In the Spring of 2010, a bespectacled, middle-aged policy wonk named Peter Schweizer fired up his laptop and began a months-long odyssey into a forbidding maze of public databases, hunting for the financial secrets of Washington’s most powerful politicians. Schweizer had been struck by the fact that members of Congress are free to buy and sell stocks in companies whose fate can be profoundly influenced, or even determined, by Washington policy, and he wondered, do these ultimate insiders act on what they know? Yes, Schweizer found, they certainly seem to. Schweizer’s research revealed that some of Congress’s most prominent members are in a position to routinely engage in what amounts to a legal form of insider trading, profiting from investment activity that, he says, “would send the rest of us to prison.”

Schweizer, who is 47, lives in Tallahassee with his wife and children (“New York or D.C. would be too distracting—I’d never get any writing done”) and commutes regularly to Stanford, where he is the William J. Casey research fellow at the Hoover Institution. His circle of friends includes some bare-knuckle combatants in the partisan frays (such as conservative media impresario Andrew Breitbart), but Schweizer himself comes across more as a bookish researcher than the right-wing hit man liberal critics see. Indeed, he sounds somewhat surprised, if gratified, to have attracted attention with his findings. “To me, it’s troubling that a fellow at Stanford who lives in Florida had to dig this up.”

It was in his Tallahassee office that Schweizer began what he thought was a promising research project: combing through congressional financial-disclosure records dating back to 2000 to see what kinds of investments legislators were making. He quickly learned that Capitol Hill has quite a few market players. He narrowed his search to a dozen or so members—the leaders of both houses, as well as members of key committees—and focused on trades that coincided with big policy initiatives of the sort that could move markets.

While examining trades made around the time of the 2003 Medicare overhaul, Schweizer experienced what he calls his “Holy crap!” moment. The legislation, which created a new prescription-drug entitlement, promised to be a huge boon to the pharmaceutical industry—and to savvy investors in the Capitol. Among those with special insight on the issue was Massachusetts Sen. John Kerry, chairman of the health subcommittee of the Senate’s powerful Finance Committee. Kerry is one of the wealthiest members of the Senate and heavily invested in the stock market. As the final version of the drug program neared approval—one that didn’t include limits on the price of drugs—brokers for Kerry and his wife were busy trading in Big Pharma. Schweizer found that they completed 111 stock transactions of pharmaceutical companies in 2003, 103 of which were buys.

“They were all great picks,” Schweizer notes. The Kerrys’ capital gains on the transactions were at least $500,000, and as high as $2 million (such information is necessarily imprecise, as the disclosure rules allow members to report their gains in wide ranges). It was instructive to Schweizer that Kerry didn’t try to shape legislation to benefit his portfolio; the apparent key to success was the shaping of trades that anticipated the effect of government policy.

“Senator Kerry does not buy, sell, or trade stocks,” says Jodi Seth, Kerry’s spokeswoman. She notes that Kerry’s holdings are in family trusts and managed by independent trustees with whom he does not communicate. Further, Seth says, Kerry is not a beneficiary of Teresa Heinz Kerry’s trusts, which were established before they were married. In any case, Seth adds, Kerry was running for president when the Medicare bill was passed, and he missed much of the debate.

“It’s not that I think John Kerry is calling up his broker, on health care, and saying, ‘Buy this company, sell that company,’?” Schweizer says. “The issue is one of a double standard.” He notes that if the executive of a health-care company were in discussions with the White House over pending legislation that would affect his industry, and then made a series of unusual stock transactions related to the industry, the SEC might well open an insider-trading investigation. “The only group in America that we exempt is politicians, who are probably the last people about whom we should be saying, ‘Oh, we’ll take their word for it,’?” he says. “That’s what’s so amazing to me.”

