The Daily - $1 Billion in Losses: A Decade of Trump’s Taxes

Episode Date: May 8, 2019

In October, The New York Times published an investigation into the tax returns of President Trump’s father, revealing the president’s past involvement in tax evasion and stark inconsistencies in his account of his success. Two reporters who broke that story are back with new information about the president’s own taxes. Guests: Russ Buettner and Susanne Craig, investigative reporters for The Times. For more information on today’s episode, visit nytimes.com/thedaily. Background reading: The Times has obtained figures from President Trump’s federal income tax returns from 1985 through 1994. They paint a far bleaker picture of his financial condition than was previously known.Here are five takeaways of what the numbers show.Listen to an episode of “The Daily” about Mr. Trump’s participation in dubious tax schemes during the 1990s.

Previously on The Daily. I stopped at my mailbox. There was three pages of Donald Trump's tax returns from 1995. And we started acquiring these documents, previously unseen documents. We were able to unearth the tales about Donald Trump's wealth that he has worked very hard for a very long time to keep hidden. It was just holy shit. Back in October. I have heard that you are worth something like $3 billion.

The Times published an investigation. It was all his father's empire, his father's success. Into the tax returns of the president's father, Fred Trump. I built this empire, and I did it by myself. That revealed stark inconsistencies in the president's own account of his success and his involvement in tax evasion. He inherited hundreds of millions of dollars from his father, and much of it was gotten through fraudulent means.

Just imagine how much more we could learn if we could just get our hands on his tax returns. Today, two of the reporters who broke that story return, this time with new information from the president's own taxes. It's Wednesday, May 8th. Sue Craig, Russ Buettner. What happened after you published your story back in October? Immediately after publications, a number of things happened. We're watching the fallout now from a bombshell New York Times investigation.

A massive, exhaustive, detailed investigative report that the New York Times just dropped on the political world tonight. This is worse than what you knew to be the case. Oh my God, I knew it was bad. The president himself didn't respond in substance. He just said that this was old, recycled, and boring material. It's a totally false attack based on an old, recycled news story. I'm not going to sit and go through every single line of a very boring 14,000-word story. Regulators in New York State launched investigations

into some of the allegations that were raised in the story. New York City also suggested they were going to look at some of that. And then... CNN can now project that Democrats will win the majority in the U.S. House of Representatives. The House flipped control and the Democrats are now in control. We deserve to know, we indeed need to know, whether the president is making decisions in our interest or in his family's financial interest. They're much more eager now to obtain his tax returns. Now, in October 2018, the New York Times revealed that, quote,

President Trump participated in dubious tax schemes. And have raised in hearings some of the issues that we raised also. And would it help for the committee to obtain federal and state tax returns from the president and his company to address that discrepancy? I believe so. They've got a number of investigations underway of which they want the taxes. The president of the United States

told the American people that he would release his tax returns. So that means that he has lied to the American people. So this drumbeat for the taxes has just gotten louder and louder since the story ran in October. Okay, so while all this is happening,

I assume that you are also both trying to get your hands on Donald Trump's taxes. We are. Yes, and several months ago, we had a major breakthrough. We now have the most complete tax information that's really ever been seen outside of Donald Trump's inner circle and his tax preparers. In this case, we happen to have it from 1985 and running right through to 1995. So does that mean you actually have his tax returns? We don't have his tax returns, but we have the information that goes into every line.

All deductions, all the final net proceeds from his various businesses. So I could recreate a tax return of Donald Trump's with the numbers that we have. So just to be clear, information about Donald Trump's tax returns for 10 years has been communicated to both of you. And from that, you can sort of recreate what his tax returns would look like if you had them. That's correct. Correct. Okay, so walk me through these tax returns chronologically.

What story do they tell? So this all starts in 1985. In a world where mere millionaires have become a dime a dozen, there is a new billionaire in town. 1985. Trump's the name, Donald Trump. It's the year where you really start, when you go back, you start to see Donald Trump everywhere. All along from 72nd all the way down to 59th, we're going to have magnificent marinas, shopping, restaurants, everything all over the Hudson River. He picked up a giant plot of land in New York.

