December 26, 2016
Dean Baker
Truthout, December 26, 2016
I don’t know that Donald Trump will take advantage of the inside information he will have access to as president, but no one knows that he won’t. And the president has access to a massive amount of inside information.
Just for beginners, the president gets advance access to the monthly jobs numbers and the quarterly GDP report. Suppose Trump finds out that the job growth in March is far weaker than the markets expected, or that GDP growth for the first quarter of 2017 is surprisingly strong.
These reports would have a huge effect on the stock and bond markets. Trump could make a fortune by making highly leveraged bets just before the government reports are officially released. Or, if he doesn’t want to make the trades himself, he can pass the information along to Vincent Viola, his designee for secretary of the US Army, who became a billionaire running a high-frequency trading company. Apparently, Viola plans to maintain a stake in his high-frequency trading company even after he enters the government.
This is just the beginning of ways in which Donald Trump and his top appointees can personally profit from their positions in government. We already have heard accounts of foreign diplomats changing their reservations so that they can stay at Donald Trump’s new hotel in Washington. And, it seems likely that foreign leaders will be more generous in considering licensing requests from Trump-owned properties throughout the world.
And a good businessman is likely to know that little favors can go a long way. If Donald Trump were to support Turkey’s President Recep Erdo?an in his crackdown on the country’s Kurdish population, it may lead to large payoff for Trump-owned properties in Turkey. The same would apply to the dozens of other countries in which Trump has a direct business stake.
Does the public have any reason to believe that Donald Trump will not conduct foreign and domestic policy so as to maximize the returns to the Donald Trump Organization? Has Trump given us any reason to believe that he will resist the temptation to profit from his position as president? The fact that he can’t keep himself from tweeting bizarre and absurd claims at the all hours of the night does not give confidence in his self-restraint.
More importantly, this is not a Trump-specific issue. Every president in the last 50 years has put their money in a blind trust. Ronald Reagan and both Bushes didn’t ask the public to trust them. They put their money in a blind trust. The same was true of Lyndon Johnson, Jimmy Carter and Bill Clinton. Barack Obama put his family’s modest assets in Treasury bonds, which is also a fine option for avoiding conflicts of interest in the White House.
Divesting is also not something that would be difficult to do, even for Trump. As I outlined last month, Trump just needs to arrange for independent auditors to produce estimates of the value of his business enterprise. He can then buy an insurance policy based on these appraisals, under which the insurer would guarantee the appraised value.
The business would then be turned over to an independent manager who would look to sell it off in a way that maximized its value. This would avoid a need for dumping the various Trump businesses in a fire sale. They could continue to operate and earn profits until there was an opportune moment to sell. At that point, the assets would be placed in a blind trust.
If the total value of the assets was less than the appraised value, Trump would be able to collect on the insurance policy for the difference. If it was more than the appraised value, the additional money would go to a charity of Trump’s choosing (not one under his family’s control). This process would remove Trump’s stake in the profitability and value of his assets from the day in which he takes out his insurance policy and turns over the operation of his various businesses.
Every president for the past 50 years has acted to assure the public that they would not personally profit from their actions as president. It’s not clear why Donald Trump thinks he should be exempt from this requirement. Does he think that losing the popular vote by almost a 3-million-vote margin makes him special? Of course, he has more assets and a business empire that he would have to surrender to follow past precedents, but being president involves some sacrifices. If he doesn’t understand this fact, he shouldn’t take the job.
