Bills
| 3.23.22

Should the President & Vice President Have to Place Their Financial Assets in Blind Trusts to Avoid Conflicts of Interest? (S. 882)

Do you support or oppose this bill?

What is S. 882?

(Updated January 24, 2022)

This bill — the Presidential Conflicts of Interest Act of 2019 — would require the president and vice president to disclose and divest any potential financial conflicts of interest and require presidential appointees to recuse themselves from any specific matters involving the president's financial conflicts of interest that come before their agencies. 

Currently, presidents and vice presidents are exempt from many federal financial conflicts of interest laws. However, it has been a long standing practice for presidents to address concerns regarding their foreign and domestic conflicts of interest by divesting their financial interests and placing them in a true blind trust (or its equivalent). To ensure presidents’ and vice presidents’ compliance with the Constitution’s Emoluments Clause, this bill would codify that practice by: 

  • Requiring the president, vice president, their spouses, and minor or dependent children to divest all interests that create financial conflicts of interest by placing those assets in a true blind trust, which would be managed by an independent trustee who would oversee the sale of assets and place the proceeds in conflict-free holdings;
  • Adopting a sense of the Congress that the President's violation of financial conflicts of interest laws or the ethics requirements that apply to executive branch employees constitute a high crime or misdemeanor under the impeachment clause of the U.S. Constitution; and
  • Prohibiting presidential appointees from participating in matters that directly involve the financial interests of the president.

This bill would also require all major-party presidential nominees to release three years of tax returns.

Were this bill to be enacted into law, a president who violates its provisions could be subject to impeachment.

Argument in favor

Presidents and vice presidents currently aren’t required to put their assets into blind trusts to avoid conflicts of interest while in office. This is problematic because it gives powerful elected officials the ability to make decisions that enrich themselves while serving in a position of public trust.

Argument opposed

Given the complexity of some presidents’ finances and holdings, it’d be unduly cumbersome for them to divest of all their assets or put them all in a blind trust (which don’t always work as intended). This requirement could prevent wealthy, qualified individuals from running for president or serving as vice president.

Impact

Presidential appointees; U.S. presidents; U.S. vice presidents; U.S. presidents’ and vice presidents’ spouses and dependent children; and U.S. presidents’ and vice presidents’ conflicts of interest.

Cost of S. 882

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sen. Elizabeth Warren (D-MA), a candidate for the 2020 Democratic presidential nomination, reintroduced this bill from the 115th Congress to require the president and vice president to disclose and divest any potential financial conflicts of interest and require presidential appointees to recuse themselves from any specific matters involving the president's financial conflicts of interest that come before their agencies: 

"Corruption has always been the central stain of this presidency. This bill would force President Trump to fully divest from the same Trump properties and assets that special interests have spent two-plus years patronizing to try and curry favor with this administration - all while lining the President's pockets."

While speaking at the Center for American Progress’ (CAP) Ideas Conference in Washington, D.C., Sen. Warren argued that concentrated money and power are “corrupting” American democracy: 

“Concentrated money and concentrated power are corrupting our democracy – and becoming dangerously worse with Donald Trump in the White House. Money slithers through Washington like a snake – and I’m not simply talking about giant bags of money exchanging hands in dark alleys. I’m talking about the dozens of perfectly legal ways that the super-rich and giant corporations use their cash and their influence to rig the system and to get government to favor their interests over the interests of everyone else.”

Before she introduced this bill last Congress, Sen. Warren explained the need for it to protect the American people from presidents using their elected office to enrich themselves. She said: 

“The American people deserve to know that the President of the United States is working to do what’s best for the country – not using his office to do what’s best for himself and his businesses. The only way for President-elect Trump to truly eliminate conflicts-of-interest is to divest his financial interests and place them in a blind trust. This has been the standard for previous presidents, and our bill makes clear the continuing expectation that President-elect Trump do the same.”

Rep. Katherine Clark (D-MA), who has sponsored this bill’s House companion in both the 115th and 116th Congresses, says: 

“Every recent president in modern history has taken steps to divest from conflicts of interest while President Trump has ardently fought this basic ethical responsibility. It’s time the American people know if the President is working on their behalf or if he is lining his own pockets.”

Public Citizen’s Vice President of Legislative Affairs, Lisa Gilbert, expresses her organization’s support for this legislation: 

“The need for this legislation has been made manifestly obvious by the numerous ways that Donald Trump has continued to profit as a private citizen from investments and properties while President of the United States. Passing legislation that requires a divestment of presidential assets to avoid conflicts of interest in policy and personnel is just common sense.”

Blind trusts’ effectiveness as a way to prevent conflicts of interest has come into question in the past. In 1994, Mitt Romney — who would later go on to use a blind trust for his own assets to avoid financial conflicts of interest while running for president in 2012 — criticized Ted Kennedy’s use of a blind trust when he was running for Senate against Kennedy. At that time, Romney called the blind trust “an age-old ruse” and added, “you can always tell a blind trust what it can and cannot do." 

