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How did Mitch McConnell’s net worth soar?

Senate Minority Leader Mitch McConnell's opponent Allison Lundergan Grimes slammed in her primary victory speech Tuesday night, saying he has voted against raising the minimum wage 15 times. (Video: Alison Lundergan Grimes for Kentucky)

“Never gone without a pay raise for himself, [Sen. Mitch McConnell] quadrupled his net worth on the backs of hardworking Kentuckians that can’t afford it.”

–Democratic challenger Alison Lundergan Grimes, in her primary victory speech, May 20, 2014

In her forceful speech accepting the Democratic nomination for Kentucky’s high-profile Senate race, Grimes contrasted Sen. Mitch McConnell’s long opposition to the minimum wage with a startling claim—that he has given himself pay raises and “quadrupled his net worth on the backs of hardworking Kentuckians that can’t afford it.”

The implication, of course, is that increase in McConnell’s wealth came from being on the public payroll. Is that the case?

The Facts

McConnell is a 30-year veteran of the Senate, having first entered the chamber in 1985. A senator earned $75,100 in 1985, and it has risen to $174,000 as of 2009, Senate records show. (No pay raise has taken placed since then.)

As Republican leader of the Senate, McConnell earns an even higher salary–$193,400. However, his office has announced that he donates as much as $5,100 a year to an undisclosed charity because he does not want to accept the federal contribution to his health premiums associated with the Affordable Care Act.

The Grimes campaign points to two instances, in 2001 and 2003, when McConnell voted that an amendment halting an automatic pay raise of $4,900 was not germane and voted to block an amendment that would have delayed a $3,400 increase, respectively.  (Neither vote directly increased pay.) McConnell’s office counted eight recorded votes since he became leader in 2007 in which McConnell voted against giving himself a pay raise.

But a focus on pay raises is a red herring when looking at McConnell’s finances.

Lawmakers are required to file personal financial disclosure forms listing their assets within broad ranges (such as $5 million to $25 million), making it difficult to get a precise sense of a lawmaker’s wealth. Still, the Center for Responsive Politics ranks McConnell as the 10th richest senator, with a net worth of between $9.2 million and $36.5 million.

McConnell’s average wealth of $22.8 million puts him well above the Senate average. Oddly, however, before 2008 McConnell was well below the Senate average. In 2004, his average net worth was $3.1 million, compared to a Senate average of $14.5 million.

That’s almost a sevenfold increase in 10 years. McConnell has quadrupled his net worth since 2007, when it was $7.8 million.

So what happened in 2008? His financial disclosure form tells the story—suddenly there appeared a tax-exempt money market fund, valued at between $5 million and $25 million, listed as a “gift from a filer’s relative.” (Look at Line 2 and then Line 3.)

Indeed, a McConnell spokesman confirms that this was an inheritance for McConnell’s wife, former Labor Secretary Elaine Chao, after her mother died in 2007. Chao, who married McConnell in 1993, earns significant income on her own, serving on corporate boards, and has at least $1 million in a Vanguard 500 Index Fund. (Since these shares are in her name, McConnell only needs to report they have a minimum value of $1 milllion.)

McConnell, in his acceptance speech, mentioned that his wife arrived in the United States in a cargo ship not speaking any English. Shortly after she came to the United States, her father James S.C. Chao founded Foremost Maritime Corporation, which developed trade with Taiwan and was a major agent for shipments of rice during the Vietnam War. Today, Foremost Group still is a major shipping company. As an example of the firm’s success, a Chao family foundation donated $40 million to Harvard Business School in 2012, which Chao and three of her sisters attended.

In other words, virtually all of the increase in McConnell’s increase in net worth comes from his wife’s money, not his congressional work.

The Pinocchio Test

McConnell’s wealth may be fair game when trying to highlight his current opposition to Democrats’ efforts to boost the minimum wage. Grimes is correct that he has generally opposed increases in the minimum wage. McConnell has voted at least once for a bipartisan bill to increase the minimum wage – and that was when it was paired with cuts in small business taxes.

But that does not give Grimes license to suggest that somehow the increase in his wealth came from being on a public payroll with pay raises that McConnell voted for—“on the backs of hardworking Kentuckians that can’t afford it.” Rather, this is money that his wife inherited, meaning it has nothing to do with his earnings as a U.S. senator.

Three Pinocchios

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