Trump’s campaign is bankruptcy protection

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It pays in US politics to follow the money. In Donald Trump’s case, the money is flowing away from him in the form of various fines and damages — roughly $530mn worth in the past month. The settlements are not high enough to trigger Trump’s bankruptcy. His net worth is around $2.6bn. But they will swallow his cash balance and severely restrict the Trump Organization’s ability to operate. He faces a three-year ban on taking out loans in New York, which is where he leveraged his name in the first place.

The obvious cure for Trump’s business woes is to recapture the White House. Unlike any federal convictions that Trump might suffer between now and election day, it is clear he would have no power as president to pardon himself for his spate of civil losses. But another term would give him great scope to replenish the family coffers in other ways. The world is mostly focused on whether Trump would pull America out of Nato, abandon Ukraine and start new trade wars. Trump’s domestic opponents, meanwhile, are preoccupied with the threat he would pose to America’s constitutional order.

All of these spectres are real; most are highly probable. What is guaranteed, however, is that Trump would go for the money. Shortly before he was inaugurated as president in January 2017, Trump doubled his Mar-a-Lago membership fees to $200,000. In his first two years in office, Trump hotels took about $7.8mn in business from foreign governments, chiefly Saudi Arabia, China, Qatar, Kuwait and India. During Trump’s presidency, China fast-tracked numerous trademarks for his daughter Ivanka Trump’s companies. Soon after leaving office, her husband, Jared Kushner, received a $2bn investment from Saudi Arabia’s sovereign wealth fund. That is without mentioning the various licensing deals that Eric and Donald Jr — Trump’s sons, who ran the business while he was president — picked up overseas. It was about as far from a blind trust as you get. 

In theory, it is illegal to give the US president gifts. Short of a direct cash bribe, however, such emoluments are hard to prove in court. The Supreme Court threw out petitions to hear Trump’s conflicts of interest in 2021, saying they were no longer relevant because he had left office. Since then, Trump has diverted roughly $50mn in campaign donations to pay his legal bills. If the Federal Election Commission had teeth and clearer rules, such misdirection would not have been allowed. As Trump keeps reminding his base, however, rules are for chumps. The only realistic block to Trump monetising the presidency is the US electorate. 

Given that Trump’s net worth could shrink, the opportunities to influence his decisions would be great. It is no accident that his so-called Muslim ban in the opening days of his presidency excluded wealthy Gulf countries. It should have been called the “poor Muslim countries ban”. His first overseas trip as president was to Saudi Arabia. The Saudis were the second most lucrative occupants of Trump Towers in New York and his Washington hotel in his first two years. China was first. Unless he wins on appeal, Trump is now banned from borrowing from New York-chartered banks until 2027. This sharply raises the leverage of potential lenders in the Gulf and elsewhere. The Trump Organization cannot function without debt. 

The day after last week’s New York court ruling, Trump launched a new line of $399 “Never Surrender High-Top” sneakers. The new Trump merchandise is gold with a large T inscribed on the side. Since they come in a limited edition of just 1,000 pairs, Trump will clearly not dent much of his damages with sneaker sales — though some buyers paid as much as $9,000 a pair. Nor is his $99 “Victory47” Trump perfume likely to provide big bucks. But that is to miss the point. Trump’s campaign is inseparable from his merchandise business. The same would be a hundred times truer of his presidency and his party. Last week he proposed that his daughter-in-law, Lara Trump, be the next co-chair of the Republican National Committee.

It is often said that Trump’s biggest incentive to win in November is to keep himself out of prison. In fact, the law would permit him to campaign and win from jail at which point he would presumably try to liberate himself. Less understood is the boost that another term would give to Trump’s solvency. Last week’s huge fine was based on his defrauding of lenders by hugely inflating his assets. Where the Trump Building on Wall Street had 63 floors, for example, his officers claimed it had 72. Having failed to do their due diligence, his creditors deserve whatever losses came their way. The same would apply to the American electorate if it voted Trump back into office.

edward.luce@ft.com

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