Donald Trump and small business
Scourge, not saviour
What small-businesses owners might wish to know about Mr Trump
“HE ALMOST bankrupted us,” says the retired owner of a construction business on the east coast. Thirty years ago he ran a small business with around ten employees, which was hired by Donald Trump to work on an 11-month project at his Taj Mahal casino in Atlantic City. It was the biggest contract, by far, that the business had ever had. The builders worked as they had never done before to complete the job on time. As soon as they finished, Mr Trump stopped paying. He owed around $200,000 of a bill totalling about $700,000, a huge sum for a small company.
What followed was a nearly year-long battle to extract the money it was owed. Lawyers advised the company that Mr Trump would procrastinate with expensive litigation, as he had done many times before. Other contractors relayed their experiences with the “Trump discount”, the billionaire’s habit of rarely paying the full sum he owed. As the “Trump discount” made the rounds in the industry, wily contractors quoted a higher price at the outset to avoid suffering any losses. Then, one day in 1988, the phone rang at 9.30am. A sweet-voiced special assistant of Mr Trump’s announced she had a cheque for the builders which, she claimed, had been lying on her desk for a year. “We only got paid because of Merv Griffin,” says the retired contractor. In a surprising swoop, Mr Griffin, an entertainment-business tycoon, had bought the company that owned the Taj Mahal.
Owners of small businesses are among Mr Trump’s most dedicated supporters. They believe his biggest selling point is his business acumen. He is a consummate dealmaker, they say, and has made heaps of money, maybe as much as $10 billion. They also like his proposal to slash the corporate income-tax rate from 35% to 15%. A poll earlier this year by Manta, an online directory for small businesses, of 2,527 owners of small companies who were planning to vote in the primaries, found that 60% favoured Mr Trump as the Republican candidate.
Bryant Simon of Temple University, who wrote a history of Atlantic City, marvels at how the author of “The Art of the Deal” sells his failure there as a great success. Mr Trump paid too much to finance the Taj with junk bonds; he also overpaid for the casino’s interior, whose mirrors and chandeliers made the palace of Versailles look unadorned. Even though the Taj was the highest-earning casino in America for a while it could not cover its debt.
Even more impressive business accomplishments do not readily translate into success in the White House. Presidents who cut their teeth in business are among the least successful and least popular of the 43, according to the Siena College Research Institute (SRI), which ranks presidents in 20 areas such as integrity, intelligence, willingness to take risks and leadership ability. Harry Truman is the only president with business experience who ranks highly, says Don Levy, director of the SRI. (Truman, a former haberdasher, ranks ninth.) Warren Harding, a newspaper publisher, comes bottom, at 43. Calvin Coolidge, a corporate lawyer, ranks a lowly 29th and Herbert Hoover, who had a career in the mining industry, comes in at 36.
Those businessmen who became presidents eased into politics slowly. After making money in the oil business, George H.W. Bush served for years in Congress, as ambassador to the UN and as boss of the CIA. His son, George W., also started out in the oil business and then, after a false start when he lost a House race, was elected governor of Texas at the first attempt.
Some companies are considering skipping the Republican convention in Cleveland. Presented with a choice of Trump v Clinton, the owner of the construction business that worked on the Taj would set aside his dislike of Mrs Clinton and vote for her. The Clinton campaign can look forward to plenty more stories like this from those who have worked with Mr Trump during his freewheeling career.