The Richest Administration In History Just Got Richer

Dec 20, 2016
Originally published on December 20, 2016 11:23 am

President-elect Donald Trump is adding another billionaire to the top ranks of his administration.

Trump plans to nominate a wealthy financial executive, Vincent Viola, to be secretary of the Army. Viola would be at least the fourth Trump nominee with a net worth in the billions. And that's not counting Trump's own 10-figure fortune.

Viola is a West Point graduate who served in the 101st Airborne Division. The son of a Brooklyn truck driver, he made his fortune in the financial industry. Viola started working as a trader on the New York Mercantile Exchange in the 1980s and eventually became the NYMEX chairman.

He is credited with helping the exchange quickly resume operations after the terrorist attacks on Sept. 11, 2001. The following year, Viola founded and bankrolled the Combating Terrorism Center at West Point.

"It is an honor to be nominated to serve our country," Viola said in a statement. "If confirmed, I will work tirelessly to provide our President with the land force he will need to accomplish any mission in support of his National Defense Strategy."

Viola founded his own electronic trading company, Virtu Financial, in 2008. The company went public last year. Viola, who ranks 374th on the Forbes 400 list, also owns the Florida Panthers hockey team.

Trump has chosen at least three other billionaires for top jobs in his administration. The president-elect, who campaigned as a champion for working people, insists there's no disconnect in assembling the wealthiest administration in history.

"You know the media was saying the people who are negotiating your trade deals are very rich," Trump told supporters in Orlando Friday. "I'm saying, isn't that what we want?"

Some of Trump's nominees may have to sell off their investments to avoid potential conflicts of interest. In return, they could qualify for a valuable tax break.

For example, if Andrew Puzder is confirmed as labor secretary, he might not be allowed to hold stock in the fast-food company he runs because the Labor Department polices that company's compliance with wage-and-hour regulations.

If a nominee does have to sell investments to comply with federal ethics rules, he or she may be allowed to put off any capital-gains tax.

That's a break designed to help new nominees avoid conflicts of interest without paying a personal price.

"If there were a tax penalty, there might very well be fewer Americans willing to serve," said Steven Rosenthal, a former staffer for the Joint Committee on Taxation.

To take advantage of the tax break, nominees are required to invest any proceeds from a sale in assets that would be free from conflict, such as Treasury bonds or a broad-based mutual fund.

That's "to give Americans confidence that their civil servants would be acting in the country's interest and not their own financial interest," said Rosenthal, who now works for the Tax Policy Center.

The Office of Government Ethics has warned that even though it does not have much purview over conflicts of interest for the president, it does have some say when it comes to Cabinet officials.

"OGE reviews their financial disclosure reports not only for their compliance with applicable disclosure requirements but also for conflicts of interests," the agency's director, Walter Schaub, wrote to Congress last week.

Former ethics lawyers for both President Obama and former President George W. Bush have encouraged Trump and his children to liquidate their investment in the Trump Organization. While the president is not strictly subject to conflict-of-interest laws, he is governed by the "Emoluments Clause" of the Constitution, which bars officeholders from accepting gifts from foreign governments without approval from Congress.

Ethics lawyers Norman Eisen and Richard Painter warn that so long as the president-elect maintains his ownership stake in the Trump Organization — with its vast holdings in foreign countries — "Trump would arrive in office as a walking, talking violation of the Emoluments Clause."

So far Trump has shown no inclination to sell his stake in the company. He does plan to turn over operational control to his sons Don Jr. and Eric, although details of that arrangement won't be made public until next month.

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You can add another billionaire to the top ranks of the Trump administration. The president-elect plans to nominate a former airborne Ranger turned Wall Street executive as the next secretary of the Army. Vincent Viola would be at least the fourth Trump nominee with a net worth in the billions. Government service would come with a sharp pay cut for many of these folks. But they could get a nice tax break in exchange. NPR's Scott Horsley is here to explain. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Rachel.

MARTIN: Before we get to that tax break, what can you tell us about Trump's pick for Army secretary, Vincent Viola?

HORSLEY: Well, he's the son of a truck driver. He grew up in Brooklyn. He attended West Point and served with 101st Airborne Division. He made his fortune on Wall Street starting out as a trader on the New York Mercantile Exchange, and he eventually became chairman of that exchange. He was working there when the World Trade Center was attacked on 9/11, and he later founded and bankrolled a counterterrorism center at West Point. He's on the Forbes 400 list of the wealthiest Americans, and he's also the owner of the Florida Panthers hockey team.

MARTIN: It's hard not to notice that, for a president-elect who's pledged to be a champion of working people, he's nominating a whole lot of people on the opposite end of the economic spectrum.

HORSLEY: Yes, he has. Trump has chosen at least three other billionaires for top jobs. If you think about it, Rex Tillerson, the ExxonMobil CEO who's been tapped as secretary of state, is one of the highest paid executives in America, but he would rank only in the middle of the pack for Trump's cabinet and wealth, well behind, say, investor and turnaround artist Wilbur Ross, Trump's nominee for commerce secretary. The president-elect defended these wealthy picks at a rally in Florida over the weekend.


DONALD TRUMP: You know, the media was saying, the people that are negotiating your trade deals are very rich. I said, but isn't that what we want?

HORSLEY: Trump's pick for education secretary is married to an Amway heir. She's worth more than $5 billion. And you also have nominees for treasury and labor secretary whose net worth is measured in the tens of millions.

MARTIN: This wealth can be complicated, though, right? Some of these nominees may have to sell off investments to avoid potential conflicts of interest.

HORSLEY: That's right. Federal ethics officials will look at the nominees and how their money is invested. And if those pose a conflict of interest with their official duties, there - they might be required to sell. If you think, for example, about the nominee for labor secretary, Andrew Puzder, he might be forced to sell stock in the fast food company that he's been running because, as labor secretary, he would be responsible for policing that company's wage and hour policies.

MARTIN: What does that mean for them? How big of a problem could it be for these nominees if they're forced to sell off investments really fast?

HORSLEY: Well, there is a sweetener in the law. If a nominee has to sell to comply with federal ethics rules, he or she would be allowed to postpone any capital gains tax on that sale. Steven Rosenthal, who's with the Tax Policy Center, says that's kind of a balancing act that's designed to meet a couple of goals.

STEVEN ROSENTHAL: One is to make government service more attractive to Americans who otherwise would face a tax burden. Secondly, to give Americans confidence that their civil servants would be acting in the country's interest and not their own financial interests.

MARTIN: OK, does that mean Donald Trump himself would be eligible for that tax break?

HORSLEY: It's not entirely clear. The president is not strictly subject to most conflict of interest laws, so he's not explicitly required to sell his stake in the Trump organization, and therefore he might not qualify for the tax break. A lot of ethics watchdogs, however, have been encouraging Trump to sell, saying he's going to face a world of conflict headaches if he doesn't. So far, though, Trump has shown no inclination to sell off. He's - he's pledging to distance himself from the management of his company but not his ownership stake.

MARTIN: NPR's Scott Horsley. Scott, thanks so much.

HORSLEY: Good to be with you, Rachel. Transcript provided by NPR, Copyright NPR.