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Supreme Court Hears Cases Involving Trump's Taxes, Financial Records

President Trump's financial records from the period before he entered the White House are under scrutiny in the latest Supreme Court showdown.
President Trump's financial records from the period before he entered the White House are under scrutiny in the latest Supreme Court showdown.

History, politics and law are converging at the Supreme Court on Tuesday, as the justices confront questions about the limits of presidential, congressional and judicial power.

At issue are three cases involving subpoenas — some issued by congressional committees, and one by a New York grand jury in a criminal case. All call for the production of Donald Trump's financial records, mainly from the period before he was president, and all issued not to Trump, but to banks and accounting firms he did business with.

How the court decides these cases could dramatically change the balance of power among the three branches of government, thus shifting the American system of checks and balances.

In 2016 President Trump famously said, "I could stand in the middle of Fifth Avenue and shoot someone, and I wouldn't lose any voters."

The position he is taking in these cases is essentially the legal version of that statement. It's an assertion of nearly complete presidential immunity.

In Trump's view, only Congress can hold him accountable — and only by impeachment and removal from office. Though presidents in the past have complied with congressional and grand jury requests for financial and other personal records, Trump has refused to do that in these cases.

In October 2019, during the appeals court argument in the grand jury subpoena case, Judge Denny Chin asked Trump's lawyers about the president's "view on the Fifth Avenue example." Are you saying that "local authorities couldn't investigate? They couldn't do anything about it? That's your position?" Chin asked.

"That is correct. That's correct," responded William Consovoy, Trump's lawyer.

The subpoenas

So, what information is actually being sought in these subpoenas at the center of Tuesday's arguments?

All are seeking similar, but not identical, financial records, largely from before Trump became president. And they were issued not to Trump, but directly to Deutsche Bank and Mazars USA, the bank and accounting firm that he and his family do much of their business with.

"Deutsche Bank is sitting on a trove of records ... Trump's innermost financial secrets," says David Enrich, business investigations editor at The New York Timesand author of Dark Towers, a book about Trump and Deutsche Bank. He says that among the documents are not only Trump's tax returns but also "balance sheet information, income statements ... who his business partners are ... which he has spent years trying to keep hidden from public view."

Trump has taken out multibillion-dollar loans from Deutsche Bank, but the relationship extends beyond that. The bank also managed his assets and "provided matchmaking services that connected Trump with wealthy individuals, including some very wealthy, well-connected Russians who were looking to invest in American real estate," Enrich says.

Mazars and Deutsche Bank have not objected to complying with the subpoenas. Instead, Trump stepped in to ask the courts to block them from complying.

Though the justices are technically hearing three cases on Tuesday, there basically are two questions before the court. First, whether Congress can subpoena a president's personal information outside of an impeachment inquiry, and second, whether a state can subpoena a sitting president's personal records in a criminal investigation. There is also a third question in the congressional case: whether the court has any power to be in the case at all, or whether it is a "political question."

On the congressional front, the House Financial Services Committee, the House Intelligence Committee and the House Government Oversight Committee all say the subpoenas are in the exercise of their basic oversight and legislative responsibilities.

They say they are seeking the information in the Trump records to inform the need for new international money laundering restrictions, and for other purposes; for instance, to determine whether the ethics laws should be tightened to prevent a president with huge business interests from using his office unethically, or whether future presidents should be required to disclose their tax returns, something that Trump's lawyers maintain would be itself unconstitutional.

The subpoena issued by a New York grand jury involves a broad investigation that includes an investigation of alleged hush money payments by Trump to adult film star Stormy Daniels and another woman during the 2016 presidential campaign.

President or king?

No ordinary citizen would be able to block congressional or grand jury subpoenas for business records or tax returns. But, as Trump lawyer Jay Sekulow puts it, "this is not ordinary. This is against the president of the United States. And the Supreme Court has recognized the president is not treated like any ordinary citizen."

"I don't think that the president is king," counters Stuart Gerson, who served as assistant attorney general during the George H.W. Bush administration and as acting attorney general in 1993.

Gerson is among a group of former high-ranking justice department officials who have filed a brief opposing Trump's position. Ultimately, he argues, "there's a demonstrable public need for these documents that outweighs any argument about presidential privilege that might be raised."

Enrich of The Timesadds that: "There's a legitimate interest in understanding better who [Trump] has done business with in the past," and who he is still doing business with because Trump "still has a very strong, direct financial interest in what goes on inside his company," and his business dealings have been hidden from the public.

"It's basically a black box," Enrich observes. "And Deutsche Bank is one of the few institutions in the world that has the keys to unlock it."

Trump's lawyer Sekulow, however, maintains that the president is entitled to immunity from subpoenas, even those not served directly on him, as long as he is president. The president, he says, does not have to comply with any subpoena from a state grand jury, like the one in New York.

He notes that there are more than 2,300 state and local district attorneys in the country, and if the subpoena in this case is upheld, every Tom, Dick and Harriet DA would be harassing presidents they didn't like. He maintains that the Supremacy Clause of the Constitution means that state prosecutors simply don't have the power to investigate a sitting president because state law is trumped, as it were, by federal law.

