Editor’s note: Joe Maschman, an attorney, is a Common Cause volunteer in Washington.
During the 2016 campaign and the early days of the transition, a persistent legal question loomed over Team Trump: what would be the relationship between a President Trump and his business empire?
The president’s answer came quickly. In a November interview with The New York Times, then President-Elect Trump infamously asserted, “The law’s totally on my side, meaning, the president can’t have a conflict of interest.” He was only correct in that he could not be criminally prosecuted for his conflicts. Title 18 Section 208 of the U.S. code indeed exempts the president and vice president from the prohibition on participation in matters in which they have a financial interest. Not wanting to interfere with the exercise of the president’s constitutional duties, Congress trusted the president himself, rather than the criminal law, to prevent conflicts.
This same exemption, however, does not apply to President Trump’s daughter Ivanka or his son-in-law Jared Kushner, both of whom are now federal employees. Trump’s decision to involve close relatives in his administration immediately raised questions about the reach of anti-nepotism laws, but there’s no disputing that federal employee conflict of interest laws apply to these appointments.
A Department of Justice opinion issued on Jan. 20, Inauguration Day, argued that one advantage of having Jared Kushner serve as a formal rather than personal advisor to the president, was that it would “subject him to substantial restrictions against conflicts of interest.” In a March 29 statement, Ivanka Trump gave similar reasons for formally joining the Trump Administration: “I have heard the concerns some have with my advising the president in my personal capacity…and I will instead serve as an unpaid employee in the White House Office, subject to all of the same rules as other federal employees.”
Despite this apparent understanding of their new legal position, Kushner and Trump have adopted an anti-conflict strategy nearly identical to the president’s. They have resigned from positions at their respective companies, removing themselves from day-to-day operations, but have retained their significant financial interests.
Kushner’s financial disclosures show that he will remain a beneficiary of his extensive real estate holdings and companies with billions of dollars in outstanding loans to American and international banks. Ivanka Trump likewise continues to own her international clothing and shoe business and a share of rental income from the Trump International Hotel in Washington, D.C.
Neither Kushner nor Trump has sought to fully divest these holdings or create a blind trust. Until they do so, their only legal option may be to recuse themselves from huge areas of the Trump Administration’s agenda.
Because Section 208 also affects spouses’ financial interests, a conflict for either of them is a conflict for both. Kushner’s extensive bank obligations may require recusal from financial services regulation and repeal of Dodd-Frank, the financial services reform law passed after the stock market collapse of 2008. Tax reform may also be off the table for them, given tax benefits for the real estate industry and its effect on Kushner’s holdings. Ivanka’s involvement in international manufacturing and importation for her business may demand a recusal on international trade issues. Even attending the Trump International Hotel on White House business could be an illegal action to benefit her investment.
Considering how much President Trump relies on the advice of his daughter and son-in-law, it is hugely optimistic to expect their complete recusal on such large components of domestic and foreign policy. At the same time, it seems unlikely that they will rush to divest themselves of their business interests. If they wish to avoid breaking federal law, however, those are their options. The law may be “totally” on the president’s side, but it’s not on theirs.
Office: Common Cause National
Tags: Executive Ethics