How President-elect Trump could eliminate conflicts of interest

Trump's business 'wall' is already crumbling
Trump's business 'wall' is already crumbling

President-elect Donald Trump has given no indication that he will sell any of his vast business holdings before he takes office.

But if he really wants to eliminate conflicts of interest unlike anything an American president has ever presented, he has some options.

They would be both messy and financially painful. But Trump himself once said that his company would be "peanuts" compared with his responsibility as president.

The most sweeping proposition for Trump: Liquidate his holdings.

He could take his company public or sell the assets, then hand the leftover cash to an independent trustee to manage.

This would be a true blind trust, far from the solution Trump has presented — letting his three adult children run the family business.

Related: Unprecedented potential conflicts for President-elect Trump

Richard Painter, a former ethics lawyer for President George W. Bush, has advocated that solution.

"I just think he's got to cash out," said Painter, a University of Minnesota law professor. "He may give up some of the value of his name by taking the name off the building and off the organization, but that was his decision when he decided to run for president."

Trump told reporters and editors from The New York Times on Tuesday that selling his business would be "a really hard thing to do," complicated by his real estate investments. He owns or has a position in more than 500 companies, according to a CNN analysis.

Handing the Trump Organization over to the three children would not eliminate a conflict of interest, ethics experts point out. Trump would not simply forget where his properties are around the world, even if he relinquished business control.

The Wall Street Journal editorial page is among the most prominent voices calling on him to sell everything.

Related: Poll: 6 in 10 say Trump isn't doing enough to avoid conflicts of interest

One other factor to consider: Forcing a fire sale could discourage business moguls from running for public office, said David Rivkin Jr., an attorney who worked in the Justice Department under Presidents Ronald Reagan and George H.W. Bush.

"If we come up with this baseline for Trump, we're going to create a bar — a serious disincentive — for any entrepreneur to run for president," he said.

Rivkin, who also worked in the White House counsel's office under Bush, said Trump would probably be faced with a huge tax bill on any sale. Exactly how big is impossible to know because Trump never released his tax returns.

In any case, the financial pain could be eased, Painter said. Under federal law, executive branch officials who are forced to sell investments, like Cabinet appointees, can defer paying capital gains taxes as long as the money is placed in a diversified investment fund approved by the government.

Rivkin instead suggested that Trump's proposal to cede control of his business to his children could be sufficient, as long as certain protocols are met. He said Trump and his children would have to agree not to discuss the business.

He said that White House lawyers could step in to review potential problems.

"If the president wants to ask Ivanka what she thinks about keeping Guantanamo open, that's a pure foreign policy question and does not have any business connections," Rivkin said. "If, on the other hand, he wants to ask Ivanka about, should we improve relations with Cuba and possibly open investment opportunities for American hospitality businesses, he has to go to the White House counsel office."

Related: Trump's family plan to cut business conflicts falls short

So far, there is little indication that Trump wants to keep his children at considerable distance. Ivanka Trump sat in on the president-elect's first meeting with a foreign head of state, and the three adult children and Trump's son-in-law are all part of his political transition team.

There's another reason to sell that has nothing to do with conflicts of interest, Painter said: Buildings around the world with Trump's name on them become greater security risks when he becomes president.

But the main point, he said, is that this is what Trump signed up for, no matter how painful selling would be.

"You cannot be president of the United States and collect money all over the world from people merely for putting your name up on a building," Painter said. "There are certain compromises, sacrifices you make for public office. People leave salaried positions making millions of dollars a year to make $100,000, $150,000 a year for the government."

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