Since Donald J. Trump announced his candidacy for president in June 2015, there have been many commentaries on his financial history — particularly because he has refused to release his tax returns.

In 2016, David Barstow, Susanne Craig and Russ Buettner of The New York Times obtained Trump’s 1995 tax returns, and for their article published on the front page of The New York Times on October 3, 2018, they worked together for over a year to investigate the wealth that the president inherited from his father.

The narrative in the NY Times investigative piece is compelling.

Like most rules and regulations, U.S. tax law assumes that people will voluntarily comply in the interest of equity and fairness across the board.  If the laws are not fair, they should be amended, not circumvented.

Having worked in the real estate and financial services industry for many years, I am familiar with many of the strategies exposed in the article, particularly the rather arbitrary and capricious use of independent appraisals to determine market value at a point in time.

Where many — if not most — wealthy families and individuals pay their fair share of taxes (perhaps grudgingly), the Trump family has notoriously and conspicuously fought against taxing authorities, continually challenging assessments and levies as a part of their overall family business plan.

Note a recent kerfuffle in Westchester County, NY where a Trump National Golf Club is located.

With a 65,000 square foot club house, private gourmet restaurant, swimming pool, tennis pavilion and courts, the 18-hole, 7,261 yard Jim Fazio designed course is situated on 140+ acres of prime real estate in the Town of Ossining, NY.

This ultra-exclusive private club demands a hefty 5-figure initiation fee from new members, with minimum annual dues of $19,400.

In his 2017 Executive Branch Personal Financial Disclosure Report (filed 6/14/2017), Donald Trump revealed the value of his ownership interest in Trump National Golf Club – Westchester at ‘over $50,000,000.’ with annual personal income attributable to the Club of $9,771,428.

Yet, in 2015, the Trump Organization sued the town of Ossining to lower its assessment from the 2014 value of $13.5 Million to $1.4 Million in order to reduce property and school taxes.

After the feud with Ossining became public, Trump’s lawyers raised the dollar value of the golf course, but it was still nowhere near the official 2015 assessment of $14.3 million and 2016 assessed value of $15.1 million.

The moves are consistent with repeated efforts by the Trump Organization to challenge property valuations in an effort to win massive local property tax reductions, not to mention the potentially illicit impacts on federal, state and local income tax obligations which in many cases are directly linked to these local assessments (valuations).

Over the past several years, Trump has lauded himself as “one of the most successful businessmen in the world,” who paid “no more tax than legally required.”

“I have brilliantly used [the U.S. tax] laws,” Trump said at a campaign event in October 2016. “I was able to use the tax laws of this country, and my business acumen, to dig out of the real estate mess — you would call it a depression — when few others were able to do what I did.”

It was a reported $916 Million net operating loss in 1995 which gave Trump the ability to avoid paying taxes on more than $50 Million in annual taxable income over the following 18 years.

Make America Great Again? Only if others are willing to cough up the tax revenues needed to pay the freight.

Advertisements

“We Fed an Island”

September 15, 2018

While U.S. President Trump continues to blame the people of Puerto Rico and their elected local leadership for delays, inefficiencies and various failures in the response to the aftermath of Hurricane Maria (2017), Trump is lavish with praise for the wonderful response by his administration.

“I think that Puerto Rico was an incredible, unsung success,” Mr. Trump said.  “I actually think it is one of the best jobs that’s ever been done with respect to what this is all about.”

Meanwhile, other sources do not agree with President Trump’s assessment.

One of the true unsung heroes involved in the Island’s recovery from Hurricane Maria is José Andrés, a chef and restaurateur who helped organize others from the food industry to form a veritable army comprised of both professionals and volunteers to feed residents, medical professionals and other disaster response workers.

A year after the initial response to Maria began, José Andrés has released a book reflecting on his experiences and lessons learned from the disaster response.

