economics

kalshiMarch 22, 20264d ago

Will Trump invoke the Insurrection Act during his Presidency?

Will Trump invoke the Insurrection Act before 2027?

Signal

SELL

Probability

22%

Market: 28%Edge: -6pp

Confidence

MEDIUM

68%

Summary.

My estimated probability of Trump invoking the Insurrection Act before January 1, 2027 is 22%, compared to the market's 28.5%, suggesting the market is overpriced by approximately 6.5 percentage points. The critical datapoint is Trump's revealed constraint in mid-January 2026: he explicitly threatened to invoke the Act against Minnesota Governor Walz following the ICE shooting death of Renee Good and subsequent mass protests, yet did not follow through. This gap between rhetoric and action suggests binding legal, political, or institutional barriers. Three additional factors support a lower probability: (1) institutional military resistance evidenced by General Guillot's March 2026 testimony opposing domestic troop deployment, (2) the Middle East war diversion that has committed military resources overseas and dominated executive attention away from domestic enforcement, and (3) time decay with only 9.5 months remaining until resolution. While Trump's unprecedented willingness to push executive authority boundaries justifies a probability well above the historical base rate (~2-5%), the market appears to underweight the January non-execution signal and overweight his threatening rhetoric. The stagflationary environment (negative payrolls plus energy-driven inflation) creates tail risk for civil unrest that could trigger invocation, but absent a crisis exceeding the January 2026 threshold, current constraints appear likely to hold through year-end.

Reasoning.

Step-by-step probability assessment:

1. Base Rate Analysis (extremely low historical prior) The Insurrection Act has been invoked only twice since the 1950s: 1992 LA riots and 1989 Virgin Islands hurricane looting, both by Bush Sr. It was NOT invoked during the 2020 George Floyd protests despite Trump's consideration, Hurricane Katrina, or any recent civil unrest. Historical base rate: ~2-5% in modern era.

2. Trump-Specific Adjustment (upward) Trump represents a structural departure from historical norms:

Explicitly threatened invocation mid-January 2026 against Minnesota Governor Walz
Deployed National Guard to multiple cities throughout 2025 under alternative statutes
Demonstrated willingness to push boundaries of executive authority
January 7, 2026 ICE shooting death of Renee Good created catalytic event that Trump could have used but didn't

This raises probability from base ~5% to ~30-35% range.

3. Critical Constraint: Trump Threatened But Didn't Act (major downward signal) In mid-January 2026, Trump had:

A catalytic event (Renee Good shooting, massive protests)
Explicit conflict with Governor Walz
Stated intention to invoke the Act
Yet he DID NOT follow through

This "revealed preference" gap between rhetoric and action is the single most important data point. It suggests either:

Legal/political constraints are binding
Institutional resistance is effective
Strategic calculation favors alternative approaches

4. Institutional Military Resistance (downward) General Gregory Guillot's March 2026 testimony explicitly opposing domestic troop deployment for elections signals:

Military leadership unwilling to cooperate with domestic deployments
Public testimony creates political/legal barriers
Reduces feasibility even if Trump attempts invocation

5. Catalytic Diversion: Middle East War (significant downward)

US Marines deployed to Iran conflict
Administration attention diverted to energy crisis (Brent crude >$110)
Military resources committed overseas reduce domestic deployment capacity
Executive bandwidth focused on geopolitical crisis rather than domestic enforcement

6. Time Constraint (downward) Only 9.5 months remaining until January 1, 2027 resolution. Each passing month without invocation reduces probability window.

7. Potential Catalytic Events (upward risk, but speculative) Stagflationary environment could create civil unrest:

Job losses (-92k in February)
Energy-driven inflation (2.4% CPI, rising food costs 3.1%)
Mass deportation operations could escalate to violence
2026 election disputes (November midterms)

However, these are forward-looking scenarios, not current conditions.

8. Market Calibration Check Market at 28.5%, stable 27-30% range for past week. This represents informed equilibrium pricing. The market has already observed:

Trump's January threat and non-execution
Middle East diversion
Military resistance
Economic data

Market stability suggests no new catalytic information.

