Trump’s Crony Capitalists Plot a New Heist

The Treasury secretary floats a plan to hand $100 billion in capital gains tax savings to his moneyed friends. It’s almost certainly illegal. 

By The Editorial Board

It seems that last year’s $1.5 trillion tax-cut package, despite heavily favoring affluent investors and corporate titans over workers of modest means, was insufficiently generous to the wealthy to satisfy certain members of the Trump administration. So now Treasury Secretary Steven Mnuchin offers an exciting plan to award an additional $100 billion tax cut to the richest Americans. 

Specifically, Mr. Mnuchin has directed his department to explore allowing investors to take inflation into account when calculating their capital gains tax bill. (Instead of determining how much value a stock had gained by subtracting its selling price from its original purchase price, investors would first adjust the purchase price to reflect what it would be in inflation-adjusted dollars.) Fans of the move argue that it would benefit the wide swath of middle-class Americans who own stocks, along with all those older Americans whose homes have appreciated in value over the decades. And, indeed, many middle-class Americans could wind up with a sliver of savings. But not all investors are equal. 

Independent analyses say that a whopping 97 percent of the savings from Mr. Mnuchin’s plan would go to the highest 10 percent of income earners. (For the severely math challenged, that would leave a paltry 3 percent to be divvied up by the remaining 90 percent of the country.) Two-thirds of all savings would go to the top 0.1 percent of income earners.

 

So in rough dollar terms, the administration is looking to hand $66 billion-plus to the ultrarich like — just to name a few — Mr. Mnuchin, who did very, very well during his years at Goldman Sachs (and already has a net worth estimated at $252 million); Wilbur Ross, the loaded secretary of commerce (estimated net worth: $506.5 million); Betsy DeVos, the even richer secretary of education (about $1.1 billion); and, of course, the extended Trump-Kushner clan. (To be sure, Ivanka Trump could use a financial pick-me-up to help take the sting out of having to close down her clothing brand.)

Thus die the final vestiges of this president’s pretty little narrative about being a populist hero. 

Hard-core economic conservatives and anti-tax activists have long pushed to index capital gains taxes for inflation under the dubious argument that it would bolster the overall economy. Unsurprisingly, this crusade has failed to catch fire in Congress, where even anti-tax lawmakers can be skittish about so blatantly playing to the plutocrats.

But here’s where Mr. Mnuchin’s plan is so politically inspired. He hopes to cut Congress out of this deal altogether by declaring it a regulatory matter and allowing Treasury to unilaterally redefine the term “cost.” No need to subject this process to the messiness of the legislative process when it is so much more efficient to claim jurisdiction for oneself and change the meaning of words to suit one’s purpose. Behold Trumpian logic at its purest. 

One potential sticking point is that Mr. Mnuchin’s proposal may not be, strictly speaking, legal. Congress has never authorized the Treasury Department to interpret tax law in the bizarre way the secretary is advocating. And the last time such a possibility was floated, in 1992, President George Bush’s Justice Department shot it down with extreme prejudice. The department’s Office of Legal Counsel went so far as to issue a 23-page opinion laying out in excruciating detail why the Treasury Department does not have the legal authority to index capital gains for inflation by means of regulation. 

So there’s that.

But the Trump administration isn’t one to fret about legal niceties when pursuing its pet projects. It much prefers to plow forward and let the court challenges shake out as they will. You win some. (Think travel ban, eventually, after multiple revisions.) You lose some. (Snatching migrant kids from their families at the border.) But as the adage goes, it’s easier to ask for forgiveness than permission. 

Mr. Mnuchin may well figure that the risk is worth the potential gain for himself, his wealthy friends and, more broadly, members of the Republican Party’s donor class who might very well show their gratitude by channeling some of their tax savings into party coffers. Besides, a case like this could take a while to wend its way through the courts, and who knows how many millions could be saved in the meantime. 

Beyond pure greed and a desire to suck up to the 0.1 percent, it’s hard to see any real-world logic behind this move. As political messaging goes, it seems flat-out bonkers to position Republicans as the party of the superrich — especially during a critical midterm election campaign with control of both houses of Congress on the line.

But at this point, President Trump may have decided that it doesn’t much matter what economic policies he pursues so long as he can keep the base distracted and fired up with his relentless culture warring. (Build the wall! Lock her up! Gorsuch! Kavanaugh! Stand for the anthem or be fired!) In early 2016, candidate Trump famously boasted that he “could stand in the middle of Fifth Avenue and shoot somebody” and not lose any voters. Since becoming president, he has been given little cause by his base — or by Republicans in Congress — to doubt his political infallibility. As such, with Mr. Mnuchin’s proposal, as with so many other moves undertaken by this administration, Mr. Trump’s thinking may boil down to little more than, “Why the heck not?” 

