Do Super-Rich Presidents Get A Pass?

Excerpted from a (much) longer piece which you should definitely read by Jane Chong for Lawfare

I wrote last November that the Foreign Emoluments Clause “is on its face a national security provision designed to protect the country from officers too enmeshed with foreign interests.” If the Justice Department’s recent court filing is to be believed, that protection is exceedingly limited. This new position marks a decisive break from the more conscientious approach long espoused by both the Comptroller General and the Office of Legal Counsel (OLC).

At the heart of the emoluments controversy is President Trump’s refusal to liquidate his business holdings. He has instead maintained ownership of the Trump Organization, a multibillion-dollar umbrella company with thousands of domestic and international investments, and placed the assets in a revocable trust managed by his sons Donald Trump, Jr. and Eric Trump. Trump now faces three lawsuits alleging that he is profiting from his business empire in violation of the Constitution. Three days after his inauguration, Citizens for Responsibility and Ethics in Washington (CREW), a government accountability watchdog group, filed the first suit in the Southern District of New York. This month, two more complaints were filed by the attorneys general of Washington D.C. and Maryland and 196 congressional Democrats, in federal district courts in Maryland and the District of Columbia, respectively.

All three suits center on the meaning and scope of the Foreign Emoluments Clause, which provides that “no person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept any present, Emolument, Office or Title of any kind whatever, from any King, Prince or foreign state” (U.S. Const. art. I, § 9, cl. 8). Citing Trump’s business dealings with state governments and federal agencies, such as its lease on the Old Post Office Building that now houses the Trump International Hotel, two of the suits also allege violations of the Domestic Emoluments Clause. This provision applies specifically to the president and provides that he shall receive “for his Services” a fixed compensation during his tenure and not “any other Emolument from the United States, or any of [the states]” (U.S. Const. art. II, § 1, cl. 7).

Serious procedural challenges like standing notwithstanding, given the House and Senate’s failure to address head-on the risks posed by Trump’s financial conflicts pose, the lawsuits could prove important in forcing a much-needed conversation: Is Trump taking in profits in violation of the Constitution? And just as critically, are future presidents entitled to pull a Trump—or does the Constitution dictate that they, like Jimmy Carter, must sell their family peanut farms as a condition of taking office?

No Article III court has ever rendered an opinion on how either Emoluments Clause should be interpreted, though the Supreme Court has offered interpretations of the term “emoluments” as it appears in Foreign Emoluments Clause-related statutes periodically enacted by Congress since 1881. Because of the limited judicial precedent, the internal memoranda from the Comptroller General and the Office of Legal Counsel that have been made public over the years are among the most important sources of guidance we have on emoluments issues. And though these memoranda do not directly address the question posed by the Trump business empire, making some amount of inference and legwork necessary, in critical respects they quite clearly contradict the sweeping defense that the Justice Department put forward this month in its 70-pagemotion to dismiss the CREW case against Trump.

The key issue in these suits—once you get behind a set of justiciability questions that may prove dispositive—is what constitutes an emolument (though with respect to the Foreign Emoluments Clause there’s also some disagreement about what kind of entity constitutes a “foreign state”). In plain English, we are looking at an exotic presidential twist on the biggest and oldest challenge to enforcing any anticorruption law: What counts? Do the forbidden “emoluments” cover only goodie boxes, blatant quid pro quo arrangements, and employment-related compensation? Or are the profits that Trump enjoys by way of his business transactions also prohibited when they come from foreign states and domestic government entities? And if the latter, more expansive definition is the appropriate one, are the profits prohibited only when the take is in excess of  “fair-market-value”—and if so, does that definition serve as a meaningful limitation when at issue are luxury goods whose value or sales may be inflated by the fact that Trump is president and the products are prominently branded with his name?

Predictably, the dispute has taken the form of a battle for the original meaning of “emoluments.” An array of historical materials support both a limited and broad definition. The two possible interpretations are well summed up by the Oxford English Dictionary, which provides two definitions dating back to the Founding: “1. Profit or gain arising from station, office, or employment . . . . 2. Advantage, benefit, comfort.”

The Justice Department, like Trump’s lawyers at Morgan Lewis, latches onto the first definition  to argue that “the Emoluments Clauses apply only to the receipt of compensation for personal services and to the receipt of honors and gifts based on official position.” That is, President Trump is precluded only from receiving benefits in exchange for services provided to a foreign state in his official capacity as president, or—and this is crucial, given the subject matter of the OLC opinions—services provided “in a capacity akin to an employee of a foreign state.”

The plaintiffs in the three suits, on the other hand, argue for the much more expansive definition. Marshaling its own set of historical evidence, CREW asserts that emoluments are “anything of value, including money, permits, approvals, tax benefits, any other benefits, and anything else monetary or nonmonetary, regardless of whether it is given in exchange for goods or services, and regardless of whether it is part of a transaction at, above, or below market rates.”

A close examination of the relevant Comptroller and OLC opinions reveals that the current Justice Department is reading the Emoluments Clauses too narrowly, while CREW and the other plaintiffs are reading them too broadly. None of the opinions approves the receipt of benefits that can even arguably be attributed to the prestige or influence conferred by an office, and together they do not support the Justice Department’s claim that presidents may, as a categorical matter, collect profits from business transactions with foreign entities and domestic government entities as long as fair value is extracted on both sides. But notwithstanding the plaintiffs’ hard pull in the other direction, the opinions also suggest that presidents may in limited cases accept certain fixed benefits—as I will explain, these might be pensions from the U.S. state that used to employ them or money damages from a foreign country against which, in a past life, they successfully won a judgment. The key is that those benefits cannot be subject to foreign or domestic government manipulation or adjustment in connection with the presidential office.

This happens to be a sensible position that accords with what the opinions repeatedly underscore as the purpose of the Emoluments Clauses and the ultimate touchstone for interpreting their meaning: “to prevent corruption and foreign influence” and to bar “payments which have a potential of influencing or corrupting the integrity of the recipient.”

 

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One thought on “Do Super-Rich Presidents Get A Pass?

  1. The emoluments question is a Venus fly trap. For the real question is whether Trump (his children and those acting on Trump’s behalf as agents and employees) is using his powers and the office of the presidency to advantage himself, his businesses and others in financial transactions around the world – and especially in those where Trump uses his office to benefit third parties in and out of government around the world – constitutes Bribery in violation of 18 U.S. Code § 201 – Bribery of public officials.

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