Most pundits currently commenting on President Joe Biden’s and former President Donald Trump’s relative campaign finance war chests are indicating that Mr. Biden had a significant advantage over Mr. Trump.
I hope they’re right.
On April 17, the Wall Street Journal reported that the total market value of Mr. Trump’s social media company, Truth Social, had plummeted from $9 billion when it initially started public trading to $3.1 billion as of the edition’s publication. Mr. Trump owns 60% of the company, which means his Truth Social shares – on paper – currently have a value approximating $1.8 billion.
It has been widely noted that Mr. Trump’s stock is locked – i.e., he can’t sell shares – during the first six months following the date of Truth Social’s initial public offering in late March; but that means he can sell shares starting around October 1, 2024 – more than a month before Election Day.
A quick internet research recently confirmed my understanding that there are no legal limits on what a candidate can spend of his/her own assets on his/her own campaign.
Mr. Trump is legendarily loath to spend his own money when he can get others to spend money on his behalf, but if he believes that winning the presidential election is the only way for him to stay of jail, I bet he’ll be a little more willing than in the past to expend his own funds.
Let’s consider the current Trump Social value of about $3 billion. Although the value could easily go up by October 1 if Mr. Trump appears to have a significant chance to return to office, let’s instead assume Truth Social’s total value drops another 50% by October 1, to $1.5 billion. Under this scenario, Mr. Trump’s stock would be worth a “mere” $900 million. Although the former president – who is the company’s asset – would undoubtedly be loath to cede control of what will be an extremely valuable asset if he reclaims the presidency, it is tenable that when the lock ends, he will be able to sell a significant percentage of his stake while maintaining either de jure or de facto control of the company. Even if the “forced sale” nature of his divestiture drives the value of the shares down even further, he will still arguably be able to reap tens of millions in sale proceeds. Notwithstanding any reduction from the “top line” sale proceeds for capital gains tax, he’d still compile a sizeable campaign war chest to spend between the conversion date and Election Day.
While there are other ways the former president can raise cash, a partial divestiture of Truth Social shares seems the easiest way for Mr. Trump to raise a lot of money in a short amount of time; his current challenge is the lock. If there is a manner he can circumvent it, he undoubtedly will.
So query: is President Biden’s campaign funding edge as great as it appears? On or about October 1, there may be little difference between the candidates’ respective resources. Mr. Biden’s true advantage here may be his combination of currently-available funds and timing. He will seemingly have months more than Mr. Trump to use his financial wherewithal to execute his voter turnout initiatives and to pummel Mr. Trump in ads targeted at swing state swing voters.
Let’s hope that the Biden Campaign uses its current apparent financial advantage wisely.
McCoy's Noise 