Apropos of, oh, nothing in particular, it’s time to talk impeachment.  “So what do you think, will Donald Trump be impeached?” is easily in the first five questions anybody ever asks me when I tell them about PredictIt.  And usually my answer is some form of “I honestly don’t know.”  But let’s take a closer look.  What can he be impeached for?  What are the political dynamics at play?  How would the timing work?

Firstly, yeah there’s a case to be made on the merits

Obstruction of justice.  Emoluments.  Perjury if he ever sits down with Mueller.  Maybe treason if (and probably only if) Mueller finds evidence that Trump did something insane like explicitly and knowingly alter US policy for the express purpose of paying back Russia for their help with the whole email thing.  I’m not a Resistance fantasy-writer so I won’t dwell too much on this stuff (I suggest lawfareblog’s takes).  The point is that there’s almost certainly enough there for the House to act if it so chooses (and more might be coming, either via Mueller or via the Cohen case or via Congressional investigation).

A Republican House very likely does not impeach

For a Republican Speaker to bring impeachment to the floor, there’d have to be overwhelming support within his caucus or he’s getting ousted.  And do you really think the Jim Jordans of the world are going along with impeaching Trump?  The guy who’s got 70% of the Republican base by the ‘nads?  No.  A just-up-to-the-line report from Mueller that says something like “We cannot definitively establish the President’s intent when he fired Comey or tried to fire me” and therefore leaves the determination of Obstruction up to Congress won’t get anywhere with the Republican base.  Basically, unless Mueller finds some Real Shit or unless Trump decides to test his theory about what happens when he shoots people in the middle of 5th Avenue, no Republican House is voting to impeach.  (Which is why the market for impeachment in 2018 is priced as it is).

Ah, but a Democratic House…

Impeachment, I read, is fundamentally political.  You screw up enough and the other team gets a shot at marshaling enough support to boot you.  And depending on where you look there’s at least a 2 in 3 chance Democrats take back the House this fall.  Harry Enten wonders “If the Dems win the majority, what is the chance they move to impeach in the first few weeks?”  Well probably pretty low considering the “first few weeks” qualifier.  But he’s right to point out that a lot of the value in the impeachment markets as they now stand depends on the perceived equity that Democrats have in the outcome of the midterms.  (More bluntly – if Republicans maintain control of the House, those markets crash in November.  If Dems win, they probably see a modest though possibly transient bump).

Okay – so a Democratic House guarantees impeachment, right?  Well, not necessarily.

When is it Mueller Time?

A Democratic House, absent any other obvious major crimes/misdemeanors, does not move on impeachment until Mueller is done.  And when will that be?  Mueller is almost certainly not going to release a report before the midterms, and I think it’s unlikely he’ll be done after the midterms.  While he’s moving quickly, he still wants an interview with the President, which means Trump can stall for a long time – potentially forcing the Special Counsel to subpoena him and then fighting that subpoena all the way to the Supreme Court.  I’m honestly bearish that we see the report before September 2019, but who knows.

2020 Looms

Does a Democratic House vote to impeach Donald Trump in October of 2020?  No they wait to see what happens in the election.  September 2020?  No they wait to see what happens in the election.  August 2020?  No they wait…  There’s a clock on impeachment.  Unless Trump’s offenses are so severe that they merit immediate attention, I reckon impeachment has to happen some time between January 2019 and March 2020 (at the absolute latest).  (And this is also why the value for impeachment in 2019 is so close to the value of impeachment in first term).

Stuck between a Mueller and an Election

The most likely course of events, again as I see it, is that a Democratic House spends 2019 gleefully firing up its investigatory committees, building a case for their 2020 nominee (while potentially also uncovering impeachable offenses).  When Mueller’s report drops, it’s decision-time.  Let’s assume, for the sake of playing it out, what would happen if Mueller’s report is sufficiently damning but not overwhelmingly so, and arrives in the summer of 2019, giving the House plenty of time to act.  Here, the Democratic Speaker has a real challenge.  The next few sections go through the political considerations as I imagine them.

The left wants blood…

And not without merit!  In a world where a serious Mueller report drops I don’t see how the safe-D seat House Democrats aren’t pushing for impeachment.  This is visceral.  There’s a large part of the Democratic base that really really really just wants to see Trump humiliated and abased.  (I’m in that group, I suppose – though I’d rather see him humiliated electorally).

…yet the memory of Clinton looms

Remember how Clinton got impeached and then the Senate didn’t convict and he left office more popular than before?  Well Trump is going to be facing a more serious sheet than Clinton did.  But still the “what if this is pointless” and the “what if this backfires” hand-wringing will be strong.  Who wants to send impeachment up to the Senate if there aren’t 60 votes there?  Is this what I want my 2020 House re-election campaign to be about?  Are we just juicing up Trump’s base?  Giving him an excuse to play the victim card and make it all about him? (Hot take: he will always make it all about him no matter what).  There’s a very real concern about how The Argument would be framed among politicians, and this will serve as a somewhat of a brake on impeachment proceedings.

Who do you want to run against in 2020 anyway?

Even if we’re talking mid-2019, Democrats will fundamentally be grappling with the political implications of ousting Trump.  If they succeed, would they like their odds better against Pence than against Trump?  Would Pence even survive a primary?  What happens if you end up running against a Nikki Haley?  If they fail, have they reduced the chances that Trump faces a potentially draining primary?

My sense is that almost all the 2020 contenders out there really really really want to run against Trump.  They want to run on a big progressive agenda and so forth, but they also just think it’s an easy contrast by default.  Plus that’s who their base would be most motivated to defeat.  So there might be an incentive to “focus on defeating Trump at the ballot box” and so forth.  And what do you do if three of your four front-runners for President are in the Senate anyway?  How do they feel about voting to convict?

There’s a real likelihood, in fact, that Mueller’s report could make impeachment a big issue in the early stages of the Democratic primary.  Will be fun to watch!

Okay – so how do you play these markets?

Aside from all I’ve written above, here is a non-exhaustive list of the key questions I’m looking at that address the impeachment markets:

• Who wins the House? (If Dems win, I expect at least a transient bump over 55c in impeach first term.  If R’s win, they die to 20s.)
• How many seats do Ds win? (The more they win, the easier it is to get the votes).
• Does Trump pardon Manafort? (A small bump in impeachment odds – Trump has been laying the groundwork to soften the blow and folks like Dershowitz are already arguing it wouldn’t be impeachable).
• When will Mueller announce that he’s preparing a final report?  How many more indictments will there be?  When will Don Jr. sit for an interview?  Ivanka?  Trump himself?
• What happens to the Cohen matters if Dems get ahold of House Oversight?  What about emoluments?
• What are the opinions of the various 2020ers?
• How does Pelosi (or whoever will be the next speaker) respond when asked about impeachment, and how does that rhetoric evolve?
• How does Nadler (who would be chair of House Judiciary) respond when asked about impeachment, and how does that rhetoric evolve?
• Finally, will some huge shoe drop that makes impeachment obvious?

Hope this helps get you oriented to the impeachment markets, or at least give a sense of all the wonderful political dynamics at play.  Again, the usual disclaimer applies.  I don’t have a position as of writing this in the impeachment markets (except for the 2018 impeach, which I have NO in), but will in the future.  I do not knowingly lie, but I do knowingly omit information that I think might give me an edge (well not in this case, but it’s possible I’ll think of something good and not update this post in the future).  As always, you should do your own research before making any investment decision, and you should consider my advice and analysis fundamentally biased by my own financial incentives.