Small Ball

Seven Springs Estate near Mt. Kisco; after local authorities refused to let him build a golf course and 15 private houses on the estate, Trump used not-developing it as a conservation easement charity deduction, probably inflating its value, while writing off the property taxes as a business expense. Photo by Craig Ruttle/AP, with a report on how New York attorney general Letitia James is looking at the setup from a criminal standpoint.

Total Fake News

by Donald J. Trump

I didn’t call on you. I’m talking
to him. You should be more respectful
of this gentleman. You’re very rude to him.

But I will tell you that I look forward to
releasing that. I look forward to
releasing many things. I’m going to
release many things, and people will
be really shocked. But the New York Times
has been doing — it’s fake story after
fake story. I’ve never seen anything like it.

And people understand it, and people —
that’s why the — the media has such a
low approval rating now because of
what they’ve done. It’s really a shame.

Well, then, that's not fake news, is it? In a unique feat of reporting, The New York Times has uncovered evidence backing up one of Trump's most idiotic-sounding claims: that audit that his taxes are always under, year in and year out, really exists—

a decade-long audit battle with the Internal Revenue Service over the legitimacy of a $72.9 million tax refund that he claimed, and received, after declaring huge losses. An adverse ruling could cost him more than $100 million.

There was this brief moment when, for perhaps the first time in his life, he was starting to make some really serious money, not as a penniless young upstart (with nothing but a "small loan of a million dollars" from the father who in reality kept him afloat for decades with 500 times that) or a heroic builder of a tower to the sun or a cunning, audacious dealmaker, but as a fatuous "personality" on reality TV, the same way as Paris Hilton or Kim Kardashian got from rich to super-rich, only with a lot less off-camera work and on-camera time. And also when, for certainly the first time in a lifetime of tax avoidance (chronicled in previous Times reporting), he started paying some serious income tax, between 2005 and 2007, on what ended up being over $427 million on his 50% share of the show. plus another $120 million on licensing deals and product endorsements. He paid, in fact, a total of $70.1 million, and set about clawing it back, 104% of it in fact (including 2008 payments), as you see, filing for a refund and receiving it, in 2010, triggering an automatic IRS investigation, which he has managed to drag out, as The Times says, ever since. While he got back to paying the more Trumpian rate of between $750 and $0 per year.

Though of course the rest of the claim—that the audit is a reason for Trump to defy the custom of the past 50 years and keep his filings secret from the public—is as bogus as it ever was.

Steve is no doubt right to note that these revelations won't cost Trump any voters—they'll refuse to believe that he's not a billionaire, since he played a billionaire on TV, and they'll admire him for cutting his income tax down to zero (everybody's remembering how he cheerfully acknowledged that in 2016 debates, saying that proved he was "smart"). And who reads The Times anyway? While Fox's coverage of the story is, well, Matt Gertz has summarized that pretty neatly:

Here’s how far down Fox News’ mobile site you need to scroll to get to a reference to the NYT Trump taxes bombshell, it’s even below “sponsored stories” — and even then the headline framed around him saying the story is “made up.” pic.twitter.com/dgbCj1G7eS

— Matthew Gertz (@MattGertz) September 28, 2020

But you know me, I'm not that interested in politics. Or maybe I should say I have really, really low expectations of what an institution like The Times or the Washington Post is capable of bringing about, politically, in any direct way; it's not what I'm reading them for.  Even at the crudest level, one sentence from Walter Cronkite did so much more than all the Pentagon Papers to shake voters up about the Vietnam War (and even then, they got the wrong message, to trust Nixon's "secret plan" instead of Johnson's honestly kind of noble sacrifice of his own presidency in the cause of peace); it was the actual, entirely public march of events from the Saturday Night Massacre in October 1973 to Nixon's refusal to surrender the tapes in April 1974, not the investigations of Woodward and Bernstein, that shifted public opinion on Nixon, or such seems to have been the conclusion of Gladys Engel Lang and Kurt Lang in their 1983 study of The Battle for Public Opinion: The President, the Press, and the Polls During Watergate, or at least reviewer Leila Sussmann:

It's the narratology, stupid: the effect of the public's ability to recognize the stories as plot points adding up to a meaningful sequence, which the Trump coverage has totally failed to provide, maybe because it follows the jerky rhythms of Trump's own nonexistent attention span.

Or specifically what I'm interested in, with regard to this new report, is the phase of the narrative that you'd call the establishment of character, as it helps you understand what's happening in the confluence of interests of Trump, the Russian state, and the Republican party. Which has been difficult, because Trump seems like so many different people at once, so poorly connected to each other: the idiot, the gangster, the politician, the billionaire with his laundered billions salted away in golf courses, the cash-starved con man pretending to be a billionaire, and so on.

