Memo To: Website Fans and Browsers
From: Jude Wanniski
Re: Wall Street and Bill
Back on December 15, I sent a letter to clients of Polyconomics to assure them that while I thought President Clinton probably was going to be impeached and convicted, because of Sidney Blumenthal's testimony. Wall Street would continue to advance. That is, equity values and the future of the U.S. economy that they forecast do not depend upon the President remaining in the Oval Office. This is what I do for a living, so I'm not making a big deal out of it. Now that more than a month has passed, you might appreciate the analysis that routinely underpins the work we do at Polyconomics. Since we sent this out, the Dow Jones Industrial Average has climbed to 9200.23 from 8823.30 and the NASDAQ has climbed to 2407.14 from 2012.60. Following is the December 15 letter:
December 15, 1998
IMPEACHMENT ON WALL STREET
There of course is no doubt that an impeachment vote on Thursday will increase the risks to dollar-based equity assets. All year long we’ve seen the blue chips react to the ups and downs of the President’s fortunes relative to the Starr investigations. It isn’t that Wall Street prefers a President Clinton to a President Gore, but that uncertainties about the management of Superpower USA rise on every front as investors try to peer over the horizon. On the other hand, nothing fundamental will change if the process runs like clockwork. The President’s advocates warn the process could take several months, during which the world will be in limbo. It should not take that long, though, and as the Senate leadership is able to discuss the parameters involved, heightened risks based on sheer uncertainty will recede. In this analytical model, a Senate vote to convict Bill Clinton and have him removed from office would have the DJIA recover any lost ground and then some. There is nothing about the President’s vacating the Oval Office that is intrinsically threatening to the structure of global finance. The risks have to do with unknown eventualities that are mishandled because of the distractions inherent in the process.
Assuming the House will vote articles of impeachment on Thursday, a Senate trial would probably begin right after the first of the year. Because the Senate is a continuing body and the House is not, there really is no problem in having the 106th Congress adjudicate articles of impeachment produced by the 105th. Managers of the impeachment appointed by the House immediately following the Thursday voting -- Judiciary Chairman Henry Hyde certainly among them -- would have to be reappointed when the House is reorganized as the 106th in January. Once done, the trial could proceed with dispatch. Majority Leader Trent Lott indicated it could theoretically be concluded in a three-week period, but even if it stretches to three months, the time frame is not one that would cause extraordinary disruption to the ordinary business of Congress. Some of the risks for the financial world have already been reduced because of the outcome of the November elections. With Speaker Newt Gingrich gone and a replacement, Bob Livingston, conditioned by temperament to work with the other party, the appropriation process should be the easiest in recent memory.
My expectation is that the atmosphere surrounding a Senate trial would be far less partisan than what we observed last week -- when Judiciary’s Democrats did their partisan best to minimize the problems faced by their party’s leader. The idea the President need fear nothing because it takes 67 votes to remove him and the Republicans have only 55 is based on a total misreading of the process. All Senators view themselves as members of the world’s greatest deliberative body. They now understand that the United States is the Global Sovereign, and the President is the highest elective official on the planet’s political pyramid. If they decide he perjured himself, it will be easier for them to vote to “cleanse the office,” as Henry Hyde puts it, than now is surmised. The reason enough Democratic Senators might vote to convict is the realization that what the President has done is poisonous in its influence on the national culture -- and an example to the rest of the world that the American President can violate his oath of office.
The White House now believes there would be no more than five Democratic Senators prepared to vote for conviction. What I believe will swing many more against him is the testimony of Sidney Blumenthal, one of his most devoted aides, who lets us see what Bill Clinton was prepared to do to Monica Lewinsky when he feared the cover story they had prepared in the Paula Jones case had been broken. Forget the fact that Monica still was prepared to lie for him. The President at that evil moment in late January believed he had to use the powers of his office to destroy her. As I noted in a memo I wrote Monday to Chairman Hyde:
How can I say the Republicans on your committee voted purely on principle? First, your own framing of the hearings and your conduct throughout was clearly based on pure principle. Secondly, the careful piecing together of the evidence by your majority counsel, David Schippers, clearly demonstrated probable cause that the President was prepared to lie about his behavior in the same way a rapist will accuse his victim of having lured him into his attack. As an added ugly twist, the President told his aide Sidney Blumenthal that Monica Lewinsky had threatened him with exposure unless he submitted to sex with her. To see into the President’s soul at a moment when he thought it was his word against that of his victim was enough to persuade me that he does not belong in the presidency. It will take a Senate trial to make it obvious he had to be removed in order to cleanse the office.
The Blumenthal testimony makes it practically impossible for the Senate to minimize the President’s behavior by arguing “it does not rise to the level of impeachment.” The President has so disgraced himself and the office of the presidency that the issue is beyond punishment. The shame isn’t that he has used the trappings of his office to invite sexual favors. Powerful men do that and the electorate knew it about Clinton when they elected and re-elected him. We can excuse sin because we are all sinners. We are not all criminals, though, and what our President did was criminal and cannot be excused. Republicans who have announced opposition to impeachment are now changing their minds on the basis of this evidence. The Democrat party elders, who have not yet faced this fact and continue to make believe it did not happen, will be forced to stare it in the face in the Senate. Maybe I am completely wrong about this, but I fully expect the President to resign when a delegation of party elders informs him there is no room for acquittal and no point to a censure.
The White House press secretary, Joe Lockhart, now pathetically warns against an impeachment vote in the House because it will cause uncertainty on Wall Street. Almost providentially the market greeted his warning by bouncing back today, even as reports piled up that the number of undecided Republicans had dwindled to a few and the number of Democrats considering an impeachment vote were rising. There are a great many uncertainties facing the world’s financial markets. This is only one of them. For the Republican Congress to be acting on pure principle, as I believe it is, should not produce negative consequences. There’s no reason this particular uncertainty will produce any greater risks than it has already.