Trump and the Emoluments Clause: Who’s Toupée?

Posted by: Ember Van Vranken, Natalia Villar, Cadmus Wang, Zachary Ward, Sarah Wolf, and Ikaika Woods

INTRODUCTION:

I have a little conflict of interest because I have a major, major building in Istanbul,”

Donald Trump in an interview with Stephen Bannon last year.

PresidentTrumpThe two Emoluments Clauses of the Constitution have become a source of interest and controversy due to President Trump’s election into office. The Foreign Emoluments Clause in Article I, Section 9, Clause 8 bans those who hold offices under the United States from receiving payments or emoluments from foreign governments. Additionally, the Domestic Emoluments Clause in Article II, Section 1, Clause 7 bans the President from receiving emoluments from any of the states. CNN reported that President Trump revealed business dealings with 144 companies in 25 countries during his initial pre-campaign financial disclosures. Furthermore, according to the New York Times, President Trump’s businesses have received substantial state tax benefits.These business interests likely violate the Foreign Emoluments Clause and have the potential to violate the Domestic Emoluments Clause.  

Citizens for Responsibility and Ethics in Washington (CREW) filed lawsuit against President Trump in late January, alleging that President Trump’s business interests violate the Constitution. The substantive issues involved have merit, but the plaintiffs likely lack standing for lack of a differentiated claim and will probably fail for this reason. Due to his extensive business interests, President Trump is in violation of the Foreign Emoluments Clause and will likely violate the Domestic Emoluments Clause. President Trump’s business interests have created a widespread, general awareness for the constitutional issue brought up by both the Emoluments Clauses. President Trump stated during his campaign, that he would delegate all responsibilities in his business dealings to others; however, his financial interest would remain regardless of his delegation. Hence, we are left with the issue of determining whether President Trump’s business dealings both within the country and in foreign nations violates either of the Emoluments Clauses. To arrive at a conclusion, this blog will provide background information on the development and adoption of both the Foreign and Domestic Emoluments Clauses from the Articles of Confederation to the adoption of the Constitution. This blog post will further analyze President Trump’s measures to avoid a constitutional violation and why these measures are insufficient.

BACKGROUND

        The drafters of the United States Constitution were well aware of the danger of foreign powers bribing United States Officials. In Federalist 22, Alexander Hamilton argues, “One of the weak sides of republics, among their numerous advantages, is that they afford too easy an inlet to foreign corruption.” Hamilton argued that the nature of Republican Governments exposes elected officials to foreign corruption and bribery. Hamilton contrasts Republican Governments to Hereditary Monarchies. He claims that in Hereditary Monarchies, officials have such a significant personal interest in the government that it is extremely difficult for a “foreign power to give him an equivalent for what he would sacrifice by treachery to the state.” However, in a Republic, it is much more likely that a bribe from a foreign power will outweigh their duty to the people.

        Even before the Constitutional Convention, it is evident that the drafters of the Constitution wished to protect the people of the United States from the corruption of its officials by foreign powers. Article VI of the Articles of Confederation reads “[N]or shall any person holding any office of profit or trust under the United States, or any of them, accept any present, emolument, office or title of any kind whatever from any King, Prince or foreign State.” Clearly, the threat of foreign corruption was an issue since the birth of the United States, and the issue was one that the Founding Fathers wished to address.

        During the Constitutional Convention, Charles Pinckney, Governor of South Carolina, urged for the inclusion of a provision mirroring the Foreign Emoluments Clause in the Articles of Confederation. The drafters settled on phrasing very similar to that used in the Articles of Confederation. Article 1, Section 9, Clause 8 of the Constitution reads “[N]o Person holding any Office of Profit or Trust under them [i.e., the United States], shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” Furthermore, Article 2, Section 1, Clause 7 reads, “[t]he President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.” During the Virginia Ratifying Convention, Governor of Virginia Edmund Randolph emphasized the importance of the Foreign Emoluments Clause and argued the Foreign Emoluments Clause was created to prevent corruption by prohibiting anyone holding office from receiving gifts or emoluments from foreign powers.

        Given the background of the Foreign and Domestic Emoluments Clauses, it is now interesting to analyze the potential violations by President Trump. President Trump’s strategy to comply with the Foreign Emoluments Clause is to hand over control of Trump Organizations to his children. Past Presidents, by contrast, have avoided violating the Foreign Emoluments Clause by setting up a blind trust. The blind trust ensures that the President will not know when “something of value” comes their way.

