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Economic View: Donald Trump and the Art of the Public Sector Deal
Gov. Hugh Carey pointing to an artists' conception of the New York Hyatt Hotel/Convention facility in 1978. At the ceremony were Donald Trump, left, Mayor Ed Koch and Robert T. Dormer, executive vice president of the Urban Development Corporation.Credit Associated Press

“I wrote ‘The Art of the Deal,’ ” said Donald Trump, introducing himself at the beginning of Wednesday’s Republican presidential debate, before moving on to his next qualification for the nation’s highest elected office. “I say, not in a braggadocious way, I’ve made billions and billions of dollars dealing with people all over the world.”

On the campaign trail, Mr. Trump frequently calls “The Art of the Deal,” published in 1987, his second-favorite book in the world after the Bible. He has repeatedly said it’s the best-selling business book of all time, a claim that isn’t true but might be an example of what he terms “truthful hyperbole” on Page 58 of “The Art of the Deal.” In July, he said the United States made a bad deal with Iran because our negotiators failed to read his book.

I read the book this week, with an eye toward what it says about the government, since the next deal Mr. Trump wants to do involves running it. What shone through is a view of government that is more critical on waste and incompetence than you would typically see from the left, but that lacks the leave-us-alone edge of the right.

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Economic View: Donald Trump and the Art of the Public Sector Deal
Ivana Trump, Donald Trump and Dr. Ruth Westheimer at a party celebrating the publication of "The Art of the Deal" in 1987.Credit Ron Galella/WireImage, via, Getty Images

“The Art of the Deal” is not a free-market book.

This isn’t surprising given the exact nature of Mr. Trump’s business background. It’s hard to make a living constructing large buildings in New York if you can’t stomach public involvement in private enterprise. The government was often a valued partner in the deals of “The Art of the Deal” — providing zoning variances, offering generous tax abatements and in one case buying a piece of land in which Mr. Trump had an interest in order to build a convention center. And in the book, Mr. Trump repeatedly showed off his superior skill in government relations — as when he obtained an Atlantic City casino license that even Hilton Hotels couldn’t get.

“There is no real estate without government,” says Julia Vitullo-Martin, a senior fellow at the Regional Plan Association, an urban planning research organization in New York. “Donald Trump and his dad built their fortunes on government.”

Fred Trump, Donald’s father, made his money building modest apartments for lower- and middle-income people in Brooklyn and Queens with subsidized loans from the Federal Housing Administration. But, as the younger Mr. Trump wrote in “The Art of the Deal,” nobody was doing that by the 1980s because “it’s not profitable and government subsidies have been eliminated.” So the younger Mr. Trump shifted toward higher-profile projects in Manhattan, which also depended on government assistance in the form of tax abatements.

His earliest major construction deal in Manhattan was the redevelopment of the Commodore Hotel near Grand Central Terminal, now the glass-covered Grand Hyatt. Mr. Trump sought and won a 40-year property tax abatement (one so long it is still in place today) over the objections of other hotel operators. Before that, he helped persuade the city to build the Jacob K. Javits Convention Center on a former Penn Central rail yard on the Far West Side; Trump earned an $833,000 fee when the city bought the land, on which he held a purchase option.

A lot of conservatives have criticized public spending on convention centers as a subsidy to the hotel industry, but Mr. Trump called the publicly funded convention center project “critical to reviving the city’s image and, ultimately, to putting its economy back on track.”

When seeking tax abatements and zoning variances for his private projects, Mr. Trump emphasized how great his developments would be for the city. The tax breaks for the Grand Hyatt, he said, were the only way to stop the existing building from becoming a closed, blighted eyesore. His planned Television City development (a now scrapped proposal to bring NBC to a site on the Hudson River in the West 60s) would bring “business worth at least $500 million a year from new residents.”

Sometimes public officials bought these arguments and sometimes they didn’t. But nowhere in the book is there a contention that he shouldn’t have to make them. Never does he say that it’s none of the government’s business how he does business.

This is more evidence for what some conservatives have been shouting with increasing alarm: Donald Trump is not one of us, does not share a gut-level suspicion of government, is not a true believer in free enterprise. Mr. Trump is an enthusiast of business, but as conservative critics of “crony capitalism” emphasize, being pro-business is not the same as being pro-market.

That said, while “The Art of the Deal” is not antigovernment in general, it does contain a lot of complaints about specific actions of government. For example, he disliked Ronald Reagan’s 1986 tax reform, which abolished various tax deductions related to real estate. This move, he wrote, “will be a disaster for the country, since it eliminates the incentives to invest and build — particularly in secondary locations, where no building will occur unless there are incentives.” That is, while Mr. Trump is running on a platform of tax simplification today, he was against it 30 years ago.

Parts of the book presage Mr. Trump’s recent rants about “stupid” politicians. Mayor Ed Koch, he wrote, “has achieved something quite miraculous. He’s presided over an administration that is both pervasively corrupt and totally incompetent.” One chapter is devoted to an almost gleeful description of how the construction of an ice rink in Central Park was botched — they tried to build it on a slope, can you believe that? — and then Mr. Trump took over and got done in six months what the city had failed to do inside six years.

But these are not so much arguments against government as against stupidity. Cost overruns on the Javits Center could have been avoided, Mr. Trump wrote, if the city had awarded the construction contract to him as he had suggested. Not surprisingly, this year, he has talked about the need for infrastructure spending with the zeal of many Democrats — while insisting he can deliver needed upgrades much more cheaply than the government would.

Twenty-nine years is a long time, and “The Art of the Deal,” which he wrote with Tony Schwartz, who is now a contributor to The New York Times, will not necessarily be Mr. Trump’s blueprint for governing. But in his campaign speeches, Mr. Trump has often echoed the meddlesome approach to business he learned from New York City officials. As president, Mr. Trump likes to say, he’d call up the chief of Ford with a threat: Move your factories back from Mexico or I’ll slap a huge tax on your imports.

This is antithetical to the conservative approach that says markets, not the government, should determine the allocation of business capital. But it is fully in line with the ideas in “The Art of the Deal.”

Read more http://rss.nytimes.com/c/34625/f/640350/s/49ff1a41/sc/7/l/0L0Snytimes0N0C20A150C0A90C20A0Cupshot0Cdonald0Etrump0Eand0Ethe0Eart0Eof0Ethe0Epublic0Esector0Edeal0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm


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