This article from the Washington Post describes his passion and introduces the book in a manner I wish I was able:

https://www.washingtonpost.com/lifestyle/food/jose-andress-riveting-we-fed-an-island-calls-for-a-revolution-in-disaster-relief/2018/09/05/b126d766-ad70-11e8-b1da-ff7faa680710_story.html?utm_term=.df529f66adc0

Labor Day Reflections

September 2, 2018

Labor Day, the first Monday in September, is an outcome of the U.S. Labor Movement and is dedicated to the social and economic achievements of American workers. It is an annual national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.

The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union.  It didn’t take long for the federal government to recognize it (1885), and it became a national holiday in 1894.

The inspiration of Labor Day is closely tied to both the roots of Capitalism and the emergence of Labor Unions in the U.S.

In 1983, the first year for which union data are available, the union membership rate was 20.1 percent and there were 17.7 million union workers.

By 2017, the union membership rate had declined to 10.7 percent, and – most alarmingly – union representation of public-sector workers (34.4 percent) had become more than five times higher than that of private-sector workers (6.5 percent).

The origin of Capitalism as economic system assumed that private individuals or families who directly invested in (and directly took on the risks of loss) would own the means of production, distribution, and thus ensure a free and fair market for goods and services: They had real skin in the game.

Relying on the theories that: (1) people (consumers) are rational and will seek maximum utility from their economic actions; (2) information is transparently available to all who participate in the economy; and (3) markets are self-correcting; the concepts of Capitalism are compelling to most people when contrasted to cooperatively or state-owned means of wealth.

Worker exploitation was one of the early criticisms of the Capitalism model. The Labor Movement in the U.S. was instrumental in creating a buffer (safeguard) to help ensure a safer workplace, fair wages and reasonable hours and benefits.  The Labor Movement was enabled by Labor Unions.

Today’s version of Capitalism has morphed into ownership of corporations by passive investors (mutual funds, pension funds, venture funds, etc.) which seek maximum current ROI with little or no regard to sustainability or externalities.

The executives who are charged with achieving the expectation of the passive investors are “hired guns” who begin with no skin in the game, yet who often are rewarded with stock options when short-term outcomes are positive.

In 1978, the average CEO earned about 30 times as much as the average worker.  U.S. Census data tells us that the average income for U.S. households was $17,730, pegging average CEO income at $531,900.

In just 40 years, statistics from 2017 indicate that CEOs in the 350 largest companies in the U.S. are earning over 300 times as much as the average worker (actually, 312:1).

A recent survey by Glassdoor found that the median salary for U.S. employees is $51,272, implying median CEO compensation at nearly $16 Million.

There is no rational explanation for the explosion of the CEO to Worker compensation ratio.  It seems to reflect a total lack of oversight by those individuals who have been elected to represent the interests of the American people.

Current economic conditions ought to raise a red flag to our elected officials that our nation has navigated very close to a Feudalistic System which is on track to implode and to destroy the very notion of what is described in the Declaration of Independence.

Labor Day seems like an appropriate time to pause and reflect on what seems to be an egregious obstacle to the healthy future of our American society.

Martha Stewart served prison time for a conviction on insider trading.

There is a cadre of Trump Insiders who are privy to Mr. Trump’s rants which roil the financial markets, some of whom are getting rich off of their advance information of what he will say or do.

Donald Trump’s frequently irrational, generally unpredictable — and often arbitrary and capricious — tweets, pronouncements and actions have proven to significantly move financial markets, often creating a whipsaw effect.

Today – May 31, 2018 – Mr. Trump allowed tariffs to be enacted on steel and aluminum imports from Canada, Mexico and the E.U. on the grounds that such materials are being imported into the United States “in such quantities and under such circumstances as to threaten to impair the national security of the United States.”

There is no credible evidence that steel and/or aluminum imported into the U.S. from Canada, Mexico and/or the E.U. pose any threat to the national security of the U.S.  In fact, there is no credible evidence that such imports pose any threat to the U.S. domestic economy.

Meanwhile, Mr. Trump’s action today to impose tariffs on imports from our closest allies was apparently not expected in the financial markets, leading to a 1% drop in the Dow Jones Industrial Average.