Critics of the President Trump worry that his global business dealings create the situation where he would not be able to act as both President of the United States and a businessman with impartiality. For instance, President Trump has openly lobbied Nigel Farage to oppose wind farms in the United Kingdom. The United States has very little incentive to oppose the United Kingdom wind farms. However, a relatively new wind farm in Aberdeen, Scotland is blocking the view from President Trump’s golf course. Additionally, the single largest tenant of Trump Tower is the Industrial and Commercial Bank of China, which the People’s Republic of China owns in its entirety.  The bank’s lucrative lease is set to expire during President Trump’s 4-year term. These business interests represent conflicts of interest and potential constitutional violations.

THE PRESIDENT AND THE FOREIGN EMOLUMENTS CLAUSE

PresidentialSealThere has been significant debate among legal scholars as to whether the Foreign Emoluments Clause refers to the President at all. Also, the contradictory conduct of past Presidents does little to clarify its meaning. President Washington notably received two gifts from officials of the French government and accepted both of them without asking the permission of Congress. However, other Presidents since that time, such as Presidents Jackson, Tyler, and Van Buren, have either asked permission of Congress to keep foreign gifts, or given them to the American people. The Foreign Emoluments Clause specifies that any “Person holding any Office of Profit or Trust under [the United States]” may not receive any emoluments. The crux of this debate hinges on whether the President of the United States holds an office of profit or trust. Despite significant merit to legal arguments on both sides, it is likely that the Foreign Emoluments Clause includes the President.

Those who would claim that the President is exempt look to Constitutional structure. Framers placed the Foreign Emoluments Clause in Article I, which enumerates the powers of Congress; whereas Article II addresses the President’s powers and responsibilities. Additionally, some constitutional law scholars argue that the language of the Emoluments Clause precludes presidential inclusion. These scholars argue that the constitution does not rely on “office” language to refer to the president. For example, the Impeachment Clause, Article II, Section 4 of the Constitution, refers to the “President, Vice President and all civil Officers of the United States…” If the Constitution indeed refers to the President separately, then it would seem that he does not hold an office of profit or trust. However, other legal scholars have been quick to point out that the constitution does contain references to the President as holding an office. Article II, Section 1 states that the President shall “hold his Office during the Term of four Years.” Article II, Section 1 also conditions that, “[n]o person except a natural born Citizen…shall be eligible to the Office of the President.” Additionally, the tradition of referring to the President as holding an office has continued after the Constitutional Convention, as the 12th, 22nd, and 25th amendments all describe the “Office of President.”

The framers of the constitution likely meant for the Foreign Emoluments Clause to refer to the President. In the Debate in Virginia Ratifying Convention, Edmund Randolph, one of the delegates to the Constitutional Convention from Virginia stated, “There is another provision against the danger, mentioned by the honorable member, of the President receiving emoluments from foreign powers. If discovered, he may be impeached.” This historical evidence supports the theory that the legislative intent was to include the President under “offices of trust and power.”

Finally, the Office of Legal Counsel (OLC) in Washington DC, which assists the Attorney General as legal advisor to the President, has issued two opinions that imply that the Foreign Emoluments Clause includes the President. In the first opinion, issued in 1963, the OLC stated that the proposal that the President receive an honorary Irish citizenship “would fall within the spirit, if not the letter, of Article I, Section 9, Clause 8, of the Constitution…” Additionally, in 2009, in an opinion regarding the receipt of President Obama’s Nobel Peace Prize, the OLC stated that, “[t]he President surely ‘hold[s] an[] Office of Profit or Trust.’”

While the Foreign Emoluments Clause may at first glance appear not to extend to the President, the language in the Constitution, evidence of framer’s intent, and the respected opinions of the Office of Legal Counsel would indicate that the President is also constitutionally barred from receiving foreign emoluments.

TRUMP OWNED BUSINESS CONNECTIONS

        While the definition of emoluments could fill hundreds of pages of legal debate, by far the simplest method of determining the original meaning of “emolument” is to consult Constitutional Convention era dictionaries. The New and Complete Dictionary of the English Language, published in 1775; An Universal Etymological English Dictionary, published in 1783; and Dictionary of the English Language, published in 1785, define “emolument” as “an advantage, [or] a profit.” Similarly, The Complete English Dictionary, published in 1772, defines “emolument” as “profit, gain, or advantage.” These dictionary definitions indicate that the word “emolument” should be construed broadly as any profit. President Trump’s attorney has proposed a narrow definition that categorizes the contested money as payment for services rendered rather than gifts from foreign countries. This narrow definition raises concern about a potential loophole, foreign states paying above fair market value or choosing specifically to use Trump Hotels to turn payment for services rendered into a gift. The definition also ignores indirect benefits that may still influence President Trump’s behavior. Therefore, the correct definition of emoluments refers to profits, meaning that President Trump’s revenues from foreign nations, despite being fair market transactions, likely violate the Foreign Emoluments Clause.         