He's opened Trump Tower by then. He is buying hotels. He's bought a football team. The quality of the league has made it exciting. A football team that would soon go defunct in an alternative football league. And he, during that period of time, really begins this wave of acquisitions. They say he's land hungry, money hungry, power hungry. Each time that he does this, he's bringing a tremendous amount of publicity to himself doing that. I think the general way that you have been presented in the media is money.

It's the first year that Forbes magazine lists him as one of the, I think, 400 wealthiest individuals in the country. TV shows, talk shows. The power is nonsense. I love the creative process. What about the name of Trump City, Trump Tower we're sitting in, Trump Plaza, Trump Castle? It sells, Mike. That was thought to be his real peak when he was really making money hand over fist. And what you don't see is what we now see on his tax returns, which is he is losing and he's declaring tens of millions of dollars in losses. So what we see in the 1985 tax return is that at that point in time, he's already losing tremendous amounts of money. He records a business loss that year of $46 million.

And those numbers would just continue to magnify as the years played out. So when Donald Trump is at his public peak and he's buying all these big things and he's in the Forbes list of richest Americans, he's actually documenting... Massive losses, yes, right. And you can think of this as sort of, this is a guy starting out and of course he's going to take some business losses, but we never see that he actually gets profitable. It just, the losses just keep getting worse and worse and worse. And what happens the following year? So in 1986, it's another wave of really amazing acquisitions for him. He buys out his partners in Trump Tower and the Trump Palace Casino.

Taking on more debt to do that. He bought an apartment building in Palm Beach for $43 million. Taking on more debt to do that. He bought an apartment building in Palm Beach for $43 million. Taking on more debt to do that. And his losses for that year come to almost $100 million. A loss of $100 million. Wow, so basically double the loss of the year earlier. That's correct. And it seems like there's a theme growing here,

which is he's got a lot of debt and he's simply just not making enough money to cover his expenses. And what's going on with his Forbes wealthiest American list? Is he staying on it despite these losses? He is staying on it. He's telling them lies. And I think the gentleman who was reporting out that list at the time wrote last year that he now realizes that Donald Trump was lying to him at the time, giving him financial statements that were not accurate. And even going so far as to call under a different name, the name of John Barron, a vice president of the Trump organization, who didn't exist. And sort of assert that Donald was worth all this money and had taken over his father's empire. Is that including the residential?

Yes. Everything's been consolidated basically now. And over the last couple of years, they've been working on it. And I guess that's sort of come out now. And so what happens in 1987? Just let me refresh my memory real quick here. Okay. Let me refresh my memory real quick here. Okay.

Ladies and gentlemen, please welcome the author of this book right here, The Art of the Deal, Donald Trump. Later in that year in November, he takes this gigantic, audacious step to publish his first book, The Art of the Deal. How much are you worth right now as you're sitting right here? Zero idea, David.

It depends on what's happening with the world and the market. In that he presents himself as this master of business that everything he touched sort of turns to gold, to use the phrase he attributed to his father. Because you are unquestionably one of the most successful men in the country, if not the world, and also one of the wealthiest. So give us a figure that we might ponder here. You'll never get it out of me, David. You'll never get it out of me.

You'll try, but you'll never get it. And that's really when he launches on the stage. A billion. You're worth a billion dollars? Perhaps. Perhaps? Perhaps. Perhaps. Are we the low side of perhaps or the high side of perhaps? It's incredible, like, to hear all these things he's saying and his first book,

The Art of the Deal, laid him out to be this master dealmaker, which has sort of become a touchstone now for people, you know, when they talk about him and his ability to do deals. My new game is Trump the Game. Trump the Game, where you deal for everything you've ever wanted to own. Because it's not whether you win or lose. It's whether you win. But that year, we see in these documents that his core businesses, his real estate and hotels,

lose another $42 million that he shows on his tax returns there. He makes some money in interest income that we don't know the source of that starts to rise up. But still, it's not enough to take him out of the red. He's still registering huge amounts of losses that year. And not talking about that, of course, or not mentioning it in his book. Right. At this point, what is the value for Donald Trump in staging this kind of public deception, in building up the art of the deal, super successful version of himself, when in fact, as we can see from these numbers that you now have, that wasn't the case. What's the value of basically perpetuating a untrue version of himself? Well, I think at that point in time, the myth was the value to him.

