Kurt Eichenwald continues his chronicle of Donald Trump's business failures today, this time via a report from the New Jersey Department of Law and Public Safety that summarizes Trump's federal tax returns from the late 70s. The report was based on tax returns furnished to them when Trump first tried to break into the casino business in 1980. This was just after Trump had scored his first big success—the Grand Hyatt hotel in Manhattan—which relied entirely on loans personally guaranteed by Trump's father. Fred Trump also arranged for Donald to obtain a personal line of credit of $35 million at Chase Manhattan:

But Trump was unable to control his spending....In 1978, the same year that Fred Trump set up the credit line for his son at Chase Manhattan, Trump’s personal finances collapsed....Losses came across the board. A number of Trump’s New York rental properties—on Third Avenue, Fifth Avenue, East 56th Street, East 57th Street, East 61st Street and East 67th Street—all were financial flops....Partnership investments—Park Briar Associates, Regency Lexington Partners and 220 Prospect Street Company—contributed even more red ink. The interest owed to Chase Manhattan on Trump’s massive use of his credit line topped off the dismal financial performance.

....No one could withstand these types of losses given the comparatively paltry amount of money available to offset them. So Trump took the same route he did for the rest of that decade and in decades to come: He borrowed more to keep himself afloat....On September 24, 1980, Fred Trump arranged for a series of loans totaling $7.5 million to his son....That same day, one of the Trump family’s companies, Trump Village Construction Corporation, lent Donald Trump an additional $976,238. All of the loans could be paid back at any time, and Donald Trump was not liable for any of the interest payments on them.

So what kind of businessman is Donald Trump? The truth is that it hasn't been all bungling and failure—just most of it. There have basically been six eras of Trump:

1970s: The Era of Early Failures. See above. Trump breaks into the Manhattan real estate market but racks up loss after loss. He is bailed out by his father.

Early 1980s: The Era of Success. A chastened Trump apparently decides to buckle down and pay attention to work. It's during this period that he puts together the parcels and financing for Trump Tower, one of his most successful projects. This is the briefest of the Trump eras.

Mid 80s/early 90s: The Era of Catastrophic Failure. Trump reverts to form. He negotiates terrible deals for a USFL team, the Plaza Hotel, the Eastern Shuttle, and a yacht he never uses. He obsesses over plans to develop a grandiose project he called Television City, located on 57 acres of land along the Hudson River. But he bungles the deal and loses control. He builds casinos in Atlantic City, but epically mismanages them and loses a huge sum. By 1991 he's broke. He avoids personal bankruptcy partly by browbeating his bankers and partly by pleading for tens of millions of dollars in loans from his father and his siblings.

Mid/late 90s: The Era of Desolation. Trump finally emerges in 1995, no longer broke but no longer all that rich either. His marriage to Marla Maples is heading south, and ends in divorce in 1999. He keeps up a brave public face, but these are bleak years with nothing much to maintain his interest. Then, in 1999, Trump's father dies, followed by his mother in 2000. Trump inherits roughly $70 million or so.

2000 and beyond: The Era of Golf and Licensing. Building skyscrapers is now out of reach, since no one will lend Trump the kind of scratch that takes. So he starts overpaying for golf courses instead. Beyond that, he finally finds something he's good at: making money from his mouth. He licenses his name to naive developers from overseas who still think he's the king of real estate. He lends his name to a seemingly endless string of penny ante businesses—Trump steaks, Trump vodka, Trump radio—as well as a dodgy assortment of penny-ante scams—Trump University, Trump diets, Trump mortgages. In 2004, he hits the jackpot of random luck when reality king Mark Burnett chooses him to host The Apprentice, a show perfectly suited to Trump's talents for bullying and bombast.

2015-16: The Era of Making America Great Again. You all know this part of the story, right?

It's kind of sad, really: Donald Trump has lived his entire life in the shadow of his father's success. Everything he's done has been one long, desperate attempt to prove to himself and the world that he's as successful as Fred Trump—who really was a self-made man. He never found that success, though, and running for president is his final, most audacious attempt to win his father's respect. Unfortunately, like all the others, it's doomed to failure—and not just because he's likely to lose in November. His problem runs much deeper than that. He's never looked in the right place.

The theories are piling up! Today, Josh Barro summarizes a theory from Lee Sheppard in Tax Notes about how Donald Trump managed to show a $916 million operating loss on his 1995 tax return. By my count, this is the third plausible theory in circulation. I shall now summarize Barro's summary of Sheppard.

