President Trump is in debt to the tune of hundreds of millions of dollars. Those debts are soon coming due. For years, he paid no federal income taxes. In 2016 and 2017, he paid just $750 a year. Those are some of the bombshells reported by the New York Times, which obtained years’ worth of tax returns.
The losses from his real estate businesses, like golf courses and hotels, wipe out the income he’s earned from “The Apprentice” and from licensing his name. And it may be a big reason why he ran for president four years ago — as a way to make money and get out of debt. It also raises questions about whether he’s using the presidency now for his personal financial gain.
KCRW speaks with Dan Alexander, reporter at Forbes and author of the new book “White House, Inc.: How Donald Trump Turned the Presidency into a Business.”
KCRW: You've been poring over Trump’s finances since way before he became president. So when you're looking at the New York Times story, a lot of it probably looks familiar to you. But what stood out to you in terms of what came from the actual tax return data?
Dan Alexander: “The surprising thing is that when you get the documents, you can see the sort of wizardry that he and his accountants and team used in trying to take what is a business that actually does turn out large operating profits — and make it look to the IRS like this is not a profitable business at all, and in fact, many years is just hemorrhaging money.
And that takes a certain level of creativity, but also aggressiveness and comfort with the fact that you might have to battle it out with the federal government, which of course now Donald Trump is in the position of leading.”
Trump frequently said that he can't release his tax returns because he's under audit. Now this report shows us exactly what the IRS is auditing him for, right? He apparently received a $72.9 million refund in 2009.
“Right. … The Times wasn't certain what deal it was that sparked this. But they sort of made a guess that it might have been related to the bankruptcies at his Atlantic City casinos. He finally gets out of Atlantic City in 2009, and there seems to be an enormous loss at that point that he then is able to use in later years. And the question is whether he basically is allowed to use that entire loss or whether he's only allowed to use $3,000 a year. So that, again, it's not locked in. We don't know for sure that that was the deal. But certainly, anytime that you want to take a loss like that, obviously, the implications are huge for you. They're also huge for the government.
But now, Trump is in a position with this potential $100 million penalty hanging over his head. And we estimate that he only has $169 million in cash. If he were to suddenly take a $100 million hit, that would be a substantial blow to him personally, and it would really complicate his business.”
He owes $72.9 million, and he would have to pay it back plus interest? Is that how you’re getting the $100 million figure?
“Exactly.”
He has only $169 million in cash on hand?
Yeah, we estimate only 160 flat. … People were talking just a few weeks ago about how oh, he might want to put $100 million into his campaign. Well, when you look at the math here, that just doesn't add up. How are you going to put $100 million in your campaign, if you only have an estimated $160 million, knowing that at any minute, you could get clobbered over the head with a $100 million penalty? So it really stretches him in ways that we didn't know that he was stretched.
And this is exactly the sort of thing that people were curious about with his tax returns, if we would get a better sense of where his pressure points are, and where he might be vulnerable, and in turn where the country might be vulnerable.”
Could he take out a loan to pay that back?
“Yes, he absolutely could. He could take out a loan. He could also sell property. Obviously right now it's not a great time to be selling real estate assets just because the coronavirus deflated the value of almost everything except for technology companies, which he's not in. So it would be difficult for him to sell at a price that he could stomach.
But certainly he could take out additional leverage. And in fact, his two most valuable properties are 555 California Street and 1290 Avenue of the Americas. He has a 30% stake in each of them, which he shares with Vornado, which is a large publicly traded real estate firm. And Vornado, a couple of quarters ago said that they were open to either selling those properties or refinancing. And of course, if you do a refinance, you can take out a large amount of cash. And his balance sheet isn't that bad. I mean, we estimate that he's got $3.7 billion in assets, and $1.1 billion in liabilities.
Now if you are running a technology firm, that would be very highly leveraged. But keep in mind that for a lot of real estate developers, having 50% leverage on a portfolio is fairly typical, and Trump is under that.”
The two properties that he co owns with Vornado — one is based in New York City and the other is in San Francisco. You reported on that property, where you took out a workspace to find out who was renting this property. And you found out that Qatar was renting some space there.
“That's right. And not only that, but when I got up and looked at the office, I had spoken to somebody in the building who had told me that he had never seen anybody go in or out of the office since it was under construction, which seemed very suspicious. Because of course, you have a foreign government that's built out its space after Trump takes office. And it's a small space. So it doesn't seem like an amount of money that would influence Trump, or somebody who's wealthy as Trump. But of course, Trump is sort of a one of a kind billionaire.
And so when I get up there, I wasn't sure if it actually existed and all of that. And I walk off of the elevator, and none of the cushions look like they've been moved. I mean, the place looks like it had never been touched. And on the counter of the welcome desk was, I think it was an orchid that was as brown as sand. That thing look [sic] like it had been dead for months. So I saw that and you start sort of connecting the dots.”
Has Trump changed the United States’ policy towards Qatar since Qatar became a tenant in one of the buildings he co-owns?
“Yes, and in a very dramatic way. One of the first things that he did when he was coming into office is he’d take his trip to Saudi Arabia, and he's with a bunch of the leaders over there. And Saudi Arabia, of course, is an ally and so is Qatar with the United States. But they don't get along between each other. Saudi Arabia accuses Qatar of financing terrorists all the time. And Qatar, of course, says no, we're not doing that.
And so Trump goes over there. And basically, he buys what the Saudis tell him. And he comes back, and is at the White House. And he says, ‘You know, we got to shake things up.’ And unfortunately, Qatar has historically been a funder of terrorism. And so people are sort of like, ‘Wait a second, you're saying that a U.S. ally is a funder of terrorism.’ And Trump sticks to it. And then there are some other things that happen. And so it's not definitely that this office lease changed it.
But the Qataris … do lease out this empty office space. And after that, Trump invites the leader of Qatar back to the United States. They're sitting in the Oval Office. And he says to him the exact opposite thing that he had been saying before this lease. And he says, I’m really proud that you guys have been fighting against terrorism [unintelligble]. And the Emir of Qatar is sitting there, and he's sort of, it's like, ‘I just want to make one thing clear, we were never funding terrorists.’ And Trump just sort of nods his head.
And he comes back about a year later. And this time, Trump really rolls out the red carpet for him. They have a dinner. And Steve Mnuchin stands up and he says, ‘This room is a great tribute to the economic and security partnership between our two countries.’ And Trump stands up to give a toast as well. And he's addressing the Qataris who, of course, he had been criticizing so strongly just a couple years before. And he says, ‘You know, I just really want to tell you how much we appreciate your investments in the United States.’”
— Written by Amy Ta, produced by Nihar Patel