Monthly Archives: August 2016

PRESIDENTIAL DEBATES : TAX RETURNS & WALL STREET SPEECHES

It is a safe bet that some time before the November balloting, there will be several presidential debates, likely in the format of past debates. The questions will almost certainly cover the full ambit of domestic economics, foreign policy, security and the other usual suspects. There are two issues, lingering unresolved from the primaries, that will also be raised. Phrased pejoratively, they are:

  • What is Donald Trump hiding by refusing to disclose his tax returns as other candidates have been doing for decades?
  • What promises did Hillary Clinton make in her paid speeches to protect Wall Street from more aggressive government oversight and to resist new taxes on the extra-wealthy (familiarly known as the “one percent”)?

Let’s consider these one at a time. Trump first. Trump’s oft-repeated excuse for withholding his tax returns is that he is being audited and no one would ever disclose returns that are under audit.

This is pure hokum. The fact that an audit is underway has nothing to do with the reasons the public should know what is in the filed returns. First, and importantly, every individual who has reportable income must sign an oath at the end of the tax return that reads, in relevant part: “Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct and complete.” If it’s a joint return, the spouse must also sign the oath.

This means that, when submitted, the disclosed income fully accounts for reportable gross income as defined by the Internal Revenue Code and relevant regulations. While it is theoretically possible that an audit might reveal that too much income was reported, this would be a very unusual case, especially if the return were prepared, as surely Trump’s were, by a professional tax advisor/accountant/tax attorney. In any case, people who inadvertently report too much income would likely not be too worried about disclosing their generosity, no matter how misplaced.

On the other hand, if one had made much publicly of how wealthy he was and the under-oath return showed significantly less income, there would be a serious credibility question, among other things.

The other aspect of audits is, of course, that they examine whether the taxpayer has claimed inappropriate deductions, exemptions or exclusions. This is where the real fodder sits. No doubt Mr. Trump’s tax returns are very complex, given the multitude of companies, partnerships and other legal entities likely connected to his vast real estate holdings and other business ventures. No doubt he has aggressively sought to limit his tax liability, which is everyone’s right as long as avoidance does not slip into evasion.

Much about the way Trump does business would likely be revealed by disclosure of his tax returns. For example, the extent of his charitable contributions would be revealed.   Trump has crowed often about his generosity (despite questions that repeatedly arose about the lack of evidence that promised monies were actually paid) The returns would also likely show the extent to which his business expenses are incurred in off-shore business operations designed to reduce taxes paid in the United States (which may be lawful under the current tax system but would be relevant to his political claims made about how our economy can and should operate).

Even if the audit later revealed that all of the claimed deductions/exemptions/exclusions were entirely proper under current tax law, there is no reason to withhold the data until the auditors finish their work. Moreover, the tax code is complex, so it would not be surprising if adjustments were proposed by the auditors. This would not indicate, necessarily, any nefarious behavior on Trump’s part … but it might. Trump would, of course, benefit politically if his return were found 100 percent correct, just as he would be hurt if significant problems were uncovered. He appears to be more concerned about the risks of a bad audit than the rewards of a clean bill of health. This issue will definitely come up in the debates and we can only hope that the questioners have done their homework and don’t sit still for a repetition of the “audit excuse.”

Now, to be fair, we must also consider the question of Hillary Clinton’s paid speeches to firms on Wall Street following her service as Secretary of State. There seems little doubt that either Trump or the debate moderators will raise the issue of Clinton’s refusal to disclose the speech transcripts, assuming such exist.

Is it plausible to believe that Clinton, aware of the intense interest in everything she said and at least contemplating if not already decided to run for President, would make damning statements that, regardless of contractual assurances of privacy, would eventually leak out? Is it plausible to believe that since nothing has leaked out, nonetheless there is a vast conspiracy of silence at work here for which Clinton is “bound” to deliver reciprocal benefits to Wall Street if elected? It is possible, but it seems extremely unlikely that a political pro like Clinton would make anything reasonably resembling a reciprocal commitment to Wall Street when speaking to hundreds of people she didn’t know, any one of whom might be secretly recording the statements.

On the other hand, whatever she did say was not likely a “spit in your eye” to her paying hosts. Nor is there any reason to expect her to behave that way. Would any expressions of gratitude for the opportunity to speak be twisted and used against her politically? This would be a legitimate concern if, as is very likely, she was already determined to make a run for the presidency. Clever pundits on the right have already conjured up inventions of what she must have said, even though they have no hard information about what she did say.

We have seen a few scattered reports attributed to unidentified attendees at the Goldman Sachs speeches indicating that the speeches were coddling up to bankers. Since we don’t know the politics of these unidentified sources, and there are other interpretations from attendees indicating they heard nothing out of the ordinary (“It was one smart person talking to another smart person about global macroeconomics,” according to another unnamed source), there is simply no basis for speculation about the content of the speeches.

