Senator Johnson Holds Millions in Cash to Avoids Conflicts, Profits
Senator Ron Johnson, a Wisconsin Republican who founded specialty plastics company Pacur LLC and touted his business credentials on the 2010 campaign trail, sold all his stocks, bonds and mutual funds and put the money into cash accounts before taking the oath of office in January.
“I decided to liquidate all my marketable securities to avoid even a hint of a conflict of interest,” he said in an interview.
Johnson now has cash accounts worth as much as $25.9 million, according to a financial disclosure statement released yesterday. The statement gives the value of holdings in broad ranges.
By keeping cash, Johnson could be losing money: The highest yield on a cash fund at Charles Schwab Corp. (SCHW), where Johnson’s largest account is held, was 0.05 percent, according to the company’s web site. The inflation rate as measured by the Consumer Price Index was 3.6 percent for the 12 months ending in May, the Labor Department said yesterday.
“To the extent that you’re not beating inflation, the purchasing power of that stack of money is going to decline,” said Robert Kerr, a spokesman for the National Association of Enrolled Agents, a membership organization of tax professionals licensed by the Internal Revenue Service.
Before selling, Johnson held shares of more than 200 mutual funds and companies, including BP Plc (BP), Exxon Mobil Corp. and ConocoPhillips. (COP) He also had interests in 65 foreign companies, including Toyota Motor Corp.; Petroleo Brasiliero, the Brazilian oil company; and the telephone companies of Italy, Argentina, New Zealand, Spain and Mexico.
In a bad investment climate, cash can be a better choice than stocks, Kerr said. “The market right now has been sinking,” he said. “Ultimately you don’t know until after the fact.”
Johnson, who defeated incumbent Democratic Senator Russell Feingold in November, earned $10 million in compensation from Pacur and an additional $75,000 in so-called flow-thru income from his 5 percent ownership share in the company, which was valued between $1 million and $5 million. Taken as a whole, Johnson’s assets could be worth as much as $36.6 million, the high financial range on the disclosure reports.
Feingold, by contrast, had little wealth. The largest asset he reported in his last disclosure was his Wisconsin state pension, valued between $50,000 and $100,000.
During the campaign, Johnson trumpeted his business background and criticized Washington for having too many lawyers in Congress and not enough experienced businessmen.
“That would be fine if we had a lawsuit to settle,” he said in one campaign television ad, “but we have an economy to fix. There are zero manufacturers and one accountant. It’s no wonder we’re losing jobs and piling up debt. I’m not a politician. I’m an accountant and a manufacturer. I know how to balance a budget, and I do know how to create jobs. Now that’s something we could really use.”
In selling his assets, Johnson incurred millions in capital gains. He enjoyed gains between $100,001 and $1 million on each of his holdings in Anadarko Petroleum Corp. (APC), ConocoPhillips, CVS Caremark Corp. (CVS), FedEx Corp. (FDX) and Pfizer Inc. (PFE), among others.
Johnson, who as an accountant acknowledged that cash isn’t the best investment for his millions, said he would like to set up a blind trust for his assets but has been busy with his Senate work.
Johnson serves on the Budget, Appropriations and Homeland Security committees. He has been an outspoken critic of President Barack Obama and has co-sponsored a bill that would place a hard cap on government spending.
“We are hurtling toward bankruptcy, and we have to prevent that,” he said yesterday on MSNBC.
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