Final Calculation:

Base Trump willingness: 30-35%
January non-execution discount: -8%
Military resistance discount: -3%
Middle East diversion discount: -4%
Time decay (9.5 months): -2%
Estimated probability: 22%

Edge Assessment: My estimate of 22% vs market 28.5% suggests market is ~6.5 percentage points too high. However:

Market has remained stable, suggesting strong consensus
My estimate relies heavily on interpreting January non-execution as binding constraint
If I'm wrong about what constrained Trump in January, true probability could be higher
Moderate edge, but uncertainty is significant

The market may be overweighting Trump's demonstrated willingness and rhetoric while underweighting the revealed constraint from his January decision not to invoke despite having a clear opportunity.

Key Factors.

Trump's January 2026 revealed constraint: explicitly threatened invocation after Renee Good shooting but did not execute, suggesting binding legal/political barriers
Institutional military resistance: General Guillot public testimony opposing domestic troop deployment creates structural obstacle
Middle East war diversion: Iran conflict commits military resources overseas and dominates executive attention, reducing domestic deployment capacity
Time constraint: only 9.5 months remaining until January 1, 2027 resolution, with each passing month reducing probability window
Historical base rate: Insurrection Act invoked only twice since 1950s, never by Trump during 2020 protests despite consideration
Stagflationary economic environment: job losses (-92k February) plus energy-driven inflation (Brent >$110) creates potential for civil unrest that could change dynamics
Market stability at 28-30% range suggests informed consensus has already priced in known constraints and risks

Scenarios.

Base Case: No Invocation

78%

Trump does not invoke the Insurrection Act before January 1, 2027. Status quo continues with conventional law enforcement and National Guard deployments under existing statutes (10 U.S.C. § 12406). The Middle East crisis continues to dominate executive attention through fall 2026. Military institutional resistance remains effective. Economic conditions remain tense but don't trigger mass civil unrest requiring federal military intervention. November 2026 midterm elections proceed without major violence. Trump's January 2026 decision not to invoke despite the Renee Good shooting protests proves to be the template: rhetoric without execution.

Trigger: Continuation of current trajectory. No major domestic crisis escalates beyond state/local capacity. Military leadership maintains public opposition to domestic deployment. Court challenges to National Guard deployments continue to constrain executive action. Middle East conflict remains unresolved, keeping military resources committed overseas.

Crisis Invocation

18%

Major domestic crisis emerges that Trump uses to invoke the Insurrection Act between now and December 2026. Potential triggers: (1) Mass violence during deportation operations in sanctuary cities, with governors refusing to cooperate; (2) November 2026 midterm election disputes leading to sustained protests/riots in multiple states; (3) Coordinated attacks or domestic terrorism creating national security emergency; (4) Economic crisis (oil shock-induced recession) triggering widespread civil unrest; (5) Middle East war resolution frees up military resources and executive attention, allowing refocus on domestic enforcement priorities.

Trigger: Multi-state protests/riots overwhelming local law enforcement. Governors explicitly refusing federal requests for cooperation. Media coverage of violence creating political pressure for federal intervention. Trump public statements threatening invocation. Military resources returning from Middle East. Legal opinion from DOJ supporting invocation authority. Congressional Republicans signaling support or acquiescence.

Bull Case: Early Invocation (April-June 2026)

Trump invokes the Insurrection Act in spring 2026, potentially triggered by: (1) Rapid Middle East war resolution allowing refocus on domestic agenda; (2) Escalation of immigration enforcement operations leading to violent resistance; (3) Spring protests around anniversary of Renee Good shooting; (4) Economic deterioration (stagflation worsening) creating political imperative to demonstrate federal control; (5) Trump calculates that early invocation before midterms demonstrates strength to base. This scenario requires Trump to overcome the same institutional constraints that prevented invocation in January, suggesting either: legal strategy has changed, military leadership has been replaced/pressured, or crisis magnitude exceeds January threshold.