Some “observers” have argued that no one gets paid more than $200,000 to speak without an expectation of reciprocal pay-off down the road. Maybe, but there are plenty of reasons a firm like Goldman Sachs would want to bring a big-name speaker like Clinton before its audience. One is that it makes Goldman look more powerful to its audience of employees and investors – this is a common explanation for the high fees earned by “big name” speakers all the time. In other contexts, big fees are paid to big names to draw attendance to an event, for the simple reason that people are interested in seeing and hearing famous people, even those who, unlike Mrs. Clinton, have little of substance to say. A little research into the speaker marketplace will substantiate the argument that high fees are commonplace.

Clinton’s critics have not had much to say about one of her appearances as the keynote in connection with a 2014 Goldman Sachs 10,000 Women: Proving the Case for Women Entrepreneurs dinner. The criticism is, it appears, a one-way street.

All that said, this issue is not going away. One hopes Mrs. Clinton and her advisors are prepared to address it forthrightly when the time comes, as it certainly will. There is reason to hope that once disclosed, these speeches will contribute less to Mr. Trump’s campaign than the revelations of his tax returns will add to Clinton’s chances.

DING DING DING — LESSONS OF THE TRUMP-KAHN EPISODE: TRUMP OUT COLD IN FIRST ROUND

If the 2016 presidential race were a boxing match, Donald Trump would be spread-eagled on the canvas, blood running from his broken teeth … or wherever … having knocked himself out with a roundhouse punch to his own mouth in mid-screech. And his handlers would not be trying to revive him – they would be slinking out the side of the arena. Unfortunately, the race is not a sporting event but the real thing, a process intended to elect the political leader of the United States Government, the Commander-in-Chief of the U.S. military and the leader of the Free World.

The latest firestorm surrounding the presidential campaign of Donald Trump derives from Trump’s reaction to the appearance of Mr. Khizr Khan and his wife, Ghazala Kahn, at the Democratic National Convention. Mr. Kahn spoke about the death of their son, a Muslim who was a captain in the U.S. Army killed in combat in Iraq in 2004. He criticized Donald Trump and endorsed Hillary Clinton. Mr. Kahn’s brief statement can be read at http://abcnews.go.com/Politics/full-text-khizr-khans-speech-2016-democratic-national/story?id=41043609.

Trump implied that Mr. Kahn’s remarks were written by the Clinton campaign staff, implying that the grieving parents were stooges for Clinton saying what they were told to say. He also attacked Mrs. Kahn who said nothing at all on the DNC stage. Using a favorite meme of his, Trump said “plenty of people have said” that Mrs. Kahn wasn’t allowed to speak, a claim she later refuted. In response to Mr. Khan’s statement that Trump had sacrificed “nothing” and “no one,” Trump, when later directly asked about the sacrifices he claims to have made, said “I’ve made a lot of sacrifices,” citing the many people employed in his businesses and his claimed (but as yet not verified) contributions to veteran’s organizations.

This approach is a common Trump tactic: purporting to be reporting what other people have said while denying that he is adopting their statements as his own. This tactic reminds many of us of the old political semi-joke in which a politician repeats in every stump speech: “I will not be associated with the rumors being spread by others that my opponent is a communist sympathizer/wife beater/traitor/you name it.”

In his attack on the Kahns, Trump saw no inconsistency in having Patricia Smith, aggrieved mother of a victim of the Benghazi attack, appear at the Republican National Convention and directly blame Hillary Clinton for the death of her son while calling for Clinton’s imprisonment. Nor did Trump see inconsistency in having two members of the so-called Benghazi Annex Security Team accuse the State Department security agents of abandoning the Security Team to their own defense, using words like “ass” and “tampon” for what they thought was humorous effect, and claiming that the four men killed would have survived but for Hillary Clinton who somehow had left Americans behind to die. Their co-sourcing of the book “13 hours” was, of course, mentioned at the outset. One wonders if Trump is getting a cut of the book and movie royalties. I’m not saying he is, but others may be asking the same question.

More seriously, Trump’s response to the Kahn appearance raises several important questions. While Trump is, of course, as free as any politician to push back against people who challenge his candidacy, there is the matter of what is revealed by his decision to attack the authenticity of the parents of a Bronze Star-awarded American soldier who died trying to protect the men under his command. One would expect a presidential candidate, knowing the issue of Mr. Kahn’s statements would come up again, would consult with key family and campaign advisors, in this case Melania and Ivanka Trump and his campaign managers, regarding the appropriate response.

