President-elect Donald Trump will enter office with an astonishing array of business projects, loans and business deals around the globe. Reports have raised questions about those potential conflicts – Trump acknowledged that he recently encouraged British politician Nigel Farage to oppose offshore wind farms that might affect the view from one of his Scottish golf courses — but Trump shrugged off any potential problems.
“The law’s totally on my side, meaning, the president can’t have a conflict of interest,” he said.
Is this the case?
The law doesn’t say the president can’t have a conflict of interest. But Congress, under Title 18 Section 208 of the U.S. code, did exempt the president and vice president from conflict-of-interest laws on the theory that the presidency has so much power that any possible executive action might pose a potential conflict.
“As a general rule, public officials in the executive branch are subject to criminal penalties if they personally and substantially participate in matters in which they (or their immediate families, business partners or associated organizations) hold financial interests,” the Congressional Research Service said in an October report. “However, because of concerns regarding interference with the exercise of constitutional duties, Congress has not applied these restrictions to the President. Consequently, there is no current legal requirement that would compel the President to relinquish financial interests because of a conflict of interest.”
This principle was outlined in a 1974 letter from the Justice Department, issued at a time when Nelson Rockefeller was under consideration to be confirmed as vice president after Richard Nixon resigned and Gerald Ford became president. Rockefeller, then governor of New York, was heir to a fortune and consented to congressional hearings in which his business interests were closely examined.
“The uniqueness of the President’s situation is also illustrated by the fact that disqualification of the President from policy decisions because of personal conflicting interests is inconceivable,” the letter noted. The 1978 Ethics of Government Act and the 1989 Ethics Reform Act later codified this principle.
In other words, Congress assumed that the president could be trusted to do the right thing. Most recent presidents — Lyndon Johnson, Jimmy Carter, Ronald Reagan, George W. Bush, George H.W. Bush, Bill Clinton — have placed their personal assets in a blind trust, even if they did not have a legal obligation to do so. President Obama did not, but his assets were only in mutual funds and Treasury bonds.
Trump is unique because so much of wealth is tied in with the value of his “Trump” brand. Already, foreign diplomats have been flocking to his recently opened hotel in downtown Washington — and Trump noted to the Times that his brand is suddenly “hotter.”
The fear of potential influence from foreign governments through economic benefits to federal officials led to the Foreign Emoluments Clause in the U.S. Constitution. Trump’s business holdings around the world could test the boundaries of the letter or spirit of the clause. Case Western Reserve University law professor Erik Jensen outlined key questions that may arise regarding whether the Emoluments Clause would apply to Trump and his business holdings.
“If nothing else, however, the Clause emphasizes the founders’ fears about economic benefits coming to American officials from foreign governments. It adds a constitutional dimension to some good, old-fashioned appearance-of-impropriety concerns,” Jensen said in response to a question about Trump and the Emoluments Clause posed by Jonathan Adler of the Volokh Conspiracy blog.
For what it’s worth, Trump’s pick for chief of staff, Reince Priebus, has vowed that the White House counsel will review all potential areas that could pose a conflict: “I can assure the American people that there wouldn’t be any wrongdoing or any sort of undue influence over any decision-making.”
The Pinocchio Test
While spoken in classic “Trumpese” that fails to capture the nuances of the law, the president-elect did rightly point to an exemption for the president and vice president in conflicts of interest laws. And while such an exemption exists, the theory was that the presidency has so much power that any policy decision could pose a potential conflict. The law assumed that the president could be trusted to do the right thing and take actions to avoid appearance or presence of impropriety — not that the law is “totally” on the president’s “side” or that it would allow the president to use the exemption to his favor.
Trump’s statement does not quite rise to the level of a Geppetto Checkmark, nor does it qualify for a Pinocchio. So we will not rate this claim. Trump, nevertheless, should be more careful about his wording on this point. It’s quite possible he will face a number of conflicts of interest during his presidency. The law may offer an exemption for the president, but political reality — and perception— often does not.
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