On the one hand, I always appreciate creative ideas to reduce the national debt.
On the other hand, Axios has a point. Demanding some sort of bonus for strongarming ByteDance into selling TikTok to an American company on national-security grounds is “skating very close to announcing extortion,” come to think of it.
“The U.S. Treasury is not an investment bank collecting deal advisory fees,” sniffed Ben White of Politico about this clip. Well, not yet. Not yet, it isn’t. Watch, then read on.
President Trump on TikTok @tiktok_us: "It'll close down on September 15th unless Microsoft or somebody else is able to buy it." pic.twitter.com/GVn1yZeJ2W
— CSPAN (@cspan) August 3, 2020
Reporters who watched that were left wondering what sort of legal mechanism might entitle Treasury to take a cut of the sales price. “While the Treasury Department has in the past received financial compensation from companies, it is highly unusual and typically happens amid a financial crisis,” the Wall Street Journal noted, pointing to federal bailouts. “It was unclear how the president would require TikTok to pay a portion of its sale into the U.S. Treasury, beyond the normal collection of tax revenue by the Internal Revenue Service,” added WaPo, which contacted Treasury for comment and, not surprisingly, got no reply.
What Trump’s describing in the clip sounds like a tax, but a tax unilaterally imposed on a transaction at the president’s whim, without the involvement of Congress. He’s not conceptualizing it that way, though, as a public official; to him, this is more like a real-estate deal in which the “landlord,” who I guess is the U.S. government in this analogy, gets “key money” for renting a property to the lessee. Think of it as a commission, or a finder’s fee. Or, on the seedier side, a kickback.
This is literally the Mafia’s business model. “We’ll threaten them until they’re forced to sell their business; then you give us a cut for the use of our muscle.”
— Julian Sanchez (@normative) August 3, 2020
How does he imagine America’s cut affecting the final sales price? Would Microsoft pay extra to cover Treasury’s “share” of the deal or would the U.S. simply expropriate a certain percentage of whatever ByteDance receives from Microsoft? Do we plan on telling either party up front what we think Treasury’s fair share would be, or is the plan to just seize an amount once Trump settles on it?
Libertarians are rubbing their temples imagining what sort of message it’ll send to foreign companies about operating in the U.S. if the president gets the idea that he can use his natsec powers to squeeze them into selling and then taking a cut of their sales price. Others are wondering, a la Trump’s trade war, how foreign governments are apt to treat American companies operating overseas once they see their own native firms being subjected to this squeeze-and-steal tactic by the United States. Trump’s interest in banning TikTok as a security risk is legitimate, but the public interest in forcing ByteDance to sell to a U.S. company is the improvement in national security that would come from having users’ data controlled by an American firm instead of having it within the grasp of the Chinese government. The fact that Trump would resort to tacking on some petty pecuniary interest to U.S. action, as if the natsec benefits weren’t enough in and of themselves, is indeed a window onto how he approaches the world:
The campaign committees use Trump properties. The inaugural committee spent more than $1 million at the Trump hotel. There is a mindset. https://t.co/u6vwr8V0ak
— Maggie Haberman (@maggieNYT) August 3, 2020
At least it’s the public’s pocketbook he’s looking out for in this case, not his own. But yes, “What’s in it for me?” is very much part of his bedrock psychology, which is why it was always easy to believe that he wanted a quid pro quo from Ukraine’s president in dangling military aid in return for reopening the Burisma probe into the Bidens. A guy who approaches government like a real-estate deal, expecting a certain amount of backscratching in order to make things work, isn’t going to just hand over something of value to another party when that party is in a position to do him an important favor — even if handing it over was in the public interest by advancing Congress’s foreign-policy goals. As a general rule, I don’t think Trump has much regard for the idea of the “public interest” unless it can be expressed in dollars-and-cents terms, such as, for instance, reducing trade deficits. Wanting a cut of the Microsoft/ByteDance deal is just another aspect of that. National security is nice, but where’s the money?
In all likelihood this’ll end up as one of many comments that everyone just sort of forgets about. His lawyers and advisors will explain to him why it won’t work and the public will write it off as something new for the Stuff Trump Says file. It’s actually to his advantage if everyone forgets it, as a sale here would be an elegant way to extricate him from a tricky political spot with the election looming. If he’s forced to ban TikTok instead, it’s unclear how things would go in court and it would leave him at risk of a backlash at the polls among the app’s many young users. To the extent that he’s complicating a sale between Microsoft and ByteDance with this weird ask for a cut of the sales price, he’s putting himself in a position where a ban is his only option.