Investor class could hold key to the election
WASHINGTON – Republican leaders are increasingly uneasy that the stock market's decline could ruin the GOP's prospects in the upcoming elections.
Voter surveys show increasing concern over the economy, much of it fueled by the disappearance of trillions of dollars in worker 401(k)s, IRA savings and investments that have made Americans feel financially insecure and a lot less confident about the future.
So far, there is no solid evidence that the voters are blaming President Bush or the Republicans in Congress for the economy's anemia and Wall Street's bear market – now in its third year.
"Among those who are pessimistic about the economy, only 13 percent blame Bush, and even fewer blame Democrats or Republicans in Congress," a Washington Post poll concluded at the end of September. "Instead, half of those voters blame either the terrorist attacks of Sept. 11 or normal changes in the business cycle."
But the GOP's latest internal surveys show that voters are increasingly unhappy with the stock market's losses and scary volatility.
Administration officials and Republican leaders have tried to balance a message of confidence in the future with a strong dose of concern about the economy's weaknesses. They have recently taken steps to counter voter fears and political unrest.
In an unusually late-in-the-session move, House Ways and Means Committee Chairman Bill Thomas of California held a mark-up late Monday night and early Tuesday to approve two bills to help investors – especially vulnerable, older investors – who are retired or are nearing retirement.
Thomas did not mince words in an opening statement at the mark-up session. The economy is "growing slowly," and its course is "erratic." Job levels are holding steady overall, with the unemployment rate at 5.6 percent, but job creation remains weak. Business investment is flat, and "the financial markets were in decline." Something has to be done, he said.
The first bill would let investors deduct more of their net capital losses from their taxes. Taxpayers can deduct as much as $3,000 now, which hasn't changed since 1978. The GOP's bill raises the deductible to $8,250.
The second bill would increase the age at which Americans must begin taking funds from their 401(k)s and IRAs – from 70 to 75. "That will give seniors more flexibility and control over their retirement savings," Thomas said.
The bill would also accelerate the scheduled increases in contribution limits for 401(k)s and IRAs in the Bush tax cuts, making them effective next year instead of 2008, when they were originally to take effect. An additional contribution "catch-up" provision for older workers who got started late in their retirement savings plans would also take effect next year, rather than in 2006.
The House probably will review these bills by the end of this week to send a clear message that the GOP intends to help investors next year if the party keeps control of the House. Of course, the Senate will shelve it. Democratic leaders still think all investors are rich and thus don't deserve any tax relief whatsoever.
But, in another signal from Senate Republicans, Minority Leader Trent Lott announced last Friday that if the GOP takes over the Senate, it will enact a pro-growth "jobs package" of tax cuts for small businesses and investors next year.
Bush has tried to balance his preoccupation with Iraq with occasional speeches on the economy. But the occasional speech about the economy may not be enough to satisfy voters if things do not improve.
Copyright 2001, United Feature Syndicate, Inc.