        Some argue that, despite the broad meaning of the term profit, President Trump does not violate the Foreign Emoluments Clause because he is not currently personally receiving profits from the Trump Organization. In order to avoid liability under the Foreign Emoluments Clause, President Trump has turned over management of the Trump Organization to a trust run by his two sons, Eric and Donald Jr. However, Eric has admitted that he will be providing President Trump with regular financial reports, despite promising otherwise. In theory, the trust assures that President Trump would not prejudice his relationship with foreign states in exchange for payments made to the Trump Organization by those foreign states. Rather, the payments would be for the services of the hotel, resort, or other accommodation. The Trump Organization has promised to give any proceeds made from foreign states to the U.S. Treasury. The Trump Organization has also clarified that it does not plan to hand over those proceeds until the end of the year.

        However, even if President Trump turns over his revenues and eliminates the possibility of an immediate quid pro quo arrangement, both President Trump and foreign nations are aware that President Trump will likely reclaim leadership of the Trump Organization after his term as President. Thus, any favor he has with foreign governments now, or any loyal hotel guests he develops over the course of his presidency will benefit him in the future.This would likely fall under the category of an “advantage or profit” under the meaning of an emolument.

Additionally, a foreign diplomat could still stay in a Trump-owned hotel to generate good favor. A former Mexican Ambassador has gone on the record saying “Some might think it’s the right way to engage, to be able to tell the next President, ‘Oh, I stayed at your hotel.’” Another diplomat said, “Why would I stay at his hotel blocks from the White House, so I can tell the new President, ‘I love your new hotel!’ Isn’t it rude to come to his city and say ‘I’m staying at your competitor’?”

        Even if President Trump turns over all of the revenues gained from his global business enterprises while he is President, it will not create a circumstance where he, and other nations, would not know about President Trump’s business interests. It would not matter that President Trump was not acting as the CEO, or taking the profits, or planning the next ventures of his business. President Trump would still be the face and founder of his business empire, and other nations would be able to gain his favor by soliciting these businesses, and giving President Trump’s enterprises favorable deals and contracts. Foreign nations would still solicit President Trump’s hotels and businesses to seem more agreeable and gain favor with him. President Trump would still have the financial incentive to act favorably towards these nations and put his business ventures ahead of the interests of the American people. To avoid this, President Trump needs to do more than merely hand over power to his children. A blind trust, like those used by past Presidents, would be better suited to prevent any knowledge of potentially profitable business dealings.

TrumpInternationalHotel

TRUMP BRAND CONNECTIONS

In addition to the hotels and businesses that the Trump Organization owns outright, including the Trump International Hotel in Washington, D.C., the Trump Organization generates a great deal of revenue through the leasing of the Trump name and brand, such as a luxury resort and golf course in Indonesia. Compensation for these leases could be a fixed amount or based on the project’s revenue, but the exact nature of the lease agreements are unknown.

A fixed payment for using President Trump’s brand likely would not violate the Foreign Emoluments Clause. If the compensation is a fixed amount, then the amount President Trump will receive remains the same regardless of his actions as President. This arrangement would be similar to the pension benefits President Reagan received for his time as governor of California. Congress has already determined that these fixed arrangements do not violate the Domestic Emoluments Clause. By extension, President Trump’s fixed arrangements would likely also not violate the Foreign Emoluments Clause.

A revenue-based payment for using President Trump’s brand, on the other hand, would probably violate the Emoluments Clause. President Trump’s actions as President might affect the amount the Trump Organization receives from these types of licensing deals. However, this emolument is attenuated, because the Trump Organization would not receive direct payment from foreign states. Instead, foreign states would be paying a third party for the accommodations, the third party would add those payments to their total revenue, and finally, the Trump Organization would receive a percentage of that total revenue. Despite the diminished connection between foreign payments and the Trump Organization, Trump Organization profits are still directly influenced by foreign governments’ use of these hotels. Thus, these profits likely fall under the category of an emolument as an “advantage” or a “profit” that stems from foreign governments. At the very least, these continuing deals raise conflicts of interest.

THE DOMESTIC EMOLUMENTS CLAUSE  

TrumpTowerWhile the Foreign Emoluments Clause leaves room for debate, the Domestic Emoluments Clause in Article II, Section 1, Clause 7 is clear. This clause addresses the President directly. The clause specifies that the presidential salary must “neither be increased nor diminished” and further declares that the President “shall not receive within that Period any other Emolument from the United States, or any of them.”This clause although similar to the Foreign Emoluments Clause in language aims to tackle a separate evil. Where the Foreign Emoluments Clause protects the National Government from outside corruption at the hands of foreign entities; the Domestic Emoluments Clause shields the President from being influenced by the states or Congress.  