This may strike some as a depressingly cynical reading of what is being proposed. What, you thought their motives were pure?

Trump Cabinet’s Bible Study Minister Justifies Child Separation as Consequence of Immigrants’ “Illegal Behavior”

By Lee Fang

Amid increasing scrutiny of President Donald Trump’s hard-line immigration policies, criticisms have been lodged against the policy of family separation at the border by, among others, members of his own party and otherwise stalwart Christian right allies of the GOP. One Christian ally of the White House, though, came out swinging in favor of taking children away from their parents: Capitol Ministries.

Ralph Drollinger, the head of the private Christian group, which leads Bible study sessions for Republican lawmakers and senior members of Trump’s Cabinet, led the charge to defend the administration even as photos and stories emerge showing children crowded into cages and snatched from their mothers.

“No one, especially my personal friend, the kind-hearted Attorney General Jeff Sessions, desires that a mother or father be separated from their children,” wrote Drollinger, in a message to supporters on Friday. But, the Capitol Ministries leader said, there are “three classifications of people in every country, as was true in ancient Israel in the Old Testament.” In Drollinger’s interpretation, there are citizens, legal immigrants, and foreigners — the latter were known as being “illegal,” he said — and the Bible only forbids family separation for citizens and legal immigrants.

“It follows that when someone breaks the law of the land that they should anticipate that one of the consequences of their illegal behavior will be separation from their children,” Drollinger wrote. “Such is the case with thieves or murderers who are arrested and put in jail.”

Sessions attracted controversy after citing a Bible verse to defend the administration’s “zero-tolerance” border enforcement strategy. “I would cite you to the Apostle Paul and his clear and wise command in Romans 13, to obey the laws of the government because God has ordained the government for his purposes,” the attorney general declared during a speech in Fort Wayne, Indiana, last Thursday.

Despite the support from a right-wing Christian group that’s especially close to the administration, other conservative Christians are pressuring the Trump administration to change its practices. Earlier this month, a group of evangelical pastors signed a letter harshly condemning the child separation policy. “The traumatic effects of this separation on these young children, which could be devastating and long lasting, are of utmost concern,” stated the letter, which was signed by the Rev. Samuel Rodriguez, who gave an opening prayer at Trump’s inauguration and is reportedly close to the president, among other evangelical leaders.

Drollinger, who has become immensely influential following the 2016 election, believes Sessions correctly invoked the scripture.

“The passage the Attorney General cited, Romans 13, bespeaks of this: there are and there should be serious, known consequences for breaking the laws of the land — otherwise the law becomes toothless and inconsequential and it is no longer a deterrent to harmful behavior, which is what God designed it to be,” Drollinger wrote, citing his own Bible study on illegal immigration, published on the Capitol Ministries website two years ago.

In the 2016 Bible study, Drollinger wrote that “immigration laws of every nation should be Biblically based and strictly enforced — all with the utmost confidence that assurance that God approves such actions by the nation’s leaders.” He added, “To procedurally exclude foreign individuals who might be criminals, traitors, or terrorists, or who possess communicable diseases is not racist in the least!”

Drollinger, a former college basketball star turned spiritual adviser to conservative politicians, has quietly amassed power in Washington, D.C., through his Monday evening Bible studies with conservative lawmakers on Capitol Hill. Several Cabinet members, including the vice president and Secretary of Agriculture Sonny Perdue, pray on a regular basis with Drollinger’s group. As the minister recently told a German newspaper, he provides the administration with “the high-protein diet of the Word of God.” In the past, Drollinger bashed gay rights and called Catholicism the “world’s largest false religion.”

As The Intercept first reported, shortly after the presidential election, Drollinger could barely conceal his excitement that members of his inner circle would soon occupy the White House. He published a press statement celebrating the fact that Trump’s appointments for his administration were drawn from “long time sponsors of the Members Bible Studies.”

“It follows then that the sudden rise of Pence, Sessions, and Pompeo — all men who are disciples of Jesus Christ — serve to vividly illustrate the truth of 1 Timothy 2:1-4!” Drollinger announced, referring to a Bible verse that calls for prayer “for kings and all who are in authority.”

Drollinger’s controversial interpretations extend to other areas of GOP orthodoxy. Capitol Ministries claims “that Islam and its Koran are nothing more than a plagiarism of OT truths” — a reference to the Old Testament — “and a non-chronological, sloppy one at that — topped off with a falsified diminution of Jesus Christ.”