Sheppard reckons that Trump's casino operations were organized as an S corporation, in which profits and losses flow through to the owner. So when the S corporation sustained huge losses after the casinos collapsed, those losses passed through to Trump. Subsequently, the corporation's debts were canceled, which should have shown up as offsetting income. However, because the debts were canceled through bankruptcy, they never showed up on the S corporation's balance sheet and never passed through to Trump:

"But wait!" I hope you are saying. "Wouldn't that put Trump afoul of the rule that his tax losses from the S Corporation can't exceed what he invested in it in the first place plus the prior profits?"

Yes, it would — except that, before the 2002 loophole fix, the debt forgiveness enjoyed by the S Corporation would have passed through to Trump for the purposes of calculating the amount of profit the S Corporation had earned on his behalf, even though the same debt forgiveness did not pass through as actual taxable profit to him.

Sheppard refers to this as a "double dip" — the tax loophole would have allowed Trump to claim losses on his individual income tax return that were ultimately borne by creditors, not by him.

Did you notice the reference to a "2002 loophole" there? This is what makes Sheppard's theory so precious. "Double dipping" is obviously stupid, and it was never the intention of Congress. However, when the IRS tried to kill it off, the Supreme Court ruled that the letter of the law is the letter of the law. If Congress screwed up, it's up to Congress to fix it.

So they did. In 2002 double dipping was banned. And guess who voted to ban it?

Yep: Hillary Clinton. So when Donald Trump disingenuously demands to know why Clinton never tried to close the loopholes he used, the answer is: She did. And if there had been any way to make it retroactive, she probably would have voted for that too.

So many theories. But all of them have one thing in common: They demonstrate that although Trump isn't much of a businessman, he is rich enough to hire good tax attorneys who will hand over huge stacks of forms for him to sign blindly. That's a helluva qualification for president, isn't it?

Here's a bracing dissection of whether it should be possible to patent software:

Given that an “idea” is not patentable and a generic computer is “beside the point” in the eligibility analysis, all software implemented on a standard computer should be deemed categorically outside the bounds of section 101.

The central problem with affording patent protection to generically-implemented software is that standard computers have long been ceded to the public domain....Because generic computers are ubiquitous and indispensable, in effect the “basic tool[]” of modern life, they are not subject to the patent monopoly. In the section 101 calculus, adding software (which is as abstract as language) to a conventional computer (which rightfully resides in the public domain) results in a patent eligibility score of zero.

....Software lies in the antechamber of patentable invention. Because generically-implemented software is an “idea” insufficiently linked to any defining physical structure other than a standard computer, it is a precursor to technology rather than technology itself.

(Note: "Section 101" is 35 U.S. Code § 101, the part of US law that governs patents.)

The interesting thing here is that this was written by a longtime judge for the Federal Circuit Court: Haldane Mayer, a Reagan appointee who is now on senior status. Apparently, Mayer has had enough. In a recent case involving a patent troll, he didn't feel like fiddling around on the edges of the Alice test handed down recently by the Supreme Court. He believes that Alice effectively does away with software patents entirely. Instead, software should be governed by copyright, as it was for decades before a series of vague rulings and the establishment of a new court accidentally created them in the 70s and 80s.

Mayer's analysis is just a concurring opinion and has no legal force. Still, it's encouraging that an experienced judge is saying stuff like this out loud. Maybe a few other will now follow suit. And maybe the Supreme Court will eventually agree. Maybe.

Here's some cheery news: the CFPB has issued new rules to rein in the wild, wild West of prepaid cards. I had to read to the end of the story to find out what the new rules actually were, but eventually I was rewarded for my patience:

The rules specifically require financial institutions that offer prepaid accounts to provide consumers with free and easy access to their account balances, transaction history and a list of any fees charged....Consumers also get protections against fraud under the new rules. A consumer who promptly notifies the issuer about unauthorized transactions will be responsible for only $50 worth of charges....The CFPB also is setting an industrywide standard on disclosures to help consumers understand fees upfront and allow them to easily comparison shop.

Some issuers allow consumers to spend more money than they have on their cards, and the CFPB rules will extend credit card-type protections to those users. Companies offering such cards will have to make sure the consumer has the ability to repay before offering credit. Issuers also will have to give customers regular statements detailing fees, interest rates and other information and must offer at least 21 days to repay the credit before charging “reasonable and proportional” late fees.

Consumers also must be asked before money loaded into the card, such as from a paycheck, can be used to repay a credit bill. And issuers cannot offer credit until 30 days after a prepaid account has been opened.

