During Donald Trump’s 2016 presidential campaign, he had much to say about the success of his private business and the wealth he earned from it. On the night of the Michigan and Mississippi primaries, March 9, he famously used his prime-time cable coverage to lay out for the audience samples of various Trump products. “I built a great, great company,” he proclaimed. “You have the water. You have the steaks. You have the wines and all of that.” [69] As unorthodox as this primary-night product promotion was, Trump was then just a candidate who held no office. Upon his election, he pledged to separate from his business and put his Trump Organization assets into an independently administered trust.
By the fourth year of his term, however, Trump “accomplished something no president before him has done: fusing his private business interests with America’s highest office.” [70] Up to that point, “he has spent one out of every three days as president visiting one of his luxury resorts, hotels or golf courses. He has leveraged his powerful international platform to promote his developments dozens of times. And he has directed millions of dollars from U.S. taxpayers to his businesses around the globe.” Trump also continued to promote his properties, as he did when he tweeted in March 2019 that he was “[v]ery proud of perhaps the greatest golf course anywhere in the world”: the Trump International Golf Links in Aberdeen, Scotland. [71] “Also, furthers the U.K. relationship!” he added, highlighting how openly he connected this business interest to this presidency.
In this chapter, we focus on Trump’s extraordinary mingling of presidential duties with his personal business interests. This practice has highlighted a range of inadequacies in the regulation of and accountability for presidential conflicts of interest, and it has demonstrated the need for comprehensive reform to achieve the complete separation of a president from his or her private business.
Background
Congress in 1989 clarified that presidents and vice presidents are exempt from the core financial conflict-of-interest statutes, which set out divestiture and blind trust requirements for senior executive branch appointees. [72] The exemption was justified on the theory that, because presidents and vice presidents must discharge their constitutional responsibilities, they cannot be held to remedial measures such as “recusals” that are appropriate for appointed officials. The Department of Justice had embraced this theory fifteen years earlier in suggesting that any presidential or vice presidential conflict-of-interest requirements might constitute an impermissible addition to the qualifications to hold office specified in the Constitution. [73]
This regime left it to the public and the political process to monitor whether a president carried out his or her duties with an ethical focus on the public interest. Over a number of presidencies, these forces shaped what appeared to be a durable norm. As Daphna Renan has noted, presidents “long complied with a structural norm pursuant to which the President conducts himself as if bound by those statutory [conflict of interest] restrictions.” [74] The power of the norm was evident in advice that presidents received from within the executive branch. In an opinion issued by the Office of Legal Counsel in the Ford administration, then–Assistant Attorney General Antonin Scalia affirmed that the president was not subject to executive orders and regulations governing financial conflicts. He noted, however, that “it would obviously be undesirable as a matter of policy for the President or Vice President to engage in conduct” proscribed by the rules, “where no special reason for exemption from the generally applicable standards exists.” [75]
Until Barack Obama, every president since Dwight Eisenhower had established a blind trust for financial holdings to prevent a risk of conflict. [76] Obama did not set up one because he maintained his relatively uncomplicated financial interests exclusively in mutual funds and bank accounts. There was, to be sure, variation in the stringency of the trust arrangements that presidents established. Lyndon Johnson appointed “two business associates and family friends” as trustees for the purportedly independent management of radio and television facilities. One of the trustees was the executive director of the broadcasting stations, which meant that “Johnson must have had some degree of comfort that the trustees would not sell his interests.” [77] Jimmy Carter specified in his trust that the trustees could not sell his share of a family farm.
In the wake of Watergate, Congress passed the Ethics in Government Act of 1978, which subjected the president to a statutory transparency requirement as a check on conflicts of interest. [78] Along with other senior executive branch officials and members of Congress, the president would be required to comply with annual public reporting of financial holdings. These “personal financial disclosure” reports make public, within broad ranges, sources of income, assets, and liabilities. This reporting is limited in scope and detail and does not require information about closely or privately held entities in which the president would have a significant financial interest. A law enacted in 2012 required the financial disclosures of the highest officials in the executive branch, including the president, to be posted on the internet for public viewing. [79]
These financial reporting requirements are not associated with any more substantive obligations. If a president’s report reflects holdings or transactions that may pose conflict-of-interest questions, the president answers for them to the public, and perhaps to Congress in response to oversight or investigative inquiries. But there are no further legal requirements, or consequences. Presidents thus set their own conflict-of-interest standards. What they choose to do depends on their understanding of and sensitivity to long-standing norms, and to the political pressures of the moment.
The Domestic and Foreign Emoluments Clauses place constitutional prohibitions on the president’s or other federal officials’ receipt of compensation, gifts, or other financial benefits. The Domestic Emoluments Clause, found in Article II, Section 1, of the U.S. Constitution, states that the president “shall not receive” emoluments from “the United States or any of them.” [80] The Foreign Emoluments Clause, found in Article I, Section 9, is written in the passive voice and does not specifically reference the president. Instead, it provides that “no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” [81] There is disagreement, as yet unresolved by the Supreme Court, whether this provision applies to elected federal officials, including the president.
