What You Need to Know About the Emoluments Clause

(Bloomberg) -- America’s founding fathers probably didn’t envision Donald Trump. They did, however, include a sentence in the U.S. Constitution that could curb the activities of a businessman-president. Trump’s decision to keep his stakes in his global business, the Trump Organization, raised the question of whether he is continually violating what’s known as the "emoluments clause." Critics of the president have filed lawsuits pressing the case.

1. What does the Constitution say?

The foreign emoluments clause -- in Article I, Section 9 -- reads, "No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State."

2. What does that mean?

Merriam-Webster defines emoluments as "returns arising from office or employment usually in the form of compensation or perquisites." Historians largely agree that the original intent of the constitutional provision was to discourage early American leaders from being influenced by gifts or titles bestowed by European governments or royalty.

3. Why is this an issue for Trump?

Though he stepped away from day-to-day operations of his businesses, Trump retains ownership in companies that do business with foreign diplomats, state-controlled companies and state-owned television channels. The Trump International Hotel in Manhattan, for instance, got a noticeable revenue boost from a five-day stay by associates of Saudi Crown Prince Mohammed bin Salman, according to the Washington Post. The Trump International Hotel Washington, D.C. also gets business from foreign governments and their representatives. It’s also housed in a building that Trump’s company leases from the U.S. government, which raises another issue: A second constitutional clause -- in Article II, Section 1 -- says the president receives a salary while in office but "shall not receive within that Period any other Emolument from the United States, or any of them."

4. So has Trump accepted an emolument?

That might be for judges to decide. Two lawsuits pressing that argument cite trademarks granted to Trump’s company by China’s government; rent paid at Trump Tower in New York by the Industrial & Commercial Bank of China Ltd. and the Abu Dhabi Tourism & Culture Authority; and events booked at Trump’s Washington hotel by the embassy of Kuwait and by a lobbying firm working for Saudi Arabia. The foreign emoluments clause makes Congress the arbiter of whether any of this crosses the legal line. Following their win in the midterm elections, Democrats in the House of Representatives will be able to open an investigation next year.

5. Does Trump acknowledge those were emoluments?

No. His lawyers say fair-market transactions, like when a foreign delegation pays the market rate to stay at a Trump hotel, are permitted. The U.S. Justice Department, defending Trump in court, argued that the strict interpretation being applied by Trump’s critics would mean that "presidents from the very beginning of the Republic, including George Washington, would have received prohibited ‘emoluments.’” Trump pledged early in his presidency to donate to the U.S. Treasury "all profits" from foreign government patronage of his hotels. In March, the Trump Organization said it turned over $151,470 to the U.S. Treasury, representing profits from foreign governments in 2017.

6. Didn’t Trump put his companies in a trust for this reason?

Yes, but it’s not the kind of blind trust that most recent presidents have used to avoid conflicts. The one Trump created is overseen by an independent ethics officer and managed by Trump’s sons, Eric and Don Jr., and Chief Financial Officer Allen Weisselberg. It holds profits from the business for him and allows him to draw money. A blind trust, by contrast, would be run by a fully independent trustee, who would have no contact with Trump and would be the sole decision-maker on keeping, selling or reinvesting Trump’s assets.

7. Who’s suing, and for what?

A lawsuit brought by the attorneys general of Maryland and the District of Columbia accuses Trump of violating the Constitution by holding a financial interest in the Washington hotel. (A federal judge ruled on Nov. 2 that the case can advance to the evidence-gathering stage.) Citizens for Responsibility and Ethics in Washington, or CREW, is appealing the dismissal of its lawsuit, which it filed in New York along with a Washington-area restaurant association and luxury hotel event booker that say Trump’s businesses pose unfair competition. In another suit, almost 200 Democratic members of Congress are seeking "the opportunity to cast a binding vote" on the issue, since the Constitution requires the president to obtain "the consent of Congress" before accepting an emolument. A federal judge on Sept. 28 denied the Trump administration’s request to dismiss that one.

8. What does legal precedent tell us?

Not much. It’s exceedingly rare for emoluments to be litigated in court, especially as they relate to the president. But the issue does come up occasionally. In 2009, amid political dueling about whether President Barack Obama could keep his Nobel Peace Prize, the Justice Department advised that there was no emoluments violation because the committee that awards the prize isn’t a “King, Prince, or foreign State." In 1963, President John F. Kennedy declined an offer of honorary Irish citizenship on the advice of the Justice Department.

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