But New York maintains that there are important reasons for states to be allowed to move forward with criminal investigations, even if they might entangle a president, and even though a president cannot be charged with a crime until after leaving office.

Columbia law professor Dan Richman summarizes the Manhattan district attorney's argument this way: "In fact, the ability to pursue this case, even were we to wait, would be substantially impeded. Memories deteriorate, evidence disappears, so unless we're going to declare that once a person is president, they're above the law for anything that happened before they were president, we need to pursue a case involving others, and in time, once he steps down, possibly against him."

As for the congressional subpoenas, Trump's lawyers argue they can't be enforced against the president, because as Sekulow puts it, what Congress is really doing is investigating the president. And, "they're not entitled to be a law enforcement agency."

Basically, he says, if Congress wants to subpoena a president, it can only do so through a formal impeachment investigation.

Nixon, Clinton and Trump

Gerson, the Republican former acting attorney general, points out that the Supreme Court, by a unanimous vote in 1974, ordered President Richard Nixon to comply with a federal grand jury subpoena for tape recordings relevant to the Watergate investigation. Ultimately, those tapes would lead to Nixon's resignation.

And in 1997, the high court, also by a unanimous vote, ordered President Bill Clinton to testify in a sexual harassment case stemming from his time as governor. His eventual testimony would lead to his impeachment and acquittal by the Senate.

That case, however, was a civil, not criminal, case, and the court punted on the question of whether a state could force similar compliance in a criminal investigation. So, expect Trump's lawyers to stress that unresolved point Tuesday.

Gerson replies that while it has long been understood that a president can't be indicted while in office, that does not mean he can't be investigated by Congress or by state grand juries.

"I don't think that the court is going to hold that the president has some kind of royal powers," he says. "There is a zone where information from the president is available through subpoena."

For instance, Gerson says, "a judge could intervene and say that the need for those is outweighed by other factors. But that hasn't been the case in any of these situations. Indeed, the president is making a blanket argument that really doesn't hold historical or constitutional water."

Sekulow replies that no matter how small or large a president's offenses, the only remedy Congress has is impeachment. And, in this case, the Senate failed to convict Trump on impeachment charges.

To be more precise, though, the Republican-controlled Senate refused to issue subpoenas for the additional witnesses the House managers wanted, after Trump refused to allow those individuals testimony during the impeachment inquiry.

'Heads, I win. Tails, you lose'

University of Texas law professor Stephen Vladeck argues that Congress' oversight powers have never been limited to impeachment.

"Congress' oversight function, as the Supreme Court has long recognized, extends to matters of public concern and areas where Congress might want to regulate — might want to do something but needs more information first," he says.

As an example, Vladeck says if Congress were seeking "financial fraud records into the 2008 financial crisis, we would all agree that it has that power."

Trump's lawyer Sekulow, however, counters that Congress is on a fishing expedition to discredit the president and has no intention of legislating.

"I think that there's been a pattern and practice of harassment and distraction, and this is a continuation of that," Sekulow says.

But Congress and the New York district attorney see Trump's legal positions as a shell game.

As Vladeck puts it, whether investigators are seeking information as part of congressional oversight or during an impeachment investigation, or in state court, or in federal court, "the answer is 'no.' "

"The president's position in this litigation all along has had remarkably straightforward 'Heads, I win. Tails, you lose' quality," he says.

Just how the newly energized conservative Supreme Court majority will weigh all these factors is uncertain. Every one of the conservative justices, as well as Obama appointee Elena Kagan, served in the executive branch and all have, at various times, argued strenuously in support of muscular executive power.

The newest justice, Trump nominee Brett Kavanaugh, has both criticized and praised the Supreme Court's Nixon tapes decision. Indeed, prior to his nomination to the court, he wrote a law review article suggesting that Congress should pass a law making the president entirely immune from investigation during his tenure.

Finally, the court has recently asked the lawyers in this case to brief an additional question: whether the fight between Congress and the president is a political question that the courts should stay out of.

Were the court to take that off-ramp, it would make it very difficult for any future Congress to force the president to produce information directly. But it would also mean that in this particular case, with the subpoenas still in place, Deutsche Bank and Mazars, which until now have explicitly had no objections to complying with the subpoenas, might have to comply; Trump would have no power to go to court to prevent compliance.

Finally, for a Supreme Court already viewed by some as suspect, these cases present a genuine challenge to its reputation for nonpartisan and fair resolution of important questions.

Some conservative court advocates like Paul Clement, who served as solicitor general in the George W. Bush administration, see this case as an opportunity for the court to make clear it is no political pawn.

"The best way to try to reassert normalcy, if you will, is ... rule the way that you might otherwise rule. And I think if you look at the court's precedents, you know, the president's argument is a tough one. Maybe an uphill one," Clement says.

The last two challenges like this — involving subpoenas for Nixon's tapes and Clinton's testimony — were both decided by unanimous votes against the presidents. The current court, however, seems unlikely to achieve such unanimity.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

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