However, Congress assumed that the Foreign Emoluments Clause applies to the president when it exercised its power to “consent” to foreign “emoluments” in the Foreign Gifts and Decorations Act of 1966. That statute specifically applies to the president and supplies congressional consent for gifts of “minimal value” that might be received in the course of hospitality provided by a foreign government or official. [82] Congress has also provided this consent to allow retired members of the uniformed services to accept compensation for employment by foreign states, subject to the further condition that any such employment is approved by the secretary of the relevant branch of the armed forces and the secretary of state. [83] In each case, Congress implicitly found that the gifts or compensation may or do constitute “emoluments,” but by express “consent” it has removed the receipt of these benefits from the strictures of the clause.
The Trump Trust
A few weeks after he became president, Trump pledged to abide by conflict-of-interest norms. “While I am not mandated to do this under the law, I feel it is visually important, as President, to in no way have a conflict of interest with my various businesses,” he tweeted. Trump added that “legal documents are being crafted which take me completely out of business operations.” [84]
Yet Trump would take “visual” appearances only so far. A little over a week before Trump became president, his lawyer, Sheri Dillon, explained the legal structure that Trump would use to address the matter. Dillon insisted that Trump embraced the spirit of the norm that had prevailed for decades. “President-elect Trump wants the American public to rest assured that all of his efforts are directed to pursuing the people’s business and not his own,” she said. [85] But Trump did not divest any of his assets. And unlike every other president since the 1950s who had complex business arrangements, he declined to establish a blind trust. Rather, he simply rolled his interests into a trust managed by his son Eric and the chief financial officer of the Trump Organization.
Dillon argued that a more stringent blind trust or divestiture strategy, which was not legally required, would present costly complexities and subject the president’s “massive” business “empire” to unjustified and draconian financial losses. But she pledged that the structure Trump established would “completely isolate” him from the management of his company with “sharply limited … rights” to information only in the aggregate about how his business was faring.
Dillon also addressed the restrictions applicable to Trump under the Foreign and Domestic Emoluments Clauses of the U.S. Constitution. She maintained that only the receipt of income from services provided as a consequence of his officeholding would run afoul of the constitutional provisions. Trump was free, Dillon argued, to benefit from “fair value exchanges that have absolutely nothing to do with an officeholder.” But Dillon announced that to address any issue of appearances, the president-elect would commit to the voluntary donation to the U.S. Treasury of profits to his business interests from foreign government sources. Presumably on this basis, Trump would not seek Congress’s consent to their acceptance in the first instance.
Dillon also announced that in addition to Trump’s “complete isolation” from management, he would build into the trust structure procedures for screening conflict-of-interest problems. The Trump Organization would establish the position of “chief compliance counsel” charged with assisting the firm to prevent “any actions that could be perceived as exploiting the office of the presidency.” In addition, an independent ethics adviser would review all new proposed transactions for any conflict issues.
The ethics adviser subsequently appointed to the position, Bobby Burchfield, described four vetting standards that he would apply:
Through the application of these standards, the ethics adviser would either disapprove transactions or identify issues that, as a condition of entering into a deal, the Trump Organization would have to address and resolve. [86]
The president’s supposedly complete isolation from management did not mean he would eschew business income to meet his daily and other expenses. During the 2016 campaign, Trump announced that he would not accept the compensation provided by statute for the president: “The first thing I’m going to do is tell you that if I’m elected president, I’m accepting no salary, OK? That’s no big deal for me.” [87] He repeated the pledge after he was elected and stated that he would return his salary to the United States and target the repayments to different agencies that would then have the benefit of the funds. To meet his expenses, the president decided to call on personal resources held in trust. A revision of the trust in February 2019 provided Trump a right of withdrawal on request and bound the trust to supply him with support for “maintenance, support or uninsured medical expenses.” [88] The law governing trusts generally treats “maintenance expenses” as those required to keep up an “accustomed manner of living”—that is, the normal costs of living typically incurred by the particular trust beneficiary. [89]
In short, Trump switched his government-paid salary for access to trust funds to meet his living expenses. He was making what he evidently believed to be the political point that he was a successful, wealthy businessman who did not need taxpayer support and could magnanimously return to the American people the money he did not take. But this rearrangement of his finances while in office raised again the question of how much attention the president would pay to private business interests now tied directly to the payment of his day-to-day living expenses.
