Donald Trump was feeling under appreciated — a common occurrence — at a townhall meeting in New Hampshire this week. He explained to NBC’s Matt Lauer how rough his life had been because he’d been frequently rejected. “My whole life, really has been a no,” he said. “It has not been easy for me. It has not been easy for me. I started off in Brooklyn. My father gave me a small loan of a million dollars. I came into Manhattan, and I had to pay him back, and I had to pay him back with interest. But I came into Manhattan and I started buying properties and I did great.”
Lauer finally got Trump to admit that getting a $1 million loan was not exactly a hardship for someone starting out in business in the 1970s – today that loan would be worth over $3.6 million.
Tonight’s GOP debate on CNBC will be on economics. So it will probably feature some back and forth on Trump’s qualifications to manage government policy. He has never before run for elective office so his business acumen is his strong suit. Trump likes to give the impression that he pulled himself up by his own bootstraps and was fabulously successful. I’m sure he will trumpet his wealth tonight, so here’s some perspective on it.
Trump became president of his father’s real-estate organization in 1974. His share of his father’s empire as one of five siblings was $40 million. As the National Journal has pointed out, If someone were to invest $40 million in a S&P 500 index in 1974, reinvest all dividends, and have to pay capital gains he’d wind up with about $3.4 billion in 2015. Trump claims to be worth over $10 billion but has admitted in a 2007 deposition he frequently exaggerates his wealth. Bloomberg currently puts it at $2.9 billion, while Forbes puts it at $4 billion. So Trump’s actual wealth probably is about as much as he would have accumulated if he had taken his dad’s money and put it into an index fund.
Trump’s father Fred relied on machine politicians in Brooklyn and Queens to grease the skids for many of his government-financed projects, which may explain his son’s frequent references to making elected officials do whatever he wants them to do. He has often bragged about his ability to “convince” public officials to give him tax abatements and generous subsidies. Not to mention his extensive use of eminent domain to clear out troublesome tenants to make way for his projects.
Trump’s family wealth has often propped him up in times of trouble. As Timothy O’Brien of the New York Times reported in a 2005 look at Trump’s net worth, Trump asked for a $10 million loan against his inheritance to bolster his position when he almost went out of business in the early 1990s. His siblings, who had a stake in the pool of money that would be inherited, grudgingly agreed. A year later, he asked for $20 million more. Trump claims O’Brien’s account is bogus. What isn’t disputed is that after Trump was dropped from the Fortune 400 in 1990 when his casino and other properties were in trouble, his father stepped in. Fred Trump bought $3.5 million in Trump Castle Casino Resort chips, which he never put on any gaming tables. Later, the maneuver was determined to be illegal and the Trump casino had to pay a fine.
Donald Trump has had his share of business success, and employs many people at good wages. But he is no miracle worker, and his methods in accumulating wealth often reek of crony capitalism.
“It takes brains to make millions,” was the slogan of Donald Trump’s 1989 board game. “It takes Trump to make billions.” But as we will see, just how many billions Trump has made and just how he used his brains to make them are still a legitimate question.