On Tuesday, September 24, 2019 the Speaker of the House – Nancy Pelosi – announced that the United States House of Representatives was opening formal impeachment hearings on President Donald Trump. To many people, this was a long time coming, for others this is more of the same. The impetus for the proceedings was the revelation that Donald Trump had held up releasing $391 million in military aid to Ukraine in an effort to gather (or create) dirt on Presidential candidate Joe Biden. Many of the details are yet to be revealed, unclear, or in dispute, but the central fact is that the House of Representatives has started the ball rolling on impeachment. Whether they will submit formal articles of impeachment is still up in the air, but the talking heads say the odds of removing President Trump from office are low, given the fact that the Senate is firmly controlled by the Republican Party, and Mitch McConnell is the leader of the Senate.
That is a very high level summary of the basic facts as of today (October 16). The question is, does any of this matter to you if you own or operate a small business? The answer is yes, and it could be a very big deal.
Impeachment is a very rare event. There have only been three impeachment inquiries in United States history, and none of them led to conviction in the United States Senate. Andrew Johnson and Bill Clinton both stayed in office when the Senate declined to convict, while Richard Nixon resigned before the Senate even got to a vote. Impeachment is serious, and even if a President is not removed from office, it still leaves a stain on his (or her) record.
The fact that President Trump is now undergoing an impeachment inquiry is extremely concerning. Since Speaker Pelosi’s announcement on September 24, impeachment is dominating the national news, and polls have shown rapid movement toward being in favor of further inquiry, or even removal from office. By early October national polls showed that a majority of Americans were in favor of the inquiry, while over 40% were in favor of ultimately removing the President from office.
While these may seem like events far removed from day to day business, it is a given that most business owners and stock market investors do not like risk. They prefer steady, predictable behavior, so they can have more confidence in their decisions and plan farther ahead. Just the threat of impeachment leads to more fear, uncertainty and doubt (FUD).
FUD leads to paralysis on many fronts. There are already signs of reduced consumer spending, which is very troubling going into the holiday season. In times of political crisis companies hold off on new ventures, expansion, capital investments, etc. This affects companies throughout the pipeline.
For those planning a product launch, it is nearly impossible to break through the political noise. This reduces the impact of long-planned marketing and PR campaigns. For example, Google’s recent launch of new products was barely a blip on major networks. Previous launches garnered much more air time.
The impeachment hearings could drag on for months. The longer the hearings go on, the less likely it is that any positive legislative or executive initiatives will be implemented. The entire federal government is stuck in molasses already. Climate change, healthcare, infrastructure, and wealth inequality are all major issues, and there has been almost no progress on any of them over the past three years. In fact, there are signs that the country has gone backwards on all of these issues. More gridlock will not be good for most of us.
Here are four possible impeachment scenarios:
- House Does Not File Articles of Impeachment – This seems unlikely, given the fact that the House is majority Democrat and Speaker Pelosi is excellent at counting votes. She would not have started this process if she didn’t believe she would eventually have the votes.
- House Files Articles of Impeachment, but Senate Does Not Convict – Right now, this appears to be the most likely scenario. Not one single Republican Senator has come out in support of impeachment, and conviction requires 20 of them.
- House Files Articles of Impeachment, and Senate Convicts – Right now, this seems very unlikely. But if the evidence of corruption and obstruction becomes overwhelming, and the polls shift much further against the President, it could happen.
- House Files Articles of Impeachment, and Senate Convicts, But President Trump Refuses to Leave – This is extremely unlikely, but it actually could happen.
While the first three scenarios are all constitutional, each could lead to further political division, and instability. If President Trump makes it to the next election, he will probably act more impulsively and erratically while he remains in office. If he is reelected, he will almost definitely feel emboldened, and become even more reckless and undisciplined than he has been so far. If he is convicted by the Senate and he leaves peacefully, the transition to a new interim President (Mike Pence or Nancy Pelosi) will almost certainly generate more fear uncertainty and doubt. If the House files, the Senate convicts, and President Trump refuses to leave office, then all bets are off – it could lead to economic collapse and widespread civil unrest. In other words, there is good reason to be nervous.
Of course there is still a chance that we will have a smooth transition to a new President, or to the reelection of President Trump, and everything will work out just fine.
But just in case, prepare yourself for a very bumpy ride.
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