On a formal level, Trump and his advisers had laid claim to a “limited right” to information about the performance of his businesses that would consist of a quarterly briefing from his son Eric, who would serve as the co-chair of the trust advisory committee. [90] But there have always been indications that Trump would remain apprised more closely of the state of his business in other, informal ways. In 2017, the director of revenue management for the Trump International Hotel in Washington, D.C., wrote an email, later leaked, in which he noted that the president had asked him for an assessment of the business. “DJT is supposed to be out of his business and passed on to his sons, but he’s definitely still involved …. I had a brief meeting with him a few weeks ago, and he was asking about banquet revenues and demographics.” [91] The hotel denied that the conversation ever took place and insisted that the email reflected nothing more than the employee’s wish to inflate his own importance.
But by 2020, the Wall Street Journal would report that the president did in fact keep a “close” watch on the operation of his business. [92] The president was involved in “regularly” questioning employees on how the business was running, wishing to keep his son Eric “on his toes.” Trump was also reportedly critical of Eric’s “handling of scrutiny from federal and state investigators, who have probed matters at the Trump Organization and the Trump Foundation”—but any such judgment of his son’s performance would be possible only if the president had access to information about how his son was managing this legal scrutiny.
Though the public has little additional detail about the quarterly briefings and whether Trump was pursuing other channels of information about his business, the president was open about his desire to stay publicly associated with his properties. He made regular visits to his golf properties in the United States and in Scotland. Organizations tracked the visits and reported that, as of May 15, 2020, Trump visited his golf properties at least 245 times. [93] The president kept up this practice in the face of criticism that he appeared to be promoting his business. Meanwhile, Trump properties, especially the hotel down the street from the White House, attracted customers from foreign governments and interests, and from domestic groups with interests in government policy. It also attracted Attorney General William Barr, who personally paid $30,000 to have a 200-person holiday party at the hotel in December 2019.
The president has answered concerns about these arrangements by denying that his incumbency was a boon to his business interests. His hotel probably drew clientele seeking to find favor, or to avoid giving offense, by staying there on business affairs that involve the administration. But the Trump brand name could also have driven away customers unwilling to associate with his controversial policies and statements. Trump has made just this claim as proof of the significant sacrifice he made in giving up his business career for public office. “This thing [the presidency] is costing me a fortune,” he has claimed. [94]
In one respect, Trump’s properties did benefit from a specific clientele whose business payments for bookings and services could be tracked. The Secret Service released records showing that, as of March 2020, the Trump organization had charged the Secret Service more than $628,000. The Mar-a-Lago resort property in Palm Beach, Florida, charged a nightly rate of $396.15. At the Trump National Golf Club in Bedminster, New Jersey, the Secret Service rented a cottage on site for its operations for $17,000 a month for the summer of 2018 and part of the following summer as well. The Washington Post reported that this rental charge was “unusually high for homes in the area.” [95] Eric Trump, now managing the Trump Organization along with his brother Donald, Jr., had previously told the press that the company would charge the Secret Service only the “cost of housekeeping,” which he cited as being on the order of “50 bucks.”
Of course, the Secret Service payments did not represent a major windfall for the Trump Organization, even if the aggregate payments over the first three and a half years of Trump’s presidency were not negligible. But the net financial effect of the presidency on Trump’s personal fortune is immaterial. An assessment of the risk of serious conflicts of interest does not rest on an accounting of profits and losses. That there is even an argument about the personal profitability of Trump’s presidency is a problem. A president should not be in the position of arguing the point one way or the other. The involvement of a president with an ongoing business, thriving or faltering, always raises the question of whether public power has advanced—or is available as required to advance—personal interests.
The questions raised by Trump’s business interests are not limited to how much he stands to gain, but also how much those interests might subject him to other pressures. Trump had long boasted that he was a master of high leverage: “the king of debt.” [96] In 2020, the significance of this indebtedness drew particular scrutiny when the press reported that one of the New York commercial real estate properties in which the Trump Organization held a 30 percent interest owed $211 million on loans from the Bank of China. The bank disputed the report, claiming that it had sold off its interest in the loan shortly after it was made. However, records on file with the state of New York indicate that, in 2017, the bank still retained a secured creditor’s interest in the property’s fixtures. Once again, the bank insisted that the list was a “technical error.” [97] Whatever the facts of this particular property and its creditors, the episode illustrated another facet of the conflict-of-interest questions presented by Trump’s active business interests.
When the president’s trust arrangement was first announced, it attracted opposition within the executive branch. The Office of Government Ethics (OGE) pushed Trump to follow the norm of abiding by the same standards as his executive branch subordinates. In January 2017, the OGE director, Walter Shaub, stated that “it’s been the consistent policy of the executive branch that the President should act as though the financial conflict of interest law applied.” [98] Trump’s lawyers would later question the historical basis for this claim. They pointed out, for example, that President Carter arranged for a close personal associate to be appointed as trustee, not someone who would have met the standard for a trustee’s independence under federal statutory conflict law. But Shaub believed that Trump’s revocable trust arrangement lacked any of the material features of a blind trust. “It’s not even close,” he said. The president’s quarterly briefings were among the reasons that the trust lacked meaningful protective features. “There’s not supposed to be any information at all,” Shaub noted. Shaub also disagreed that divestiture was unworkable and noted that prior presidents had made financial sacrifices. Trump stood his ground, and Shaub left the government.