These all seem like pretty reasonable rules. And they don't apply only to cards:

Popular mobile-payment apps including PayPal Holdings Inc.’s Venmo and Alphabet Inc.’s Google Wallet will be subject to more stringent government oversight under a regulation completed Wednesday....Analysts say other products that could be covered by the rule include Square Inc.’s Square Cash and fintech firm Dwolla’s payment tool.

The digital folks all objected vociferously, of course, because tech. Everyone knows that tech is totally different from non-tech and needs to be allowed to breathe free or else all human progress will grind to a halt.

Luckily the CFPB gave this argument exactly the consideration it deserved. If you're storing money and providing credit, then you have to play fair with your customers. The fact that a microprocessor is involved somewhere along the line doesn't change that.

POSTSCRIPT: I'm eager to hear from Donald Trump and the Republican Party why this is an outrageous offense against the free market right of prepaid card vendors to scam users out of the maximum possible amount of money in the form of exorbitant fees and interest on unwanted loans.

Mike Pence won last night's debate. Pretty much everyone agrees about that. Here's what everyone also agrees about: Pence lied constantly. It was one of the most widespread observations about the debate:

Washington Post: More effectively than any Trump surrogate up to now, Pence simply denied — and denied, and denied, and denied — that someone as essentially good as Donald Trump could hold the views that cameras had recorded him holding.

New York Times, on Kaine's charge that Pence and Trump have praised Vladimir Putin: “We haven’t,” Mr. Pence protested, even though he himself said on CNN last month that Mr. Putin was “a stronger leader in his country than Barack Obama has been in this country.” But Mr. Pence during the debate flatly denied making that remark.

LA Times: [Pence] smoothly, and without a hint of embarrassment, denied that Trump had said things Trump had said.

Guardian: Mostly Pence flatly denied that Trump had made controversial statements and, instead of defending the candidate, resorted to the strategy of gaslighting, by repeatedly challenging known facts to manipulate the truth.

Politico: The main tenet of [Pence's] strategy was to deny that Trump ever said these things to begin with — despite the fact that many of the statements were both real and a part of the public record.

McClatchy: During the few moments he did address statements Trump made, Pence denied them or even misstated them. “No he hasn't,” he said repeatedly.

I didn't have to go looking for this stuff. I just opened up seven debate recaps and found these six. (Only the Wall Street Journal seemed not to notice Pence's behavior.) So here's where we are: Pretty much everyone watching the debate agreed that Mike Pence lied over and over about simple stuff that's on tape and easily verified. And yet pretty much everyone also agreed that he won the debate. Does anyone see the problem here?

Apparently a lot of people needed to clip their fingernails last night:

This suggests that the post-debate spin is going to be more important than usual since so few people actually saw the debate. I suspect that's good for Team Clinton, since Tim Kaine's performance is likely to look better over time. It may not have won people over during the debate itself, but Kaine badgered Pence pretty effectively and did a good job of exposing Pence's unwillingness to defend Donald Trump. In the end, the fact that Pence was so determined to throw Trump under the bus is likely to be the debate's biggest takeaway.

I'm now turning into some of the post-debate blather. The general consensus seems to be that Tim Kaine had the facts on his side; Mike Pence repeatedly refused to defend Donald Trump; and Kaine did a good job of keeping Trump's cretinism front and center. But Pence was calmer, and therefore he won.

CNN's instant poll bears this out. Respondents thought Kaine defended his boss better; was more knowledgeable; and attacked more.

But! Mike Pence was judged more likeable, and therefore he won the debate 48-42 percent. The American public has spoken: they'd rather have a beer with Mike Pence, and that makes him the winner. Some things never change.

On the bright side, though, we will always have Mike Pence complaining that Kaine had "whipped out that Mexican thing again."

This was a more normal debate than last week's, which makes it harder to call. Tim Kaine was very much the aggressor, interrupting frequently and demanding that Pence defend the most egregious of Donald Trump's outbursts. Pence was calmer, and kept insisting that Trump had never said the stuff Kaine accused him of saying. This wasn't true, but there's no telling if the audience at home believed him anyway. In the future, perhaps candidates should be allowed to have a series of video clips they're allowed to display during their answers?

