American politics

The promise and the perils of impeachment

In America Nancy Pelosi has moved against President Donald Trump. It is not the moment to cheer




AMERICA ALMOST didn’t have a president. The men who arrived at the constitutional convention in 1787 brought with them a horror of monarchy. Absent a figure of George Washington’s stature, the young country might have adopted a parliamentary system of government. Yet having created the office, the founders had to devise a way to remove presidents who abuse their positions—not all people are Washingtons.

They defined the mechanism: an impeachment vote in the House, followed by a trial in the Senate. The question of what exactly a president should be impeached for—“treason, bribery or other high crimes and misdemeanours”—was deliberately left to Congress.

Hence, though impeachment is a constitutional provision, it is also a political campaign. That campaign began in earnest this week when Nancy Pelosi directed her Democratic colleagues in the House to begin impeachment hearings into President Donald Trump. This will not necessarily lead to impeachment. In the past, though, impeachment hearings have generated a momentum of their own. The process is fraught with risks on both sides. One thing seems certain: the process will further divide a country that is already set against itself. 
Ms Pelosi has taken such a momentous step because she believes the president’s behaviour towards Ukraine’s government crossed a line. If that seems an obscure reason to contemplate unseating a president, remember that impeachment proceedings against Richard Nixon had their origins in an office burglary and the ones against Bill Clinton began with an affair with an intern.

Mr Trump appears to have let Ukraine’s government know that relations with America, including the supply of aid, depended on it pursuing an investigation into the family of a political rival—that would be more serious than a break-in or a fling. It would mean the president had subverted the national interest to pursue a political vendetta.


The federal government often gives foreign powers promises of aid in exchange for doing something that America wants them to do. The Ukraine case is different. America has an interest in ensuring that Ukraine is able to defend itself against Russian aggression, which is why Congress came up with a package of $391m in military aid for its newly elected government.

Mr Trump acted against the national interest in putting that aid on hold, while pressing Volodymyr Zelensky, Ukraine’s president, to investigate Hunter Biden, who had business dealings in Ukraine and is the son of the Democratic front-runner, Joe Biden. If that were not clear enough, Mr Trump also sent his personal lawyer to meet an adviser to Mr Zelensky and repeat the message.

In a country as corrupt and vulnerable as Ukraine the link between American support and investigating the Bidens—you give us dirt on Joe and we’ll give you weapons and money—did not need to be explicit to be understood. “I also want to ensure you that we will be very serious about the case and will work on the investigation,” Mr Zelensky told Mr Trump in a call on July 25th.

You might have thought the Mueller investigation into his campaign’s dealings with Russia would have made Mr Trump wary of dallying with foreign governments. It seems not. His conduct looks a lot like bribery or extortion. And to use taxpayer funds and the might of the American state to pursue a political enemy would count as an abuse of power.

The founders wanted impeachment to be a practical option, not just a theoretical one. Otherwise the president would be above the law, a monarch sitting on a throne for four or eight years.

Declining to impeach Mr Trump would set a precedent for future presidents: anything up to and including what the 45th president has done to date would be fair game. Republican partisans should consider to what depths a future Democratic president, thus emboldened, could stoop.

It would also signal to America’s allies and foes that snooping on Americans who are influential or might become so was a fine way to curry favour with a president. There would be no need for the dirt even to be true. Russia and China, are you listening?

Such are the risks of ducking impeachment. Yet the risks on the other side—of pressing forward—are great, too. Voters expect impeachment to be a last resort, not a trick by one party to remove a president from the other, or a means for the losers of an election to frustrate its result. House Democrats risk looking self-indulgent as, rather than getting on with fixing infrastructure or health care, they obsess over the minutiae of internal White House communications.

The hearings may spin out of control and make Democratic politicians seem ineffectual and obsessive, as the stonewalling testimony of a former Trump aide, Corey Lewandowski, did last week. The hearings may also be too confusing and rancorous for the public to follow.

