- The Washington Times - Thursday, October 10, 2002

There is a growing uneasiness among Republican leaders 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 poll by The Washington Post concluded at the end of September. "Instead, half of those voters blame either the terrorist attacks of September 11 or normal changes in the business cycle."
But the GOP's latest internal surveys show 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.
Mr. 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 up to $3,000 now, which hasn't been changed since 1978. The GOP's bill raises the deductible to $8,250.
The second bill would raise the age at which Americans are required to 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," Mr. 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 will probably 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, both measures will be shelved in the Senate, where Democratic leaders still think all investors are rich and thus are not deserving of 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 pass a pro-growth "jobs package" of tax cuts for small businesses and investors next year.
With nearly four weeks to go before the elections are held, there "is no evidence" yet that voters want to "send a message" to the White House by voting against Republicans for Congress, says ace elections tracker Stuart Rothenberg. But, he warns, voter swings "often occur very late in an election cycle sometimes as late as the last weekend of the cycle."
Right now, the focus is on the Senate and House debate over going to war against Iraq to disarm Saddam Hussein's deadly arsenal of weapons. Mr. Bush is popular, and the voters' concern over terrorism/homeland security is strong.
But if the stock markets continue their descent and the economy shows new signs of deterioration, the electorate's attention could focus much more on pocketbook issues. Democratic ads will hit economic issues hard in the final days of the campaign to help fuel that shift.
With polls showing Republicans have lost support for their handling of the economy, this could produce some upsets in close races in a battle for control of Congress that is still up for grabs.
Mr. Bush has tried to balance his preoccupation with Iraq with occasional speeches on the economy, but that may not be enough to satisfy voters if things do not improve.
This is what has fueled Mr. Thomas' late-session move to demonstrate Republican concern for the nation's muscular investor class, who could very well determine the outcome of this election.

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

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