Thursday, February 9, 2017

Trump and Taxes

Entrepreneurial profit . . . is the expression of the value of what the entrepreneur contributes to production . . ..
&38212; Joseph Alois Schumpeter, The Theory of Economic Development (1934)

Just as DJT began to calculate how much money he earned running for president, he used the speech he gave at the National Prayer Breakfast as a vehicle to announce a proposed dramatic change in tax law. If adopted by Congress, it will change the tax laws pertaining to the deductibility of charitable contributions in a way that will benefit those who contribute to political campaigns but presently derive no tax benefits from doing so. But first, a brief reprise of how DJT fulfilled a prophecy he made in April 2000, converting a run for the presidency into an enormous money maker for him and his companies.

In April 2000, DJT had an interview with Jerry Useem of Fortune magazine on board DJT’s airplane, as he was heading off to a meeting to discuss the possibility of running for president on the Reform Party Ticket,with campaign stops on the way. In the course of the interview, DJT said that he was giving ten motivational speeches for which he was paid $1 million and, happily, each speech coincided with a campaign stop. As a result, he could use campaign contributions to pay his company for his plane ride in a company owned plane. The company pocketed the proceeds, and DJT pocketed the profits. Contemplating this strategy while talking with Mr. Useem, DJT said that: “It’s very possible that I could be the first presidential candidate to run and make money on it.” Sixteen years later he did and did.

According to a report compiled by CNN, DJT’s campaign paid $12.5 million to DJT businesses during his presidential run. It paid $8.7 million to one of the companies that owns the aircraft DJT flitted about in while campaigning. It paid hotels and golf clubs in which DJT stayed, $1.4 million. It paid $238,000 for restaurant and food service and even paid a DJT owned bottled water company $2,085 for water DJT and his staff drank while travelling. DJT could not, legally, have taken campaign funds and simply pocketed them, so this protocol was clearly the next best thing. Campaign funds went to entities owned in whole or in part by him and he pocketed his share of the profits.

DJT is a sensitive man, and recognized how unfair it was that, whereas his campaign was a money maker for him personally, there were no tangible financial benefits for those people who contributed money to help him get elected. Accordingly, one of the first things DJT did after he was elected, was to propose a change to the tax laws that would help future contributors to political campaigns derive tax benefits from their generosity. It comes from getting rid of something known as the “Johnson Amendment.”

The Johnson Amendment was sponsored by Lyndon Johnson when he was in the Senate in the 1950s. The IRS regulations issued pursuant to the Johnson Amendment, prohibit 501©(3) organizations (which include churches and other religious and charitable entities) from “directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.” Although the prohibition has reportedly not been vigorously enforced by the IRS, it has nonetheless been effective in keeping 501©(3) organizations from endorsing candidates or becoming involved in partisan activity.

DJT took advantage of his speech at the National Prayer Breakfast (at which he digressed enough from matters ecumenical to mock Arnold Schwarzenegger who succeeded him as the host on the TV show DJT formerly hosted) to say that: “I will get rid of and totally destroy the Johnson Amendment.”

If the Johnson Amendment is “totally destroyed” or, as the vernacular would have it, “repealed”, churches will be free to become actively involved in politics of all stripes. And when that happens, people who have been making millions of dollars in contributions to political campaigns and causes without receiving any tax benefits, will be able to make those same contributions to the religious organizations of their choice, and claim a charitable contribution for tax purposes. The religious organization will then be able to direct those funds to the candidates or causes that the donor favors. It is a win-win for all concerned.

If the Johnson amendment had been repealed before the last election, tax deductible political contributions could have been made by DJT supporters to churches, and the churches would have been able to pay the money to political organizations that supported DJT, and the political organizations would have been able to pay the money to DJT companies for services rendered, and the DJT companies would have earned profits from services rendered to the campaign, and the DJT companies would have paid the profits to DJT. It would have been a win-win for all concerned-except the electorate. Of course, even without the Johnson Amendment being repealed, DJT made money from running for president-just as he promised in his 2000 interview. So sad.


