Ethics Fiasco: Trump, Divestment and the Perversion of Executive Politics

Photo by Marc Nozell | CC BY 2.0

Photo by Marc Nozell | CC BY 2.0

One of the biggest stories this week is the confirmation controversy over the President Elect’s cabinet nominees. This controversy was accompanied by discussions of Trump’s own personal finances. Reporters are flooding major news outlets with stories questioning whether Trump and his nominees can be trusted to put the public interest first, considering the black hole that is The Donald’s finances, and the potential conflicts of interest between his business holdings and his democratic obligations to the country. The message from the Democrats and media is that Trump and his nominees’ opposition to financial transparency are threats to good governance. This narrative has some value, in terms of spotlighting the dangers of official abuse of politics for private gain. But this narrative is also stunningly naïve, demonstrating a willful ignorance to the longstanding perversion of American politics by corporate interests.

Of primary concern to journalists is the failure of numerous Trump nominees to provide a full disclosure of their financial assets, or a plan for how to divest from holdings that could place them in situations where their personal financial interests conflict with the common good. The economic background of Trump’s nominees is somewhat unique, in that never have so many people of such opulence been nominated to key federal positions. As the New York Times reported on January 6, “Mr. Trump has selected what would be the wealthiest cabinet in modern American history, filled with millionaires and billionaires with complicated financial portfolios. Mr. [Rex] Tillerson [the Secretary of State nominee] is worth at least $300 million, but is hardly the richest among them; Wilbur L. Ross Jr., the Commerce Secretary nominee; Betsy DeVos, the Education Secretary nominee; and Steven T. Mnuchin, the Treasury Secretary nominee, each hold assets estimated at more than a billion dollars.”

Echoing the concerns of Democratic leaders, the editors at the New York Times write:

Donald Trump’s transition team and Senate Republicans are determined to railroad several nominees to his cabinet of billionaires and moguls through to confirmation without fully revealing business interests that could disqualify them…This is unprecedented, potentially illegal, and the clearest sign yet of Mr. Trump’s cavalier attitude toward criminal laws preventing federal officials from profiting from public service. Mr. Trump’s Senate allies are shirking their constitutional duty, attempting to rubber-stamp nominees without information that would help determine whether they merit the public’s confidence. The law doesn’t require Mr. Trump to shed his business interests, but the failure of his cabinet officials to do so could land them in jail.”

As of January 7, the Office of Government Ethics (OGE) expressed “cause for alarm” if the Senate was to begin confirmation hearings prior to all Trump’s nominees submitting the relevant financial disclosure paperwork. The New York Times reports the Trump administration “is behind where it should be in this process of disentangling conflicts of interest. This is partly a reflection of the extraordinary complexity of negotiating such conflict of interest agreements for incoming government officials worth hundreds of millions, or even billions, of dollars.” OGE director Walter Shaub warns: “During this presidential transition, not all of the nominees presently scheduled for hearings have completed the ethics review process. In fact, OGE has not received even initial draft financial disclosure reports for some of the nominees scheduled for hearings.”

Democratic Senate Minority Leader Chuck Schumer attacks Trump’s incoming administration for a lack of transparency. He criticizes Republican Senators and Trump for “collusion” in pushing hearings prior to financial disclosures are complete: “The Senate and the American people deserve to know that these cabinet nominees have a plan to avoid any conflicts of interest, that they’re working on behalf of the American people and not their own bottom line, and that they plan to fully comply with the law.” Reiterating this concern with good governance, the New York Times editorializes: “Nominees face a long [vetting] process to ensure they’ll be working for the American people, not for their own enrichment. By law, they must submit hundreds of pages of financial disclosures, shed assets and jobs and take other steps to avoid conflicts of interest.”  The Times encourages Trump’s nominees to “divest [their potentially compromising assets] and enter office free of conflict.” The paper denigrates Trump for being “the only incoming president in modern history who has refused to do so.” The Times quotes Lawrence Noble, former counsel at the Federal Election Commission, who argues nominees should sell their investments and place the earnings in treasury bonds or mutual funds: “We don’t want the decisions that these individuals make to be influenced by their own financial interests.”

The above concerns about graft in the executive branch are warranted in light of the longstanding plutocratic dominance of U.S. politics. Numerous academic studies find that business interests prevail over public concerns in the policy process. In Affluence and Influence, political scientist Martin Gilens provides evidence that policy outcomes are significantly more likely to benefit the top 20 percent of income earners over the bottom 80 percent. Gilens and Page conclude in another study, “Testing Theories of American Politics,” that average citizens have virtually no effect on policy outcomes compared to wealthier Americans. Citizen’s groups have at times a modest impact on policy, but much less than wealthy individuals and business lobbies. In Representing the Advantaged, political scientist Daniel Butler finds that the grievances of Americans of higher socio-economic status are more likely to be taken seriously by political officials than those of lower-socio economic status, even when both groups contact officials at equal rates. Considering these findings, it would be extraordinarily naïve to claim that political officials are not biased in favor of the wealthy.

