A lot of people are nervous about the stock markets after the latest drama with the President and the potential for his removal from office.
After Speaker Nancy Pelosi announced that the House would launch a formal impeachment inquiry in response to the President’s dialogue with Ukrainian president Volodymyr Zelensky concerning former VP Joe Biden’s son, the US markets quickly fell. Investors were shaken by the potential of removal of President Donald Trump from office. By the time the closing bell rang, most sectors in the US were in the red after starting the day in the green.
How does this process work and what history do we have to draw on for past performance of the stock market during impeachment proceedings? The answer to the former I can lay out for you, the answer to the latter is a bit harder to gather answers from.
From October 1998 to February 1999, stocks rose despite the Clinton impeachment. But the times are difficult to compare. The economy was in the middle of a dot-com explosion at that time. We were in the middle of a massive bull run in the markets. Six of the top 10 performing stocks were tech stocks. Investors seemed completely unfazed by the craziness at the White House.
The process of impeachment is an interesting one. First off, a president of the United States has never been removed from office by way of impeachment. Only two presidents have been impeached – Andrew Johnson in 1868 and Bill Clinton in 1998 – and both were ultimately acquitted and finished their terms in office. One of the most common misconceptions, especially for younger generations that may not have witnessed or remember the Clinton impeachment proceedings, is that impeachment does not mean you are removed from office. In fact, in my opinion, there is a very slim chance President Trump is removed from office while also having a better than good chance of being impeached.
The House Judiciary Committee will typically hold an investigation and if their findings are determined to be sufficient evidence of wrongdoing, they will send their findings to the House of Representatives for a floor vote on impeachment. The Democrats currently control the House so if this process gets to this point, I have no doubt a majority will vote to impeach the president. What happens from here is what leads me to believe there is a slim chance of removal.
The articles of impeachment are moved to the Senate, which then holds a trial overseen by the chief justice of the United States. The Senate is currently controlled by Republicans and there has to be a two-thirds or more vote of guilty for the president to be removed from office. At that point, if we reached that two-thirds guilty vote, there is no opportunity for appeal. Mike Pence would become president and you would see quite the chaotic scene on Capitol Hill. But the interesting part of this trial held by the Senate is that there are no set rules. Quite literally they are made up as they go along. In fact, the Senate isn’t even obligated to hold a trial. The Republican majority, in this case, could vote to immediately dismiss the case without any consideration of evidence at all. The majority leader Senator Mitch McConnell could even refuse to convene a trial. But maybe that’s what the Democrats want? Maybe heading into the election season, they want the cloud of uncertainty to be hovering over the President, looming so large that some of his supporters are swayed to vote the other way.
I don’t know how this will ultimately turn out but one thing I do know is that it will certainly divide the country even more. In fact, Alexander Hamilton called his shot in one of the Federalist Papers all the way back in 1788, as impeachable offenses were first being laid out. He said the prosecution of a president “will seldom fail to agitate the passions of the whole community, and to divide it into parties more or less friendly or inimical to the accused. In many cases it will connect itself with the pre-existing factions, and will enlist all their animosities, partialities, influence and interest on one side or on the other; and in such cases there will always be the greatest danger that the decision will be regulated more by the comparative strength of parties, than by the real demonstrations of innocence or guilt.”
Isn’t that something? Amazing and insightful stuff from a guy who still seems to be relevant today, including a smash hit on Broadway about him, despite the fact that he would have turned 264 years old this past July.