The new swing voter

http://www.NewsAndOpinion.com | The economic calculus behind President Bush's repeal of the tax on stock dividends may or may not be sound, but there is no faulting its political math. Investors, more male than female and older rather than younger, are the swing vote of the '00s, just as soccer Moms were the keys to the politics of the '90s.

Thirty-six million Americans families earning $50,000 to $100,000 own stock - two thirds of them directly through stock purchases, mutual funds or 401(k)s. It is their withdrawal from the stock market that has caused its collapse.

They may not be investing, but they sure are voting and they likely comprise a quarter to a third of all voters in presidential elections. By giving them a tax break, Bush stimulates his electoral prospects.

Democrats' complaint - that the tax cut is aimed at the most wealthy - won't fly. Remember that the top 10 percent of incomes pay 70 percent of the income taxes and cast about 25 percent of the vote.

The more serious problem for Bush - and opportunity for the Democrats - will come later in the year, when the Securities and Exchange Commission gets its act together and begins to ponder restitution for the enormous market losses of these men and women have lost thanks to misdoings by the likes of Merrill Lynch, Salomon Smith Barney, Enron and WorldCom.

Brokerage firms are setting aside only a tiny portion of investors' losses. (Citibank has reserved $1.5 billion after almost $1 trillion was lost.) These swing voters will not be amused at compensation of pennies on the dollar.

Bush is courting these investors by offering tax breaks. Will Democrats go after them by promoting restitution?

The problem: Democrats have to drop their stupid class-warfare rhetoric. With 74 million Americans owning stock in one form or another, anything which helps them can't be derided as a sop to the rich. (The rest of the Bush tax package - fast forwarding of other tax cuts and aid to unemployed workers - will be popular as well.)

Will Bush get ahead of the Democrats in offering compensation to those who have had their wallets emptied by Wall Street's fraudulently optimistic earnings estimates?

Who is going to help these people get their money back? The answer could indicate who will win their love and loyalty in elections to come.

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JWR contributor Dick Morris is the author of, among others, "Power Plays: Top 20 Winning and Losing Strategies of History's Great Political Leaders" Comment by clicking here.

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