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2019-02-01 00:00:00 -
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Charles Laffiteau’s Bigger Picture

 

SINCE I’m still not 100 per cent certain that Beto O’Rourke will be running for US president in 2020, I will devote this column to discussing some of the myths that President Donald Trump has promoted about himself throughout his business and political career.

 

I will first attempt to dispel the notion promoted by President Trump that he is “a really smart person” because he graduated from Penn, an Ivy League school. Unlike most Ivy League graduates, Trump did not have to undergo the usual admissions process and its rigorous examination of a students’ character and academic credentials that all high school students face when they apply. That is because Trump spent his first two years in college at Fordham University in New York City.

 

While Fordham is an excellent college, it is also only ranked 70th among American universities while Penn, or the University of Pennsylvania, is ranked eighth. Since Trump’s grades at Fordham were just average, how was he able to transfer to Penn? In her book The Trumps, Gwenda Blair explains that he was only admitted because he interviewed with an admissions officer who was a classmate of his older brother and, because he came from one of New York’s wealthiest families, the admissions team thought they might give money to Penn’s endowment.

 

Trump also likes to brag that he graduated first in his class from the Wharton School of Finance. However, Trump never got the prestigious MBA from Wharton that he wants everyone to believe he has, because he only took undergraduate classes there for a bachelor’s degree in economics. Furthermore, not only did Trump not graduate first in his undergraduate class, he did not graduate with any academic honours whatsoever.

 

Trump also likes to explain that the reason why he never served in the American armed forces was because he was ruled medically unfit due to bone spurs in his feet. What Trump doesn’t like to acknowledge is that he got student deferments while he was in college and that when he was no longer eligible for those, his father Fred got him a medical deferment as a favour from a podiatrist, Dr. Larry Braunstein, who was renting office space from him.

 

Another popular idea that Trump promotes, and that most of his supporters believe, is that he is a self-made billionaire. During the presidential campaign, in explaining how he became so wealthy, Trump said: “My father gave me a small loan of a million dollars and I had to pay him back with interest.” But an in-depth investigation of President Trump and his father Fred’s business empires by The New York Times tells a very different story. It shows that Trump is rich simply because his dad was rich, not because Donald was a great investor or businessman.

 

The investigation also exposed the fraudulent business practices and illegal tax dodges Fred Trump and his children used for many years to defraud their investors and to avoid paying their fair share of city, state and federal income taxes. Fred gave Donald $1m dollars by the time he was eight years old and millions more every year after that. Over the next five decades, Fred Trump transferred $413m to Donald and a total of $1bn to Trump and his four siblings while paying taxes of just five per cent, or $52m, on their inheritance.

 

So the ‘million-dollar loan that he repaid with interest’ is another myth President Trump likes to promote, because it makes him look like a smart investor and a savvy businessman. The truth is Trump’s father Fred bailed him out of his bad investments time and again. Beginning in the late 1980s, Fred Trump made numerous loans totalling almost $61m to help his son out of the troubled investments he had made in the Trump Shuttle, The Trump Castle Casino, the Trump Taj Mahal and the Trump Plaza Hotel, to name just a few.

 

Worried that Fred might die and leave an estate that would be liable for hundreds of millions of dollars in inheritance taxes, Donald and his father concocted a scheme to siphon money from the estate and distribute it to Donald and his siblings and avoid paying those taxes. They created an entity owned by the Trump children called All County Building Supply & Maintenance to mark up the building supplies purchased for Fred’s real estate empire so they could be bought by Fred’s company, with the mark-up profits going to Donald and his siblings.

 

In 2015, Donald Trump told the Federal Election Commission that his net worth was in excess of $10bn and that his income for 2014 had been $362m dollars. But a recent analysis by Forbes shows that his net worth is actually less than a third of that, at $3.1bn. But doesn’t $3.1bn still prove that Trump is a great investor? Well, if Trump had invested $40m of Fred’s money in a passive S&P 500 Index fund in 1982, it would be worth over $6bn today. By comparison, Warren Buffet tuned his $40m in 1974 into over $67bn today. So the perception that Trump is self-made billionaire is also just another Trump myth.

 

Charles Laffiteau is a US Republican from Dallas, Texas pursuing a career in public service. He previously lectured on Contemporary US Business & Society at DCU from 2009-2011 and pursued a PhD in Public Policy and Political Economy

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