On style, then, Pence probably won with his calm demeanor. On substance, it was a KO for Kaine. Trump really did say all the stuff Kaine accused him of, but Pence simply refused to engage with it. Trump did casually say he didn't care much if other countries got nukes. Trump did say that women who get abortions should be punished.1 Trump's tax plan does include huge cuts for millionaires. Trump did promise to release his taxes and then reneged on it. Trump (and Pence) have called Vladimir Putin a better leader than Obama. Trump has trash talked the military. Trump did call NATO obsolete and then suggest he might not bother defending the Baltics if Russia invaded them.

Neither Pence nor Kaine made any terrible gaffes, and neither landed any killing blows. This means that partisanship probably weighs most heavily here, but even with that in mind I'd give the debate to Kaine. The post-debate commentary is going to make it clear that Kaine was mostly accurate about Trump, and that Pence simply wasn't willing or able to defend him. I don't know if that will be devastating for Pence, but it won't make him look good. Overall, I give Kaine a B+ and Pence a B-.

As for Elaine Quijano, I really don't know. She didn't take control of the debate at all, and frequently allowed Pence and Kaine to talk when she should have shut them up—but just as frequently moved on when she should have let them talk. Was this because of the debate rules? Because Pence and Kaine refused to abide by the rules? Or because she's a bad moderator? I don't know.

A full transcript of the debate is here.

1He took it back the next day, but he still said it.

In a presidential campaign featuring superstars Hillary Clinton and Donald Trump, Tim Kaine and Mike Pence have faded so far into the background they're almost invisible. In fact, they've both avoided controversy so assiduously that the main attacks against Kaine are about his defense of murderers several decades ago, while the biggest complaint about Pence is that he claimed cigarettes weren't killers back in the year 2000. I'm exaggerating here, but only barely.

Actually, what most people seem to be looking forward to is Pence's defense of Donald Trump's various meltdowns. Sadly, he's probably well prepped for this. But you never know. There might be fireworks anyway.

10:35 - And that's a wrap.

10:33 - Pence: We'll unify America by bringing change to Washington DC, standing tall in the world, and supercharging the economy. Um.

10:31 - How will you unify America if you win? Kaine: Republicans respect Clinton. She has a track record of working across the aisle. Kaine says he does too. Not a bad answer.

10:27 - Pence opposes abortion. Kaine supports women making their own choices.

10:26 - Now it's a lovefest. Everybody agrees that faith is great. Everybody agrees that the other guy's faith is great.

10:23 - Now let's talk about faith. You will be unsurprised that both men are deeply, deeply informed by their faith.

10:20 - Quijano: I remind you both that the question is about North Korea.

10:19 - Now Kaine is talking about foundations too. The Clinton Foundation is great! But the Trump Foundation is "octopus like" and breaks the law all the time.

10:16 - What would you do to prevent North Korea from developing a missile that can reach the United States? Pence delivers a bit of mush and then....returns to Trump's taxes and the Clinton Foundation. Huh?

10:11 - Finally Kaine says something not really true: that Trump didn't know Russia annexed Crimea two years ago. Pence goes after it. But he's still stuck on most of Kaine's accusations because they're all on tape.

10:10 - Kaine has generally been pretty aggressive in his accusations against Trump. Pence is constantly rolling his eyes and saying "Oh please" or something similar. But he rarely even tries to explain why Kaine is wrong. He just switches to an attack on Hillary Clinton. I guess he doesn't have much choice since Kaine has mostly been accurate.

10:07 - Now Kaine makes it explicit: He's tried to get an answer on nukes "six times." Pence won't defend Trump's position. Quijano bails out Pence by moving to a new subject.

10:05 - Kaine keeps poking Pence on Trump's casual attitude toward other countries getting nuclear weapons. Pence resolutely refuses to deal with this.

9:58 - A question about Aleppo. And speaking of Aleppo, Gary Johnson says his ignorance of geography is a benefit. Folks who know all those foreign countries and foreign leaders just end up wanting to attack them. Seriously.

9:54 - What is an "intelligence surge"? Kaine: Expanding our intelligence capacity and building better alliances. Okey doke.

9:49 - Is America more or less safe than it was eight years ago? For the record, I'd say it's about equally dangerous.

9:48 - Kaine doing a pretty good job of running down why Trump is dangerous on foreign affairs: Trash talks the military, wants to tear apart alliances, he loves dictators, and he wants everyone to have nukes.

9:44 - Back to immigration. Pence trying to soften Trump's plan. Kaine trying to make sure everyone knows every single detail.

9:41 - Pence now trying to make case that "basket of deplorables" is equivalent to all of Trump's insults. It's not working.

9:40 - Interesting that Pence rather obviously refused to say the word "wall" when talking about Trump's immigration plan.

