WSJ to Trump: Do the prudent thing and liquidate your business holdings
posted at 6:41 pm on November 18, 2016 by Allahpundit
You’ve heard the arguments already for why a true blind trust rather than the fakey, family-run version Trump seems to be planning would be the smart, ethical thing to do. This Journal editorial on the subject underlines a key point, though: It’s for Trump’s own political good. If “conflicts of interest are bad” doesn’t sway you because you’re a true-blue Trump fan who resents seeing him hassled for potentially profiting massively from public service, which was a core argument against electing the Clintons, consider the fact that Trump will benefit politically from taking the WSJ’s advice. The scandals to come in which some Trump property somewhere ends up making bank thanks to a Trump administration policy are inevitable and will become a drag on his presidency as they pile up. Even if the Trump kids operate in good faith and make a point of not discussing their management of the business with dad, it’s a cinch that some Trump properties will end up profiting from Trump policies by sheer coincidence. And the appearance of impropriety that will create will cast suspicion on him and the wider family.
Case in point, this otherwise innocuous photo was circulating all last night on social media:
"And this is Ivanka. She manages my blind trust…" pic.twitter.com/C4F9ZeKJu5
— Binyamin Appelbaum (@BCAppelbaum) November 18, 2016
That’s Ivanka Trump, would-be co-manager of the Trump business empire, sitting in on a meeting with Japanese PM Shinzo Abe, leader of the world’s third-biggest economy. Was economic policy discussed at what was essentially a meet-and-greet? Probably not, no, but it’s revealing that the photo came from the Japanese, not from the Trump transition team. You would think Team Trump would want to publicize images of Trump gladhanding world leaders, but maybe they were sensitive to people knowing that the business side of Trumpworld was in on a meeting that was supposed to be diplomatic — especially at a moment when the media’s starting to pay attention to the mega-bucks conflicts of interest that lurk in all of this.
The Journal’s editorial went live a few hours before the photo was released:
Thanks to a Clinton Administration precedent, Presidents can face litigation in private matters—so the company will become a supermagnet for lawsuits. Rudy Giuliani lamented on television that divestment would put the Trump children “out of work,” but reorganizing the company may be better for business than unending scrutiny from the press. Progressive groups will soon be out of power and they are already shouting that the Trump family wants to profit from the Presidency.
The political damage to a new Administration could be extensive. If Mr. Trump doesn’t liquidate, he will be accused of a pecuniary motive any time he takes a policy position. For example, the House and Senate are eager to consider tax reform—and one sticking point will be the treatment of real estate, which will be of great interest to the Trump family business. Ditto for repealing the Dodd-Frank financial law, interest rates and so much more.
The conflicts span the globe, including a loan from the Bank of China and likely dealings with sovereign-wealth funds. Along the way Mr. Trump could expose himself to charges, however unfair, that he is violating the Constitution’s Emoluments Clause, which prohibits public officials from accepting gifts or payment from foreign governments.
A few days ago the Times looked at some of the conflicts that are already brewing. Again: Completely foreseeable.
The Trump International operates out of the Old Post Office Building, which the federal government owns. That means Mr. Trump will be appointing the head of the General Services Administration, which manages the property, while his children will be running a hotel that has tens of millions of dollars in ties with the agency.
He also will oversee the National Labor Relations Board while it decides union disputes involving any of his hotels. A week before the election, the board ruled against Mr. Trump’s hotel in a case in Las Vegas…
There are also more general issues that could prove troubling. For instance, Mr. Trump will nominate the Treasury secretary, yet he owes hundreds of millions of dollars to banks, and he benefits from low interest rates set by the Federal Reserve, an institution he has criticized as political. The head of the Internal Revenue Service is also appointed by the president, and the agency is currently auditing Mr. Trump’s taxes and sets tax policy that directly affects his businesses.