Charmian Gooch: Meet global corruption's hidden players

When we talk about corruption, there are typical types of individuals that spring to mind. There's the former Soviet megalomaniacs. Saparmurat Niyazov, he was one of them. Until his death in 2006, he was the all-powerful leader of Turkmenistan, a Central Asian country rich in natural gas. Now, he really loved to issue presidential decrees. And one renamed the months of the year including after himself and his mother. He spent millions of dollars creating a bizarre personality cult, and his crowning glory was the building of a 40-foot-high gold-plated statue of himself which stood proudly in the capital's central square and rotated to follow the sun. He was a slightly unusual guy. And then there's that cliché, the African dictator or minister or official.  

There's Teodorín Obiang. So his daddy is president for life of Equatorial Guinea, a West African nation that has exported billions of dollars of oil since the 1990s and yet has a truly appalling human rights record. The vast majority of its people are living in really miserable poverty despite an income per capita that's on a par with that of Portugal. So Obiang junior, well, he buys himself a $30 million mansion in Malibu, California. I've been up to its front gates. I can tell you it's a magnificent spread. He bought an €18 million art collection that used to belong to fashion designer Yves Saint Laurent, a stack of fabulous sports cars, some costing a million dollars apiece — oh, and a Gulfstream jet, too.

  Now get this: Until recently, he was earning an official monthly salary of less than 7,000 dollars. And there's Dan Etete. Well, he was the former oil minister of Nigeria under President Abacha, and it just so happens he's a convicted money launderer too. We've spent a great deal of time investigating a $1 billion — that's right, a $1 billion — oil deal that he was involved with, and what we found was pretty shocking, but more about that later. So it's easy to think that corruption happens somewhere over there, carried out by a bunch of greedy despots and individuals up to no good in countries that we, personally, may know very little about and feel really unconnected to and unaffected by what might be going on. But does it just happen over there? Well, at 22, I was very lucky. My first job out of university was investigating the illegal trade in African ivory. And that's how my relationship with corruption really began. In 1993, with two friends who were colleagues, Simon Taylor and Patrick Alley, we set up an organization called Global Witness. Our first campaign was investigating the role of illegal logging in funding the war in Cambodia. So a few years later, and it's now 1997, and I'm in Angola undercover investigating blood diamonds. Perhaps you saw the film, the Hollywood film "Blood Diamond," the one with Leonardo DiCaprio. Well, some of that sprang from our work.

  Luanda, it was full of land mine victims who were struggling to survive on the streets and war orphans living in sewers under the streets, and a tiny, very wealthy elite who gossiped about shopping trips to Brazil and Portugal. And it was a slightly crazy place. So I'm sitting in a hot and very stuffy hotel room feeling just totally overwhelmed. But it wasn't about blood diamonds. Because I'd been speaking to lots of people there who, well, they talked about a different problem: that of a massive web of corruption on a global scale and millions of oil dollars going missing. And for what was then a very small organization of just a few people, trying to even begin to think how we might tackle that was an enormous challenge. And in the years that I've been, and we've all been campaigning and investigating, I've repeatedly seen that what makes corruption on a global, massive scale possible, well it isn't just greed or the misuse of power or that nebulous phrase "weak governance." I mean, yes, it's all of those, but corruption, it's made possible by the actions of global facilitators. 

So let's go back to some of those people I talked about earlier. Now, they're all people we've investigated, and they're all people who couldn't do what they do alone. Take Obiang junior. Well, he didn't end up with high-end art and luxury houses without help. He did business with global banks. A bank in Paris held accounts of companies controlled by him, one of which was used to buy the art, and American banks, well, they funneled 73 million dollars into the States, some of which was used to buy that California mansion. And he didn't do all of this in his own name either. He used shell companies. He used one to buy the property, and another, which was in somebody else's name, to pay the huge bills it cost to run the place. And then there's Dan Etete. Well, when he was oil minister, he awarded an oil block now worth over a billion dollars to a company that, guess what, yeah, he was the hidden owner of. Now, it was then much later traded on with the kind assistance of the Nigerian government — now I have to be careful what I say here — to subsidiaries of Shell and the Italian Eni, two of the biggest oil companies around. So the reality is, is that the engine of corruption, well, it exists far beyond the shores of countries like Equatorial Guinea or Nigeria or Turkmenistan.  