Congress could have intervened with oversight and by exercising its authority to explicitly withhold “consent” for income from any foreign state sources received into the Trump trust. When controlling both chambers until January 2019, Republicans were not receptive to inquiries into the president’s business arrangements. Democrats attempted to take matters into their own hands. In 2018, 200 Democratic members of the House and the Senate sought judicial intervention to require the president to seek congressional consent. The U.S. District Court for the District of Columbia ruled that the members had standing to bring the suit. The court also agreed with them that an “emolument” was on the broadest construction any “profit,” “gain,” “benefit,” or “advantage,” and not, as the president’s lawyers argued, only “profit arising from an official’s services rendered pursuant to an office or employ.” [99] In February 2020, however, the U.S. Court of Appeals for the D.C. Circuit ruled that the members of Congress “lack standing to assert the institutional interests of a legislature” and dismissed the case. [100]
After the Democrats won the House majority in the 2018 midterm elections, they did not investigate the Trump trust structure or assert that the Trump trust’s receipt of income from foreign state sources required advance congressional “consent.” They focused instead on alleged violations in the operation of the trust. Several House committees investigated whether groups, “including at least one foreign government,” attempted to curry favor with Trump by booking rooms at his hotels but never staying in them. [101] They also looked into alleged irregularities in the Trump Organization’s leasing arrangement with the General Services Administration for the Trump International Hotel in Washington, D.C. The House Oversight and Judiciary committees announced an investigation into military stays at a Trump-owned property in Turnberry, Scotland, and substantial increases in military refueling at a nearby airport after Trump won the election.
Some members of Congress called for the House to take action more broadly based on its “consent” authority under the Foreign Emoluments Clause. They argued for a resolution declaring that that payments to Trump businesses from foreign governments are “emoluments” and that the House does not consent to their receipt. Congress did not pass any such resolution, and the House Judiciary Committee did not include an emoluments charge in the articles of impeachment that the House subsequently approved on December 18, 2019. It was reported that the House leadership was concerned that any specific action on the Emoluments Clause issue would undermine the pending lawsuit filed by individual lawmakers.
President Trump appeared unfazed by these events. On October 17, 2019, he announced that the next G-7 summit would be hosted at the Trump National Doral Miami resort. However, two days later, Trump reversed course. He claimed in a tweet that he did so because “the Hostile Media & their Democrat Partners went CRAZY!” [102] But news reports suggested that Trump’s decision was driven by Republican lawmakers critical of the move and the notable absence in Fox News coverage of a vigorous defense of his position.
Trump did not express legal concerns about the arrangement. Yet had the president proceeded, the substantial government contract with his company would have raised issues under both Emoluments Clauses even if, as he proclaimed, the rooms were provided “at cost.” Commentators noted that the hosting of a major international event at Doral would have generated an abundance of publicity helpful to the attraction of business and profits in the future. Moreover, providing the rooms and accommodations at cost did not mean that guests would not make other profitable purchases, such as for food and drink. And the “at cost” expenditures during the Florida off-season could have reduced aggregate overhead costs. The term “at cost” is also ambiguous because it likely would not include separate allocations for the additional personnel required to work during that time or for any renovations or other spending to prepare for the event.
And yet Trump and those Republicans urging him to retreat from the plans for the Doral summit seemed moved more by the worry bluntly described by Acting White House Chief of Staff Mick Mulvaney: “people think it looks lousy.” [103] It seems that the norm rather than constitutional law threw the president on the defensive and forced him to reconsider and reverse his decision. For all of Donald Trump’s brazen norm-busting, this norm turned out to have bite, at least in this one context. And yet it is hard to assess the broader significance of the episode, since without the impeachment that was pending at the time, congressional Republicans might have reacted less strongly to the proposed Doral summit. But whatever might have happened in different circumstances, it is clear that the president’s own party concluded that in this instance he had gone too far.
By spring 2020, Trump continued to fend off political and legal challenges to his retention of active private business interests—interests that he was to some extent overseeing and promoting—while in office. He might have lost the Doral battle, but he seemed to be winning the war over his unique “trust” arrangement. The norms in effect for the modern presidency for more than a half-century proved generally ineffective in preventing both the appearance and the reality of a president mixing interests of personal profit with public duties.