9:34 - Pence: Enough with all this institutional racism crap. Kaine: We can't be afraid to bring up issues of bias.

9:31 - Both guys agree that cops are great.

9:29 - What is Elaine Quijano doing? She's not keeping either of these guys in line, and she's only allowing a minute or two on each subject. Come on. This isn't a race to see who can talk about the most subjects in 90 minutes.

9:27 - Pence to Kaine: "There they go again." Oh please.

9:26 - What the heck are the rules for this debate? Are interruptions allowed? Are there time limits? Or what?

9:22 - Pence to Kaine: "You can roll out the numbers" but the economy sucks no matter what all your egghead numbers say.

9:21 - Kaine on Trump: "His economic plan is a Trump first plan." Meh.

9:19 - Nobody is making any funny faces yet.

9:16 - So far, our moderator is not doing a good job of keeping things in line. Maybe she's restrained by bad rules?

9:14 - Both candidates are trying to be tough. It's a little comedic. Sort of like five-year-olds trying to look tough next to John Wayne.

9:12 - Why do so many people think Donald Trump is erratic? How much time do we have to answer this question?

9:11 - Why don't people trust Hillary Clinton? Hmmm. Let me think.

9:03 - And we're off. Can I remember to use Eastern time zone time stamps this time? Wait and see!

9:00 - CNN can't seem to make up its mind whether this debate is going to be a snoozefest or the biggest moment ever in debate history.

8:55 - David Axelrod: There will be no painting outside the lines tonight.

Tax guru David Cay Johnston says he thinks he knows what Donald Trump's $916 million operating loss in 1995 was all about. The story starts when Trump's casino empire crashed in the early 90s, producing multiple business bankruptcies. And because Trump had personally guaranteed about a billion dollars in loans, it nearly produced a personal bankruptcy too. Here's Johnston's theory of what happened next:

  • Trump threatened to tie his bankers in legal knots for years unless they forgave the loans that had been largely responsible for his operating losses in the first place. Eventually, he badgered them into agreeing.
  • But a forgiven loan is income, so this produced a billion dollars in taxable income for Trump that would have offset his $916 million in operating losses. What to do?
  • In 1995, Congress passed a law that allowed real estate professionals to trade the taxes on forgiven debt for future real-estate tax deductions.
  • This gave someone at Trump HQ a bright idea: why not use this trade to dump his tax obligation onto Trump's casino properties? Normally this would just be trading one tax obligation for another, so to get around that they advised Trump to take all his casino holdings and put them into a shiny new public company.
  • Here's the genius part. By trading away the taxes on his forgiven debt, Trump kept his $916 million operating loss. It was the new public company that got saddled with property that owed a lot more in taxes than it normally would.
  • Thousands of people invested in the company, and lost everything when Trump drove it into the ground. But as CEO, Trump paid himself $82 million along the way.

Isn't that great? Trump got $916 million in tax free income over the next decade. He shoveled a bunch of problem properties into a public company. He paid himself $82 million to run the company. And everyone who bought the stock took a bath.

In the end, there was one big winner: Trump. And three big losers: Trump's bankers, the American taxpayers, and all the investors in Trump's crappy public company. This is the business acumen that Trump says qualifies him to be president: not the ability to run a company profitably, but the ability to manipulate the legal system into letting him dump his debts onto other people. Trump 2016!

Yesterday I wrote a bit about how my bout with cancer hadn't produced any life lessons for me. But millions of other people have been diagnosed with cancer too, and every one of them has a story of their own. So why bother sharing mine? This is why:

Given the tsunami of celebrities telling us their stories about how cancer profoundly affected them, there might be a lot of people who feel like there's something wrong with them for not having a profound reaction of their own. But there isn't, and it might help to hear that plenty of other people feel the same way.

On a similar note, a few days ago I talked to a friend who was recently diagnosed with lymphoma. He told all his friends and coworkers about it, and everyone was duly sympathetic and supportive. But then, when all the tests had finally been completed, it turned out to be a very low-grade cancer that posed no immediate danger. After all this fuss, he had to go back and tell everyone that it wasn't a big deal. There would be no chemo, no battle, and no further tests. Just a blood draw every few months to monitor things. He says he felt kind of guilty about the whole thing. I wonder how many other people have felt that way?

Everybody responds differently to this stuff. There's nothing wrong with you if your response doesn't follow the Hollywood script and you don't feel like turning the world pink every October. Chances are, lots of people feel the same way. But you'll only know it if all those other people open up and say so.