The decision this week by House Speaker Nancy Pelosi to open an inquiry to try to impeach President Donald Trump will have a seismic impact on how business gets done in Washington for the foreseeable future. We quickly moved from a smoldering tinderbox where compromise and action was already hard, to all out political warfare where a partisan majority in the House appears to have the votes to impeach the president. The battle lines for the next year’s political agenda and election have been drawn.
Impeachment proceedings – no matter the outcome – will impact almost everything that happens in the nation’s capital and on the campaign trail between now and January 2021, when the president or his opponent is sworn in and a new Congress convenes.
The inquiry not only will be historic and play out in the made-for-TV way that President Trump has expertly embraced to sell himself and his presidency to his political base, but it also will shape the race for the presidency and control of Congress, making the outcome of what was already an unpredictable campaign year even more uncertain.
While divided power on Capitol Hill and intense partisanship has already hindered most legislative action over the past 2.5 years, this impeachment inquiry essentially freezes the “regular order” legislative process. It will be virtually impossible to reach bipartisan agreement between the Democratic-controlled House and the Republican-controlled Senate on anything but must-pass bills to fund government and keep it open. These will become – essentially – the sole “vehicles” for legislating. Even then, that legislation almost certainly will come down to negotiation and trade-offs between Speaker Pelosi and Senate Majority Leader Chuck Schumer for the Democrats and Senate President Mitch McConnell and House Minority Leader Kevin McCarthy for the Republicans, with presidential intervention throughout.
There are certain wildcards that could change this gridlocked dynamic and force action. Watch for the levers of Capitol Hill to start moving again if the economy tanks, if there’s a significant national security incident, or if a natural disaster is so catastrophic that the two sides have no choice but to come together to govern.
Those with business in Washington should consider:
- Mitigating the political risk of any advocacy strategy or initiative that appears to benefit one party over another. While partisanship is at an all-time high, those with business in Washington need to arrive with advocacy strategies that appeal to and can engender support from each party.
- Anticipating employee and customer reactions. We expect that employees and customers will continue to scrutinize and speak out on corporate political advocacy, federal contracting and executive political giving through the impeachment process and the 2020 elections.
- Highlighting the benefits of any initiative to employees, constituents and voters. Initiatives that boost wages, stimulate domestic job growth and foster competition that can lower consumer costs will likely fare better in a political climate where both parties are making populist appeals to voters.
Corporate leaders also should keep in mind that:
- The political uncertainty in Washington as the impeachment inquiry plays out – coupled with President Trump’s trade agenda and criticism of the Federal Reserve on interest rates – could add further uncertainty to already volatile financial markets.
- Impeachment proceedings are likely to exert a gravitational “pull” on many administration decisions, from proposed rules to proposed mergers. The calculus may be at times less about the law and the facts around such decisions vs. how they will be perceived to help the president and “hurt” his political opponents.
- The Washington press corps already is consumed by upcoming impeachment proceedings, which will make it more challenging to attract media coverage on public policy and international relations issues. Initiatives that require a media “voice” in Washington will have to be innovative and powerful.
- Certain campaign initiatives that business leaders were hoping to see, or conversely were worried about, may now become less urgent. Impeachment now is the leading campaign issue for Trump, House and Senate candidates of all political stripes, Democrat Joe Biden and the entire field of challengers.
- The inquiry may speed the departures of senior personnel from the federal government and make it more challenging to attract qualified replacements, which may impair the management of public policy issues at the agency level and in the administration.
As the inquiry plays out, it’s also important to keep in mind that Wall Street, Washington and the C-Suite are more connected than ever — and what happens in one world will continue to affect the others.