Then came the coronavirus pandemic, which led Congress to address Trump business–related conflict-of-interest issues unique to the extraordinary circumstances. In providing emergency relief to businesses devastated by the national lockdown, it barred the president’s commercial enterprises from participating in the benefits made available through “stimulus” legislation. The CARES Act, passed in March 2020, excluded them from the class of businesses eligible for loans, loan guarantees, or other investments. This disqualification applied to any business in which the president and his children held “directly or indirectly … a controlling interest.[104 ] The law also applied to the vice president, heads of executive departments, and members of Congress, but it was clear that congressional Democrats had pressed for the provision to close off access to emergency public funding for Trump businesses. “Democrats and other critics of the president were concerned that Trump’s businesses would receive bailout money because the tourism industry is one of the hardest hit by the coronavirus.”[105 ]
The coronavirus emergency highlighted the conflicts issues in other ways. Under the catastrophic conditions facing the hospitality industry, the Trump Organization sought to renegotiate the terms of its lease with the General Services Administration for the property occupied by the Trump International Hotel in Washington, D.C. Eric Trump stressed that the relief sought was only temporary and that he and his brother wished only to have the federal government “treat us the same” as other federal tenants. [106] Of course, these requests for relief were being directed to agencies that answer, ultimately, to the president. The Trump Organization also sought to alleviate the economic stresses generated by the pandemic by seeking the postponement of payments on loans owed to Deutsche Bank—which was reportedly under an ongoing federal investigation.
It was possible that, in this situation, Trump’s interests would be addressed on fair, arms-length terms, no different from others. But it was more reasonable to assume that those on the other side of the negotiating table would not , in Eric Trump’s words, “treat us the same.” An official of Palm Beach County pithily noted the problem when expressing anxiety about the Trump Organization’s request for relief from the lease payment schedule for the Trump International Golf Club. If the county failed to grant the Trump interests the desired terms, it “could anger the president and lose out on federal assistance” in the coronavirus emergency.
Reform
However inadequate in the judgment of critics, Trump’s revocable trust arrangement demonstrates that even he was unwilling to declare himself free of all ethically grounded conflict-of-interest limits in the pursuit of private business interests. Like the Doral episode, this suggests a norm with at least enough bite that Trump was prepared to pay it lip service.
The norm has two components that each require attention in thinking about reform. First, the presidency is a full-time job that is not compatible with other professional or business commitments. Presidents are expected to live in government-supplied housing and to receive support by government-supplied staff, and they may not decline round-the-clock Secret Service protection. They owe all of their energies to the conduct of the presidency. Second, this full-time commitment guards against the threat that other commitments or interests could interfere with or conflict with presidents’ discharge of their responsibilities solely in the public interest. Both components operate together to limit presidents to the business of the nation, not their own. Enforcement of the norm requires attention to passive as well as actively pursued investments or other financial interests that could undermine public confidence in the president’s integrity and impartiality.
Trump’s discretionary trust arrangement insufficiently protects this interest in a full-time president with appropriate checks on potential financial conflicts of interest. The inadequacies fall into two categories: the failure of the structure to “completely isolate” the president from active involvement with his business, and a lack of transparency about its operation.
The ethics screening process the president and his advisers devised contemplates prior approvals of any “new deals,” while allowing the adviser to work with company management to resolve identified issues and permit those deals to progress. The president’s lawyer claimed that the trust provides for appointment of the adviser to the senior management team; but neither Trump nor his legal advisers have provided details about how this arrangement works in practice. The outside ethics adviser has spoken about the standards that he claimed to apply, which are sweeping in scope. But, citing the attorney-client privilege, he has declined to be more specific about transactions that may have posed issues he was required to address. The result is an entirely privatized arrangement that purports to address important public concerns without any formal public accountability.
Congress could request information on a voluntary basis or seek it through compulsory process, on a case-by-case basis or on a set schedule, such as annually. In other words, it could subject the more or less privatized arrangement to public monitoring. A president could resist it, however, by arguing that if the president is exempt from statutory conflict-of-interest requirements, Congress has only the most limited legitimate need for the information and must demonstrate this need with each request. In this and related contexts, including tax disclosure, which we discuss in Chapter Four, Trump has tried to carve out a broad zone of immunity against congressional inquiry. There is no reason to assume that he will be the last president to adopt this position.
The net effect of this state of affairs is to drive Congress toward inquiries into reported instances of specific wrongdoing. A hint of scandal becomes the opening for the demand for presidential accountability and strengthens Congress’s hand in conducting oversight or the basis for impeachment. But this means that presidential conflicts of interest are investigated, not regulated. The result is a scattershot rather than systematic treatment of conflict issues. And the partisan setting in which these issues are often raised and investigated can distort the congressional debate and weaken the prospects for a bipartisan resolution. Moreover, the presidency itself is hobbled by the onset of scandal and associated investigations. More comprehensive and effective regulation of financial conflicts would limit the incidence and costs of these controversies.
Relatedly, and especially in the polarized politics of our time, the extent to which Congress is motivated to inquire likely depends on which of the parties commands the majority at any one time. A president’s party is not a reliable inquisitor. The reluctance of parties to police their own is a feature of hard-core contemporary partisanship: Neither party wants to open up lines of attack for the opposition. Such viral partisanship also typically means that the president’s accusers will claim that the other party’s presidential conflict-of-interest charges are motivated by partisanship. The more evident that motivation, the more certain it is that the president’s allies will resist.
