United States President Donald Trump. Photo / AP
Revelations that United States President Donald Trump is personally liable for more than US$400 million ($610m) in debt are casting a shadow over his presidency that ethics experts say raises national security concerns.
They say he could be manipulated to sway US policy by organisations or individuals he is indebted to.
New scrutiny of Trump, who claims great success as a private businessman, comes after the New York Times reported that tax records show he is personally carrying a staggering amount of debt - including more than US$300m in loans that will come due in the next four years.
Senator Elizabeth Warren, D, was blunt about the potential implications. "He may be vulnerable to financial blackmail from a hostile foreign power and God knows what else," said Warren, a frequent Trump critic.
The New York Times said the tax records also show that Trump did not pay any federal income taxes in 11 years between 2000 and 2018, raising questions about the fairness of a president - who purports to be a billionaire - paying less in taxes than most Americans.
The Republicans’ Electoral College advantage this cycle leaves the door more open to a Trump victory than if he had to win via the popular vote. https://t.co/B6hldQJTF0
— FiveThirtyEight (@FiveThirtyEight) September 28, 2020
The politically damaging revelations about Trump's tax avoidance, however, are perhaps less concerning than word the President is holding hundreds of millions of dollars of soon-to-mature debt, ethics experts said.
"Americans should be concerned about the President's debt because it's a national security risk for our country," said Donald Sherman, deputy director of the nonprofit government watchdog group Citizens for Responsibility and Ethics in Washington (Crew).
"This is information that the President has aggressively and repeatedly tried to keep away from the public."
Trump, citing an ongoing Internal Revenue Service audit, has refused to follow the post-Watergate precedent set by other presidents of releasing his tax returns, so the complexities of his financial interests and who he does business with have remained opaque.
"That 750 bucks isn't just a fraction of what you probably pay in taxes."
— The ReidOut (@thereidout) September 28, 2020
"It's a fraction of what his predecessors paid their first year in office."@JoyAnnReid on Trump. #TheReidOut pic.twitter.com/jmh5Zdzw1o
He's fighting ongoing court battles with New York's attorney-general, Manhattan's district attorney and two House committees who want the records.
Richard Painter, who served as chief ethics lawyer in Republican George W. Bush's White House, also noted that Trump-owned companies have declared bankruptcy six times, raising the question: Why have lenders been willing to keep risking loans of such enormous amounts?
"Why would banks assume the risk on these loans?" Painter said. "Or did someone else quietly assume risk of that loan for the bank to make it happen?"
Trump, according to his latest financial disclosure statement, reported that he had 14 loans on 12 properties.
Trump has stacked the federal bench, but he's not winning many election court battles | Analysis https://t.co/eQdUQRxmtu pic.twitter.com/GvPsz5AaX7
— CNN Politics (@CNNPolitics) September 28, 2020
One lender, Germany-based Deutsche Bank, continued to do business with Trump even after he defaulted in 2008 on a loan for his Chicago hotel and condo development. Trump filed suit against the bank and others whom he blamed for his inability to repay.
But Deutsche Bank's private banking division continued to lend to Trump, including US$125m to finance the purchase and renovation of his Doral golf resort in 2012, according to previous disclosures.
Trump today suggested that his debt load is hardly unusual in comparison with his assets, claiming in a tweet that he's in fact "extremely under leveraged."
"I have very little debt compared to the value of assets," he wrote, adding that he may release a financial statement that spells out all assets, properties and debts.
Food for thought from @jackshafer: Why people shouldn't expect Chris Wallace to do what he did in that Trump interview (because of the format)https://t.co/41yN2pH62f
— Aaron Blake (@AaronBlake) September 28, 2020
Trump during an appearance today ignored a reporter's question about when he might release such a statement, and the White House would not comment on when he might follow through. He said repeatedly before his election that he would release his actual taxes but never has.
Kathleen Clark, a government ethics expert at Washington University in St Louis, said that a separate financial statement from Trump would shed little light on his business dealings if he does not disclose who his business partners are in his various holdings.
