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For Trump Presidency, Old Ethics Laws Meet New Money-Making Methods

Dec 27, 2016
Originally published on December 27, 2016 7:30 am

President-elect Donald Trump's type of wealth — based largely on the value of his brand name and on global real estate holdings — doesn't fit well with existing ethics laws, which were written for an earlier time when rich politicos mainly invested in stocks and bonds.

To be clear, some ethics laws do apply to the incoming president.

"He's still subject to bribery laws, he's subject to the STOCK Act, which prohibits insider trading," says Larry Noble, general counsel for the Campaign Legal Center, which supports anti-corruption laws.

What doesn't apply to presidents is the federal conflict-of-interest law. So for example, Trump can own a golf resort while he also shapes the tax, environmental and labor laws that could affect his golf profits.

Noble says Trump could follow the example of other presidents and voluntarily put his holdings into a blind trust. On Fox News earlier this month, Trump said he would give control of his holdings to his children, but that's a less-than-blind arrangement.

Now, you may be wondering why there isn't a conflicts law for the president. One argument is that such a law would violate the Constitution. Congress cannot pass a law that restricts a president's decision-making authority. In 1989, a presidential commission was assigned to set ethics standards for all federal officials.

But with the Constitution's separation of powers "we quickly came to the conclusion that that was not possible, for both constitutional and practical reasons," says ethics attorney Jan Baran, was served on the commission.

So there are conflict-of-interest rules for most government employees. But not the president.

And there's another problem with the ethics laws.

They were written to cover 20th century wealth, which typically came from stocks and bonds — paper that could be turned over to a trust.

But Trump derives much of his fortune from his name, which he licenses on properties all over the world.

That's not uncommon these days. Think of Oprah, or Ralph Lauren. That kind of wealth can't be put into a blind trust.

Baran says new laws are not needed for this kind of wealth. Presidents just need to do the right thing.

"It will require presidents going forward to figure out how to impose rules on themselves," he says.

But Norm Eisen, a clean-government advocate at the Brookings Institution, says the best approach lies in a clause that's already in the Constitution: the emoluments clause.

Basically, it says government officials cannot take gifts, or emoluments, from foreign officials. Eisen says the founding fathers left room for an expansive interpretation.

"We capture with the very broad language intangible things like the value of Mr Trump's name," he explains.

Democrats will be pushing for this new interpretation when Congress comes back in January.

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RACHEL MARTIN, HOST:

As President-elect Donald Trump prepares for his inauguration, the federal ethics laws are showing their age. They were written for an earlier time, when rich politicos invested in commodities like paper or just stocks and bonds. Now there are questions about how well those ethics laws cover a president who makes his fortune from international real estate and personal branding. Here's NPR's Peter Overby.

PETER OVERBY, BYLINE: To be sure, some of the ethics laws apply to the incoming president.

LARRY NOBLE: He is still subject to bribery laws. He's subject to the Stock Act, which prohibits insider trading.

OVERBY: Larry Noble is general counsel for the Campaign Legal Center, which supports anti-corruption laws. What doesn't apply to precedents is the federal conflict of interest law. So, for example, Trump can own a golf resort while he also shapes the tax, environmental and labor laws that could affect his golf profits. Noble says Trump could follow the example of other presidents, that is voluntarily put his holdings into a blind trust. Trump has said he'll give control of his holdings to his children, a less than blind arrangement. Here he is on FOX News earlier this month.

(SOUNDBITE OF ARCHIVED RECORDING)

DONALD TRUMP: They're going to run it. They're going to run it. Hopefully they're going to run it properly. I'm sure they're going to run it properly, but I'm not going to do deals.

OVERBY: Now, you might ask, why isn't there a conflicts law for the president? One argument is that such a law would violate the Constitution. Congress cannot pass a law that restricts a president's decision making authority. In 1989, a presidential commission was assigned to set ethics standards for all federal officials. But with the Constitution's separation of powers...

JAN BARAN: We quickly came to the conclusion that that was not possible for both constitutional and practical reasons.

OVERBY: This is ethics attorney Jan Baran, who was on the commission. So today there are conflict of interest rules for most government employees, but not the president. And here's another problem with the ethics laws. They were written to cover 20th century wealth, which typically came from stocks and bonds, paper that could be turned over to a trust. But Trump derives much of his fortune from his very name, which he licenses on properties all over the world. That's not uncommon these days, think of Oprah or Ralph Lauren. That kind of wealth can't be put into a blind trust. Jan Baran says new laws are not needed for this kind of wealth. Presidents just need to do the right thing.

BARAN: It will require presidents going forward to figure out how to impose rules on themselves.

OVERBY: But others argue a new approach is necessary. Norm Eisen says it lies in a clause that's already in the Constitution.

NORM EISEN: You could expressly frame the ethics laws around the prohibition on receiving foreign government cash or benefits of any kind.

OVERBY: Eisen is a clean government advocate at the Brookings Institution. He's talking about the Constitution's Emoluments Clause. Basically it says government officials cannot take gifts - emoluments - from foreign officials. Eisen says the Founding Fathers left room for an expansive interpretation.

EISEN: We capture with the very broad language intangible things like the value of Mr. Trump's name.

OVERBY: Democrats will be pushing for this new interpretation when Congress comes back. Peter Overby, NPR News, Washington. Transcript provided by NPR, Copyright NPR.