We now have several data points relating to financial market response to irrational actions by President Trump which clearly represent huge arbitrage opportunities for Trump insiders.

The ‘out-of-right-field’ announcement in early March 2018 by Mr. Trump that the U.S. would impose tariffs on steel and aluminum imports precipitated an almost immediate 500 point drop in the DJI.

 

It’s bad enough that Trump’s actions pose a tremendous risk to the entire U.S. society and our economy.

The Securities and Exchange Commission (SEC) needs to reign in this illegal behavior by Mr. Trump, and to charge those insiders who are illegally profiting in the financial markets from advance knowledge of what sort of disruptive, arbitrary and capricious pronouncements President Trump will make in the near term.

America’s Teachers

April 12, 2018

America’s teachers have notoriously been underpaid relative to their peer group. The excuses include, (a) Flexibility; (b) Summers off; (c) a profession dominated by women (and we all know that women earn about 80% of what men earn for comparable experience in similar jobs).

If I were a young person approaching college graduation, I might look at starting salary, and projections for advancement over the course of my career.

If I did that, teaching would not likely be on my list of job choices.

According to a study published by US News and World Report looking at the best jobs for 2018 college graduates, there are dozens of opportunities which absolutely blow away starting salaries for teachers, which seem to be in the $38k range.

One random example is an entry level Financial Analyst in the area of investment banking, private banking and the securities industry. The highest paid in the financial analyst profession work in the metropolitan areas of San Francisco, New York City, and San Luis Obispo, California. The Stamford /Bridgeport, CT area also pays well, as does the city of Salem, Oregon.

San Francisco      $141,840
New York City     $133,130
San Luis Obispo, CA  $120,750
Bridgeport (Stamford), CT   $120,520
Salem, Oregon            $120,150

These are median starting salaries for newly minted graduates.  What’s most egregious about this?

On a really good day, financial analysts provide zero economic value-added to our overall economy and society; on a bad day, they can cause catastrophic damage. Financial analysts produce no tangible outputs; they endeavor to discover and exploit financial opportunities to benefit their firm and its clients at the expense of other individuals.

Teachers bring value every day, yet they are generally under-respected and certainly, under-compensated. Teachers are the mechanism by which we build future intellectual capital to benefit future generations in and across the U.S.

Some may argue that this example attempts to pit Capitalism against Socialism:  Nice try on that one!

Pure capitalism relies on the premise that private capital, invested strategically, adds value to the overall economy and society, while providing a fair and reasonable profit to the capitalist(s).

Pure socialism requires a government controlled population of workers to both plan and operate the system; true socialism requires government control of all economic as well as political and public affairs.

By levying fair and reasonable income taxes on excess or suspicious profits, a nation is able to re-invest those taxes into strategic and forward-focused programs and initiatives, such things as: bridges; tunnels; airports; rail rapid transit; healthcare research and innovations; and public education – including teacher quality and teacher compensation.

Teachers need to re-focus their compensation and resource allocation argument toward pure economics.

It strikes me that the message needs to be:  “High quality, well-compensated teachers who are provided with appropriate and needed classroom resources help to shape and create the next generation of high-performance, highly motivated and productive citizens our nation will need to ensure future economic and political success.
There is no substitute for a ready and reliable supply of intellectual capital waiting in the wings to take charge in the coming decades.”

A half century ago, the Baby Boomer generation entered adulthood with plenty of energy and commitment to help make our world safer and better.  As they set forth to establish families of their own, careers and all of the rest, they faced some unexpected head winds.  The rapidity of technological change combined with growing economic and social divides put extraordinary pressure on these young families, and they became self-absorbed.

The direct socioeconomic impacts of American suburbanization didn’t really begin to take hold until the 1970’s.  The resulting economic and racial segregation shielded the next generation(s) of middle class young people growing up in suburbia, away from their less affluent peers who were left behind in urban neighborhoods. They lost touch with each other, not able to see common ground.

Somehow, things have begun to change for the positive.

