Saturday, November 5, 2016

Donald Trump got rich on government subsidies yet he refuses to give back

Donald Trump’s wealth exists because of the help his family received from government programs. Yet now that Trump has become a multi-billionaire as a result, he fights like mad against extending the same helping hand to others.

Trump did not start his own business from scratch. Instead, he glided into the already established business created by his father, Fred C. Trump. Trump’s father began his real estate development company in the late 1920s. And before long the business was built upon new government programs designed to assist the lower and middle classes with housing.

During the Great Depression, the housing market was devastated. Banks stopped offering mortgages, families stopped buying homes and developers stopped building. To solve this problem, the government under President Franklin D. Roosevelt intervened and created the Federal Housing Administration (FHA) in 1934.

The FHA essentially devised a form of long-term mortgage that was affordable for home buyers and builders. To incentivize banks to make these loans, the federal government insured the loans against the risk of loss. This intervention by the government rejuvenated the housing market.

Trump’s father was a major beneficiary of this new government program. He began using FHA loans to build apartment buildings. When World War II broke out, Trump’s father continued to benefit from the government’s largesse by building apartments for the United States Navy. And in the aftermath of the war, he continued to use the FHA loan program to build apartment buildings for soldiers returning home from the war, who themselves used government programs to buy the apartments. His buildings primarily served the middle and lower classes in the neighborhoods of Queens and Brooklyn in New York City.

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