In a press briefing on October 17, 2019, acting White House Chief of Staff Mick Mulvaney announced that the United States would host the 46th G-7 summit at the Trump National Doral Miami, a golf resort in Doral Florida owned by the Trump Organization. The announcement provoked widespread concern (see here and here) that this choice would violate the U.S. Constitution’s Foreign Emoluments Clause, which bars any person “holding any Office of Profit or Trust under [the United States]” from “accepting any present, emolument, office, or title, of any kind whatever, from any King, Prince, or foreign state,” as well as the Domestic Emoluments Clause, which bars the President from receiving any emolument, other than his salary, from the United States or any of the individual states. Following two days of complaints—not only from the ethics watchdogs and the President’s Democratic opponents, but also from some of his Republican allies—the White House abandoned the plan. So, the situation appears to have resolved itself. Nonetheless, the particular argument that Mulvaney advanced to defend against the anticipated Emoluments Clause complaints is worth considering—and debunking—lest this argument arise again in another context.
To be clear, the White House’s attempt to host the G-7 at a Trump Organization venue appears to be part of the same pattern of self-dealing that has already prompted multiple lawsuits against Trump for alleged violations of the Emoluments Clauses. As Mulvaney said on Fox News this past Sunday, “[President Trump] still considers himself to be in the hospitality business, and he saw an opportunity to take the biggest leaders from around the world and he wanted to put on the absolute best show.” Although the proposal to host the G-7 summit at the Doral resort was dropped, Mulvaney’s admission is worrying because there are reasons to suspect Trump chose the Doral property to benefit himself financially. (Consider the fact that in 2004, when the United States hosted the summit on Sea Island the organizers served 45,000 meals and paid the resort owners $3 million to reserve the entire property for 10 days.)
When Mulvaney detailed the White House’s decision-making process for the G-7 venue on October 17, he claimed the administration used neutral criteria when it made this choice (which is a bit hard to swallow given that Mulvaney stated the President suggested Doral), and that Doral was actually the best location (an assertion that is hard to assess without knowing the other venues the White House was considering). Furthermore, Mulvaney also argued that there was no Emoluments Clause violation because Doral would host the event “at cost”—that is, that Doral would only charge the government for the cost of the goods and services provided, and would not make a profit. On its face, this sounds plausible. After all, if Doral—and hence the Trump Organization—does not earn any profits on the G-7 meeting, but merely breaks even, then how can Trump have received an “emolument” from the U.S. government? If anything, the Trump Organization would have provided the U.S. government with a venue and associated amenities at a discounted rate.
Despite its superficial plausibility, there are three flaws with the argument that running the event “at cost” would eliminate any Emoluments Clause problem:
- First, while Mulvaney said that Doral would have provided rooms, services, and amenities “at cost,” it is likely that this would be limited to outlays made directly for the U.S. government. But a massive event like the G-7 would inevitably generate a huge amount of additional spending that the U.S. government would not cover. Suppose, for example, that Germany wants to bring one hundred staffers to the event, and the U.S. only pays for sixty. Would Doral provide the remaining forty rooms to Germany “at cost,” or would Germany pay the normal room rate? If Germany is not given the “at cost” rate, a strong argument can be made that that is both a domestic and foreign emolument, as the White House has picked the location and the Trump Organization is selling the additional forty rooms to a foreign government for a profit. Similarly, would press rooms and press meals be provided “at cost?” It is unlikely that reporters from CNN, the Washington Post, or the New York Times would receive a discount from a Trump Organization resort so the President could avoid a domestic emoluments case.
- Second, even if all goods and services are provided at cost, the struggling Doral resort would still receive an enormous amount of valuable free publicity. Mulvaney dismissed this idea on the grounds that Trump’s fame already guarantees plenty of publicity for his resorts, but that argument assumes that each of the Trump Organization’s properties is as famous as any other. This is wrong. Trump’s Mar-a-Lago property, for example, has received far more press coverage than Doral. Thus, the G-7 would provide the added value of free press for a lesser known property.
- Third, although the Doral Miami resort was one of the Trump Organization’s most prized properties before Trump became president, its revenue has steadily fallen since 2016. Hosting a massive event like the G-7—which would ensure a three-to-ten-day period where the hotel is completely booked—may actually save the Trump Organization money, even if the rooms and other services are being provided at cost, because the resort might otherwise operate at a loss for those days. Thus, the President would still be in violation of the emoluments clause because the federal government would be helping him save money.
Ultimately, the administration backed away from hosting the G-7 summit at a Trump property because many of his Republican allies opposed the decision as improper. It is important to understand why President Trump (or any future president) cannot avoid the strictures of the Emoluments Clauses simply by asserting that firms he owns or controls will sell the U.S. government, state governments, or foreign governments at cost. Even if this hard-to-verify promise is honored, the transaction may still confer financial benefits on the president, and hence violate the Constitution.