I should have been clear that the Socialists are hiding behind fighting free trade. I was running my own business in California in the 70s. Closed the first one.
This is the right move by the Republicans. It happens anyway. We all came to SI as investors. And the boards are 70/30 conservative voters.
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washingtonpost.com
Parties Put Stock In 'Investor Class'
GOP, Democrats Heed Growth Of Voters Attuned to Market
By Claudia Deane and Dan Balz
Washington Post Staff Writer
Monday, October 27, 2003; Page A01
When candidate George W. Bush first proposed a plan for partial privatization of the Social Security system in 1999, he was challenging one of the cherished assumptions of political strategists, who have long regarded the government retirement system as the third rail of American politics: Touch it and you die.
His advisers and some others in the Republican Party saw the initiative far differently -- as a direct appeal to a segment of the electorate they had dubbed the "investor class," the growing number of Americans with at least some savings invested directly or indirectly in the stock market.
Some Republican strategists see this investor class as one key to their future -- akin to soccer moms or the burgeoning Latino population -- and argue that the more these voters are in the market, the more likely they are to support the kind of free market-oriented economic policies associated with GOP administrations. Over time, some of them say, more of these voters, regardless of income, education or family background, will identify and vote as Republicans, helping to realign the electorate in the party's direction. Democrats say those claims are vastly overstated, but they are doing their own studies just to be sure.
Based on the findings of a recent Washington Post poll that examined the attitudes and political leanings of Americans with money invested in the financial markets, Republicans could be more correct than Democrats care to admit. But the findings come with some important caveats that raise doubts about the rosiest scenarios sketched by the GOP's most enthusiastic proselytizers.
The Post survey and analysis found that Americans who have bought individual stocks -- "direct investors" -- are more optimistic about the economy, more likely to identify themselves as Republicans, have a more favorable view of the GOP and are more inclined to support Bush's reelection than are non-investors of comparable income.
Where Republicans strategists are wrong is in their assumption that less direct involvement in the market changes attitudes and party affiliation. The Post poll found that, once a person's income is taken into account, the political views of Americans whose only participation in the markets comes through contributions to a 401(k) retirement plan or an Individual Retirement Account (IRA) are not much different from those of non-investors.
The growth and sheer size of the investor class makes it an obvious target. Republican and Democratic politicians cater to the interests of these voters, from Bush's proposal earlier this year to eliminate the tax on stock dividends to recommendations from politicians in both parties for various government-subsidized savings accounts.
About 3 in 5 adult Americans (58 percent) have some savings invested directly or indirectly in the markets, compared with 44 percent six years ago, according to the Post poll. The majority of those investors (61 percent) own no individual stocks; 37 percent do. Investors of either type are more likely to vote than non-investors, and some studies have estimated that investors make up about 70 percent of the electorate.
The more income someone earns, the more likely he or she is to have investments, but more and more middle-income Americans have become members of the investor class. The Post poll found that, among those with incomes of $30,000 to $50,000, 54 percent said they have investments. When broken down by generation, people under age 30 are the least likely to be in the market, with the next least likely to be Americans over age 60.
Because of the generally greater affluence of voters who identify themselves as Republicans, the GOP has a higher percentage of people who have investments. Still, at every income level, direct investors are more likely to identify themselves as Republicans than are non-investors.
For example, 40 percent of direct investors with incomes of more than $50,000 identify themselves as Republicans, compared with 22 percent of non-investors. Among those with incomes below $50,000, 34 percent identified themselves as Republicans, compared with 23 percent of non-investors.
Direct investors also were less likely than non-investors to blame Bush for the economy's problems and were more likely to point to normal movements of the business cycle or to blame the effects of the terrorist attacks of Sept. 11, 2001.
There are some clear partisan differences, however. Democratic investors don't like Bush or his policies very much, which suggests that the most fertile ground for Republicans to gain converts is with investors who are political independents.
Grover Norquist, president of Americans for Tax Reform, is an unabashed enthusiast for the theory that the investor class will help to expand the GOP, saying, "The Republican solution for every problem" is some kind of new tax-deductible savings plan.
"It changes your time horizon, over time it changes your party affiliation, and it also changes what you read and what you watch on TV," he said.
Norquist has plenty of company among conservatives, who have promoted the investor class as a rich prize in the battle between the parties for political supremacy. But Democrats say those Republican theories are no better grounded in reality than predictions in the late 1990s that the Dow Jones index was on a path to run past 30,000 -- predictions that came shortly before the tech bubble burst and a long bear market set in.
Ruy Teixeira, a Democrat who has studied the demographic trends of the electorate, says the flaw in the Republican theory is that the investor class is simply too large and diverse to be remotely considered a homogenous group. Republicans are promoting their theory for parochial reasons, he said, because it fits with their assumption that anyone with a piece of ownership becomes more conservative (and therefore Republican) over time. "I'm skeptical of all that, for sure," he said.
Stanley B. Greenberg, a Democratic pollster, said he has done survey research attempting to understand the political behavior of the investor class but found no conclusions worth reporting.
"We couldn't find anything interesting to write about," he said. "It was a nonevent."
Greenberg also points to current trends to debunk Norquist and other conservatives. Over the past four months, he said, "The stock market has gone up and the president's support has gone down. Unemployment and disposable income are clearly more important [political indicators] than stock ownership."
Norquist disagreed. "If the unemployment rate is 6 percent and you're secure in your job, a 7 percent unemployment rate is not as big a threat to you as a drop in the Dow," he said.
On that question, the Post poll found that, for both investors and non-investors, the unemployment rate is by far the most politically sensitive economic indicator. A greater percentage of investors cited market changes than did non-investors, but even an overwhelming percentage of investors said the unemployment rate is more important.
Interviews with some of those surveyed by the Post, however, underscored that investments in the stock market can change the way voters look at and interpret political developments.
Jason Jones, 26, is a banker from Stockton, Calif., who said his involvement in the financial markets makes him receptive to proposals to privatize Social Security, which would allow people to invest part of their payroll tax into the stock market. "I think absolutely that gives me an element of being more comfortable [with privatization] because I have a base of familiarity with it," he said.
Ruth Venell, 52, is a special education administrator from Acton, Maine, whose investments have prompted her to take a keener interest in how political decisions affect the economy. "I look at other things besides stocks," she said. "But the market is probably the thing that will alert me to investigate further. If I get my quarterly report back and I've lost money, then I'm really going to look at other stuff as well."
That points to the double-edged nature of having an electorate attuned to movements in the market. Bush's plan for partial Social Security privatization, for example, was blunted by the drop in the market, and many congressional Republicans remain wary of promoting the idea, despite the belief of some strategists that it will attract voters, particularly younger ones, to the party.
"Republicans have a reputation for being better for your pocketbook, but I don't know if they're better for everybody's pocketbook," said Ginny Edgcomb, a political independent from Falmouth, Mass., who said her retirement account causes her to pay more attention to economic policy debates. "I'm not sure they're better for the middle-class pocketbook."
The battle for the hearts and minds of the investor class will intensify as even more Americans start retirement or other long-term savings plans, as will the debate about how to appeal to them.
Matthew Dowd, senior adviser to Bush's reelection campaign, said both parties need to be aware of whether someone is an investor for the same reason political strategists want to know if someone is married or goes to church regularly. "What's not clear," he added, "is if you can act upon it."
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