Welcome to the kleptocracy

Ivanka Trump Executive VP of the Trump Organization sitting in on a diplomatic meeting with the Prime Minister of Japan

One reason 60 million voters elected Donald Trump is because he promised to change Washington’s culture of self-dealing, and if he wants to succeed he’s going to have to make a sacrifice and lead by example. Mr. Trump has so far indicated that he will keep his business empire but turn over management to his children, and therein lies political danger.

Mr. Trump has for decades run the Trump Organization and during the campaign said if he won the Presidency he’d turn over the keys to Donald Jr., Eric and Ivanka, all of whom are now serving on the Trump transition. A company spokesperson says the family business is “in the process of vetting various structures” and that the ultimate arrangement “will comply with all applicable rules and regulations.”

Some of Mr. Trump’s lawyers have called the plan a “blind trust,” which past Presidents have used to protect their assets from the appearance of conflicts-of-interest. But that set-up typically involves liquid assets like bonds and stocks, not buildings or a branding empire. Mr. Trump will know how any given decision will affect, say, the old post office property in Washington, D.C. that he’s leasing from the federal government (another conflict). By law blind trusts are overseen by an independent manager, not family members.

The President is exempt from federal conflict-of-interest laws, but Mr. Trump’s plan is already hitting political turbulence. Earlier this week Ivanka Trump’s jewelry company took heat for promoting a $10,800 diamond bangle that Ms. Trump donned during a family interview on CBS’s “60 Minutes.” The company chalked up the incident to an overeager marketing executive, but this is only the beginning of such media catcalls. By the way, Ms. Trump is married to Jared Kushner, who could be a useful adviser in the White House.

Mr. Trump’s best option is to liquidate his stake in the company. Richard Painter and Norman Eisen, ethics lawyers for George W. Bush and President Obama, respectively, have laid out a plan, which involves a leveraged buyout or an initial public offering.

Mr. Trump could put the cash proceeds in a true blind trust. The Trump children can keep the assets in their name, and he can transfer more to them as long as he pays a hefty gift tax. Finally, Mr. Trump should stipulate that he and his children will have no communication about family business matters.

The alternatives are fraught, perhaps even for the Trump Organization’s bottom line: Thanks to a Clinton Administration precedent, Presidents can face litigation in private matters—so the company will become a supermagnet for lawsuits. Rudy Giuliani lamented on television that divestment would put the Trump children “out of work,” but reorganizing the company may be better for business than unending scrutiny from the press. Progressive groups will soon be out of power and they are already shouting that the Trump family wants to profit from the Presidency.

The political damage to a new Administration could be extensive. If Mr. Trump doesn’t liquidate, he will be accused of a pecuniary motive any time he takes a policy position. For example, the House and Senate are eager to consider tax reform—and one sticking point will be the treatment of real estate, which will be of great interest to the Trump family business. Ditto for repealing the Dodd-Frank financial law, interest rates and so much more.

The conflicts span the globe, including a loan from the Bank of China and likely dealings with sovereign-wealth funds. Along the way Mr. Trump could expose himself to charges, however unfair, that he is violating the Constitution’s Emoluments Clause, which prohibits public officials from accepting gifts or payment from foreign governments.
Mixing money and politics could undermine his pledge to “drain the swamp” in Washington. If a backlash allows Democrats to retake the House in 2018, Mr. Trump and his business colleagues would field subpoenas from the House Oversight Committee. Ranking minority member Elijah Cummings this week expressed his enthusiasm for such a project, and answering daily questions about this can’t be how Mr. Trump wants to spend his political capital. 

There is no question that a Trump business sale would be painful and perhaps costly. We also dislike the double standard of ethics rules that put special burdens on business folks who want to enter politics, even as public-interest lawyers can move in and out of government without a peep of protest. Unlike liberals, Republicans like to work in the private economy. 

But this is the modern world of Washington. And remember that Hillary Clinton lost in part because the public didn’t want a President who mixed politics and personal gain at the State Department and Clinton Foundation. Millions of Americans have put their trust in Mr. Trump to succeed as President and improve their lives, not treat this as a four-year hiatus from his business. The presidential stakes are too high for Mr. Trump to let his family business become a daily political target.