- The Washington Times - Thursday, July 25, 2002

Democratic leaders really believe the stock market's nosedive will cause millions of frightened, angry investors to give them complete control of Congress this November.
Democratic leaders Dick Gephardt and Tom Daschle have tried other issues they hoped would lead them to victory in the midterm elections: last year's recession, the Enron scandal, inaction in the Middle East, the disappearance of the surpluses. But all failed to get political traction. This one, they say, is different. The market's fall affects everyone where it hurts most: the pocketbook.
The market's steep decline has slashed retirement accounts and deeply shaken the investment community. It has also unnerved the White House, where President Bush's top advisers are struggling to restore investor confidence, which has not been undermined this badly since the bloody bear market of the 1970s.
Despite a growing economy that has all the signs of recovery, stock values were sinking faster than you can say "bankruptcy." Since Jan. 1, the Dow has been down 2,200 points a loss of about 20 percent. The Dow peaked at 11,700 in January 2000. By Monday it was below 7,800, losing more than a third of its value. And the question, of course, was being asked: Will this sandbag Mr. Bush's resurgent economy? Will this make Dick Gephardt speaker of the House?
According to pollster John Zogby, "66 percent of likely voters have an IRA or a 401(k). They just got their quarterly report and they're weighing that report, which represents their future security and their life, against a president and a Fed chairman who say we've turned the corner and things are looking better for the economy.
"But it's not looking good today, and that's how people are going to vote: however it looks today," Mr. Zogby told me.
Historically, the party that has the White House loses seats in Congress in a president's first midterm election. Usually, the election losses are the result of voter anger over a bad economy or unpopular policies.
But the economy is looking better. The jobless rate is below 6 percent, which means more than 94 percent of the work force is employed. Consumer spending has been healthy, if not robust. The housing industry is exploding and manufacturing is on the comeback; interest rates are low and inflation is tame; the dollar is a little off, but still strong; and, goodness knows, stocks are a bargain these days.
Despite the loss of $1.5 trillion in stock values in just the last two weeks, this is not an economy that is going to throw anyone out of office at least not yet.
Voters are about evenly divided between Mr. Bush and the Democrats over whom they trust to handle the economy, with Mr. Bush getting the edge, for now. Generic polls asking the voters which party they will support in the House and Senate races show the marathon is a dead heat, which has the GOP cheering.
Why? Republicans usually enter the elections with a generic poll deficit of 3 or 4 points. "So that number shows we are in great shape," an exuberant National Republican Congressional Committee strategist told me.
Matthew Dowd, the president's campaign pollster, says he sees no sign as yet that a significant number of voters are blaming Mr. Bush and the Republicans for the stock market's collapse.
"Right now, the public is angry, but that anger is not aimed at a politician or a party. They overwhelmingly blame, by 70 percent, corporate executives and bad business practices," Mr. Dowd told me. "After that, it is a three-way tie in the single digits between [blaming] the president, Republicans and Democrats."
Mr. Bush's job approval numbers remain in the 70s and he has higher approval ratings than the Democrats in Congress, and higher trust ratings, too.
The stock market's losses "are not going to move those numbers until people get angry at politicians," Mr. Dowd said. "But if the public sees the president and Congress doing something to solve this and passing a bill to restore confidence and honest accounting practices, then it is difficult to lay the blame at some politician's feet on this."
To make an effective issue out of this that will move voters, "the Democrats are going to have to convince the public of something they don't believe, that it is the fault of the president or the Republicans as opposed to bad business executives. They don't think that. This is not a political equation in people's minds."
This is what Mr. Dowd is telling the president's advisers right now. Thus, the pressure is on to pass a corporate accounting reform bill before July 29 so lawmakers can go home for the August recess and say they have acted to fix the problem. And it likely one will be sent to Mr. Bush's desk.
Even so, most investors want a more compelling sign that the corporate criminals who are responsible for sacking their stock funds will be punished. They want to see indictments. They want to see people convicted and sent to prison. A little accelerated action from the Justice Department on this score would send stocks soaring and rob the Democrats of yet another campaign issue.

Donald Lambro, chief political correspondent for The Washington TImes, is a nationally syndicated columnist.

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