Maybe Trump’s legacy will be as the unconscious ‘uniter’ of the people of good will — Americans who reject corruption, self-dealing and bullying — who regardless of hair color, height, weight, economics, gender, race, skin tone, religion, sexual orientation, learning and/or mobility differences, and many more… — refuse to participate in the Trump Swamp.

This emerging generation, evidenced by the Parkland students, are showing signs of unity under a new paradigm of The American Dream, where the principles of life, liberty and the pursuit of happiness are honestly and equitably recognized and applied.

To date, Trump has certainly distinguished himself as the polar opposite of genuine American values.

While it’s still too early to celebrate any victories, I am betting on the young people who have taken an active role in the March For Our Lives movement — and the millions of their supporters (average age 48!) — to continue to energize and inspire the vast majority of U.S. citizens and residents who want to see common sense prevail.

High on the Hogg

April 1, 2018

David Hogg, the Parkland student who has become one of the most vocal leaders in the March For Our Lives movement, has explained their position and their mission,

“I want people to understand, we’re not trying to take your guns, we’re not against the second amendment; we don’t want to repeal the second amendment. We simply want gun legislation in this country that allows law-abiding citizens to still own guns but prevents people with a history of mental illness or a history of a criminal background from owning a firearm. It’s as simple as that.”

I think the last real, sustained and almost universal call to action by America’s youth occurred in the late ’60’s – early ’70’s when large-scale opposition to U.S. military involvement in SE Asia was the focal point.

Sure, there have been many other issues, causes, protests, rallies, etc. in the ensuing years, but I am not aware of anything quite as promising as the current March for our Lives movement.

One of the great outcomes thus far is contained within the Laura Ingraham debacle.

On her broadcast television show, Laura Ingraham personally attacked David Hogg regarding his academics.

Within 2 days after Ingraham attacked him personally, Hogg organized a successful boycott of her advertisers.

Nothing personal, he remarked. We are just following the money. Take away the money, and the show will disappear.

Brilliant!

I am not a Roman Catholic, although I know many who are.

I wasn’t prepared for what Pope Francis had to say, nor how he chose to convey his message.

I am quite pleased to have observed and listened to most of the things Pope Francis subscribes to. No doubt that the Roman Catholic Church in America has lost a great deal of its luster over the past couple of decades for a variety of reasons.

I think if the American R.C. church (and many other religious institutions) can find a way to embrace some of the values this Pope advocates for; our country could come closer to healing.

Related to this observation, the John Boehner thing came as a bit of a surprise, and for a few moments, I was pleased.

Now that some of the background has been exposed, it seems that Boehner has tried very hard to create an environment where civil discussion and debate was at least possible.

It also seems clear that there is a vociferous contingent of ultra-conservative elected officials in D.C. who share a common thread: ‘Take no prisoners: it’s our way or the highway. We don’t negotiate or compromise, ever.’

I guess I knew before the Boehner announcement on 9/25 that there were at least a few elected characters in our Congress who are mean, rigid, callous and intractable.

I just never would have guessed that there were enough of these bigots and curmudgeons to create an environment toxic enough to drive John Boehner back to Ohio, for good.

I guess the Koch Brothers (and some others) are gaining some real traction from their ‘investments’.

Goes to show: You don’t personally need to wear the white hood if you can write enough checks to mobilize an army of fringe fundamentalists who are willing to align with your doctrine.

There are dozens – hundreds – of examples throughout history which support this theory, perhaps the most frightening of which is the rise of Nazism under the leadership of Adolph Hitler.

Perhaps the spirit of Pope Francis will engage and mobilize enough folks who seem to perpetually sit on the sidelines hoping that – magically or mysteriously – the right things will happen.

History tells us that the right things will only happen when people of good will mobilize in a positive way to stop the fringe fundamentalists from taking control of our economy, government and society.

Jessica Bakeman reports on politics and education policy in Capital New York’s Albany bureau. In a recent article focused on MaryEllen Elia, our recently appointed New York State Education Commissioner, Ms. Bakeman reflects on what may be a new strategy to fix the persistent problem of failing schools in pockets around the State.

