Let’s start off by defining terms.  Selling short in the market serves a good purpose.  It curbs “irrational exuberance,” and it provides investors with an important hedge to protect themselves from bad business decisions.  It’s easy for demagogues to cast it as “betting against America” only because most people don’t understand the importance of short selling in disciplining the market and keeping bubbles from overexpanding.

With that said, the Wall Street Journal discovers that the demagogues themselves apparently indulged in the practice that they now scorn as unpatriotic (via Instapundit and Henry Blodgett):

According to The Journal’s analysis of congressional disclosures, investment accounts of 13 members of Congress or their spouses show bearish bets made in 2008 via exchange-traded funds—portfolios that trade like stocks and mirror an index. These funds were leveraged; they used derivatives and other techniques to magnify the daily moves of the index they track. …

Some of these legislators have publicly criticized practices such as short-selling, or betting on a security to decline. In February, Sen. Johnny Isakson (R., Ga.) argued on the Senate floor that “we don’t need those speculating in the marketplace to take unfair advantage of the values of equities that are owned by Americans all over this country for the sake of making a buck on a short sale.”

On Oct. 8 and 9, 2008—as the Federal Reserve was bailing out American International GroupInc.—an account Sen. Isakson held invested more than $30,000 in ProShares UltraShort 7-10 Year Treasury and UltraShort 20+ Year Treasury, the records show. These are “leveraged short” funds, designed to gain $2 for each $1 drop in the daily value of U.S. Treasury bonds. …

Jonathan Gillibrand, husband of New York Democratic Sen. Kirsten Gillibrand, made more than 250 transactions in options in his E*Trade account in 2008, when his wife was in the House, according to disclosures.

Almost all the trades were in put options, which convey the right to sell a stock or other instrument at a given price until a given date. At least 34 times, Mr. Gillibrand bought puts on stocks of home builders, including Beazer Homes USA Inc., Hovnanian Enterprises Inc.,Meritage Homes Corp. and Ryland Group Inc. These were bets the builder stocks would fall; if they did, the puts’ value would rise. …

Rep. Shelley Berkley (D., Nev.), a member of the House Ways and Means Committee, has been a critic of Wall Street. In a statement on the House floor Feb. 23, she said: “Representing Las Vegas, let me assure you, no casino on the planet behaves as irresponsibly and recklessly as Wall Street does. Wall Street ought to be ashamed, and take a lesson from the casino industry.”

An account held by her husband, Lawrence Lehrner, shows 57 trades in 2008 in ETFs designed to gain $2 for each $1 drop in the value of a market index, the disclosures show. Between July 25 and July 29, 2008—four months after Bear Stearns Cos. fell—records show four trades in and out of ProShares UltraShort Financial fund.

Color Blodgett shocked, shocked to find these members of Congress profiting through the use of investment options they now demonize:

Remember all that scorn in Congress about evil shortsellers betting against America and bringing the country down?

Well, it turns out Congress-people did it, too.  And they used derivatives to do it, which they now say they abhor. … To use their own tortured, populist logic, they were betting against the country and their 401k-holding constituents!

The Democrat with the biggest political problem regarding short selling isn’t in Congress.  Jeff Greene made hundreds of millions of dollars in the 2007-8 financial collapse by “betting against” the residential market.  Now he wants to use that money to run for the US Senate in Florida against Kendrick Meek in the Democratic primaries.  If he winds up on the ticket, will Democrats continue to demonize investors who went short on the economy?  At least so far, they don’t seem terribly consistent.