On Presidents and Money

Nov 14, 2016 • By • 128 Views

By Tricia Drevets

With an estimated net worth of $3.7 billion, U.S. President-elect Donald Trump will be by far the wealthiest man to take the office.

He stated both during the campaign and in a recent post-election interview with Lesley Stahl of CBS’s 60 Minutes that he will not accept his $400,000 salary. “No, I'm not going to take the salary,” he said. “I'm not taking it."

Trump is not the first president to forgo the paycheck. Some of his wealthy predecessors, including Herbert Hoover and John F Kennedy, donated their salaries to charity.

Although many presidents were wealthy when they took office – George Washington’s net worth today would amount to $525 million -- others were decidedly not. Abraham Lincoln, Ulysses S. Grant, Harry Truman and Calvin Coolidge rank as our poorest commander-in-chiefs.

With top CEOs easily taking in far more than the President of the United States does, it is interesting to examine the history of the presidential salary.

It was President Bill Clinton who signed legislation in 1999 that doubled the presidential pay from $200,000 to $400,000. Clinton himself did not benefit from the increase, which was the first change since 1969. In fact, the U.S. Constitution states that a president elected to a second term is not entitled to a raise.

Article II, Section 1 states, "The President shall, at stated times receive for his services, a compensation, which shall neither be increased nor diminished during the period for which he shall have been elected ..."

Remarkably, the 1999 increase was only the fifth time the presidential salary has gone up. Without a mechanism to adjust the payment automatically, any changes must come through Congressional legislation.

In 1789, the nation’s first president’s salary was $25,000. A wealthy landowner, Washington at first refused the healthy payment, but later he accepted a small portion of it to help cover his travel expenses.

It was nearly a century later that the presidential salary increased, starting several $25,000 at a time increases. In 1873, during Grant’s second term, it rose to $50,000. Then in 1909, President William Howard Taft received $75,000.

In 1949, Harry Truman was paid $100,000. Then, in 1969, Richard Nixon’s salary as president jumped to $200,000. It stayed at that mark for 30 years until Clinton approved the current $400,000. George W. Bush, who took office in 2001, was the first president to receive the current salary.

In addition to the taxable salary, presidents also have had a non-taxable annual expense account of $50,000 since 1949. This fund is commonly used to pay for dinners and meetings that do not come under a certain agency or department’s budget.  Any unused funds from this account are returned to the Treasury Department each year.

What about the vice president’s salary? Since legislation passed in 1989, the vice president's salary is the same as that of chief justice of the United States and of the speaker of the House.

Unlike the president’s salary, which is fixed, the vice president’s salary is subject to annual cost of living increases. Last year, Vice President Joe Biden received $230,700, plus a $10,000 taxable expense account.

Since 1958, former presidents have been granted a pension, an office, a staff, travel funds, Secret Service protection and free mailing privileges.The pension amount is based on the salary of the current administration's cabinet secretaries. In 2015, the pension was $203,700. It is set at $205,700 for 2016.

Today, former presidents also earn substantial income as speakers and as authors. For instance, according to a CNN report, former President Bill Clinton earned $132 million for speeches delivered between February 2001 and March 2015. Clinton reportedly earned another $15 million by publishing his memoirs. According to research by Politico, George W. Bush gave about 200 speeches in the period from 2009 to 2015, charging $100,000 to $175,000 for each speech.

Republicans have introduced legislation to cut each pension by a dollar for every dollar a former president earns over $400,000 in the private sector each year.

“If you’re going to go out and make enormous sums of money, then you don’t need taxpayer subsidies,” Rep. Jason Chaffetz (R., Utah), who introduced the bill in the House of Representatives, said in an ABC interview.

According to Burton Kaufman, author of the book "The Post Presidency: From Washington to Clinton," some presidents, like Washington, tend to withdraw from the public eye after their terms end, while others, like Jimmy Carter with Habitat for Humanity, concentrate on charitable initiatives.

What will President Barak Obama do after he leaves the White House on January 20? At the age of 55, he has many active years ahead of him, and he is leaving the presidency with high approval ratings. Therefore, it is likely he will write a follow-up to his successful memoir "Dreams from My Father."

Both President Obama and his wife, Michelle, also will be big draws on the lucrative speaking circuit. They likely will rival Hillary and Bill Clinton, who earn hundreds of thousands of dollars for each speaking engagement they make.

In thinking about all this wealth, it is easy to forget that America has had its share of poor presidents. Civil War hero Ulysses S. Grant, the 18th president, was bankrupt after being defrauded by Ferdinand Ward, his son’s business partner. He was able to give his family some financial security after the memoirs he wrote while he was dying sold posthumously for about $500,000.

William McKinley became bankrupt in the depression of 1893 after an ill-fated investment in a tinplate company. In order to pay his debts, McKinley solicited his friends to help him sell property and raise money.

Harry S. Truman struggled financially most of his life, and he was in debt when he began his political career as a senator. Truman and his wife, Bess, were the first two official Medicare recipients when President Lyndon Johnson signed that health program into law.

Oh, and in case you're into official wording, here is the statue about the president's pay:

The President shall receive in full for his services during the term for which he shall have been elected compensation in the aggregate amount of $400,000 a year, to be paid monthly, and in addition an expense allowance of $50,000 to assist in defraying expenses relating to or resulting from the discharge of his official duties. Any unused amount of such expense allowance shall revert to the Treasury pursuant to section 1552 of title 31, United States Code. No amount of such expense allowance shall be included in the gross income of the President. He shall be entitled also to the use of the furniture and other effects belonging to the United States and kept in the Executive Residence at the White House.

About the Author

Tricia Drevets Tricia Drevets

Tricia Drevets is a freelance writer and educator who specializes in business and communication topics.

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