by Greg Valliere, AGF Management Ltd.
A RUNAWAY TRAIN: A draft impeachment report is due out today, and the first impeachment hearing is scheduled for tomorrow. With virtually no chance of success in the Senate — where NO Republican supports removing President Trump — there’s an obvious question which we get frequently: why are the Democrats still pursuing this?
IN PRIVATE, MANY DEMOCRATS ARE LEERY of proceeding with a process that appears doomed to fail; Nancy Pelosi initially was reluctant to go down this path. Some moderate Democrats would like to abandon the entire exercise, or simply censure Trump, but it’s too late for that. Based on what we’re hearing, here’s what most Democrats are hoping for:
NEW EVIDENCE WILL EMERGE? Could John Bolton or Rudy Giuliani become game changers? This is the Democrats’ great hope, but there are two reasons not to expect this:
First, Bolton and especially Giuliani would drag this process out, with endless legal appeals to avoid testifying; this could stretch into spring or later.
Second, even if Bolton or Giuliani produce damning evidence, most Republicans will persist with their bottom line: Trump did nothing impeachable.
PUBLIC OPINION WILL SHIFT? This was a key premise for the Democrats, but public opinion has not shifted, despite overwhelming evidence of wrongdoing in Ukraine and obstruction of justice in Washington. And moderates — the key to the presidential election — appear to be tiring of this issue.
TRUMP’S PENCHANT FOR UNFORCED ERRORS? Trump could miscalculate, his detractors say, with a Tweet or a crude comment that could weaken his support. He can be his own worst enemy, but we don’t see this affecting his GOP support.
SOFTENING UP TRUMP FOR THE GENERAL ELECTION? Actually, impeachment has unified the Republicans while activists on the left appear to care more about health care, taxes, climate change, etc. Make no mistake — the unemployment rate is more important than impeachment.
TAINTING TRUMP’S LEGACY? This motivates many Democrats, who despise him and are hoping that “Trump fatigue” will take hold. “Even if he’s not convicted, the House impeachment will wind up in the first paragraph of his obituary,” one blunt Democrat told us yesterday. That was how Republicans felt about Bill Clinton, and his impeachment backfired on the GOP.
OUR PREDICTION HASN’T CHANGED in nearly a year: Trump will be impeached in the House, and he will be acquitted in the Senate, where it would take 67 votes to convict; we’re not sure there are even 50 votes to convict. We think the Democrats should seek an exit strategy but their base would howl — so we’re looking at impeachment, ad nauseum, all the time, through March.
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THE TARIFF MAN: Just because Trump is likely to win acquittal in the Senate doesn’t mean he will have clear sailing in the general election. Further proof came yesterday when he surprised his closest allies by picking on ailing Argentina and Brazil with more steel tariffs. And — Mon Dieu!! — he may impose tariffs on French goods, including Champagne.
WE RECOMMEND THE LEAD EDITORIAL in this morning’s Wall Street Journal on Trump’s persistent miscalculation on trade, which imperils his re-election. The economy could grow by well over 2% if there was predictability on trade, but the manufacturing sector isn’t bouncing back yet, as we were hoping to see in yesterday’s data, and trade is a Trump blind spot that will continue to hurt him politically.
AS WE WROTE YESTERDAY, the mood in Washington is increasingly glum on trade. Chances of a final deal with China before Dec. 15 have slipped, so more tariffs are possible then. And the NAFTA replacement deal continues to languish; perhaps Trump shouldn’t have called Nancy Pelosi a “mentally ill person” last month.
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