Absent more detailed legal regulation to achieve transparency, it cannot be expected that self-regulation, which is essentially what Trump has offered, will be open for adequate public review. The president’s lawyers setting up the discretionary trust arrangement claimed that it would protect against actual or apparent conflicts, but as operated it simply does not accomplish even the minimal requirement of preventing apparent conflicts. The president meets regularly with his son Eric, who is one of the co-trustees, to discuss the business and to receive reports on how it is faring, and the press reports that he also seeks out information from company employees. In this respect he is not in fact “completely isolated” from the management of the business, and he certainly does not appear to be. Any regular briefing that he receives is an opportunity for him to express an opinion about some aspect of his business’s operation.
The president’s regular presence at his commercial properties also presents obvious appearances of conflicts of interest. A president has the widest choice of venues for any meeting or public appearance. Trump’s regular visits to his golfing and resort properties may be consistent with or further the commercial interests of those properties. And since the president, who styles himself a savvy businessman, must be aware of the potential promotional impact of his appearances, he is vulnerable to the entirely reasonable suspicion that this is his intent.
In light of these deficiencies in the Trump trust arrangement, and the failure of norms to do adequate work, we propose the following reforms.
A Ban on Presidential Participation in a Business Interest
The president should not be able to maintain an active or supervisory role in the oversight of any businesses in which he or she has an interest on the day he or she takes the oath of office. The president should be barred from serving as an officer or director of any such business, and should not have a direct or indirect, formal or informal, consultative or advisory role, including any right or arrangement by which he or she has access to information about the business interests not available to the general public. The restriction would apply to the president’s solicitation of third-party support for a business interest, such as a meeting with a potential investor. We propose that the president be required to certify annually, subject to criminal penalties for false statements, that he or she has met these requirements. The certification could be made in connection with the filing of his or her personal financial disclosure reporting under the Ethics in Government Act.
A reform structured with these features would prevent a president, like Trump, from skirting the “complete isolation” standard that he articulated but did not satisfy. Under this rule, Trump would not have been able to meet with his son, or any other trust personnel, for private briefings. He could not have communicated formally or informally, as news reports indicate that he did, with employees or staff involved in his business interests. The president would have to rely on public data only. In sum, the president could draw on income held in a trust. He or she could not, however, manage or oversee directly or indirectly the management of his or her assets. The key to enforcing this set of restrictions is the certification the president would be required to make.
Because the president would have no advisory or consultative role, he or she could not be required to report in detail on the assets, liabilities, and identities of those holding interests in the businesses in which he or she has a significant or substantial financial stake. He or she should have no access to the information necessary to meet a reporting requirement. However, once the president had identified his or her business interests, the businesses should have this disclosure requirement, which would be satisfied through a filing with the OGE and posted publicly to its website.
A Ban on Presidential “Blind Trusts”
The House of Representatives passed a reform bill in 2019, H.R. 1, that would have amended the Ethics in Government Act to require that the president make a choice. [107] He could either (1) divest himself of assets, transferring them to cash or to investments that pose only a remote or inconsequential threat of a conflict; (2) place business and personal assets in a diversified or blind trust; or (3) report more extensively on his financial interests. We do not favor this approach.
First, this bill is a step too far in the direction of Congress ordering the president’s finances. The first option, divestiture, is really no option at all for many potential presidents. Divestiture would harshly penalize presidents with wealth from serving (and thus deter them from running in the first place) and is a step that, once taken, sets a precedent that could lead to abuse. Congress has no legitimate interest in the president’s wealth or far-flung business interests per se. The issue of concern, rather, is the president’s pursuit of business interests while in office, and his dependence on private funding for personal expenses, that generates the greatest risks of conflicts of interest that Congress should appropriately act to prevent.
Second, to achieve the satisfaction of core transparency interests in relation to a president’s ongoing business interests, the president should not have the option of using a “blind trust” arrangement. Congress and the public should have visibility into the financial affairs and business associates of any firm, partnership, LLC, or other entity in which the president has a significant financial interest. We favor this full transparency in addition to strong controls, subject to severe penalties for their violation, on a president’s involvement in the direction of his financial affairs.
A blind trust separates the president from the management of assets while affording privacy. But it also means that the public is denied access to information about how investment and other financial decisions are made. The trust is obligated to report only total value, not underlying assets. A blind trust strategy also depends on the president’s scrupulous avoidance of informal channels of information about his financial interests. By definition, the corrupt (or corruptible) president is not reliably scrupulous.
In our view, the businesses in which the president has such an interest should have to report publicly those interests, including the name of persons with interests in the firm or other entity, and the value of assets and liabilities. This transparency invites scrutiny of any apparent tie between official policy and personal gain by the public, by press and watchdog groups, and by Congress. It allows for the detection of suspicious patterns in the trust’s investment strategies and for questions to be asked that the president or trust representatives would be under pressure to answer.