Even if the House did decide to impeach Mr Trump, it is highly unlikely that he would be found guilty by the two-thirds majority needed in the Senate, where Republicans hold 53 of 100 seats. Legally, Mr Biden junior’s sleazy dealings in Ukraine have no bearing on whether Mr Trump abused his office. Politically, though, the two are linked because they give Republican senators minded to defend Mr Trump a handy set of talking points.

A failed impeachment that leaves Mr Trump in office might not be much of a deterrent to this president or to a future one. In fact it might even help Mr Trump, who could argue that he had been found innocent after a partisan witch-hunt by loser-Democrats. Until this week that was the calculus of Ms Pelosi and House Democrats from competitive districts. It is not clear that public opinion has yet shifted enough to change the equation. Though it may be bravado, Mr Trump’s campaign team has always insisted that the more Democrats talk about impeachment the better it is for the president’s chances of re-election in 2020.

Cast the die

Faced with such a daunting choice, Ms Pelosi had until now held back. But Mr Trump appears to be becoming more brazen as re-election draws near. The president’s behaviour needs investigating, with the extra authority that the impeachment process confers. Better, therefore, to lean towards principle than pragmatism. But it is a risky and perilous path.

Lagarde’s Edge Is Europe’s Opportunity

The eurozone economy urgently needs a more comprehensive pro-growth policy approach at both the national and regional levels, or else a second lost decade will be all but assured. Hope for the continent now rests squarely on the shoulders of Christine Lagarde, the highly accomplished incoming president of the European Central Bank.

Mohamed A. El-Erian

elerian117_ALBERTO PIZZOLIAFPGetty Images_draghi lagarde


LONDON – A highly regarded doctor assumes the care of a chronically impaired patient who is growing weaker and more vulnerable. The patient’s longstanding treatment is not only becoming less effective; now it is also introducing harmful side effects. A better approach exists, but it is not available at the new doctor’s hospital. And in the facilities where it is available, the doctors are too distracted to take on the case.

The new doctor is Christine Lagarde, the widely admired former managing director of the International Monetary Fund who will soon succeed Mario Draghi as president of the European Central Bank (ECB). Her challenge will be to avoid a second lost decade of low, insufficiently inclusive eurozone growth. How the patient fares under her care – and whether she can get key eurozone governments to provide the necessary treatment – will define not just her own legacy, but also that of Draghi.

There is now little doubt that the European economy is losing momentum. The earlier, overly optimistic prognosis of a sustained growth pickup has finally given way to the grim reality that both structural and cyclical headwinds are bearing down on economic activity. The previous consensus growth forecast of around 2% for 2019 is now converging on around 1%; it could well go even lower.

Still to come is a broader realization that Europe is at risk of suffering what economists call “stall-speed growth.” Under such conditions, growth may remain positive, but it will be insufficient to accommodate the demands of other forces: pockets of excessive indebtedness, rising demand for social services, the need for better infrastructure, and deepening popular anger, political polarization, and alienation.

Moreover, previously unthinkable conditions that could undermine the very integrity of a market system will suddenly become possible – even likely. Negative interest rates in Europe, for example, do not look likely to be reversed any time soon.

Worse, in what is already a structurally impaired economy, Europeans have yet to deal fully with the detrimental impact of global trade tensions, which have hit export-dependent industries in Germany – the region’s powerhouse – especially hard.

Despite all of these negative developments, European authorities continue to rely on just one response: unconventional monetary policy involving negative interest rates and large-scale purchases of securities (quantitative easing, or QE).

To be sure, this approach was effective in containing a debt crisis that was threatening both the monetary union and the single currency earlier in the decade. But it has proven increasingly ineffective in promoting sustainable economic growth.

Concerns over the ECB’s protracted reliance on the same old medicine have been increasing, even within the ECB, owing to a growing awareness of the detrimental effects of negative interest rates. Negative rates can curtail the provision of long-term financial-protection services (such as life insurance and retirement products) to European households, thereby undermining economic security.

