Tuesday, October 18, 2016

The Trump ‘Brand,’ Part 2: Deadbeat

“He [Donald Trump] is from the private sector, not a politician,” Sarah Palin enthused in her endorsement of her fellow reality TV star. “Can I get a ‘Hallelujah!’”

No, you can’t, Sarah—certainly not from me. I don’t understand the conservative romance with the private sector, which in my lifetime has gone past Ronald Reagan’s enthrallment to a downright fetish today.

In my more than 30 years since my undergrad days, I have worked continuously, for or with several companies, large and small, in the private sector. Trust me: While not universal, many executives in those companies abounded with arrogance, cupidity, cowardice, hubris, hypocrisy, negligence, sexism, hare-brained schemes, mindless penny-pinching, short-term thinking, wastefulness, and deceit.

Trump has committed more than a few of these offenses. Little if anything was heard about it in the primaries—partly because his business concerns were so hydra-headed as to be well-nigh impossible to untangle; partly because, for a long time, neither his GOP opponents nor the media thought he could win and therefore his business affairs weren’t worth investigating or even mentioning; and partly because the other candidates did not want to alienate his base by attacking him.

Now, the curtain is being pulled, though ever so slowly, on the wizard—and it’s not pretty. The party that, for years, screamed about self-reliance and personal responsibility now backs a candidate who’s never displayed either. Here’s just some of what we’ve learned:

In the early 1970s, Trump briefly became a Broadway producer. In certain ways, he probably missed his calling, for producing would have allowed him to swagger into Manhattan without engaging in substance—and without inducing city officials desperate for economic growth to give him close to whatever he wanted. 

(Or, as James Surowiecki of The New Yorker has observed, on “Trump’s Other Tax Ploy”: “[H]is real-estate empire, such as it is, was built on exploiting just about every government tax abatement, credit, and subsidy available.” Remember that the next time he goes into his crybaby act on the cost of regulation.)

But, as Emily Jane Fox noted in a piece for Vanity Fair’s Web site earlier this year, Trump put up half the cost of Paris Is Out but “relinquished responsibility when it came to any real decision-making or creative input.” The more important thing for him was his name, where he insisted on equal billing on the marquee and Playbills.

Perhaps it’s just as well the production lasted only 112 performances—otherwise, he might have used the same M.O. he admitted to in an interview with Howard Stern: i.e., exercising his owner’s prerogative with the Miss Universe pageant to barge in on “incredibly beautiful women” while they were still in their underwear.

Trump certainly hasn’t mastered the minutiae of his financial dealings. It wasn’t Trump who displayed the “brilliance” that enabled him to reap the tax benefit of his $916 million in losses. It was his accountant who discovered the generous write-offs resulting from the titanic loss; it was Trump who displayed the chutzpah in exploiting every bit of it.

Father Gives Best

It says something about Trump’s inability to relate to Americans of diminished circumstances that he could call the $1 million (in 1970s currency!) from his father to start his own business “small.” It says something more about his shaky relationship with the truth that he has been silent on the multiple other ways that Fred Trump ensured his rise. Wayne Barrett, an investigative reporter and author of the biography Trump: The Greatest Show on Earth: The Deals, the Downfall, the Reinvention, spelled them out in an interview with Democracy Now:

*When Trump opened his first office in Manhattan, the rent was paid by his father;

* For the Grand Hyatt, his first major Manhattan project, Donald got the financing from two banks that his father had used;

*Under ordinary circumstances, it would have been well-nigh impossible for a rookie thirtysomething developer to get the green-light on a major project like the Grand Hyatt—except that Fred Trump not only signed the financing agreements, but also sped governmental approval through his close association with members of the Beame administration in the mid-Seventies.

* Fred also supported the financing of his son’s centerpiece property, Trump Tower. 

* Subsequent infusions from Fred Trump—including an illegal $3.5 million loan—were required to bail his son out when he became overextended in the 1980s and 1990s, as a result of Donald’s unsuccessful ventures into casinos, the Trump Shuttle, even the Trump Game. A 1990 net-worth statement revealed that Trump owed nearly three hundred million dollars more to his creditors than his assets were worth.

Stiffing the Little Guy

Those creditors included small companies that delivered pianos, minarets and slot machine stands. When Trump backed out on paying his debts, these companies suffered, with some—including family-run businesses operating for generations—forced to close their doors for good.  

That practice has continued: A USA Today article by Steve Reilly found that at least 60 lawsuits, along with hundreds of liens, judgments, and other government filings, have accused Trump and his businesses of failing to pay them for their work—with not only small businesses, but more vulnerable individual workers—dishwashers, plumbers, painters, waiters, and bartenders—all stiffed. 

Nor was the bankruptcy the prime reason for Trump’s callousness: While building Trump Tower, the 2016 candidate who spoke the loudest about protecting domestic jobs was the subject of reports that 200 undocumented Polish workers had been working off the books while demolishing the old Bonwit Teller structure; that they had been paid below the minimum wage; and that they’d been denied health and medical coverage and been threatened with deportation if they complained. 