This engine, well, it's driven by our international banking system, by the problem of anonymous shell companies, and by the secrecy that we have afforded big oil, gas and mining operations, and, most of all, by the failure of our politicians to back up their rhetoric and do something really meaningful and systemic to tackle this stuff. Now let's take the banks first. Well, it's not going to come as any surprise for me to tell you that banks accept dirty money, but they prioritize their profits in other destructive ways too. For example, in Sarawak, Malaysia. Now this region, it has just five percent of its forests left intact. Five percent. So how did that happen? Well, because an elite and its facilitators have been making millions of dollars from supporting logging on an industrial scale for many years. So we sent an undercover investigator in to secretly film meetings with members of the ruling elite, and the resulting footage, well, it made some people very angry, and you can see that on YouTube, but it proved what we had long suspected, because it showed how the state's chief minister, despite his later denials, used his control over land and forest licenses to enrich himself and his family.  

And HSBC, well, we know that HSBC bankrolled the region's largest logging companies that were responsible for some of that destruction in Sarawak and elsewhere. The bank violated its own sustainability policies in the process, but it earned around 130 million dollars. Now shortly after our exposé, very shortly after our exposé earlier this year, the bank announced a policy review on this. And is this progress? Maybe, but we're going to be keeping a very close eye on that case. And then there's the problem of anonymous shell companies. Well, we've all heard about what they are, I think, and we all know they're used quite a bit by people and companies who are trying to avoid paying their proper dues to society, also known as taxes. But what doesn't usually come to light is how shell companies are used to steal huge sums of money, transformational sums of money, from poor countries. In virtually every case of corruption that we've investigated, shell companies have appeared, and sometimes it's been impossible to find out who is really involved in the deal. A recent study by the World Bank looked at 200 cases of corruption. It found that over 70 percent of those cases had used anonymous shell companies, totaling almost 56 billion dollars. Now many of these companies were in America or the United Kingdom, its overseas territories and Crown dependencies, and so it's not just an offshore problem, it's an on-shore one too.  

You see, shell companies, they're central to the secret deals which may benefit wealthy elites rather than ordinary citizens. One striking recent case that we've investigated is how the government in the Democratic Republic of Congo sold off a series of valuable, state-owned mining assets to shell companies in the British Virgin Islands. So we spoke to sources in country, trawled through company documents and other information trying to piece together a really true picture of the deal. And we were alarmed to find that these shell companies had quickly flipped many of the assets on for huge profits to major international mining companies listed in London. Now, the Africa Progress Panel, led by Kofi Annan, they've calculated that Congo may have lost more than 1.3 billion dollars from these deals. That's almost twice the country's annual health and education budget combined. And will the people of Congo, will they ever get their money back? Well, the answer to that question, and who was really involved and what really happened, well that's going to probably remain locked away in the secretive company registries of the British Virgin Islands and elsewhere unless we all do something about it. And how about the oil, gas and mining companies? Okay, maybe it's a bit of a cliché to talk about them. Corruption in that sector, no surprise. There's corruption everywhere, so why focus on that sector? Well, because there's a lot at stake. In 2011, natural resource exports outweighed aid flows by almost 19 to one in Africa, Asia and Latin America. Nineteen to one. Now that's a hell of a lot of schools and universities and hospitals and business startups, many of which haven't materialized and never will because some of that money has simply been stolen away.

  Now let's go back to the oil and mining companies, and let's go back to Dan Etete and that $1 billion deal. And now forgive me, I'm going to read the next bit because it's a very live issue, and our lawyers have been through this in some detail and they want me to get it right. Now, on the surface, the deal appeared straightforward. Subsidiaries of Shell and Eni paid the Nigerian government for the block. The Nigerian government transferred precisely the same amount, to the very dollar, to an account earmarked for a shell company whose hidden owner was Etete. Now, that's not bad going for a convicted money launderer. And here's the thing. After many months of digging around and reading through hundreds of pages of court documents, we found evidence that, in fact, Shell and Eni had known that the funds would be transferred to that shell company, and frankly, it's hard to believe they didn't know who they were really dealing with there. Now, it just shouldn't take these sorts of efforts to find out where the money in deals like this went. I mean, these are state assets. They're supposed to be used for the benefit of the people in the country. But in some countries, citizens and journalists who are trying to expose stories like this have been harassed and arrested and some have even risked their lives to do so. And finally, well, there are those who believe that corruption is unavoidable. It's just how some business is done. It's too complex and difficult to change. So in effect, what? 