They encourage excessive risk-taking, which can lead to financial instability down the road.

And they promote an inefficient allocation of resources across the broader economy.

To the extent that these risks are real and mounting (which I believe they are), the ECB will find it increasingly difficult to continue pursuing the same policy in the face of growing complaints and political pressure. But it cannot simply stand still, given the deterioration in the European economy. And it can scarcely even consider the option of unwinding the unconventional policies of the past decade, as that would raise the risk of immediate economic and financial disruptions.

The ECB’s lose-lose-lose trilemma can be resolved only through a comprehensive pro-growth approach at both the national and regional levels, involving measures that are not available to central banks. European countries need deeper structural reforms – including infrastructure modernization and worker retooling and retraining – to boost the productivity of both capital and labor.

Where possible, they should be pursuing fiscal stimulus, and resolving persistent debt overhangs that are stifling existing growth engines and impeding the emergence of new ones.

And at the regional level, Europe needs to expand and improve its policy architecture, not least by completing the banking union and resolving long-standing differences over fiscal integration.

The hope now is that Lagarde – with her exceptional mix of interpersonal skills, professional networks, and national and international policy experience – will jump-start the pivot that Europe needs. The challenge is one of political will, not engineering, and Lagarde’s recent accomplishments at the IMF – where she put a spotlight on the economic implications of gender bias and climate change – show that she is capable of ushering in the necessary changes.

This is not to downplay the scale and complexity of the challenges Draghi has faced. They are real, and they have become deeply embedded in the structure of Europe’s political economy. Still, they are not insurmountable. Lagarde brings a uniquely well-suited skillset to her new position, and she is taking the reins at precisely the right moment for Europe to make the changes needed to avoid a second lost decade. Her legacy will now be bound up with that of Draghi, whose courageous promise in 2012 to do “whatever it takes” to save the euro has since been overshadowed by the renewed threat of recession and financial instability.


Mohamed A. El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He is President Elect of Queens’ College (Cambridge University), senior adviser at Gramercy, and Part-time Practice Professor at the Wharton School at the University of Pennsylvania. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers four years running. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

Housing Is Still a Has-Been

Lower mortgage rates and a benign economic backdrop have helped boost the housing market recently, but the gains are hardly impressive

By Justin Lahart



The housing market is a bit better lately. But considering the overall economic environment, the improvement still counts as underwhelming.

On Thursday, the National Association of Realtors reported that its index of pending home sales—sales of previously owned homes that are under contract but haven’t been finalized—bounced back in August, putting it 2.5% above its year-earlier level. That follows Wednesday’s Commerce Department report showing that new-home sales jumped last month and last week’s report that existing-home sales firmed in August.

The biggest factor behind the pickup in housing has probably been the decline in interest rates. Earlier this month, the average rate on a 30-year fixed mortgage slipped to 3.49%, according to Freddie Mac. That compared with 4.54% a year earlier. It was the lowest rate since 2016, and one of the lowest in history.

Meanwhile, the job market continues to do well, with the unemployment rate near a 50-year low and wages picking up. Home-price gains have moderated over the past year and are now rising more slowly than per capita after-tax income, helping affordability.

But welcome as the pickup has been, it must be kept in perspective. Combined new- and existing-home sales have gotten back only to where they were in the beginning of last year. And they are about level with where they were in 2000, when the U.S. population was significantly lower than it is now.

Housing could show some further improvement in the months ahead, of course—all of the drop in mortgage rates probably hasn’t shown up in the sales data yet (though rates have bounced higher since earlier this month). Still, that such an apparently benign environment isn’t driving significantly higher sales shows what stiff headwinds the sector faces.

Since the financial crisis, more Americans question the value of owning a home, while the 2017 tax cuts reduced the financial incentives for homeownership, especially in high-tax states. Many millennials are saddled with high levels of student debt, making the prospect of taking on additional debt to buy a home worrisome.

