- Oct 9, 1999
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The Newsweek article is loooooong. It has to be, to chronicle The Donald's many failures. I'll just post one relatively small, but damning portion:
Dependent on Daddy
Trump boasted when he announced his candidacy last year that he had made his money “the old-fashioned way,” but he is no Bill Gates or Michael Bloomberg, self-made billionaires who were mavericks, innovators in their fields. Instead, the Republican nominee’s wealth is Daddy-made. Almost all of his best-known successes are attributable to family ties or money given to him by his father.
The son of wealthy developer Fred Trump, he went to work for his father’s real estate business immediately after graduating from Wharton and found some success by taking advantage of his father’s riches and close ties to the power brokers in the New York Democratic Party, particularly his decades-long friend Abe Beame, the former mayor of the city.
Even with those advantages, a few of Trump’s initial deals for his father were busts, based on the profits. His first project was revitalizing the Swifton Village apartment complex in Cleveland, which his father had purchased for $5.7 million in 1962. After Trump finished his work, they sold the complex for $6.75 million, which, while appearing to be a small return, was a loss; in constant dollars, the apartment buildings would have had to sell for $7.9 million to have earned an actual profit. Still, Trump happily boasted about his supposed success with Swifton Village and about his surging personal wealth.
He already ached to be part of the Manhattan elite rather than just be known as the son of a Brooklyn developer. So, in 1970, he took another shot at joining the entertainment business by investing $70,000, to snag a co-producer’s credit for a Broadway comedy called Paris Is Out! Once again, Trump failed; the play bombed, closing after just 96 performances.
The next year, he moved to Manhattan from the outer boroughs, still largely dependent on Daddy. In 1972, Trump’s father brought him into a limited partnership that developed and owned a senior citizen apartment complex in East Orange, New Jersey. Fred Trump owned 75 percent, but two years later shrunk his ownership to 27 percent by turning over the rest of his stake to two entities controlled by his son. Another two years passed, and then Fred Trump named him the beneficiary of a $1 million trust that provided him with $1.3 million in income (2015 dollars) over the next five years. In 1978, he boosted his son’s fortunes again, hiring him as a consultant to help sell his ownership interest in a real estate partnership to the Grandcor Company and Port Electric Supply Corp. The deal was enormously lucrative for Donald Trump, particularly since it just fell into his lap thanks to his family. Under the deal, Grandcor agreed to pay him an additional $190,000, while Port Electric kicked in $228,500. (The payments were made over several years, but the value in present-day dollars on the final sum he received is $10.4 million.)
Despite having no real success of his own, by the late 1970s, Trump was swaggering through Manhattan, gaining a reputation as a crass self-promoter. He hung out in the fancy nightspot Le Club, where he was chums with prominent New Yorkers like Roy Cohn, the one-time aide to Senator Joe McCarthy who was one of the city’s most feared and politically connected attorneys. Cohn became one of the developer’s lifelong mentors, encouraging the pugilistic personality that showed itself all the way back in second grade, when Trump punched his music teacher.
Soon Trump gained the public recognition he craved. Through a wholly owned corporation called Wembly Realty, Trump struck a partnership with a subsidiary of Hyatt Hotels. That partnership, Regency Lexington, purchased the struggling Commodore Hotel for redevelopment into the Grand Hyatt New York, a deal Trump crowed about when he announced he was running for president.
He failed to mention that this deal was once again largely attributable to Daddy, who co-guaranteed with Hyatt a construction loan for $70 million and arranged a credit line for his boy with Chase Manhattan Bank. The credit line was a favor to the Trump family, which had brought huge profits to the bank; according to regulatory records, the revolving loan was set up without even requiring a written agreement. Topping off the freebies and special deals that flowed Trump’s way, the city tossed in a 40-year tax abatement. Trump’s “success” with the Hyatt was simply the result of money from his dad, his dad’s bank, Hyatt and the taxpayers of New York City.
Despite the outward signs of success, Trump’s personal finances were a disaster. In 1978, the year his father set up that sweet credit line at Chase, Donald’s tax returns showed personal losses of $406,386—$1.5 million in present-day dollars. Things grew worse in 1979, when he reported an income of negative $3.4 million, $11.2 million in constant dollars. All of this traced back to big losses in three real estate partnerships and interest he owed Chase. With Trump sucking wind and rapidly drawing down his line of credit, he turned again to Daddy, who in 1980 agreed to lend him $7.5 million.
All of these names and numbers can grow confusing for voters with little exposure to the business world. So to sum it all up, Trump is rich because he was born rich—and without his father repeatedly bailing him out, he would have likely filed for personal bankruptcy before he was 35.
[...]
And while Trump is quick to boast that his purported billions prove his business acumen, his net worth is almost unknowable given the loose standards and numerous outright misrepresentations he has made over the years. In that 2007 deposition, Trump said he based estimates of his net worth at times on “psychology” and “my own feelings.” But those feelings are often wrong—in 2004, he presented unaudited financials to Deutsche Bank while seeking a loan, claiming he was worth $3.5 billion. The bank concluded Trump was, to say the least, puffing; it put his net worth at $788 million, records show. (Trump personally guaranteed $40 million of the loan to his company, so Deutsche coughed up the money. He later defaulted on that commitment.)