The purpose of the Domestic Emoluments Clause is to prevent corruption and promote the separation of powers. The founders addressed two purposes of the Domestic Emoluments Clause. First, it discourages congressional control over the President. Second, it prevents state influence over the President. As explained by Alexander Hamilton in The Federalist 73, the constancy of the presidential salary prevents the Legislature from influencing the President through financial gain or by the threat of financial hardship. In the absence of the Domestic Emoluments Clause Congress could, through monetary incentives, influence the President to promote their agenda. Similarly, the Constitution achieves the separation of powers goal through control over judicial salary. Article III, Section 1 declares that the judiciary must receive a salary “which shall not be diminished during their continuance in office.” By creating stability of judicial salaries in Article III and the presidential salaries in Article II, the Framers promoted the separation of powers goal by deterring congressional influence on the other two branches.

A case arising under the Domestic Emoluments Clause, Griffin v. United States, did not consider compensation for President Nixon’s presidential papers, when the government took them, as a violation of the Domestic Emoluments Clause. The Supreme Court of the United States held that when the government took President Nixon’s private property after his term in office, he had a right to receive compensation for the taking. Further, this was not a violation of the Domestic Emoluments Clause because the compensation for the taking occurred after President Nixon’s Term of office. The Court did not consider this to be additional compensation nor did it imply that a President could sell his papers for compensation while in office because the papers are personal property. Under the Takings Clause of the Fifth Amendment, when the government takes privately owned personal property it may only do so for just compensation.

Similar to the Foreign Emoluments Clause, the Domestic Emoluments Clause also hinges on the definition of an emolument. Preventing the President from accepting the receipt of emoluments from any State ensures that no one can influence the President to adopt a policy that favors any one particular state over the others. During the presidency of Ronald Reagan, a domestic emoluments dispute considered whether the receipt of retirement benefits for his service as Governor of the state of California constituted an emolument. In this 1981 opinion, the OLC focused on the purpose of the clause in rendering its decision. The OLC considered the connection between the retirement benefits and President Reagan’s service for the state of California. The OLC decided that the benefits were a legal right rather than a gratuity. Ultimately, the Controller General decided that there was no constitutional problem because President Reagan received the benefits before becoming the President. President Reagan earned the benefits like any other California Governor and as such the benefits had no connection to the Presidency.

To be sure, the possible money President Trump may receive from states and the Federal Government through his companies are different from those received by President Reagan. One key concern is that of tax incentives. President Trump may be in a position to influence potential gains for his businesses in the form of substantial tax benefits. In the past, Trump buildings have been the recipient of substantial tax benefits. For example, the New York Times reports that since 1980 Trump-owned businesses have received $885 million in tax breaks. Another concern is the various payments that the Trump Hotels may receive from the Federal Government. For example, the Department of Defense and the Secret Service are considering renting space in Trump Tower. These business possibilities create the potential for a quid pro quo negotiation that would violate the Domestic Emoluments Clause if they occurred. However, there do not seem to be any current business interests that place President Trump in immediate violation. In the creation of the Constitution the Framers included not one but two emoluments clauses to protect against corruption that stems from the receipt of financial incentives. Therefore, President Trump will violate the Domestic Emoluments Clause if the government grants any new tax incentives to his his businesses and by any rent payment paid by the Federal Government.

CONCLUSION

In accordance with the Office of Legal Counsel, the language of the Constitution, and legislative intent, the Foreign Emoluments Clause is meant to apply to the Office of the President of the United States. President Trump states that handing over leadership of his businesses to his sons Donald Jr. and Eric is sufficient to eliminate any potential Constitutional impropriety. However, this questionable delegation is not sufficient to write off the deep connection between President Trump and his business dealings. The “Trump” brand is recognizable by all foreign dignitaries, and it is likely that they will use the services offered by his company to gain favor with President Trump. Furthermore, President Trump’s trust allows him to take control of his company again when his presidential term concludes. Consequently, any present dealings will affect him, financially, in the future. Thus, President Trump is in violation of the Foreign Emoluments Clause. Moreover, if President Trump receives money from the Federal Government in the form of rent, it will constitute a violation of the Domestic Emoluments Clause because President Trump will be in a position to profit from his governmental post. Thus, President Trump is in violation of the Foreign Emoluments Clause and in danger of violating the Domestic Emoluments Clause.

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Trump and the Emoluments Clause: Who’s Toupée?