Trigger: Sudden Middle East ceasefire or withdrawal announcement. Major ICE operation in sanctuary city (e.g., Chicago, Los Angeles) met with organized resistance. Governor explicitly obstructing federal law enforcement. Multiple-casualty event involving federal agents. Trump personnel changes at Pentagon installing more compliant leadership. DOJ memo asserting broad Insurrection Act authority. Fox News/conservative media campaign building public support for invocation.

Risks.

January non-execution misinterpretation: What if Trump was constrained by temporary factors (personnel, legal preparation, timing) rather than binding barriers? His next attempt might succeed.
Black swan domestic crisis: Terrorist attack, assassination attempt, coordinated violence in multiple cities could create irresistible political pressure for invocation regardless of institutional resistance
Middle East rapid resolution: If Iran conflict ends quickly (ceasefire, regime change), military resources and executive attention return to domestic priorities, increasing invocation probability significantly
Military leadership changes: Trump could replace resistant generals (like Guillot) with compliant leadership, removing institutional barrier
Midterm election violence: November 2026 disputed elections could create prolonged crisis exceeding January 2026 protest threshold
Economic crisis acceleration: Oil shock-induced recession combined with mass deportations could trigger widespread civil unrest
Legal strategy evolution: DOJ could develop novel legal theory supporting invocation authority that overcomes current constraints
Informed trader signal: Market stability at 28.5% might reflect information I'm missing about Trump's intentions or ongoing planning

Edge Assessment.

Moderate edge against the market (22% vs 28.5%).

The market appears to be overweighting Trump's demonstrated willingness to threaten Insurrection Act invocation while underweighting the critical January 2026 revealed preference: he had a clear catalytic opportunity (Renee Good shooting, mass protests, conflict with Governor Walz) and explicitly threatened invocation but did NOT execute. This non-execution is the most important data point.

Why the market might be wrong:

Overreliance on Trump rhetoric vs. actual constraints
Insufficient weight on military institutional resistance (Guillot testimony)
Underestimating Middle East diversion effect on executive bandwidth
Not fully pricing in time decay (9.5 months remaining)

Why I might be wrong:

January constraint may have been temporary/tactical rather than structural
Market may have information about Trump's internal planning I lack
My probability may be too anchored to historical base rates that don't apply to Trump
Forward-looking catalytic events (midterms, deportations) may be higher probability than I estimate

Recommendation: Small to moderate bet against the market (betting NO) is justified, but position sizing should reflect significant uncertainty. The 6.5 percentage point edge is meaningful but not enormous, and the market has been stable suggesting strong consensus. If new catalytic events emerge (Middle East resolution, major domestic crisis, military leadership changes), I would need to rapidly update toward market consensus or higher.

Watch for edge evaporation: If market moves down toward 22-24% range in coming weeks, edge disappears. If market spikes above 35% on new information, reassess whether my thesis is invalidated.

What Would Change Our Mind.

Rapid Middle East conflict resolution or ceasefire that frees up military resources and returns executive attention to domestic priorities within next 2-3 months
Trump replaces resistant military leadership (General Guillot or other senior commanders) with compliant personnel who publicly support domestic deployment authority
Major multi-state domestic crisis emerging (mass deportation violence, midterm election riots, coordinated domestic terrorism) that clearly exceeds the January 2026 protest threshold
DOJ releases legal memo or opinion asserting broad Insurrection Act authority that addresses the constraints that prevented January invocation
Market price movement above 35% on new information, suggesting informed traders have knowledge of imminent invocation planning
Economic crisis acceleration with oil shock-induced recession triggering widespread civil unrest in multiple states simultaneously
Congressional Republican leadership publicly endorsing or encouraging Insurrection Act invocation, removing political constraint
Trump makes specific procedural preparations for invocation (personnel positioning, legal groundwork, public messaging campaign) that were absent in January 2026

Sources.

Market History.

Market has been relatively stable in the last 24 hours (currently 29¢). 7-day range: 27¢ – 30¢.

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