In 2012, Colby Wallace, a trust lawyer at Bernstein Shur also pointed out that blind trusts can be run by people who are related to or friends with the person whom the blind trust benefits. In such cases, the person running the trust may have a good idea of how they should operate the trust to confirm with the trust owner’s preferences. Additionally, the level of reporting that blind trusts give to their owners can vary greatly. Generally, if a trust’s beneficiary receives fairly detailed reports about how much their trust has made in capital gains, dividends, or interest, they may be able to figure out what’s going on inside the trust despite not having full transparency into it.

During Mitt Romney’s 2012 presidential campaign, Ken Gross, an ethics lawyer with the Washington, D.C. law firm Skadden Arps also noted that blind trusts are complicated, expensive, and generally a pain. As an alternative, Gross recommended that politicians without many investments simply put their money into index funds and bonds, as President Obama did, based on his 2011 financial disclosure (Obama’s investments were primarily in index funds from Vanguard and U.S. Treasury bills and notes).

This legislation has 30 Democratic Senate cosponsors.Its House companion, the Presidential Accountability Act (H.R.1481) sponsored by Rep. Katherine Clark (D-MA), has one cosponsor, Rep. Pramila Jayapal (D-WA).

The text of this bill has also been included in H.R. 1, the For the People Act of 2019. That bill passed the House by a 234-193 party-line vote, but has yet to receive a Senate vote. It’s unlikely that the For the People Act will receive a Senate vote, as Senate Majority Leader Mitch McConnell (R-KY) has called it a "power grab" and declared that the "sprawling 622-page doorstop is never going to become law."

Last Congress, this bill had 32 Democratic Senate cosponsors. Its House companion in the 115th Congress, sponsored by Rep. Katherine Clark (D-MA), had 155 Democratic House cosponsors. Neither bill received a committee vote last Congress.


Of Note: Critics have raised concerns about potential conflicts of interest involving President Trump, his family members, and members of the Trump administration for the entirety of the Trump presidency. In March 2019, T-Mobile’s disclosure that it increased spending at Trump hotels while seeking approval for a $26 billion merger with Sprint raised eyebrows among Democratic lawmakers, including Sen. Warren and Rep. Pramila Jayapal (D-WA). In a letter, the pair requested additional information about this from T-Mobile and questioned whether T-Mobile was attempting to “curry favor” with the president by having its executives spend tends of thousands of dollars at his hotel. In their letter to T-Mobile CEO John Legere, the lawmakers wrote: 

“The decision to stay at the Trump Hotel appears to be unusual for several reasons. Your stay began one day after the merger announcement.  You had a particularly high profile during your stay, walking the lobby in an outfit described as 'a walking billboard for T-Mobile,' posing for Instagram pictures, and, during a later stay, meeting in the lobby with former Trump campaign manager Corey Lewandowski."

In a February 21, 2019 letter, T-Mobile’s vice president of federal legislative affairs, Anthony Russo, defended the company’s $195,000 of expenditures at the Trump International Hotel in Washington, D.C.: 

“While we understand that staying at Trump properties might be viewed positively by some and negatively by others, we are confident that the relevant agencies address the questions before them on the merits.”

When President Trump announced in January 2017 that he wouldn’t divest from his interests in the Trump Organization, Citizens for Responsibility and Ethics in Washington’s (CREW) Executive Director, Noah Bookbinder, predicted that “[e]very decision [Trump] will make as president will be followed by the specter of doubt, and will be questioned as to whether his decision is in the best interest of the American people or the best interest of his bottom line.” 

In his refusal to divest from his investments and businesses, President Trump claimed — correctly — that “the president can’t have a conflict of interest.” Writing for USA Today, CREW board member and George W. Bush administration chief ethics counsel Richard Painter and CREW Executive Director Noah Bookbinder conceded the truth of this claim, as “[t]here is no specific law that directly prohibits the president from owning any assets — whether real estate or anything else — that conflict with his official duties.” However, they argued that rather than exculpating Trump, this merely highlighted the need for Congressional action to rectify this oversight in existing law:

“[T]he time for special exemptions from financial conflict of interest rules is over. No person — president, vice president or member of Congress — is above the law. Congress should act quickly and decisively to include all government officials, including the most powerful, in the definition of a federal ‘employee’ covered by conflict of interest laws. They are, after all, the employees of the American people who elect them, and it is our interests that they should put first, not their own. Everyone in our government should be required to act For The People.”

In Trump’s second year in office, CREW recorded “more than 900 interactions between the government, those trying to influence it, and the Trump Organization, each resulting in a conflict of interest for President Trump,” bringing the total number of known conflicts of interest involving the Trump Organization to over 1,400.

Until President Trump, past presidents acted as though conflict-of-interest statutes applied to them. Thus, they separated themselves from any financial holdings that might have caused conflicts. During his single term in office, President Jimmy Carter placed stewardship of his peanut farm in the hands of an independent trustee. Presidents Ronald Reagan, George H.W. Bush, and George W. Bush all placed their holdings into true blind trusts.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / wingedwolf)