Political Polarization Intensifies with Another Impeachment Along Party Lines

Jacob Hess

January 13, 2021

• Politics
• Growth

It has happened again. On January 13th, 2021, President Donald Trump was impeached by the House of Representatives for a second time in his term (and seven days away from the end of that term). The impeachment was in response to the Capitol insurrection last week and the role he played in the escalation of the events that day. While it may have seemed like a clearer reason for impeachment than the first round, the vote was still almost entirely divided down party lines. In the first impeachment, the House vote was 228-193 in favor, and in the second, slightly closer at 232-197 in favor. Ten Republicans crossed party lines to vote in the affirmative which felt like a major bipartisan shift, but in reality, it wasn’t.

Both votes highlight political polarization that has only heightened in the last four years of President Trump’s term. On several issues, Republicans and Democrats have become more polarized, in the public and in Congress. Views on protesting have shifted with 43% of Democrats saying that people are somewhat able to freely peacefully protest in the US while 79% of Republicans responded in the affirmative. The gap of 35% in August 2020 is up from 14% in February 2018. Trust in news sources has been even more polarized as suggested by a report from Pew Research. And of course, the approval rating of President Trump has been the largest ever observed (by Gallup) with an 82% gap in Republican approval at 89% and Democrat approval at 7%.

With Joe Biden on the verge of taking over, political polarization looks to remain at its elevated levels. What does that mean for the economy? Research from Marina Azzimonti in September 2013 is one of the more in-depth reviews of how political polarization may have adverse economic consequences. As shown in the chart above, she developed a “political polarization index” based on political news coverage that tracked the number of instances of political conflict. Her conclusion was that “an innovation to polarization significantly discourages investment, output, and employment” and suggests polarization may have helped contribute to a slow recovery from the recession brought on by the global financial crisis.

In particular, her analysis of the large jump in polarization between 2007 and 2012 found that it may have contributed with a lag of -1.75 million fewer jobs in the labor market, a drop of about -8.6% in private investment, and a decrease in production of over -1% in that period. Indeed, there are many comparisons to be made between the period following the financial crisis and the next four years, the period following the COVID-19 crisis. A new President is about to enter office, highs in unemployment, and interest rates near zero are just a few similarities.

At the moment, the UMich Index of Consumer Sentiment is still down -18.7% from a year ago. However, that is likely still being primarily impacted by the elevation in COVID-19 cases towards the end of 2020. It is worth noting that the Index of Consumer Expectations (a component of the overall index) fell -11% in November 2020 as the election was in focus (Azzimonti found that polarization especially affected sentiment around election periods). If polarization at the level of the last two weeks continues to persist through the year, it is likely to spill over into amplifying the economic anxieties of the consumer. For the sake of the economy, one can only hope that the tension in Washington will ease so that politicians can focus on solutions to the current public health crisis that is a real problem for millions of Americans across the country.