There’s no way to compartmentalize all of this so long as the kids are in charge of his assets. For one thing, they’re Trump’s closest, most trusted advisors. The only assurance we’ll have that they’re not talking business with him is their own say-so, for what little that’s worth. And even if you could somehow wall them off from dad, you’d have a secondary problem in that Jared Kushner is married to Ivanka and appears likely to become an advisor in the White House in some capacity. Lawyers are already wrestling over whether it’d be legal to appoint him to a formal position under the federal anti-nepotism law: Some say yes, especially if he refuses a salary, on the theory that the law doesn’t apply to the White House while others say no. (The first big ethics fight in Trump’s administration is likely to come over Kushner’s precise status.) But it’s clear that Kushner can and will be there as an informal advisor, at least, possibly with security clearance and access to all sorts of nonpublic info. How do you compartmentalize Kushner and what he knows via U.S. intelligence from his wife, who’ll be making investment decisions for Trump’s businesses?
Elijah Cummings, the ranking Democrat on the House Oversight Committee, is already calling for hearings about all of this. Trump and his party don’t need to worry much about that given how favorable the 2018 map is, but as we just found out last week, anything can happen in politics. If a nasty recession hits next year and Democrats end up winning back the House or Senate, all of these conflicts will be explored at length in congressional inquiries in 2019. (Needless to say, the Republican-led Congress will bow to the president and refuse to investigate any of this in the meantime.) Even if his job approval and reelection prospects don’t take a massive hit from ongoing coverage of his conflicts of interest, he’s destined to use up media oxygen answering questions about them that would have been better spent on other subjects. And remember: Even though he won last Tuesday, polls showed consistently that voters wanted him to release his tax returns. His business dealings already have a cloud over them; a drumbeat of conflict-of-interest stories will make that worse. So why not take the Journal’s advice, sell off the assets, put the money in a blind trust, and be done with the entire problem? Trump doesn’t need to worry about a business legacy anymore — if his presidency is garbage, his reputation as a hotelier won’t survive — and his kids will be filthy rich regardless, especially once they begin monetizing their new political influence. He and they can always use the proceeds from a sell-off to buy new properties once he’s out of office. It’s baffling that he’d want to jeopardize his term in office just to retain control over hotels, etc, but here we are. Does he want to drain the swamp or not?
Incidentally, for all of the liberal hype this week about the dark era to come under Trump, with “deportation squads” and “Muslim registries,” etc, I think it’s more likely that ethics scandals will be the most chronic point of contention. You can already see them developing, and not just with the blind trust. Politico has a story out today about ethical rules barring Steve Bannon from any communication with Breitbart.com for one year. We’ll see how that goes. (Trump can waive the rule.) CNN has a report that Mike Flynn, Trump’s new NSA nominee, was sitting in on security briefings with Trump this summer even while he was running a company lobbying on behalf of foreign clients. Chances are good that we’ll look back in four years and say of scandals X, Y, and Z that all could have, and should have, been avoided, as anyone could have seen them coming. But oh well.
Speaking of which, here’s something that’s far afield from financial conflicts of interest but which also falls into the “foreseeable scandals” category. Eventually Trump’s going to attack some reporter on Twitter or at a press availability the way he attacked Megyn Kelly and that person’s going to get an avalanche of death threats, just like Kelly did, with no remediation from Team Trump. People looked the other way at that during the campaign for the most part on the theory that, in the end, Trump was just a celebrity bigmouth with a Twitter account, not wildly more powerful than Kelly herself is. That won’t be true anymore two months from now. I hope Kellyanne Conway’s had “the talk” with him that the usual Two Minutes’ Hate when a reporter gets on his bad side isn’t going to play the same way going forward as it used to.
— Brian Stelter (@brianstelter) November 17, 2016
Update: This entire op-ed, written by a Republican and former FEC chairman, is well worth your time. Let me tease it with this:
Trump has said he intends to penalize China for its trade policies. That could prompt the Bank of China, owned by the Chinese government, to threaten to pull its loans that are financing Trump buildings. If so, would the president back down? Likewise, Trump knows that Deutsche Bank financing is important to his business. The bank, even before Trump takes office, is reported to be in trouble. What happens if the Treasury Department recommends that the U.S. government decline to prop it up? A major European bank failure could have an adverse impact on Trump’s real estate investments across the board. If he decides to rescue Deutsche Bank (even if that is the “right” policy decision), it will appear as if he did so to benefit his business interests.