If Trump did consult them and they agreed that attacking the Kahns was a smart approach, this would be strong evidence that Trump’s instant retaliation against all critics is now official policy of the Trump campaign with full buy-in from his core team. And that they are rank amateurs.

If, on the other hand, Trump did not consult his campaign leadership team, or did and chose to ignore their advice, then we have raised again the gravest concerns about Trump’s temperament and personal discipline in the face of even minor adversity. Really, how much harm to Trump’s ambitions would the Kahns have been if Trump had simply ignored them? Compare Ms. Clinton’s reaction to the personally insulting accusations that she essentially murdered Ms. Smith’s son. Trump is more like a school-yard bully who can tolerate no challenge to his standing, no matter how trivial. His striking out at everyone he sees as an adversary seems to be automatic and uncontrollable. Any doubts that this is the one and true Trump should by now have been laid to rest. Some of us are reminded of Richard Nixon.

CNN reported that Trump “has again put leaders of his own party in a no win position …. Once again they have been forced to choose between rebuking a nominee who destroyed the most talented GOP primary field in a generation and won the votes of millions of Republicans they need to show up in November or of tarnishing their own political brands. That’s why, when House Speaker Paul Ryan and Senate Majority leader Mitch McConnell issued statements on Sunday, they implicitly condemned Trump’s comments but did not mention their nominee by name.”  http://www.cnn.com/2016/08/01/politics/donald-trump-khizr-khan-ukraine/index.html?eref=mrss_igoogle_cnn

What does this mean — the repeated unwillingness of top Republican leadership to reject Trump’s out-of-control approach to politics? This repeated equivocation in the face of Trump’s attacks suggests that Republican leadership is prepared to endure any offense to the common weal in order to protect their political flank. If, as some data suggests, Trump’s seat-of-the-pants flying-blind behavior is not eroding his support among the Republican far-right, Republican leadership may yet be banking on salvaging enough Congressional seats, and possibly even the presidency itself, regardless of the damage to the nation’s economy, culture and international standing. This is cynicism and “party above country” in its purest and most egregious form.

John McCain, previously the target of a Trump attack on his heroism due to his having been captured in Vietnam, could not find coherence in his response, try though he did: “In recent days, Donald Trump disparaged a fallen soldier’s parents. He has suggested that the likes of their son should not be allowed in the United States — to say nothing of entering its service,” McCain wrote. “I cannot emphasize enough how deeply I disagree with Mr. Trump’s statement. I hope Americans understand that the remarks do not represent the views of our Republican Party, its officers, or candidates.”

Err…Senator McCain, Donald Trump is a Republican Party candidate. Top of the ticket. You cannot have it both ways, saying that Trump is wrong and that, simultaneously, his statements do not represent the views of the party that nominated him. The Republican Party that you refer to as “our” is in reality “his” and most of the leaders of that party are placing the party and their perceived self-interest above that of the country when they refuse to repudiate him and wash their hands of his campaign.

The Chair of the Republican National Committee, Reince Preibus, said: “We don’t go there, and I don’t go there. Donald Trump is going to speak for Donald Trump. I mean, he wants to defend himself, and it’s understandable. But look, like I said before, this is a family that is grieving and they have a right to and we have an obligation to honor them and to love them and to cherish them. That’s where I come from; that’s where our party comes from.”

That is in fact not where the Republican Party is coming from. It nominated Trump quite handily and joyfully and must now accept the consequences of what it has done. No amount of sidestepping can escape the problem that Trump’s personality, well known and fully on display throughout the primaries, has created.

No doubt inspired by the adverse coverage of his doubled-down attack on the Kahns, Trump also lashed out at CNN, claiming that it was slanting the news in favor of Hillary Clinton. This is ironic in light of the near-constant CNN coverage of Trump’s every word and move throughout the primaries. Again, shades of Richard Nixon’s enemies lists.

Attacking the media has never been considered a smart political strategy, but Trump has defied most of the “rules” of politics and gotten away with it so far. No doubt this time he was angry that Fareed Zakaria, host of a CNN news analysis show, derided Trump for saying Russian President Vladimir Putin “is not going into Ukraine, you can mark it down,” when Russia has been in the Crimea since 2014. Trump later claimed that he really meant Russia would not try to move on Ukraine if he became president. Another gaffe demonstrating how little Trump, who says he has never had time for books, actually knows about the international political scene.

The bigger question, of course, is whether any of Trump’s gaffes actually hurt him with his supporters. Much press commentary suggests that the attack on the Kahns may have been a bridge too far, while attacks on the media will continue to charm his political base. It’s too early to tell, but for anyone seriously and rationally thinking about the qualities needed in the person who is President of the United States, Trump’s performance in the Kahn episode should be causing sleepless nights.