Experts: Security Concern in Trump Debt09/29 06:16
WASHINGTON (AP) -- Revelations that President Donald Trump is personally
liable for more than $400 million in debt are casting a shadow that ethics
experts say raises national security concerns he could be manipulated to sway
U.S. policy by organizations or individuals he's indebted to.
New scrutiny of Trump, who claims great success as a private businessman,
comes after The New York Times reported that tax records show he is personally
carrying a staggering amount of debt --- including more than $300 million in
loans that will come due in the next four years.
Sen. Elizabeth Warren, D-Mass., was blunt about the potential implications.
"He may be vulnerable to financial blackmail from a hostile foreign power and
God knows what else," said Warren, a frequent Trump critic.
The Times said the tax records also show that Trump did not pay any federal
income taxes in 11 years between 2000 and 2018, raising questions about the
fairness of a president --- who purports to be a billionaire --- paying less in
taxes than most Americans.
The politically damaging revelations about Trump's tax avoidance, however,
are perhaps less concerning than word the president is holding hundreds of
millions of dollars of soon-to-mature debt, ethics experts said.
"Americans should be concerned about the president's debt because it's a
national security risk for our country," said Donald Sherman, deputy director
of the nonprofit government watchdog group Citizens for Responsibility and
Ethics in Washington (CREW). "This is information that the president has
aggressively and repeatedly tried to keep away from the public."
Trump, citing an ongoing Internal Revenue Service audit, has refused to
follow the post-Watergate precedent set by other presidents of releasing his
tax returns, so the complexities of his financial interests and whom he does
business with have remained opaque. He's fighting ongoing court battles with
New York's attorney general, Manhattan's district attorney and two House
committees who want the records.
Richard Painter, who served as chief ethics attorney in Republican George W.
Bush's White House, also noted that Trump-owned companies have declared
bankruptcy six times, raising the question: Why have lenders been willing to
keep risking loans of such enormous amounts?
"Why would banks assume the risk on these loans?" Painter said. "Or did
someone else quietly assume risk of that loan for the bank to make it happen?"
Trump, according to his latest financial disclosure statement, reported that
he had 14 loans on 12 properties.
One lender, Germany-based Deutsche Bank, continued to do business with Trump
even after he defaulted in 2008 on a loan for his Chicago hotel and condo
development. Trump filed suit against the bank and others whom he blamed for
his inability to repay.
But Deutsche Bank's private banking division continued to lend to Trump,
including $125 million to finance the purchase and renovation of his Doral golf
resort in 2012, according to previous disclosures.
Trump on Monday suggested that his debt load is hardly unusual in comparison
with his assets, claiming in a tweet that he's in fact "extremely under
"I have very little debt compared to the value of assets," he wrote, adding
that he may release a financial statement that spells out all assets,
properties and debts.
Trump during an appearance Monday ignored a reporter's question about when
he might release such a statement, and the White House would not comment on
when he might follow through. He said repeatedly before his election that he
would release his actual taxes, but he never has.
Kathleen Clark, a government ethics expert at Washington University in St.
Louis, said that a separate financial statement from Trump would shed little
light on his business dealings if he does not disclose who his business
partners are in his various holdings.
"The Trump Organization consists of hundreds of LLCs (limited liability
corporations) that have been listed on his financial disclosure forms," Clark
said. "One of the things that Trump has benefitted from and that oligarchs and
money launderers benefit from is opaqueness of LLCs, ... the ease of which
individuals can hide their assets, can hide their financial interests."
Trump refused to divest his business interests after his 2016 victory, and
left day-to-day operation of his family's real estate and other holdings to his
sons Donald Jr. and Eric. Still, the president has benefitted personally from
U.S. and foreign government activity at his properties since his election and
hasn't shied away from promoting his hotels and golf courses.
Republicans have held at least 88 political events at his properties, the
president has visited his hotels and golf courses more than 500 times, and at
least 13 foreign governments have held events at Trump establishments,
according to a tally by CREW.
The administration drew criticism last year when Vice President Mike Pence,
while visiting Dublin for meetings, lodged at Trump International Golf Links
and Hotel more than 180 miles away in Doonbeg, Ireland. And Trump scrapped a
plan to hold a meeting of the Group of 7 world leaders at one of his Florida
properties last year after bipartisan criticism.
In the runup to his 2016 election victory, Trump played down his
bankruptcies as a smart business strategy and even referred to himself as the
"king of debt."
"I've always loved debt, I must be honest with you," Trump said during a
campaign rally. "I don't love it for countries, but I love it individually. If
things work out good that's great, if they don't, you go renegotiate."
The New York Times, citing the tax records it obtained, also revealed that
Trump did not pay federal income tax in 11 of 18 years, and just $750 each year
for 2017 and 2018, as he claimed millions of dollars in business losses.
Top Democratic lawmakers on Monday called Trump's tax avoidance galling, but
seized on his debt as perhaps more concerning.
House Speaker Nancy Pelosi said on MSNBC that "our responsibility is to
protect and defend and we have to make sure we know what exposure the president
of the United States has, and what an impact it has on national security
decisions for our country."
Painter said that if Trump were attempting to appoint someone with his
massive debt load to a high-profile government position, the nominee would
almost certainly face trouble getting a security clearance. Indeed, inability
or unwillingness to satisfy debts and a history of not meeting financial
obligations could disqualify any federal employee from receiving a security
clearance, according to government guidelines.
Peter Schweizer, the president of the Government Accountability Institute,
said: "The question is also one of whether the loans are tied to actual assets
such as buildings, etc., or was the political figure granted special favors in
getting loans. Politicians and their families can engage in commercial
transactions, the question is whether the loans are unusual and unique compared
to others in the marketplace."
Trump is hardly the first president to contend with debt, either in office
or later in life.
Thomas Jefferson, whose peak net worth in current dollars reached $236.8
million according to research by 24/7 Wall Street, died in debt. The debt was
accrued during and after his presidency --- as well as by relatives --- and his
family sold dozens of enslaved people from his Monticello estate to satisfy his
On the other hand, Barack Obama, in his second term, encouraged American
homeowners to refinance their mortgages as rates dropped well below what he was
paying, but he said he and his wife were holding off.
"When you're president, you have to be a little careful about these
transactions, so we haven't refinanced," Obama explained at the time.