The broadest takeaway from The Times is on that last: it seems clear that he's in genuine financial trouble, his businesses not making enough money, and in a great deal of very unwise debt for which he's personally liable (something I thought he'd learned to avoid back in the 90s). Tax returns alone don't give you a clear picture—for that you'd need an account of his personal wealth—but the properties themselves are diminishing in value, because they were doing pretty badly even before the pandemic halted the hotel and golf operations altogether for a period, and he's impoverished his financial holdings in the last seven years, pulling $96 million out of his real estate partnership with Vornado in 2013 and selling some $230 million worth of stocks and bonds since 2014 (he's now down to his last $873,000 or less in equities). And a monstrous big load of loans coming due in the next two or three years, in the neighborhood of half a billion dollars, something like $350 million of it to Deutsche Bank, which is in plenty of legal trouble of its own at the moment and hardly going to be able to get away with treating him as generously as it has done in the past.

Sure he's probably exaggerating his losses for tax purposes, but he can't be exaggerating them all that much; he really is losing. In a way that seems ridiculous to you and me, since they all go on living like billionaires, but he takes all the spending as business deductions, which makes some kind of crazy sense when you think about it: being a billionaire is his brand, so that his income depends in some degree on his acting that way. It's fun to realize that his much-touted donation of his salary, $400,000 a year, must be a charity deduction, well under 1% of the $130 million in deducted charity reported in the Times filings (nearly all of which is not actual money, but conservation easements, agreements to leave a portion of land undeveloped on estates like his 200-acre Seven Springs estate in Westchester County, a summer retreat for family members after authorities refused to approve development anyway, but he also writes off the property taxes as a business deduction, though he's not even trying to make any money off of it).

Which means, as well, that there's not a lot of material for seeing him as a big-time Putin-style criminal, using his high office to take all the money. The Times is convinced he didn't buy those 16 golf courses on Russian money, but paid for them with his Apprentice earning, in the (very wrong) belief they were a safe investment. I'm not so sure about that, but most of the stuff that looks as if it could be illegal wouldn't add up to much by billionaire standards. Lots of room, for instance, for emoluments foreign and domestic in the hotel receipts (rooms, meals, drinks, and big events), and rentals in buildings he owns on his own or in the Vornado partnership (the stuff we were looking at here), a million here and a million there, but it might not even total up to the higher eight-digits. There's an extremely interesting bunch of "consultancy fees", something like 20% of practically every project he does

Examining the Trump Organization’s tax records, a curious pattern emerges: Between 2010 and 2018, Mr. Trump wrote off some $26 million in unexplained “consulting fees” as a business expense across nearly all of his projects.

In most cases the fees were roughly one-fifth of his income: In Azerbaijan, Mr. Trump collected $5 million on a hotel deal and reported $1.1 million in consulting fees, while in Dubai it was $3 million with a $630,000 fee, and so on.

—but because one of these, $747,622 for hotel projects in Vancouver and Hawaii, exactly matches a payment of $747,622 reported by Ivanka Trump in her own White House financial statement as a consulting fee she received, even though she was an employee of the company at the time, this looks like an illegal way of passing deductible gifts to family members, and $26 million is another low eight-digit number. 

All in all, he comes off as not so much greedy as grasping, holding fiercely to every dime he can keep from the taxman, but playing pretty small ball everywhere as far as criminal activities go, and definitely not a billionaire.

Michael Cohen's testimony, that Trump intended the presidential campaign as a brand enhancement, is definitely borne out; he declared his candidacy after two years in which he lost $100 million even as he was cashing in all that stock and it became clear the Apprentice magic was wearing off, and it certainly seemed to be working that way in some places even after he won:

One Trump enterprise that has been regularly profitable, and is a persistent source of concern about ethical conflicts and national security lapses, is the Mar-a-Lago club. Profits there rose sharply after Mr. Trump declared his candidacy, as courtiers eagerly joining up brought a tenfold rise in cash from initiation fees — from $664,000 in 2014 to just under $6 million in 2016, even before Mr. Trump doubled the cost of initiation in January 2017. The membership rush allowed the president to take $26 million out of the business from 2015 through 2018, nearly triple the rate at which he had paid himself in the prior two years.

Which doesn't mean his activities and those of the Russians weren't coordinated, through henchmen like Manafort and Flynn and Stone and fools like Junior, but that he never thought about where he was being propelled, only about how he could convert it into a little cash that would help him survive another day (and occasionally how he could stay out of jail and punish his enemies, but cash came first).

pic.twitter.com/k3CznB7j6Y

— Airborne Panic (@Yastreblyansky) September 28, 2020