This public checking function also limits the potential for abuse of office even if the president has not directed an investment decision. A president has the option of liquidating investments and holdings and reinvesting the proceeds in noncontroversial diversified mutual funds. By choosing instead to maintain his investments in a trust, a president can potentially benefit from a wide range of possible investments directly or indirectly affected by government actions. A trustee without any direction could choose to steer assets to investments that have become more attractive as a result of an administration’s regulatory or legislative actions or proposals. Imagine, for example, a president who advocates defense buildup and whose trust then invests heavily in defense contractors, or an environment-friendly president whose trust invests in clean energy firms. In myriad ways, the president’s actions and initiatives shape or influence the market and, therefore, the choices open to the trustee to maximize the president’s wealth.
A president’s financial representatives are free to pursue an active, even aggressive, wealth management strategy, but it is best that the public has the information necessary to detect or evaluate any connection between his official duties and personal business interests. While a president may direct a blind trust to avoid investments of certain kinds—for example, in munitions or tobacco—he cannot so restrict the scope of the trust’s activities that it can avoid all questions about the relationship between official actions and financial returns. Having decided to remain active in the market and to run that risk, a president is fairly held to the strictest standard of transparency. Coupled with a stringent prohibition on any consultative or advisory role in the management of the trust, this transparency seems indispensable in addressing the risks of evasion and enhancing public confidence.
Prohibition of a President’s “Rejection” of a Government Salary
A more straightforward but modest reform to shore up the expectation that the president works only for the public is a prohibition on a president’s ability to “decline” his or her statutory government salary. This salary is meant to compensate for a full-time position as president, and the president’s acceptance of the salary is one important way he or she expresses recognition of this commitment. Of course, the president, like any other taxpayer, may choose to donate his or her salary to charity. But the law should be changed to deter any personal or political advantage from doing so. It should be amended to deny him or her any deduction. And the president should be further prohibited from donating portions of his or her salary, as Trump has done, to federal agencies.
At present a president’s rejection of his or her salary is political showmanship. He or she accomplishes nothing for the operation of the government, such as reducing the deficit. But it is not a harmless political move. The replacement of a public with a private salary misrepresents the president’s true obligation, which is to attend to a full-time presidency. Just as the president is required to accept security and to live during his or her terms of office in the White House, his or her payment for doing the job is an additional way that service to the public is defined and expressed. By refusing this pay, a president unilaterally redefines the terms of his or her tenure.
An analogous restriction under federal law is the provision of Secret Service protection. Congress by statute prohibits the president (and vice president) from declining this protection. The prohibition, which no president has challenged, further illuminates the problem of privatizing the terms of the president’s “employment.” If free to reject this security, a president might take intolerable risks, to the detriment of the nation. The prohibition thus expresses the view that the president must accept the job on the condition that he or she submit to a publicly funded, government-operated security regime. Similarly, a prohibition on foregoing the presidential salary expresses the view that the presidency is a full-time job, not just one activity among others, such as private business pursuits, that then presents the potential for conflicts of interest.
Even if the president refuses to spend or donates to charity his or her government salary, a statutory prohibition on him or her declining it clarifies expectations and may help establish, over time, a norm. The presidency is a full-time position, for which the incumbent is compensated with taxpayer dollars, and there should be no alternative of seeking out—and relying exclusively on—other forms of income while in office that inevitably raise conflict-of-interest issues.
Congressional Assertion of Its Authority to “Consent” to Emoluments
Even with basic conflict-of-interest controls such as those we propose, a foreign government could invest in a president’s legacy business, or support it, through patronage of commercial facilities and in other ways, for the benefit of the president, family members, and associates. To the extent that the president retains a direct financial interest in these businesses, he could benefit personally while in office or know that he will do so in the future when he returns to private life and business affairs. Even if the president complies with the prohibition on an advisory or consultative role, which would restrict him only to the information also available to the public, he could still learn from public sources about foreign state investments in his businesses or, as in the case of commercial properties, leases or patronage.
Congress has not responded to Donald Trump’s challenge to conflict-of-interest norms by exercising its constitutional consent authority to police the enforcement of the Foreign Emoluments Clause. As noted, the Foreign Gifts and Decorations Act, one of a handful of statutory exercises of congressional consent authority under the Foreign Emoluments Clause, is directed only at gifts of “minimal value” that a foreign government might bestow on a president.
In light of the issues raised during the Trump presidency, Congress should amend this law to provide that the president or the business in which he holds a financial interest would report to the House and Senate Foreign Relations committees, and to the OGE, interests in, and income reasonably anticipated or received from, foreign state investment vehicles or foreign-state-controlled businesses. The committees would then make these disclosures public.