Faced with a lawsuit, Trump blamed all problems on his contractor, despite reams of pages of testimony by others to the contrary. The suit worked its way through the courts for 15 years before the mendacious mogul finally settled it. 

Trump and Bankruptcy: The Truth Hurts

Yet, even as Trump finagled accounts and stiffed creditors, he still couldn’t keep his business solvent. In fact, he might be considered the forerunner of “too big to fail.” In an article for Newsweek, Kurt Eichenwald explained the process: 

“Over the next few years, my fellow business reporters and I marveled at the numbskullery in the Trump financial frolics, as banks and junk bond investors threw him billions of dollars in loans so he could buy up businesses he knew nothing about—casinos, an airline and the like…. When the inevitable occurred and Trump could not even pay the interest on his billions of dollars in debt, his lenders found themselves in an impossible position—if they demanded he make good on all the debt he had personally guaranteed, he would file for personal bankruptcy, and the financial institutions that doled out the cash to him would go under. Trump and his lenders were standing in a basement filled with gasoline, and if either lit a match, they would both burn to death. Trump did not ‘outsmart’ his banks, as he likes to say now. He and they had been so reckless that they had to save him to save themselves.”

Trump is correct in only one sense when he whines that critics lie when they say he has gone bankrupt. It is true that he has never filed for Chapter 13 under the personal bankruptcy code. But as just seen, that was only because his lenders were in too deeply themselves with him. Their solution to this dilemma was fourfold: 1) engage in debt-for-equity swaps; 2) force him to sell whatever marketable assets he had available (e.g., his yacht and his air-shuttle service); 3) put him on an allowance for “personal and household expenses” of roughly $450,000 a month (yes, a month; it’s beyond the imagination of many of the desperate people who would vote for him that they’d receive $450,000 a year, never mind a month); and 4) pray awfully hard.

Financial advisers must have persuaded Trump of the folly of personally guaranteeing loans that put him on the brink of personal bankruptcy in the early 1990s. He would never again come this close to sinking. Even so, Trump companies have filed for Chapter 11—i.e., declared business bankruptcy—four times, as recently as 2009. (See Kevin Williamson’s hilarious description in National Review of the circumstances surrounding these filings—as well as Trump’s weird circumlocution around the word “bankruptcy”: “putting a company into a chapter.”)

A brush with financial ruin did little if anything to curb Trump’s penchant for risk. In fact, it has led him to project his methods for escaping responsibility onto an entire nation. This spring, he shocked fiscal conservatives with this statement: “I would borrow, knowing that if the economy crashed, you could make a deal." 

The idea that investors would accept less on the dollar than what they are owed would destroy any notion of the U.S. as a good credit risk and tank the U.S. economy as surely as Trump Casinos. (Danielle Kurtzleben’s explanation on NPR of the implications of the GOP hopeful’s muddled thinking is as deadpan as it is devastating.)

The ‘King of Debt’ Lays Waste to the ‘Sam’s Club Republican’

What Tim Pawlenty called the “Sam’s Club Republican” tried to appeal to working-class and middle-class voters. Central to that constituency is the notion of a government that tries to live within its means, or pay-as-you-go.

For years, in opposing Democrats, the GOP created an image of itself as the party of fiscal restraint. That image even survived, though barely, two of the stiffest tests imaginable: Reagan’s massive military spending increases and the loss of blood and treasury during George W. Bush’s Iraq War. 

That image, though, can never prevail against the self-proclaimed “King of Debt,” a candidate who figured out how to game the system by using other people’s money to avoid personal bankruptcy. 

This magnate helped bring on the day of the locusts in which Atlantic City now finds itself by almost single-handedly flooding the market with more casino space than it could handle. His is not a vision of sustainable economic growth, but of one mad money-making scheme after another that, more times than not, doesn’t work out.

Do we really want him to apply the same methods to the federal government?

Fraud has been an allied Trump strategy in living as a deadbeat. He started by invariably spinning his projects as the best and biggest, then moved on to assuring creditors and partners that they’d get their money on time, and culminated in fleecing gullible and desperate students to invest their hard-earned money in Trump University, a travesty of an educational institution. Not even content with that, he diverted funds meant for charitable purposes in the Trump Foundation to legal expenses for his for-profit businesses and (but of course!) to buy paintings of himself, according to a report by David Fahrenthold of the Washington Post.

Besides defrauding, there is another “D” word that actively describes Trump’s potential impact as President: debasing. Many people—including the GOP establishment that has collaborated in his hostile takeover of the party—don’t seem overly concerned with how he is debasing political discourse, though they should.

But they should be petrified at how he could debase U.S. currency, because his fiscal policies would damage the economic strength that has made the U.S. powerful throughout the 20th century and into this one. 

Trump promises to run this country like his own business empire. That means insanely high risks, beyond his (or—God forbid if he wins—our) means, crushing debt burdens, and dependence on the patience of creditors. The prospect of this vainglorious private-sector plutocrat might please Sarah Palin, but it should terrify anyone else with a functioning intellect.

(Photo taken by Gage Skidmore of Donald Trump speaking with supporters at a campaign rally at the Prescott Valley Event Center in Prescott Valley, Arizona, Oct. 4, 2016.)

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