WASHINGTON — There’s a good rule of thumb for thinking about President Trump’s personal finances: It’s not what he owns; it’s what he owes.
The New York Times’ explosive new investigation into Trump’s history of tax avoidance and IRS battles not only reveals that Trump paid a measly $750 in federal income taxes in 2016 and 2017. The Times‘ bombshell — the first in a new series of stories scrutinizing tax records that Trump himself has refused to disclose — also underscores how indebted Trump is personally, and how those debts would come due in the second term of a Trump presidency, posing a grave conflict of interest and a national-security threat.
The Times reported that Trump is personally responsible for loans and other debts of $421 million, much of which comes due in the next four years. If Trump wins reelection but cannot make his loan payments, his lenders will have to decide whether they want to mount a legal battle against the sitting president to recoup their funds.
Four years ago, Trump was the first presidential candidate in decades to not release his tax returns, denying voters the opportunity to take into account his byzantine and conflict-ridden business holdings before they cast their ballots. His refusal to do so was one of many long-standing democratic norms that Trump obliterated on his way to the presidency, and it has prompted demands by elected officials to codify such disclosures in future elections.
The public has had a partial view of Trump’s liabilities from the day he took office due to personal-financial disclosure reports he filed with the Office of Government Ethics. We know, for instance, that he entered office as the most indebted commander-in-chief in modern times and owed Deutsche Bank alone more than $300 million. But as University of Texas School of Law professor Steve Vladeck says, other existing loans of the president’s are obscured behind generically named limited liability corporations, and it is far from clear how Trump plans to repay some of these loans given his propensity to overstate his assets.
But Vladeck, an expert in national-security law, says there’s a larger problem here. “More fundamentally, there’s the concern that a president who is personally on the hook for significant loans that come due while he’s the president might take official actions, or appear to take official actions, that are meant to alleviate the personal financial pressure he faces,” Vladeck tells Rolling Stone. “Indeed, there’s a reason why the federal government generally won’t give security clearances to those who have significant debt — it’s because they’re too much of a risk. So, too, apparently, is the President of the United States.”
Based on publicly available documents, Trump’s overall debt is almost certainly higher than the $421 million in personal obligations reported by the Times. Mother Jones reported this summer that Trump’s debts added up to roughly $500 million, with Deutsche Bank remaining by far the largest creditor having extended Trump huge amounts of money for his Washington luxury hotel and his Doral golf resort in Florida. By the end of 2018, the balances on those major loans had not been paid down, according to the Times and Trump’s own financial disclosures.
And as the new New York Times investigation makes clear, Trump’s constellation of hotels, resorts, and other properties have struggled in recent years, putting him in a difficult financial position just as his debts come due. His main businesses reported losses of more than $100 million in the early 2010s. He took out a $100 million mortgage on commercial space in Trump Tower, his flagship property, in 2012, and cashed out $316 million in stocks, bonds, and a real estate partnership account between 2012 and 2016, the Times reported. Still, by 2018, the Trump Organization’s cash on hand of $34.7 million was 40 percent less than in 2013.
Putting further strain on Trump’s finances, the Times writes, is an unresolved IRS audit of a $72.9 million tax refund he claimed and received in 2010. If the IRS rules against him, it could cost him an estimated $100 million.
Trump on Sunday evening responded to questions about the Times‘ investigation by calling it “totally fake news” and insisting he pays “a lot” in state and federal taxes. He could, of course, set the record straight about what he has paid in federal income taxes in the past decade by releasing his tax return information to the public. He has yet to do so.
Tim O’Brien, a columnist at Bloomberg News and one of the few journalists to view Trump’s tax returns as part of a defamation suit Trump filed against him, points out why Trump’s hundreds of millions in debt, and the timing of those debts, poses a unique threat:
If Trump was still just a reality TV oddity, that wouldn’t be earthshaking. But he’s president, and the trade-offs someone like him would be willing to make to save his face and his wallet taint every public policy decision he makes — including issues around national security. If Vladimir Putin, for example, can backchannel a loan or a handout to the president, how hard is Trump going to be on Russia? Not that we should worry about Trump’s relationship with Putin. That’s just a hypothetical question.
One solution to this unprecedented situation — a president deep in debt to creditors known and unknown — would be stronger transparency laws for federal officials when it comes to business loans, says Kathleen Clark, a professor at the Washington University in St. Louis School of Law. Clark notes that the Office of Government Ethics does not require federal officials to disclose their business loans, so Trump has not fully disclosed how much money he owes, and to whom he owes it.
“The [New York Times] journalists deserve kudos for their investigation,” Clark says. “But the American people should not have to rely on leaks to investigative reporters to learn basic information about a president’s finances