Besides losing a Billion Dollars – of Other People’s Money!



by Selvam Canagaratna

"You must lose a fly to catch a trout."
– George Herbert, Jacula

Prudentum, 1651.

So, the President lost a billion dollars, noted Henry Grabar in Slate magazine, as though it was nothing out of the ordinary to shout from the roof-tops!

That, then, was his takeaway from another massive New York Times story about Donald Trump’s tax returns, this one showing escalating losses on the New York entrepreneur’s 1040 forms throughout the late 1980s and early 1990s. By 1994, the President had lost $1.17 billion in just 10 years – "more money than nearly any other individual American taxpayer."

"For most of us, the returns will add depth to the Times’ 2016 revelation that Trump’s federal adjusted gross income in 1995 was negative $916 million, an amount that likely spared him any income tax payments for 15 years to come!

"For the President’s cultish following, they are ‘fake news’ or ‘old news’ or evidence of Trump’s superior brainpower. "I don’t think there is a single (even in the business community) journalist capable of understanding Trump’s tax returns and telling anybody what they mean," Rush Limbaugh said of the latest Times story.

Actually, in Grabar’s view, what they mean is pretty clear: The President is a terrible businessman who may have broken the law on his tax returns. He did not actually lose a billion dollars. He just said he did.

First, let’s go back a step: Why was Trump counting such big business losses on his personal tax income, anyway? Because his businesses were partnerships, so his personal income tax return reflected their gains and losses.

Specifically, "net operating loss" provisions allow owners of these pass-through businesses, like Trump, to transfer all kinds of business losses (including asset depreciation, write-downs, and operating losses) on to their personal tax returns.

Did Trump even have a billion dollars in the mid-1980s to lose? It’s extremely unlikely – especially if he was still worth $2 billion by the end of this tumultuous period, as he has claimed, which is also unlikely. Forbes had his net worth at $600 million in 1985. Subtract a billion, and, well . . .

But that question isn’t a serious one. We know that Trump took on billions in debt at the time, and it was that money – from banks, from bondholders who bought into his casino schemes, and from contractors – he was losing. As the New York Times put it: "Mr. Trump was able to lose all that money without facing the usual consequences – such as a steep drop in his standard of living – in part because most of the loss belonged to others – to the banks and bond investors who had supplied the cash to fuel his acquisitions."

So does that make Trump a bad businessman? asked Grabar, and answered: "In some ways, no: Reporting a lot of losses is good, for tax purposes. In other ways, yes: His companies failed and he lost a ton of other people’s money, which included both fat cats and banks (who cares) and small contractors and dumb bond buyers who were never paid or repaid.

"But here’s the important part: We know Trump got hundreds of millions of debt forgiven in the 1990s as his projects went belly up. To the IRS, cancelled debt is the same as income. If you don’t have to pay back a dollar you said you did, you’ve effectively made a dollar. Trump appears to have claimed other people’s losses as his losses – but never accounted for the money he didn’t have to pay back. Reported correctly, that income would have shrunk that billion-dollar loss.

The logic here is as convoluted as you’d expect for a 30-year-old tax hack, but the point is that Trump didn’t really lose a billion dollars. He lost a lot of other people’s money, then claimed that loss as his own to avoid paying taxes!

Lucian K. Truscott IV, writing on the Salon website, truly gave vent to his incredulity. "Ten years? Seriously? It really took Trump that long to lose a billion dollars?"

Added Truscott: "Let’s have a look at what he’s lost since taking office two years ago: How about the 2,800 migrant children? He lost them when they were separated from their parents under the so-called ‘zero tolerance╩╝ policy ordered by the Trump administration in July of 2018.

"But wait. Trump and his Attorney General and the Director of Homeland Security lost a whole lot more. During that time a total of 47,083 children passed through the Office of Refugee Resettlement, the agency within the US Health and Human Services thats responsible for the care of migrant children who arrive without a parent or have been separated from them."

US District Court Judge Dana Sabraw expanded a previous court order requiring the government to reunite the children separated from their parents whom the government had lost beyond the 2,800 lost during the insane ‘zero tolerance policy. The government filed an argument with the court claiming the ‘burden of reviewing so many family separations was too great and would take too long, prompting this response from the Judge: "Although the process for identifying newly proposed class members may be burdensome, it clearly can be done. The hallmark of a civilized society is measured by how it treats its people and those within its borders, and cannot be described as unfair."

Noted Truscott: "Take a step back and consider that for a moment . . . It took Trump ten years to lose a billion dollars, but it took him only two years to lose what could turn out to be tens of thousands of immigrant children. Children, not dollars. Kids who came to this country either by themselves or with their parents seeking asylum and protection from gang violence in the Central American countries they were fleeing. Desperate children. Alone. Taken from their parents and then, well, lost by Trump and his heartless administration.

"We know how you lose a billion dollars. But how the hell do you lose thousands and thousands of children? It’s left to the ACLU to file a lawsuit and a lone federal judge to issue a 14-page court order trying to make things right. And what does the Trump administration say about losing thousands of children – potentially tens of thousands of children?

"Kirstjen Nielsen, Trump’s former Secretary of Homeland Security, went before the Congress and testified that there was no policy of separating migrant children from their parents, though images of frightened children locked in cages filled television screens at the time. And Trump’s Department of Justice filed a response to the ACLU case saying that it might take "years" to locate the thousands of children who were separated from their parents and lost in a nightmarish bureaucratic maze of shelters and haphazard record keeping.

"It took years for Trump to lose his money, and it will take years to find the children he and his administration have lost along the border. Years. That’s what it will take to regain the respect Trump has lost from allies and enemies alike around the world. Years. That’s what Trump has lost in the fight against climate change. Years. That’s what it will take to repair the alliances and treaties Trump has trashed as he has cozied up to dictators and authoritarians like Vladimir Putin and Recep Tayyip Erdogan.   

"Good job, Trump. Losing is the one thing you’re good at!"


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