"The Trump Organisation consists of hundreds of LLCs (limited liability corporations) that have been listed on his financial disclosure forms," Clark said.
"One of the things that Trump has benefitted from and that oligarchs and money launderers benefit from is opaqueness of LLCs ... the ease of which individuals can hide their assets, can hide their financial interests."
new NYT/Siena likely-voter poll of PA:
— John Harwood (@JohnJHarwood) September 28, 2020
Biden 49%
Trump 40%
as things stand 5 weeks out, PA is the state most likely to decide the election outcome
Trump refused to divest his business interests after his 2016 victory, and left day-to-day operation of his family's real estate and other holdings to his sons Donald jnr and Eric.
Still, the President has benefitted personally from US and foreign government activity at his properties since his election and has not shied away from promoting his hotels and golf courses.
Republicans have held at least 88 political events at his properties, the President has visited his hotels and golf courses more than 500 times, and at least 13 foreign governments have held events at Trump establishments, according to a tally by Crew.
The Administration drew criticism last year when Vice-President Mike Pence, while visiting Dublin for meetings, lodged at Trump International Golf Links and Hotel more than 290km away in Doonbeg, Ireland.
And Trump scrapped a plan to hold a meeting of the G7 world leaders at one of his Florida properties last year after bipartisan criticism.
Voters pick Joe Biden over Donald Trump in 18 of 19 presidential traits, poll says https://t.co/6ojvQSeSgI
— Newsweek (@Newsweek) September 28, 2020
In the runup to his 2016 election victory, Trump played down his bankruptcies as a smart business strategy and even referred to himself as the "king of debt."
"I've always loved debt, I must be honest with you," Trump said during a campaign rally. "I don't love it for countries, but I love it individually. If things work out good that's great, if they don't, you go renegotiate."
The New York Times, citing the tax records it obtained, also revealed that Trump did not pay federal income tax in 11 of 18 years, and just US$750 each year for 2017 and 2018, as he claimed millions of dollars in business losses.
Top Democratic lawmakers today called Trump's tax avoidance galling, but seized on his debt as perhaps more concerning.
House Speaker Nancy Pelosi said on MSNBC that "our responsibility is to protect and defend and we have to make sure we know what exposure the president of the United States has, and what an impact it has on national security decisions for our country."
Stop saying Donald Trump is “broke.” Does a broke guy have a private 757? Trump isn’t broke, he’s a rich guy with a high income who doesn’t pay nearly as much income tax as he should. https://t.co/YkSCDNYle9
— Josh Barro (@jbarro) September 28, 2020
Painter said that if Trump were attempting to appoint someone with his massive debt load to a high-profile government position, the nominee would almost certainly face trouble getting a security clearance.
Indeed, inability or unwillingness to satisfy debts and a history of not meeting financial obligations could disqualify any federal employee from receiving a security clearance, according to government guidelines.
Peter Schweizer, the president of the Government Accountability Institute, said: "The question is also one of whether the loans are tied to actual assets such as buildings, etc., or was the political figure granted special favours in getting loans. Politicians and their families can engage in commercial transactions, the question is whether the loans are unusual and unique compared to others in the marketplace."
Reminder that John Bolton said he believed Trump's business interests were dictating his position on Turkey, for example. https://t.co/Tdb1y8fvUG https://t.co/wY9PUkynim
— Tim Miller (@Timodc) September 28, 2020
Trump is hardly the first president to contend with debt, either in office or later in life.
Thomas Jefferson, whose peak net worth in current dollars reached US$236.8m according to research by 24/7 Wall Street, died in debt.
The debt was accrued during and after his presidency - as well as by relatives - and his family sold dozens of enslaved people from his Monticello estate to satisfy his liabilities.
On the other hand, Barack Obama, in his second term, encouraged American homeowners to refinance their mortgages as rates dropped well below what he was paying, but he said he and his wife were holding off.
"When you're president, you have to be a little careful about these transactions, so we haven't refinanced," Obama explained at the time.
- AP
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