He wasn't able to monetize that directly until much later, but you do see that it does enable him to obtain financing for things. I also think in Manhattan, it opened not just doors on Wall Street, but it just opened doors to a life for him. It opened doors to the best restaurants and the best clubs. He's living this incredible life in Manhattan. But in 1990, there's a huge reckoning. 1990, there's a huge reckoning. So by 1990, we see all these debt-heavy acquisitions that he'd been making really come to roost. His tax returns show a loss, a total loss on his core businesses of $262 million.

And the next year, he would lose an additional $255 million. Everything's collapsing. The bankruptcies start on his casinos. He stops paying his mortgage loans. He can't sustain it anymore and he's got regulators looking at every aspect of his finances. So now we can see from this entire period of time, 1985 through 1995, is his core businesses lost $1.2 billion. Which is staggering. It is a staggering amount of money to lose over the course of a decade. And keep in mind that when you lose money in a business, you can use that as sort of a credit against future income. You can earn that much money without paying any taxes on it

for years to come. In 1990, he has $400 million in losses that he can use to write off income for the next 18 years. The next year, that grows to $665 million. In losses. In losses that he can carry forward to write off income in future years. And we know from our prior reporting on this that that figure would continue to grow to almost a billion dollars about three years later. And those losses were so big that by 1994, they accounted for 1.7 percent of all losses declared by individual taxpayers. I just want to wrap my head around this. His losses that year represent almost 2% of all losses in the entirety of the United States. Yeah, it's incredible. There's 114 plus million taxpayers and his losses account for 1.7% of all the losses in America that year for individuals. That's how

big it was. It was, it's insane. And remind us, since you have seen Trump's father's tax documents for your previous investigation, how is Fred Trump doing financially during this period? Well, in fact, Fred Trump's doing swimmingly well during this entire period. During just one six-year window of it, Donald Trump loses on his core businesses $840 million, while his father declares a positive income during those years of $95 million. That's a tremendous gap. And you can see for the same years that Donald Trump was, you know, bleeding red onto his tax return, that Fred Trump was doing just fine. And really the only two losing things that we see he did in those years was invest in his son. In one case, he followed his son's efforts

to manipulate a stock. He lost a couple million dollars on that. In one case, he followed his son's efforts to manipulate a stock. He lost a couple million dollars on that. In another case, some of the loans he had given to his son, he just wrote off as a tax loss of $15 million during this period of time also. Those are really the only things he ever did that didn't turn out well. So intriguingly, your investigation into Donald Trump's taxes, which you've been waiting so long to understand, they end up reflecting back and kind of confirming your original conclusion from the investigation of Fred Trump's taxes, which is that he's bailing out his son and he is the success that his son is struggling, if not failing to replicate. I think that's true. Fred Trump was steady Eddie.

He designed his businesses with very low debt. He knew what the rents were going to be. They produced income every year for his entire life and his children's lives beyond that. Donald Trump was trying for something different and it didn't work out. So what is this new information, this 10 years of tax return data that you have obtained, really tell us that we didn't know before? This new information, I think the main thing when I kind of pour over all the numbers is this is the one period, if I were to have guessed before I saw the actual numbers, that

he had possibly made some money. This is it. And now you can see that it just isn't. Let me play devil's advocate for just a moment. Now you can see that it just isn't. Let me play devil's advocate for just a moment. Is there a universe in which these losses represent a business savvy by someone who understands how to carry forward losses or even make them look bigger and bigger over time in order to not pay taxes? somebody who is essentially playing all the possible legal games with the tax code by embracing end-of-year losses on his returns. I think if these were losses that you were seeing, where it was losses on the bottom line of $1 or $2 million, there was something in proportion to

what he actually owned at that period of time, you might be able to say, wow, this is just really brilliant accounting. Somehow they're making all this work. But we're so beyond that in these numbers. We're orders of magnitude past that. There's actual real money being lost here in a lot of it. When we think about why President Trump is so deeply reluctant to release his tax returns, any of them, how do figures like the ones that you found here for this period help explain why that might be? Well, just imagine that. This is his whole reason for being a national figure, is the idea that he's a business genius. But you just can't reconcile that with the fact that over a 10-year period, he lost $1.2 billion on his own businesses.