Potential conflicts of interest between Trump’s business holdings and his presidential responsibilities are real. I’ll provide two examples, which have already been acknowledged by journalists. One involves Trump’s role in appointing the head of the General Services Administration, which negotiates the lease for Trump’s international hotel in Washington D.C. Of course, Trump owns the hotel, and announced that he would place his holdings in a “blind trust” for his daughter and other children to run. But to argue that Trump doesn’t hold a financial interest in seeing a favorable lease negotiated for his business is outlandish. Trump also seems unaware of what a “blind trust” is. Here’s a hint – it’s not placing your holdings into the hands of your children, who are legally free to communicate with you about business affairs at any time. But this is not even the central point. Most importantly, even if Trump didn’t communicate with his children, he still has a financial interest in seeing a favorable lease negotiated for his hotel, and his children, in addition to his General Services Administration appointment, obviously know this. A second example of a conflict of interest involves Trump’s hotels and potential disputes with the National Labor Relations Board. The head of the NLRB is appointed by Trump, which could mean undue pressure on the agency to bias rulings in favor of the president. Even if Trump relies on his children to run the hotels, this doesn’t remove the blatant conflict of interest at play regarding executive labor policy.

For those who would downplay these concerns by claiming that U.S. politics is already corrupted by money, my response is simple: things can always be worse. The corruption of politics by money via campaign donations is just one form of political perversion. There are others, as reflected in concerns over patronage, bribery, and conflicts of interest such as those described above. One needs to look no further than my home state, Illinois, to see how political patronage and personal financial interests compromise government. Illinois governors are notorious for their blatant corruption. For example, former Republican Governor and ex-convict George Ryan ran a “pay-to-play” ring out of the Secretary of State’s office, with driver’s licenses shamelessly sold for bribes. Many Illinois citizens who benefitted from this program were first generation immigrants with little to no command of the English language or knowledge of the rules of the road (I say this from experience, having numerous extended family immigrating from Sicily and paying these bribes). The scandal blew up in Ryan’s face after a tragic accident involving a truck driver (who paid a bribe for his license), who caused a fiery crash involving the deaths of six children, after the driver’s taillight assembly fell off his truck and ignited a minivan’s fuel tank. The truck driver had been warned by numerous drivers on the road of his loose taillight, but drove on undeterred. The incident came to symbolize the extraordinary recklessness and criminality of patronage politics under the Ryan regime.

Then, of course, there was the shameless patronage criminality of former Governor and now-convict Rod Blagojevich. Among Blagojevich’s best hits include: his shameless horse trading of state bureaucratic nominations for campaign donations; his attempt to shake down a children’s hospital for campaign donations, accompanied by a threat of cutting off state funding; his effort have the Chicago Tribune’s editorial staff fired after they advocated his impeachment, accompanied by the threat that state renovation funds would not be available for the Cub’s Wrigley Field, which Tribune owner Sam Zell also owned; and finally, Blagojevich’s effort to sell Barack Obama’s old Senate seat to the highest bidder, a prize which he referred to as “fucking golden” – and which he had no plans of “giving it up for fucking nothin.”  Illinois’ patronage politics is a more shameless, brazen form of corruption than the business-as-usual campaign donation system driving national politics. In the national version, pro-business candidates are empowered to win political offices by a small group of wealthy donors seeking to curry favor. In the Illinois version, the same campaign contribution pressures exist, but government is viewed as an ATM machine for political leaders, with patronage allowing for repeated withdrawals of funds into officials’ personal piggybanks.

The path forward for Trump and his nominees is clearly described by former President Bush’s chief ethics lawyer, Richard Painter: divestment. Painter argues failure to divest would be a violation of Article 1, Section 9 of the U.S. Constitution, which prohibits presidents from accepting “any present, emolument, office or title, of any kind whatever, from any king, prince, or foreign state.” In this case, the emoluments [defined as a fee or profit] are illegally accrued any time Trump charges foreign leaders to stay in his hotels. Trump’s attorney, Sherri Dillon, absurdly insists that profits earned from foreign leaders do not constitute “emoluments” – but rather are “value-for-value exchange[s]” between parties that are of no concern to supporters of transparency in government.

Dillon’s silly semantics aside, Trump’s nominees are also at risk of violating federal ethics law by failing to divulge and divest their financial assets. 18 U.S.C. §208 bars executive branch employees from “personally and substantially” participating in government activities having an impact on their personal finances. Without a transparent accounting of their assets, there is no way to know whether nominees will engage in political activities that enrich their own economic fortunes.

Disclosure and divestment are important. But it’s also important to note that the Schumer’s narrative about “good government” represents a romantic, mythic belief these acts will magically cure political nominees of conflicts of interest they hold between pursuing the public good and private profits. Nothing could be further from the truth. The American political process has been captured on a system-wide level, going beyond ethics law, a single president, or presidential nominees. This system-wide corruption, however, is not as simple as common portrayals of lobbyists “buying” off officials via campaign donations. The reality of the matter is far worse. If it were merely an issue of curbing money transactions between officials and lobbyists, this could be dealt with by reauthorizing the Bipartisan Campaign Reform Act of 2002, which banned issue ad spending, and by banning campaign donations of any kind in favor of publicly financed campaigns. But the rot of American politics extends much further than campaign donations. The entire political system has been captured by a plutocratic ideology that envisions business elites as the rightful drivers of public policy, due to their allegedly superior wisdom and skills.