Thursday, February 2, 2017

Trump and Truth

Political language. . . is designed to make lies sound truthful. . . . and to give an appearance of solidity to pure wind.
— George Orwell, Politics and the English Language

In trying to help their readers understand when a lie is a lie, and when is it something else, (a question brought to our attention by DJT), the media has overlooked one arena in which DJT has come close to seeing the world as others see it. Of course, this is not meant to belittle the challenge inherent in trying to decide when a lie is not a lie. That this is a challenge is proved by the fact that hundreds of thousands of words on the subject have been written and discussed since the 2016 election.

A typical example is offered by the Wall Street Journal editor-in-chief, Gerard Baker. He appeared on New Year’s Day on NBC’s “Meet The Press” and discussed at length the difficulty inherent in labelling an untrue statement a lie. In addition, he devoted an op-ed piece in the WSJ to a discussion of the word and under what circumstances the WSJ would label a statement made by DJT or anyone else, a lie. And Mr. Baker was not alone in finding it necessary to address the topic.

The New York Times, NPR, Huffington Post and countless other publications devoted space to letting readers know when a “falsehood” has attained such a dignified status that the most careful people in the world are willing to bestow on it the honorific of “lie.” But all the focus on when a “falsehood” can be promoted to “lie”, has taken attention away from one area in which DJT is slowly conflating his facts (that we will henceforth call “untrue facts” (UTF)) with “true facts” (TF), those being facts that are known by others. That pertains to crowds and how they are perceived.

It has been known ever since DJT burst onto the scene, that crowds form an important part of how DJT sees the world and more importantly, how many people have assembled in a given situation to see him. DJT’s affection for UTFs was first brought to the attention of those who had not closely followed his career, when he entered the presidential race in 2015 and described for an unaware public that in New Jersey “thousands and thousands of people were cheering as that building [World Trade Center] was coming down.” In a later interview describing the “thousands,” he alluded to New Jersey’s “heavy Arab population.” The description of the cheering multitude came as a revelation to most of the citizens of the United States since the cheering throng had not been remarked upon by the media and anyone else in the United States because it was an UTF. Nonetheless, it remained a staple in DJT’s campaign even though it was widely accepted that he was the only person in the entire United States, including members of the Muslim community, who were aware of this UTF. So what we learned from this episode is that DJT could see crowds where none existed. And that brings us to the point of this piece.

Whereas DJT in 2001 saw crowds where there were none, DJT now sees crowds where all the rest of us see crowds, an obvious improvement. The only difference now between DJT and the rest of us, is how many people are in a crowd. Because believers in TF had visible proof as to the size of the crowd attending the inauguration, and DJT who was also there had UTF as to its size, DJT has said there will be an investigation into the size of the crowd. If the investigation produces a TF as to crowd size, in addition to costing taxpayers a lot of money, it will certainly help DJT in the future evaluate the size of crowds. And herewith one additional fact of some significance.

DJT’s observation of the cheering throng in a state with a large Arab population when the Twin Towers came down, goes a long way towards explaining his controversial order banning Muslims from certain countries from entering the United States until thorough vetting has been completed. That is because the terrorists committing the 9/11 acts of terrorism came from Muslim countries and, therefore, were probably Muslims. Thus, it makes sense that people from some Muslim countries be subjected to extreme vetting, since we’d not want another attack like that to take place. There is, of course, one slightly uncomfortable TF.

Fifteen of the 19 terrorists involved in the 9/11 attacks came from Saudi Arabia where DJT has several limited liability companies, one came from Egypt where two of his companies are registered, and one came from the United Arab Emirates where DJT ‘s name is licensed to a golf course, a residential development and a spa. People from those countries are not subject to the newly announced vetting. That is probably because DJT has business interests in those countries and wouldn’t feel right about making it more difficult for their citizens to enter the United States, even though those countries furnished the only known terrorists who came for the specific purpose of committing terrorist attacks in the United States. Excluding them from the new procedures when their purpose is to protect the United States from terrorist attacks, as DJT has explained, makes no sense. Looked at as a business proposition, it makes perfect sense. Christopher Brauchli can be emailed at brauchli.56@post.harvard.edu. For political commentary see his web page at http://humanraceandothersports.com