You can't make those two things work together. And I think a big fear of his, if his tax returns and the modern ones come out, is we're going to see if his businesses, if they are profitable, that they're not as profitable as he says. And we're going to be able to see that in black and white on a form that he sent to the IRS. And we're going to be able to see that in black and white on a form that he sent to the IRS. I keep thinking of this thing that he said back in this period of time. I don't need to make more money. I have all the money I'll ever need. Is that really the essence of what we're seeing here?

His business interests shift through the years. He changes from golf courses to hotels to licensing deals. Was all that just a billboard for the Trump name? And he already had enough money to be rich and for his children to be rich throughout his life. I think you could tell that from his tax returns. I don't think that's a fact he would ever want anyone to know. That in reality, all the money he ever wanted came from his dad. And without that support, he would never have been this successful. I couldn't say it any better than that. And what does that really matter, though? Inherited money, showmanship versus money.

He's president of the United States. Why does it matter? It's a great point. If his point for being president was that I'm here to do public service, I'm here to return something to the country that has given me and my family so much, it wouldn't matter, right? People would know that he was independently wealthy, but I don't think it would be a central issue to your perception of him.

But he's there for a different reason. He's there because he's saying, my ideas matter because I've had brilliant success in everything I've touched. He's there because he says everything he's touched has turned to gold. That's his reason for being. That's his primary argument for his own intelligence, for all of his ideas and why they matter. So that essential fact has to matter as well. But the thing I'm really thinking about when I think about Donald Trump's tax returns is, you know, we have spent so much time

looking at Trump's finances in terms of what did his father give him. And we know a lot up until 1995, but it really becomes a bit of a black hole beyond that. And we don't know really anything about the sources of his income and who is standing behind him. In short, he could be getting money from corporations, from countries, from banks, from a whole host of places, and we have no idea. And I think that the reason why this fight is escalating and he does not want these tax returns out to the point where he's suing his bank, his accounting firm, and he's willing to go to court over this, there's got to be something there he doesn't want us to see. But I think one of the biggest things embedded in his tax returns is his sources of income. I'm curious what the White House has said

in response to this latest round of reporting that you both have done. They've told us that the information that we have is demonstrably false. Of course, there's an easy way for them to sort that out, and that's to provide us with Donald Trump's actual taxes so we can compare it all. They haven't done that. Sue and Russ, thank you very much. Thanks for having us. Thanks. In Washington, the battle over access to President Trump's tax returns has sharpened in recent days amid partisan warfare over the findings of the Mueller report. On Monday, the president's treasury secretary, Steve Mnuchin,

said he would not fulfill a request from the democratically controlled House Ways and Means Committee to provide the returns, while the president has filed lawsuits against his banks and accounting firm to prevent them from turning over his returns and other financial records to congressional committees. Meanwhile, in New York, lawmakers say they intend to advance a bill today that would allow those committees to see the president's New York state tax returns. We'll be right back.

Here's what else you need to know today. The Democrats are angry. Angry that the facts disappointed them. Angry that our legal system will not magically undo the 2016 election for them. In a speech from the Senate floor on Tuesday, Republican Majority Leader Mitch McConnell said it was time for Democrats to end their investigations into President Trump's 2016 campaign. They're grieving. They're grieving. They're grieving that the national crisis

they spent two years wishing for did not materialize. But for the rest of the country, this is good news. McConnell based his claim on the special counsel's finding that there was no coordination between the campaign and Russia, but ignored the discovery of significant evidence that Trump may have obstructed justice. Case closed. Case closed.

In a rebuttal, Democratic Minority Leader Chuck Schumer called McConnell's speech a, quote, whitewashing, and said that Democrats had no plans to end their investigations. So our leader says let's move on? It's sort of like Richard Nixon saying let's move on at the height of the investigation of his wrongdoing. Of course he wants to move on. He wants to cover up. He wants to silence. Not long after, in the latest showdown between the White House and Congress, the Trump administration invoked executive privilege to prevent former White House counsel Don McGahn from complying with a subpoena to provide documents to the democratically

controlled House Judiciary Committee. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.