Many Americans will be surprised to learn that social science studies regularly fail to uncover a consistent, statistically significant relationship between campaign donations on the one hand, and members of Congress voting on legislation favored by donors on the other.  Furthermore, recent scholarship concludes that the most common policy outcome is continuation of the status quo, with lobbyists in Washington failing most of the time in securing new benefits via legislation. Despite sizable campaign donations, members of Congress are risk averse, often seeking to avoid the negative exposure associated with pushing unpopular reforms. The Chamber of Commerce may wish to eliminate the minimum wage entirely, but the negative public response would be so large as to make it impossible. The beef industry would probably like to eliminate USDA regulations entirely, but the public backlash in terms of the heightened risk to consumers would be unmanageable. Wall Street and the health insurance industry are salivating over privatizing Social Security and Medicare, but that doesn’t mean that Republicans and Democrats will uniformly embrace these proposals if they fear losing votes from seniors.

Complicating matters further, political scientists find that lobbyists don’t even try to “buy” policy via campaign donations. Rather, they seek to establish and strengthen relationships with officials who already agree ideologically with their demands. One of the main roles of lobbyists, social scientists argue, is providing the information and expertise officials need to advocate for policy changes that benefit corporate interests. Within this framework of pre-existing support for business elites, campaign contributors (and contributions) are important because they cement into place a relationship between lobbyists and officials. Donations ensure that pro-business candidates get elected over those who challenge business power. This conclusion is hardly novel. It’s well known in political science that nearly nine times out of ten, the candidate who spends more money in electoral races wins, since they are able to buy more public exposure via political ads.

Contrary to Schumer’s divestment narrative, it’s important to identify how the entire political system has been captured by wealthy interests. It may be the case that corporate lobbyists fail most of the time in securing benefits from Congress. But when changes to the law do occur, wealthy Americans and business lobbies are much more likely to get what they want than the average American or citizen’s groups. Why is this so?  Political scientist Nicholas Carnes provides a simple explanation in White Collar Government: The Hidden Role of Class in Economic Policymaking. Carnes empirically documents how more affluent political officials are consistently more likely to support pro-business, conservative economic policies, as compared to (the few) working-class Americans who have historically served in Congress. The point here is simple: beyond the concern with campaign donations, government itself is captured by plutocratic actors who now run Congress directly. Government is not “controlled” by corporate America. Government is corporate America. Most members of Congress are millionaires, and their numbers have grown significantly in recent decades.  According to the Center for Responsive Politics, the median net worth of U.S. lawmakers reached $1 million in 2013, 18 times that of the average household.

The Schumer position on corruption in politics misses a key point. Most officials are socialized to embrace elitist, upper-class values, because they are part of the upper class. The famous sociologist G. William Domhoff spent years documenting how being socialized through elitist social, economic, and interpersonal networks allows for the perpetuation of the American upper class. Italian Marxist Antonio Gramsci was right to focus on how the hegemonic power of socialization drives the indoctrination process. Socialization in favor of elite interests is absolutely vital to perpetuating plutocracy.

The Marxian position that economics determines consciousness, while seemingly crude, does explain how elite values perpetuate themselves. When coupled with elitist forms of socialization, one’s economic class (in this case being affluent) works to reinforce elitist ideologies that seek to enhance corporate power over politics. This hegemonic process isn’t recognized, however, in simplistic discussions of campaign donations “buying” officials, or for that matter by those naively claiming that divesting one’s financial assets guarantees they will act as honest brokers of policy change.

In a rare admission of how deep the rabbit hole really goes, the New York Times reports the insight of Sierra Club director Lena Moffitt, who speaks derisively of the notion that divestment will cure the Trump administration of their elitist policies. Taking aim at Rex Tillerson, Trump’s State Department nominee, Moffitt explained: “It is impossible for this man to remove his career, and frankly his personality, from the oil and gas industry. He has been knee deep in this industry for more than four decades.” Such is the way of things when political institutions are captured by business elites.

Correcting the perversions endemic in American politics requires more than disclosure and divestment from Trump and his nominees. Even “getting money out of politics” is unlikely to cure the problem of business dominance of government. Rather, Americans must take the initiative and purge the political system of the bi-partisan, wealthy officialdom who currently dominate Congress, the courts, and the White House. This project will require tremendous effort and a decades-long fight to roll back capture of government.

John Dewey was right say that “politics is the shadow cast on society by big business.” To fight the plutocracy requires a cultural, economic, and political revolution in the way people think about politics. Government must be transformed from an upper-class outfit into one dominated by the working class. The only way to do this is to remove the rot, from root to branch.

Anthony DiMaggio is Associate Professor of Political Science at Lehigh University. He is the author of Rising Fascism in America: It Can Happen Here (Routledge, 2022), in addition to Rebellion in America (Routledge, 2020), and Unequal America (Routledge, 2021). He can be reached at: A digital copy of Rebellion in America can be read for free here.