We just accept it. But as a campaigner and investigator, I have a different view, because I've seen what can happen when an idea gains momentum. In the oil and mining sector, for example, there is now the beginning of a truly worldwide transparency standard that could tackle some of these problems. In 1999, when Global Witness called for oil companies to make payments on deals transparent, well, some people laughed at the extreme naiveté of that small idea. But literally hundreds of civil society groups from around the world came together to fight for transparency, and now it's fast becoming the norm and the law. Two thirds of the value of the world's oil and mining companies are now covered by transparency laws. Two thirds. So this is change happening. This is progress. But we're not there yet, by far. Because it really isn't about corruption somewhere over there, is it? In a globalized world, corruption is a truly globalized business, and one that needs global solutions, supported and pushed by us all, as global citizens, right here. Thank you. (Applause)

Report: Donald Trump Violated US Embargo on Cuba in 1990s Even as He Called Castro a Brutal Dictator

JUAN GONZÁLEZ: Well, in news from the campaign trail, a new investigation by Newsweek reveals that one of Donald Trump’s businesses violated the U.S. embargo on Cuba and secretly did business there in the late 1990s and then tried to cover it up. The investigation draws on internal company documents showing Trump’s firm, then called Trump Hotels & Casino Resorts, spent at least $68,000 in Cuba during a secret business trip to Havana. At the time, it was illegal under U.S. law to spend any corporate money in Cuba.

AMY GOODMAN: Only a year later, Trump wrote in an op-ed piece in the Miami Herald in '99, "I would rather take a financial hit than become a financial backer of one of the world's most-brutal dictators ... Of course, we should keep the embargo in place," he wrote.

Well, for more, we go to Dallas, Texas, where we’re joined by Kurt Eichenwald, who’s senior writer at Newsweek, contributing editor at Vanity Fair. His cover story for Newsweek is headlined "Donald Trump’s Castro Connection."

So, in these last few minutes we have together, Kurt, can you just lay out what you found?

KURT EICHENWALD: Well, very simply, that Donald Trump violated the Cuban embargo, and did so with a lot of planning. They did a business trip. They spent many, many thousands of dollars, which is completely illegal, visited—this is not Donald Trump personally. They sent someone from an outside company and reimbursed him for all the costs, but that was the way to do it. They met with government officials, financiers, businessmen, came back, plotted on how to make it look like this was actually a humanitarian effort sponsored by a charity. And then, after that, no deal came out of it, but seven months later, Trump was on the campaign trail running for the nomination of the Reform Party. And he said spending money in Cuba is giving it to Castro, and he’s a murderer. And, you know, while he’s standing there, he knows that he had just done that.

JUAN GONZÁLEZ: And the reason he did that, Kurt—

KURT EICHENWALD: So, it’s really—it’s shocking.

JUAN GONZÁLEZ: Kurt, the reason he did that at the time was just looking out for potential casinos in Havana, at the time that his own company was in financial trouble?

KURT EICHENWALD: Yes. There was—there were rumblings that the embargo might be about to be revised. And so Trump was trying to get, you know, a foot in the door. He was trying to get people on the ground in Havana who would help—you know, help with the government aspects, help with the financial aspects, help with the partnership aspects, and basically was getting braced to, like, dash through the door as soon as it started getting opened. It didn’t get open, and you’re not allowed to do that. It was illegal to begin with. And so, it was a—you know, it was a financial decision for what was then a very financially struggling company. And it just—you know, to me, what’s so shocking about it is how casually they broke the law, how casually—you know, the motivation of it was so—was so based in, you know, just financial calculations, trying to pull a lousy business out of the fire.

AMY GOODMAN: Now, Kurt, you have a lot of people who—a lot of—there are a lot of people who were opposed the embargo, who felt it was wrong, except Donald Trump would not be in that category publicly, because, as you point out in the Miami Herald, he said, "I would rather take a financial hit than become a financial backer of one of the world’s most-brutal dictators." How do you know, in this last minute, that Donald Trump directly knew about this $68,000 expenditure?

KURT EICHENWALD: Well, two things. First of all, the $68,000 was coming out from the very highest reaches of the company. It wasn’t like there was some accountant doing it. The president and chief executive officer were in charge. The chief financial officer was involved. And I know from people who were directly involved in the circumstances, who were there, that Trump knew and was fully on board. You know, you don’t write a $68,000 check and not—and it was actually a $100,000 check, because they were paying for other things, too—with a consultant that Trump is dealing with personally, and have nobody know about it. But, yes, he knew.

AMY GOODMAN: And the investigation that you did of the cover-up afterwards, of—

KURT EICHENWALD: With the—well, what that entailed was, after the money had been paid, there are ways for a humanitarian effort to be expended in Cuba that are legal. And it was: "Well, maybe we should try and make it look like this. Maybe we should get a charity to have sponsored our trip." It doesn’t work that way, and you can’t do a business deal or a business transaction or a business trip and then say, "Oh, let’s make it look like it’s a humanitarian trip."

AMY GOODMAN: Well, we’re going to have to leave it there. Kurt Eichenwald, thanks for joining us. We’ll link to your piece at Newsweek, Vanity Fair.