The disclosures would not be limited, as Trump’s lawyers have argued in ongoing litigation, to compensation received for the performance of official duties. Instead, the reform would adopt the broad definition of reportable “financial interests” in the Ethics in Government Act. Those interests include property interests and assets, investment and noninvestment income, and rents and royalties. As an example of the sweep of the disclosure requirements, the OGE defines a property interest, whether held in a trade or business or for investment or the production of income, to encompass “stocks, bonds, pension interests and annuities, futures contracts, mutual funds, IRA assets, tax shelters, beneficial interests in trusts, personal savings or other bank accounts, real estate, commercial crops, livestock, accounts or other funds receivable, and collectible items held for resale or investment.” [108] Reportable investment income includes dividends, annuities, or contract payments.
In designing a reform that focuses on foreign state sources, Congress could include exceptions, subject to implementation by the OGE, for interests “too remote or too inconsequential” to constitute “emoluments” for which congressional consent is required. This standard of excepted interests applies under current OGE rules to executive branch officials who would otherwise be disqualified by those interests from participating in particular matters within the scope of their professional responsibilities. The OGE exemptions are grounded in a recognition that “in certain cases, the nature and size of the financial interest and the nature of the matter in which the employee would act are unlikely to affect an employee’s official actions.” [109]
On the basis of these reportable, nonexcepted foreign state financial interests, Congress could determine whether to provide “consent” to the president’s receipt of this benefit. The provision for public reporting would serve a basic transparency purpose but also the goal of holding Congress accountable for the decision to exercise, or not, its consent authority. A president-elect would be required to file the first report within 30 days from the date of the election. Should Congress fail within 60 days thereafter to provide affirmative consent, the statute would require that the president sell off the interest.
Thereafter, under our proposal, the president would have no further supervisory or other involvement in his business or businesses, and all subsequent reporting requirements would fall on the businesses in which he held an interest. Should the president over the course of the term come to acquire foreign government–sourced interests, the business in which he held the interests would be required to file supplemental reports, and Congress would again have to act within 60 days to consent. If it failed to do so in the case of interests acquired during the term, the business would have to sell off the interest and pay the proceeds to the U.S. Treasury. This additional requirement during the term is necessary to ensure that, absent congressional consent, the president has not obtained any financial benefit from these sources while in office.
This reform structure may present numerous questions of application, especially if a president, like Trump, has wide-ranging and complex global business interests. Congress will necessarily have to craft the law to supply the OGE with sufficient authority, subject to ongoing oversight, to address technical issues that are certain to arise. We have laid out here the basic principles that should guide reform design.
We acknowledge that it is an open question whether the Foreign Emoluments Clause applies to the president and thus whether Congress can regulate the president pursuant to its consent power in that clause. We agree with the weight of lower court and scholarly analysis that concludes that the Foreign Emoluments Clause applies to the president, but the matter is not open and shut. Only the Supreme Court can definitively resolve this issue. But we expect that most if not all future presidents would not challenge the constitutionality of our reform proposal. And the statute could in the interim go a long way in establishing the right norms even if there were eventually litigation over the matter. And in any event, the Supreme Court cannot resolve the issue unless it is presented to it in a challenge to the statute, assuming that one can be crafted.
Elevated Congressional Role in Enforcement
Oversight of executive branch ethics requirements rests with the Office of Government Ethics, an independent agency. But the OGE currently lacks enforcement authority—it cannot compel testimony nor levy penalties, for example. Proposals for addressing presidential conflicts have included mechanisms to equip it with these powers. The House bill would provide the OGE director, who serves for a five-year term on nomination by the president and confirmation by the Senate, with enhanced protection from political pressure. Under current law, the president may fire the director for cause. H.R. 1 would substitute more specific grounds for dismissal: “inefficiency, neglect of duty, or malfeasance in office.” [110]
We have reservations about the OGE’s role in enforcing safeguards against presidential conflicts of interest. Even with limitations on presidential firing authority, the history of Trump’s clashes with the OGE exposes the problems inherent in an enforcement structure that empowers an agency head to investigate and seek civil penalties against the president. It is a standing invitation to a president’s political opposition to pressure the OGE to investigate. Presidents would have reason, in turn, to staff the OGE with “our people.”
We would see a role for the OGE in advising and assisting the president with compliance, but we would propose checks and avenues for formal enforcement for which Congress would be primarily responsible. The Government Accountability Office should be charged with annually auditing and publicly reporting to Congress on compliance with the presidential conflict-of-interest rules. The Government Accountability Office would review the president’s annual certifications that he or she did not engage on a consultative or advisory basis with businesses in which he or she had a financial interest, and the office would audit reports filed by those businesses pursuant to the requirement we propose.
Congress would use the annual audits to determine whether additional oversight is required. Should the reports reveal evidence of willful disregard of the conflict-of-interest requirements, Congress would refer the matter to the attorney general for review and potential investigation.