In essence, Ms. Elia’s plan seems to rely on a “tough love” approach with district leaders and parents from the lowest performing NYS schools: ‘You have 2 years to fix these failing schools, or the state will do it for you’.  http://www.capitalnewyork.com/article/albany/2015/07/8572658/elia-delivers-tough-message-leaders-struggling-schools

Unlike some observers, I strongly believe that the root cause of failing schools is not directly linked to teachers, administrators or common core.

The primary failure begins when we as a society allow virtually all of our lower-income children to be concentrated into just a few school districts — while continuing to operate dozens of boutique public school districts which serve children from predominantly upper income households.

Extensive research tells us that if we continue to follow this model, it will ensure that the achievement gap will continue to grow.

Whether accomplished through housing choice or school choice: economic, social and cultural integration at the K-12 level has been proven to be the best solution to close the achievement gap.

New York State allows and encourages public school districts to form around — and to exclusively serve — residents of villages, towns, neighborhoods and cities. The impact of this ‘home rule’ approach to public education has created de facto segregation which has produced more egregious and dangerous consequences than the issues debated in the Brown vs. Board of Education case which was decided in 1954 – 60+ years ago!

We can witness how “Separate and Unequal” has become the standard across New York State, very clearly corroborated by NYS Education Department statistics which prove that economic and racial segregation in housing translates directly to school inequality, which results in disparate student outcomes.

There really is no place for personal or private agendas on the part of our appointed and elected officials. Public officials are expected to set a positive example for all people, affirming that our elected leadership is fair, honest and forward thinking.

It may very well be that Commissioner Elia — appointed by the NYS Board of Regents — has been tasked with sweeping the truth under the rug, because she is not talking about the only viable solution, which is to reform NYS Education regulations, many of which date to the late 19th Century.

I can grasp the enlightened self-interest of homeowners in Pittsford, Scarsdale, Briarcliff Manor, Bronxville (or in dozens of other public school districts in NYS which serve students from upper income households) who want to fight for their autonomy to keep ‘those other children’ out of their schools.

These are the very same wealthy and politically active adults who wield undue influence over our elected officials in Albany.

With that said, I’m dubious that any meaningful reform can take place until the specter of political influence is removed from our public education system.

Today (January 14, 2015), JPMorgan Chase announced weaker than expected 4th quarter 2014 earnings.

The reaction in the Market was quick and harsh.

The price of JPM stock slid down minus 3.45% today, wiping out some $7.63 Billion in shareholder value, overnight!

Analysts, prognosticators and pundits weighed in on various aspects of weakness in the franchise and potential management failures.

Meanwhile, seemingly oblivious to our real world, the folks in Corporate Responsibility at JPMorgan Chase released a report on declining summer jobs for youth, perhaps as a means to soften or divert attention away from the stock price and management failures?

https://finance.yahoo.com/news/summer-jobs-young-people-decline-150000168.html

Are they kidding?

The folks they cite in this report who are disparately impacted — “low-income youth and young people of color face diminished opportunities to gain work experience and skills, limiting potential for economic advancement” are the very same young people who are most likely to come to the table with blemishes, bruises and with clear and obvious symptoms of “the achievement gap.”

I think the folks at JPMorgan Chase must have abandoned the concept of using available research and institutional knowledge to help impact solutions in local communities to pursue a much higher-level approach which relies on a premise that is based on “research grants” paid to Aspen Institute and Brookings Institution which are intended to help discover hidden nuggets that otherwise might be overlooked.

If you read the footnotes to this particular report (http://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/54887-jpmc-summeryouth-aw2.pdf), you will find references to 2 basic sources: (1) The Brookings Institution, and (2) Northeastern University.

While no one could legitimately doubt the likely veracity of these sources, would this approach pass the smell test at any legitimate academic institution?

Seems that when a major institution is stepping up to be recognized as a Thought Leader, they ought to at least use decent quality paint to cover over the façade they are trying to use as their primary lead.

The Wizard of Oz would have it no other way!