So for now, housing looks as if it is going to provide only modest support for the economy. For it to really take off, it seems like the environment would somehow have to become even more benign, with mortgage rates slipping to new historic lows while the job market continues to run strong. That seems like an unlikely combination.

The US is losing its birds and must act before it is too late

Since 1970, the avian population in North America has dropped by almost 30 per cent

Henry Paulson

B1XJAW Indigo Bunting Perched in Thistle Blossoms
An indigo bunting. We are fast approaching a tipping point of irreversible loss to naturally functioning ecosystems that will cause catastrophic economic losses © Alamy


For some, it is easy to treat stories about cascading losses in global biodiversity as other people’s worries. Rainforest destruction in the Amazon, savage poaching and plummeting large mammal populations in Africa — those problems can seem so far away.

Last week, however, headlines about biodiversity loss pierced hearts in America. Just as Rachel Carson feared more than half a century ago in her book Silent Spring, we are losing our birds.

New research published in the journal Science shows that, since 1970, wild bird populations in the US and Canada have dropped by almost 30 per cent, a loss of nearly 3bn breeding birds.

The numbers read like Black Monday in the stock market: a 53 per cent loss among our grassland birds, a billion birds lost from our forests, 862m sparrows and 618m warblers and 440m blackbirds — all gone.

A report for the G7 prepared in May by the OECD offered a grim synopsis of all the varied measures of ecosystem loss across our planet. Overall, more than half of all the vertebrates in the world have disappeared since 1970, and today’s rate of species extinction is 1,000 times higher than prehuman times. The report also calculated the global economic costs of biodiversity loss to be on the scale of $10tn-$31tn a year.

We are fast approaching a tipping point of irreversible loss to naturally functioning ecosystems that will cause catastrophic — and frustratingly avoidable — economic losses at an enormous global scale.

Back in 1992 the UN proposed bold action through the Convention on Biological Diversity, a treaty joined by 196 member nations to launch global efforts for land and water conservation in order to protect worldwide biodiversity. The convention inspired Canada to pledge $1.35bn towards doubling its total protected area. That money launched an ambitious effort that has already conserved 1.66m square kilometres of Canadian land and ocean habitats, an area almost the size of Quebec. China, likewise, has made bold conservation moves, with its recent moratorium on development and World Heritage Site listing along the Yellow Sea coast, the world’s largest intertidal mudflat system and a critical habitat for more than 50 migratory shorebird species.

One member of the UN did not ratify the convention: the US. A century ago, the US was a global leader in conservation. It pioneered an international migratory bird treaty with Canada that protected hundreds of bird species shared across the two nations. This treaty and related laws rescued dozens of bird species that were being hunted into extinction. An American president, Woodrow Wilson, signed the treaty, and the Senate ratified the Migratory Bird Treaty Act in 1918 — even while the horrors of the first world war were monopolising lawmakers’ attention.

A hundred years later, the US has yet to join the convention on biological diversity because the Senate has been unwilling to ratify the treaty. American NGOs have valiantly stepped in and made great progress towards the conservation of wildlife and habitats, but we need more. The next big opportunity for the US to engage on this issue will be the COP15 convention on biodviersity in China next year.

One only need look to the skies to see why the US must take a leadership role. The loss of nearly a third of our wild birds — during my own lifetime — is deeply troubling to me. It took nature millions of years to fill our continent with its living rainbow of scarlet tanagers, Baltimore orioles, yellow warblers, blue jays, and indigo buntings. Now all these species, and hundreds more, are suffering steep population declines.

Failure to act in the past cannot be an excuse for the future. The US must engage in the global biodiversity crisis, and it starts with participating in a meaningful way at COP15.


The writer, a former US Treasury secretary, chairs the Paulson Institute. He is also an avid birdwatcher.