“Gaming Election Laws”: Donald Trump’s Right That The Game Is Rigged—For Him To Make Money By Running
Win or lose, Donald Trump appears poised to come out ahead financially from his run for the White House thanks to campaign finance laws that, as he has pointed out, were not written with candidates of great wealth in mind.
Those laws let Trump shift many of his lifestyle costs to his campaign and earn a tidy profit, as we shall see.
The commercialization of the presidency is a modern development. When Harry S. Truman left the White House he had to live on his $112 a month (about $1,120 a month in today’s money) World War I army pension.
The big money for former presidents started with Gerald Ford, the only appointee to that post who turned his 29 months in office into a lucrative post-White House career making public appearances. Ronald Reagan upped the ante by collecting $2 million for speeches in Japan alone after he left the White House, plus much more money from other speeches and book royalties.
The full potential of the entrepreneurial ex-president, though, came when Bill Clinton left the White House. Together with his wife, Hillary, who hopes to be the next president, the couple raked in more than $153 million in speaking fees alone. She made $21 million from 91 speeches—with most of the money coming from Wall Street firms.
But Trump has figured out how to profit not by becoming president but merely by declaring himself a candidate—fulfilling his own prediction from 16 years ago, when he was running as the candidate of the tiny Reform Party, and told Fortune magazine: “It’s very possible that I could be the first presidential candidate to run and make money on it.”
At the time, Trump had a deal with Tony Robbins, the traveling motivational speaker, to deliver 10 speeches for $1 million. Trump coordinated his campaign stops with the speeches, boasting that this meant he was “making a lot of money” from flying his 1969 model Boeing 727 to campaign events.
He may be making lots more money this time. Here’s how: Federal law builds in a profit for a candidate who owns his own aircraft by requiring them to charge the campaign charter rates, which include a profit.
Most candidates hire planes, services, and equipment as needed during a campaign, giving them an incentive to get the lowest price so they have more money free to spend on television commercials, consultants, and get-out-the-vote drives.
But someone who must bear the ongoing cost of a private jet and helicopter, or a building, has an incentive to shift as much of the costs as possible to the campaign.
The same is true for shifting to the campaign the salaries and fringe benefits paid to bodyguards, which Trump has employed for at least 30 years.
If enough donations come in from supporters, Trump’s campaign can relieve Trump of much of the multimillion-dollar annual costs of his Boeing 757-200 jet—complete with gold-plated seatbelts, dining room, two bedrooms, and shower—and Sikorsky S-76 helicopter.
Trump claims he paid $100 million in 2011 for his 1991 model plane. At the time, aircraft brokers listed such planes for about $20 million, although they were outfitted for commercial airline service. Current prices are in the neighborhood of $10 million.
By putting that astronomical value on his plane, he can justify—assuming he’s put that number in his tax returns, which he’s yet to release, and not just his public bragging—a much higher charter rate, one that’s now paid to Trump by the Trump campaign.
All told, Trump’s Federal Election Commission spending reports show payments of $3.2 million to Trump Air Group (TAG), the Florida firm that operates his aircraft. That is almost 10 percent of the $33.4 million the campaign spent through February.
For comparison, Hillary Clinton, who has traveled much more extensively on the campaign trail, has spent about $2.5 million chartering jets. That is less than 2 percent of the $129 million her campaign has reported spending.
Donations have covered about 29 percent of Trump’s roughly $12,500 per day in aircraft costs. The rest is in the form of loans Trump made to the campaign, which may eventually be paid off with future donations.
Federal law says candidates who own their own aircraft must charge their campaign “the fair market value of the normal and usual charter fare or rental charge for a comparable plane of comparable size.”
Data from Boeing, analyzed by flight companies, suggests operating costs in the range of $8,000 to $9,000 per flight-hour when jet fuel prices were double current levels.
Charles Williams, editor of a British website which analyzes airline industry costs, and several charter operators put the hourly operating costs of a 757-200 in that range with charter flights starting at about $14,000 an hour. The chief sales agent for one charter firm told me that charges for blinged-out 757 like Trump’s could be as much as $30,000 per flight-hour.
Williams said the charter fees Trump charges the campaign, after a back of the envelope analysis using the limited data available from the campaign, seem reasonable.
So each hour Trump flies his jet to and from campaign events he both relieves himself of part of the burden of the plane’s fixed costs and turns a profit of several thousand dollars.
The law’s reference to “a comparable plane of comparable size” also suggests that Trump can charge a much higher than typical price for a Boeing 757 because he asserts it is the most fancily decked out private aircraft of its kind.
That’s right: He’s found the alchemist’s recipe for turning glitz into cash.
The campaign has also rented space in Trump Tower and rooms from Trump-branded hotels—both of which can legally charge rates that include a normal profit.
America would benefit from politicians as public servants and not from a campaign of presidency for profit.
By: David Cay Johnston, The Daily Beast, April 19, 2016