Is there an inside trader inside the White House?
Monday, May 20, 2019
How many people have the ability to manipulate the stock market? One, and this isn’t a trick question. We’re watching how President Trump’s statements about slapping tariffs on China one day, or the great headway he’s making on a China trade deal the next day can tank the stock market or send it soaring.
The fluctuations he has set into motion over the last week raise a legitimate question. Who benefits from these gyrations? Could Trump and/or his family and friends be making money from these wild swings he sets in motion with words?
In 2018, Republican Rep. Chris Collins of New York was caught using a cell phone while attending a picnic on the White House lawn to convey inside information to his son about a drug trial that had failed. The early warning allowed Collins and his family to avoid hundreds of thousands of dollars in losses.
Collins was indicted along with his son and the father of his son’s fiancée, yet still managed to narrowly win reelection to his House seat in upstate New York.
With any other president, we would not be so cheeky as to insinuate that the leader of the free world would use his position to personally benefit himself and those in his orbit. But with Trump, it’s plausible.
It’s plausible because he has insulated himself against the normal routes of inquiry, refusing access to his tax returns and financial statements, and maintaining a connection through two adult sons to his business empire.
We know Trump is singularly focused on winning and making money and getting rich, even as some of his companies claimed bankruptcy multiple times and registered an eye-popping $1.2 billion in business losses between 1985 and 1992, according to tax returns reported by The New York Times.
He boasted to his friends who are members of his Mar-a-Lago resort, “You all just got a lot richer,” after he signed the GOP tax cut in December 2017.
Trump has long championed tariffs, which he portrays as a fine paid by a foreign exporter directly into the U.S. Treasury. That is not how tariffs work. The cost is borne are by the consumers who purchase the products.
To compensate for the losses experienced by farmers in the Midwest who are losing China as a market for their soybeans, Trump wants an additional $15 billion in addition to the $12 billion he sought at the outset of the trade war he started last year. It is not enough, and Trump-supporting farmers are rebelling.
Meanwhile, the president fiddles. The way it works, he talks tough, the markets tank, and those in the know – possibly including Trump and friends – sell short. Shorting occurs when brokerage firms holding stock, lend it out to short sellers until at some point those sellers eventually cover their shorts by buying what they sold. Cole Porter had a memorable line in a song referring to America’s worst stock market crash: “In 1929 I sold short.” Who is the “I” today?
Shorting a stock is perfectly legal as long as the seller is acting on public knowledge. What Rep. Collins did, putting the information out to his son, is insider trading and it is illegal.
There is no evidence that Trump is doing that, but he has set up the mechanism by which he can convey instructions in plain sight because his tax returns and financial statements and business dealings are under wraps.
No previous president has gotten away with such obfuscation. The Emoluments clause in Article 1 of the Constitution bans the acceptance of any “present, Emolument, Office, or Title, of any kind whatsoever, from any King, Prince, or foreign state.”
Ask yourself what the Founding Fathers would make of another example of Trump’s mixing of government and business: the Trump Hotel just blocks from the White House. Favored by foreign dignitaries seeking access, it is a prime example of what the Founders sought to avoid: a president or government official making money through the sacred trust of an office held for the public’s benefit.
Washington Merry-Go-Round, the nation’s longest running-column, presents today’s events in historical perspective. Douglas Cohn and Eleanor Clift are veteran commentators.