During a campaign stop in North Carolina last week, Donald Trump described the logic behind his plans for billing other countries for U.S. military support should he become president:
“It’s called OPM. I do it all the time in business. It’s called other people’s money. There’s nothing like doing things with other people’s money because it takes the risk – you get a good chunk out of it and it takes the risk.”
By “takes the risk,” Trump means that using other people’s funds reduces his risk of losing any of his own money on deals. Trump has spent a lifetime using other people’s money – and losing piles of it along the way.
Trump’s MO around OPM in his early days was defined largely by his father, Fred, basically because Fred had a lot of M. While Trump frequently downplays the role his father played at the start of his business career, his dad was always there for him, wallet and Rolodex open.
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“It has not been easy for me,” Trump said at a town hall meeting in New Hampshire almost a year ago. “And you know I started off in Brooklyn, my father gave me a small loan of a million dollars.” In a subsequent interview, Trump described his father’s financial support as amounting to nothing more than a “very, very small loan.”
None of this is true, of course.
When Trump first sized up Manhattan real estate in the mid-1970s, his father cosigned bank loans for tens of millions of dollars. These loans made it possible for young Trump to make signature deals like the one that turned a faded New York hotel into the glittery Grand Hyatt.
When Trump set his sights on the Atlantic City casino market, his father loaned him about $7.5 million. When Trump started floundering there about a decade later, Fred sent a lawyer into a Trump casino to buy $3.5 million in chips so Trump could use the money to make a bond payment and fend off corporate bankruptcy. When the bankruptcies arrived anyway and left him stumbling, Trump asked his siblings for a $30 million cut of their father’s estate in 1993 so he could pay for his own living expenses.
“I had zero borrowings from the estate,” Trump told me when I asked him about the $30 million loan request for a book I was writing, “TrumpNation.” “I give you my word.”
Trump unsuccessfully sued me for libel for the book, and during a deposition in the case, he acknowledged that, in fact, he had borrowed at least $9 million from his dad’s estate.
Trump’s deal spree of the 1980s and early 1990s also extended well beyond Fred and his relatively modest contribution to Trump’s OPM annals. Big banks, including the forerunners of Citigroup and JP Morgan, had joined forces with other credulous lenders, allowing Trump to amass $3.4 billion in debt, of which he had personally guaranteed about $900 million. This was debt on a grand scale, incurred using lots and lots of OPM and handled in a way in which nobody, including Trump, was thinking very carefully about whether or not he could pay it back.
Trump later discovered that he could also tap bondholders and stockholders to raise money for his casinos – all sorts of OPM right there. Trump’s gambling business was never profitable during the entire time he ran it as a public company.
OPM also has been a colorful part of the Donald J. Trump Foundation. Charities, of necessity and by design, revolve around OPM. Two other features are handy ways of identifying a charity associated with a famous person: 1) The charity’s namesake usually is a generous giver to his or her own organization, and 2) The charity spends its funds on the needy or some other worthy cause (as opposed to, say, on Tim Tebow’s football helmet or on a life-size portrait of yourself).
OPM also courses through the financial arteries of that skeletal, fly-by-night operation known as the Trump campaign. A glimpse of how the campaign is spending voter contributions (the OPM in this particular political equation) to hoist Trump toward the Oval Office can be had whenever campaign finance forms are filed. Politico offered a roundup last week.
Politico found that the Trump campaign has paid more than $8.2 million to Trump-affiliated business, primarily for rent in Trump-controlled properties and for use of the Trump jet. That represents about 7 percent of the campaign’s total spending of $119 million, which Politico described as “an unprecedented amount of self-dealing in federal politics.”
If Trump makes it to the White House, he’ll get to play on a bigger field than he has so far in his business, charitable and political careers. He’ll also come into close contact with the greatest stash of OPM of all time: federal tax receipts.
Timothy O’Brien is the executive editor of Bloomberg View.