Presidential nominee wrong, again. Recession of 1990-91 does not compare in severity of the 2008 financial crisis and bankruptcy is common business practice

Taxes

“I mean, honestly, I have brilliantly – I have brilliantly used those laws.” – 3 October, Pueblo, Colorado

The lies Trump told this week: from post-debate polls to losing US jobs Read more

Donald J Trump did not prepare his 1995 returns, portions of which showed a $916m loss that could have let the businessman avoid 18 years of taxes. Jack Mitnick was Trump’s accountant at the time. This week, Mitnick was asked by CNN if Trump “was brilliant in the way he used the tax code? Smart and a genius?”

“No, those returns were entirely created by us,” Mitnick replied.

He was then asked: “So what kind of involvement did he have?”

Mitnick: “Virtually zero.”

Finally, the CNN hosts asked whether Mitnick, who worked for Trump for years, had “any reason to believe that he does know how to work the tax code as much as he says he does?”

Mitnick: “Not when I dealt with him.”

‘Depression of the 1990s’

“If you remember the early 90s, other than I would say 1928, there was nothing even close. The conditions facing real-estate developers in that early 90s period were almost as bad as the great depression of 1929 and far worse than the great recession of 2008. Not even close.



“What had been a booming economy in the era of Ronald Reagan changed dramatically and the business landscape changed with it. Bank failures and collapse, the absolute total destruction of the savings and loan industry, and the implosion of the retail market and real estate in general, something we’ve never seen anything like it. Many businesspeople, including many of my competitors and some of my friends, were not able to survive.” – 3 October, Pueblo

The eight-month recession of 1990-91 does not compare in scope or severity to the recession following the 2008 financial crisis, much less the collapse of virtually the entire global economy following the stock market crash of 1929. (Trump wrongly said 1928.)

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In the first few years of the 1990s, the US lost 1.6m jobs, unemployment reaching almost 8% in June 1992. By the late 1990s, the savings and loans industry had recovered. After the 2008 financial crisis, the US lost 8.7m jobs – in October 2010, unemployment reached a peak of 10%. The recession itself lasted 18 months, officially.

The Great Depression was far worse. In 1933, 25% of all workers and 37% of all non-farm workers were out of work. For years in the 1930s, the economy staggered into sluggish recoveries and back into downturns: the entire decade is usually referred to as part of the depression.

Trump’s comparison of the 1990s to the great depression, which saw families across the US starving to death, is hyperbolic to a grotesque degree.

Nor does Trump have a leg to stand on when he blames macroeconomics for his $916m loss in 1995. In the late 1980s, Trump amassed $3.4bn in debt, largely in high-interest junk bonds. His debts, paired with massive spending on Atlantic City casinos, led one of his casinos to default months before the recession began. Mismanagement led his other casinos into decline, even though New Jersey reaped increasing profits from gambling through the 1990s.

Bankruptcy

“Some of the biggest and strongest of companies went absolutely bankrupt. Which I never did, by the way. Are you proud of me? Would have loved to use that card, but I just didn’t want to do it.” – 3 October, Pueblo

Trump’s father and family repeatedly bailed him out with millions in loans, one of them illegal. Trump has never personally filed for bankruptcy. Yet, his businesses have filed for Chapter 11 bankruptcy – which allows businesses to find ways to restructure debt and operations without being liquidated – six times in the last 25 years.

In 1991 he declared bankruptcy at his Taj Mahal casino; in 1992 he declared bankruptcy at his Trump Castle casino, Trump Plaza and Plaza Hotel; in 2004 he filed for bankruptcy at Trump Hotels and Casinos Resorts; and in 2009 his Trump Entertainment Resorts declared bankruptcy.

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In a primary debate last October, Trump bragged about four of those bankruptcies.

Catching up with Pence

“Less than 10 cents on the dollar in the Clinton Foundation has gone to charitable organizations.” – 4 October, Farmville, Virginia

This claim by Trump’s running mate during the vice-presidential debate is misleading. The Clinton Foundation is itself a charity and most of its funding goes to its own programs, for instance for Haiti and HIV/Aids treatment: 10% goes to third-party organizations.

Brian Mittendorf, a professor of accounting at Ohio State University’s Fisher College of Business, told Politifact earlier this year that in 2014, 87% of the Clinton Foundation’s funds went to its own charitable works. A charity watchdog found that it spent only 12% that year on overheads.