Democrats are attempting to use the imminent mailing of millions of dismal investment statements to return voters' attention to the struggling economy before next month's midterm elections.
In the coming weeks, investors will receive statements for the quarter, ended
Monday, in which the S & P 500-stock index and the Dow Jones industrial average
dropped 18 percent, the worst in 15 years. Democratic strategists are advising
their candidates to emphasize the mailings, which could make abstract market losses
concrete and personal, to inject economic issues back into a political discourse
dominated by Iraq.
The Bush administration dismissed the Democratic gambit as "ludicrous" and issued an upbeat report yesterday on the economy, proclaiming that despite lost savings, "America is on the road to recovery." It urged Americans to "share the president's confidence and optimism."
The report, distributed to numerous business leaders and others around the country as a nine-page memo from Commerce Secretary Donald L. Evans, argued that despite unease because of terrorism, war and corporate misdeeds, "there is more than ample cause for optimism about the economy" and asserted that "most of the economy is following a normal recovery pattern."
The political jockeying to assign or avoid blame for the economy comes amid fresh signs of economic difficulty. The Labor Department reported yesterday that new jobless claims rose by slightly more than expected last week, to 417,000. And the Commerce Department reported that factory orders were flat in August, as a drop in orders for durable goods was offset by increased demand for other goods such as food and clothes.
While economic jitters have depressed markets and worried consumers, they have yet to translate to political anger or to replace Iraq as the big news story. Democrats are hoping that voters will react differently to the soon-to-arrive statements reflecting investors' declining assets in 401(k) plans and IRAs, stocks and mutual funds.
"You don't need to read a newspaper story to be concerned about your 401(k) statement -- that's coming through the mail," said Democratic pollster Mark Mellman. For example, Fidelity Investments, the nation's largest mutual fund manager, will mail 7 million statements at the beginning of next week to investors in mutual funds and brokerage accounts. In the last 10 days of the month, Fidelity will mail an additional 6 million statements to holders of retirement accounts.
"In elections, there is always a sort of catalytic moment, and I think September 30 was that catalytic moment," said Democratic pollster Peter Hart. "The next thing voters are going to see is their 401(k) statement. They're going to know they are hurting, and they are hurting in a bad way."
Some Republican strategists say there is reason for concern. "People all know they are not as wealthy today as they were a year ago, but they don't know by how much," said GOP pollster Frank Luntz. "It's like a wet blanket to the face when they compute what they thought they had and realize what it means."
Democratic politicians are clearly trying to emphasize the statements. "This week, millions of Americans whose retirement savings are invested in 401(k) plans are receiving statements with the shocking news that much of their hard-earned wealth has disappeared," former vice president Al Gore said Wednesday. That same day, House Democrats launched an "Economic Recovery Room" forum to discuss, among other things, "401K loss."
On Tuesday, House Minority Leader Richard A. Gephardt (D-Mo.) declared on the House floor: "In a few days, Americans will start receiving 401(k) statements showing another sharp drop in their retirement savings." Gephardt returned to the theme in a floor speech yesterday, arguing that "401(k) plans are dropping in value like a rock."
White House officials say the tactic won't work. "To suggest that because my 401(k) has fallen I want to throw a Republican out is ludicrous," Bush communications director Dan Bartlett said. He said the argument is just another of Democratic "attacks that the American people have soundly discredited."
Bartlett said that investors are more sophisticated than Democrats believe. "Most investors have a long-term approach to things," he said. "They understand cycles, they understand how the economy works." Indeed, polling done for the White House by the Republican National Committee this summer showed that investors said they were more likely to vote Republican than they were at the beginning of the year.
"There is a concern about the loss of wealth," said GOP pollster Bob Teeter, but the notion "that this is going to be a political shock is baloney."
Still, the administration was concerned enough about economic jitters to arrange for widespread distribution of the Evans memo. "As you will see, there are plenty of data to show that the United States is recovering from a mild recession," Evans wrote in a cover letter titled "The Case for Confidence." Though Evans wrote that "the pain of families hurt by loss of jobs and savings is highly visible and real," he continued: "But there is good news."
Bartlett said the report did not seek to minimize economic distress. "It's not being Pollyannaish, it's being accurate," he said. Asked about whether the administration was concerned about repeating the mistakes of the first President George Bush, who was accused of papering over economic troubles, Bartlett said, "History has been recorded and we are active students of it."
© 2002 The Washington Post Company