The Kerry trustees’ impeccable timing in drug company trades was evident again in 2007, when the federal government was weighing whether to discontinue Medicare reimbursement for certain anemia drugs used by cancer patients. When the government announced that it would limit reimbursements, shares in Amgen, one of the drugmakers at issue, dropped 15 percent. Kerry’s wife happened to be an Amgen stockholder but avoided losses; her shares, valued at between $500,000 and $1 million, were unloaded more than a week before the government’s announcement.

Schweizer, an unabashed conservative and a foreign-policy adviser to Sarah Palin, has written books about Reagan and the Bushes as well as polemics about the ruinous ways of liberalism. But this latest book is not an overtly partisan work; as the title, Throw Them All Out, suggests, it should discomfit conservatives and liberals, Democrats and Republicans, alike.

Indeed, Schweizer reports that, during the debate over Obama’s health-care reform package, John Boehner, then the House minority leader, was investing “tens of thousands of dollars” in health-insurance-company stocks, which made sizable gains when the proposed public option in the reform deal was killed. (“There are laws and there are rules of the House, and they should be followed,” a Boehner spokesperson tells Newsweek. “The speaker does not make those trades himself. He has a financial adviser in Ohio.”)

One of the more dramatic episodes in the book recounts the trading activity of Republican Rep. Spencer Bachus, of Alabama, who, as the ranking member of the House Financial Services Committee, was privy to sensitive high-level meetings during the 2008 financial crisis and proceeded to make a series of profitable stock-option trades.

Bachus was known in the House as a guy who liked to play the market, and in fact he was pretty good at it; one year, he reported a capital gain in excess of $150,000 from his trading activities. More striking is that Bachus boldly carried forth his trading in the teeth of the impending financial collapse, the nightmarish dimensions of which he had learned about first-hand in confidential briefings from Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. On Sept. 19, 2008, after attending two such briefings, Bachus bought options in an index fund (ProShares UltraShort QQQ) that effectively amounted to a bet that the market would fall. That is indeed what happened, and, on Sept. 23, Bachus sold his “short” options, purchased for $7,846, for more than $13,000—nearly doubling his investment in four days.

Around the time Congress and the Bush administration worked out a TARP bailout, Bachus made another options buy and again nearly doubled his money. The House turned down the TARP proposal, and Bachus’s own Financial Services Committee remained clued in to revisions of what became the final TARP package. In the earlier closed-door briefings, Bernanke had warned the congressional members that a “meltdown in the global financial system” was imminent and that it would spill over into the broader economy if something wasn’t done. With TARP completed, Bachus seemed confident in its effect, now buying options that effectively bet that the market would rise—to mixed results.

Bachus was hardly the only member of Congress trading as the government was coming to grips with the financial crisis. After the first briefing from Bernanke and Paulson, brokers for Democratic Congressman Jim Moran, of Virginia, and his wife sold their shares in 90 companies, dodging the losses that others who stayed in the market would soon face. Republican Rep. Shelley Capito, of West Virginia, sold between $100,000 and $250,000 of Citigroup stock the day after the first meeting, recording capital gains on Citigroup transactions in that rocky period.

When Schweizer began his project, he consulted a former securities regulator, who happened to have an office down the hall from his in Florida. The adviser told him that investigators always look for two things in insider-trading cases: whether individuals had access to material information and whether they engaged in unusual trading. There is probably no group of people on earth with greater access to inside information than members of Congress; K Street lobbying firms get rich fees from hedge funds for ferreting out intelligence (such as whether some pending legislation has the votes to pass) that any member of the Senate or House routinely obtains in the cloak room.

But there have been no insider-trading cases brought against members of Congress, nor will there likely be. This is partly because, though insider-trading law is not settled, case law usually requires that an offending insider bear fiduciary responsibility at the company involved. But Congress’s relative immunity also owes to the fact that, in this regard, as in many others, Congress lives by its own rules. Schweizer notes that the Senate’s ethics manual devotes an entire chapter to the proper use of the mail and of Senate stationery, but is silent on the subject of insider trading. Ditto the rules of the House, which state that a member’s recusal from a vote affecting his or her stock portfolio “might be denying a voice” in the process. Neither the executive nor judicial branches allow such laxity.

