT!! Its just as wicked as it seems………I don’t believe Dr. Evil could have done it better.

    Moving on from the ludicrous. I think James has the correct point. As a fiduciary myself, I wouldn’t dream of taking positions in public securities where my policy decisions could alter their performance. I find that odd.

  6. hey norm says:

    I would like to see a response from Cantor about this.

  7. Andyman says:

    Cantor’s spokesperson claimed that the portion of his retirement portfolio invested in T-bills (I suppose he means the G fund, if Cantor is in FERS) is effectively a long position on gov’t debt, so there’s nothing wrong with hedging by taking a short position.

    Somehow it seems a little unpatriotic however. I don’t want my leadership taking neutral positions on whether the US will or will not make good on its obligations. It seems like if anyone should have extra skin in the game, it’s them.

  8. ponce says:

    I think Sen. Johnson’s questionable $10 million paycheck was for more interesting than the money grubbing of that treasonous weasel Cantor.

    http://tpmdc.talkingpointsmemo.com/2011/06/johnsons-cut-rate-loans-violate-election-law-watchdogs-argue.php

    Somebody’s got some ‘splainin’ to do.

  9. Mr. Prosser says:

    It would be interesting to see if any other congressmen and senators are investing in the same or similar funds

  10. rjs says:

    sounds like treason to me…

  11. newsie says:

    This is certainly not ethical. If he is just hedging his IRA he should not have done it, he should have worked to get the US to grow jobs. All his and all of congressional holdings should be in a blind trust.

    This could be why he walked out of the budget talks and is wanting the US to default. This could be why all of the GOP wants the US to default.

    This is wrong, very wrong.

  12. Sheila says:

    John Boehner and President Obama had a deal worked out. Dear Eric didn’t like it, so he walked out of the conference and held up any chance of agreement between Dems and Reps after the Boehner/Obama deal was announced. He thinks he single-handedly speaks for the American people. His ego has to be held in check; he simply wants John Boehner’s job.