Monday, January 23, 2017

Trumpeting Scorn

“O! what a deal of scorn looks beautiful
In the contempt and anger of his lip.”
— Shakespeare, Twelfth Night

It was described as a dark speech. It could have been described as a speech filled with contempt for all that had been accomplished by those coming before Donald Trump. It was a speech divorced from reality and the only thing that the Trump could have done to make it more offensive, would have been to turn to the former presidents sitting on the dais as he finished his remarks and say: “Take that, you losers.” Not that that was needed. The stench of such a sentiment permeated his remarks. There were so many offensive assertions by the man-who-would-be president-but-doesn’t-know-how, that space doesn’t permit a discussion of them all. Two stand out.

Early in his diatribe Trump said that: “What truly matters is not which party controls our government, but whether our government is controlled by the people. January 20, 2017, will be remembered as the day the people became the rulers of this nation again. The forgotten men and women of our country (FMW) will be forgotten no longer.”

The people among the FMW that Mr. Trump has selected to be rulers to help him run the country, reportedly have a combined net worth of more than $14 billion. One of them is Steven Mnuchin, (not a character from the Wizard of Oz but the man tapped by Trump to be Secretary of the Treasury). Mr. Mnuchin is so wealthy that in filing his financial disclosure forms prior to his hearing before the Senate Finance Committee, he inadvertently overlooked $100 million in assets, the sorts of omission the FMW will easily understand since they might have made the same mistake had they (a) been asked for financial disclosures and (b) had those kinds of assets. Mr. Mnuchin explained that the omission was inadvertent.

Other FMWs who will serve in the Trump cabinet include Todd Ricketts, nominated to be Deputy Commerce Secretary, who is valued at $5.3 billion, Betsy DeVos, Secretary of Education, valued at $5.1 billion, and Wilbur Ross, nominated to be Secretary of Commerce, who is valued at $2.5 billion.

The FMW who will rule the United States, (together with Mr. Trump) once they are confirmed, are not merely the wealthiest cabinet ever assembled by any president, they are also the smartest. At the lunch he hosted at the Trump International Hotel to honor his nominees, he let it be known, without citing sources, that: “We have by far the highest IQ of any Cabinet ever assembled.” Unable to resist a bit of self-adulation he commented on the hotel in which the lunch was taking place, saying: “This is a gorgeous room. A total genius must have built this place.” And the proud mention of the gorgeous hotel brings us to another part of his speech.

Halfway through were references not to the FMW, but to American families and workers. The Trump said: “Every decision on trade, on taxes. . . .will be made to benefit American workers and American families. . . . I will fight for you with every breath in my body, and I will never ever let you down. . . .”

As of January 6, 2017, mechanics’ liens totaling more than $5 million had been filed against Trump’s new five-star hotel. Among them was AES of Laurel, Maryland that filed a lien for $2.1 million. A spokesman for the company said 45 members of its staff worked 12 hour-shifts for nearly 50 consecutive days so that the hotel could open on schedule. It is likely that the workers are proud to have been part of this singular Trumpian achievement and the only thing that prevents them from full enjoyment is the fact that some of them have not been paid. Not that that has been unusual in the world of Trump business. The companies he has run have taken bankruptcy six times. The people who were left holding the bags are the people to whom Mr. Trump promised: “I will never ever let you down.” He was of course, speaking prospectively since even a man of his conceit must have, hidden in the dim recesses of his memory, recollection of the thousands of people who helped make him wealthy but were never rewarded for contributing to his enormous wealth.

The Trump organization commented on the liens that have been filed against the company saying the filing “of nominal liens at the conclusion of construction is not uncommon as part of the close out process.” A Trump spokesman may consider a $2 million dollar debt a nominal amount. Many FMWs do not. The statement offers an insight into how the Trump does business.

Mr. Trump’s speech was an insult to the past presidents sitting nearby on the platform and to the millions of people across the land who have worked to make the country what it in fact now is rather than what the self-aggrandizing Trump through his distorted vision sees.

The best evaluation of the speech at its conclusion was given by former president George W. Bush. As he was leaving the inauguration he was approached by a reporter who said: “What did you think of the speech President Bush?” “Good to see ya,” was the former president’s reply.