But while congressional stock trading is condoned, some of the activity risks, at the very least, the appearance of impropriety. Nancy Pelosi, for one, will likely be answering questions about possible conflict-of-interest issues raised in Schweizer’s study.

Pelosi and her husband, Paul, are reportedly worth $40 million, with a significant stock portfolio. In the spring of 2008, when Pelosi was speaker of the House, Paul made a big play—between $1 million and $5 million—on Visa, the credit-card company. What was striking about the investment, apart from its size, was the price the Pelosis paid for it. The Visa initial public stock offering was one of the hottest of the decade, its price-per-share jumping from $44 to $65 just 48 hours after public trading began. But the initial public offering, at the $44 price, was reserved for institutional investors and mutual funds, plus a select group of individual investors. The Pelosis bought their Visa shares in three transactions, the first of which—5,000 shares—came at the lower IPO price. This may have been just a piece of investment luck or an instance of Visa extending a friendly gesture to an important political figure.

Schweizer is happy to posit another possibility. The Pelosis acquired their IPO shares shortly after the introduction into the House of legislation that, if passed, would adversely affect Visa’s business. Visa makes money by licensing its name to banks (which in turn issue the cards and charge customers interest) and by charging “swipe fees” to merchants who accept the card as payment. These fees paid by retailers range from 1 percent to 3 percent of the purchase amount every time a Visa card is used. The proposed 2008 law would have allowed retailers to negotiate lower fees with the major credit-card companies, who, gaining billions from those fees, predictably opposed the measure.

The bill passed through committee but never made it to the floor of the House. It eventually died, and two similar efforts also failed to reach the House floor. Congress did finally act on the issue two years later, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. By that time, the value of Pelosi’s IPO shares had more than doubled, while the market as a whole had shown a double-digit decline.

Pelosi bridles at any suggestion that her financial holdings and her official duties were linked. Pelosi spokesman Drew Hammill notes that several other members of Congress also took advantage of the Visa IPO. The controversy, he insists, is a “preposterous idea” cooked up by “a right-wing hack.”

Pelosi’s office might have added that there was nothing illegal in the Visa trades, nor even a violation of House rules. But that is the point of Schweizer’s book. Indeed, none of the special dealing in his study—which also looks at land deals and the cronyism associated with the green-energy loan controversies, such as Solyndra—is technically illegal. “They have legislated themselves as untouchable as a political class,” he writes.

Washington does seem to live by its own laws of economics. The D.C. metro area has displaced Silicon Valley as home of the highest median income, at $84,523 last year (compared with the national average of $50,046). Earlier this month, a Roll Call study of congressional financial disclosures revealed that the net worth of members of Congress had grown by 25 percent since 2008, during a period in which the average American household has lost as much as 20 percent of its net worth.

Throw Them All Out arrives at a moment when the populist anger and resentment of the Tea Party and Occupy movements have melded into a kind of generalized outrage toward a system that seems geared to protect the interests of the few. Schweizer offers some prescriptions, including laws forbidding members of Congress from trading stocks of companies overseen by their committees, but he doesn’t expect what he calls the “permanent political class” to reform itself.

What Schweizer says he does hope is that others will take up his mission—requiring only time, online access, and a willingness to wade through public databases—and eventually crowd-source reform. A Throw Them All Out campaign is an interesting prospect—a movement that both Sarah Palin and Michael Moore could embrace. Schweizer’s motivation and his message could well be a credo that transcends partisan conflict.

“I was troubled,” he says, “by the fact that the political elite gets to play by a different set of rules than the rest of us. In the process of researching this book, I came to the conclusion that political party and political philosophy matter a lot less than we think. Washington is a company town, and politics is a business. People wonder why we don’t get more change in Washington, and the reason is that the permanent political class is very comfortable. Business is good.”