Tuesday, March 15, 2005

Well, on first glance, this sure doesn't help my argument that pushing personal accounts is a bad idea for the GOP...

Before I admit defeat, I'd like to see at what point one starts to feel a member of the 'Investor Class'. Is it owning equities in a personal account, is it having a 401(k), is it owning a house? Is there a dollar threshold that determines membership? Does it take having thousands of dollars in a private brokerage account or merely having $150 in a Christmas Club savings account?

The strategy of giving people personal accounts in the hope that they'll vote Republican won't work if (1) too small a percentage of eligible workers take advantage of the opportunity, (2) the money workers put into such accounts is too small to make them feel part of the Investor Class, and/or (3) having such accounts doesn't end up influencing their voting.

Bush's plan calls for allowing workers to invest only a portion of their Social Security taxes into a private account - only $2,000 a year, assuming a 4% maximum contribution for a worker making $50,000. I doubt this is enough to put workers into the Investor Class.

According to Zogby, members of the Investor Class made up 46% of the voters in 2004. Bush ended up with about 52-53% of the vote. Yet, 66% of eligible workers have a 401(k), 48% of households own mutual funds, and 73 million people own their home. Even allowing for overlap, I'd argue that not everyone owning their own home, having a mutual fund or having a 401(k) considered themselves an investor/voted for Bush.

I also wonder what comes first, the chicken or the egg? Does Investor Class determine voting, or does voting pattern determine whether one feels part of the Investor Class? If the former, then Bush might be on to something. If the latter, then he's chasing the wrong goose - he ought to concentrate on pushing the buttons that lead someone to vote GOP in the first place.

And, in any event, I remain solidly convinced that offering to raise the Social Security wage base is a terrible idea for the GOP, even if - which will never be the case - the Democrats agreed to allow personal accounts. A key GOP party plank is low taxes. Giving up this proven winner to chase a hypothetical doesn't make sense. Has there ever been a successful case - in business or in politics - where loyal and dedicated customers/voters have been shunted aside in favor of chasing a different group? It's a maxim that you expand your customer base, you don't p*** off your current customers - it's much easier to keep customers happy than to find new ones - especially so when the idea of new customers is nothing more than a hypothetical based on a hunch. I, as well as a whole lot of other GOP voters, need more proof than one of Zogby's polls to convince me otherwise...