Nothing has made the sense of prosperity more tangible under President Clinton than the dizzying upward ride of the stock market. But the past six months have been giddy in less felicitous ways, and more specifically, last week’s ugly downslide made a lot of people cough up their sense of well-being.
Although he says he doesn’t have a dime in the market, Vice President Gore is probably one of those who lost a lot of sleep over its recent ill performance. And he, as the candidate of continued prosperity, is the one who would have to do some hurried repositioning if prosperity discontinued.
After threatening to crash through the 10,000 mark on the Dow last Thursdayheaded in the wrong directionthe market engaged in a little temporary exuberance, and the Dow rallied 1.57 percent on Friday. But by Monday, the overall market was back in drift mode, so there is clearly more reason for anxiety. The success of the market over the last decade has rested on improving both corporate performance and speculative enthusiasm. Much of the speculative element was washed out last spring; recent troubles have focused more on worries about maintaining earning levels in a broader world turning uglier by the day.
Conventional wisdom holds that instability and anxiety generally help the incumbent party, which should mean that troubles abroad and in the financial markets should help Gore in the election against George W. Bush. However, with so much of his campaign tied up in his promise to keep the good times rolling, what’s Gore supposed to say now that the market has gone soft on him?
Here are some possible ways for Gore to brush it all off for maximum electoral benefit:
Spin No. 1: “It’s important that I stay in office so that the markets will remain confident in the face of this temporary correction.”
Virtue: This line underscores the big market run-up that began in 1991 and puts a little bit of retrograde motion in perspective.
Vice: It also invites the ignorance-spewing, supply-side nincompoops who get so much encouragement from talk radio to crawl out of the woodwork.
Reality: The market did well over the last decade largely because corporations were better run than they had been in the previous 20 years and because a new wave of technology reached sufficient maturity to create economic opportunities. It didn’t hurt that the economy was also significantly better managed than it had been previously, although credit belongs to both Democrats (revenue) and Republicans (expenditures) and to a divided government that achieved a balance of the two.
Meanwhile, Bush is seeking substantial tax cuts at a time when the Federal Reserve is trying to slow the economy down to head off inflation. Such tax cuts would work against that effort by stimulating the economy, which causes genuine unease at the Fed. On the other hand, if the market fell and most Americans found themselves feeling much poorer, Bush’s tax plan would have less of a stimulative effect.
Spin No. 2: “The market was doing fine until my poll numbers started to slip. Wall Street is afraid of Bush.”
Virtue: This suggests that the financial community, where the foundations of the Bush family wealth were laid, doesn’t have much faith in him.
Vice: To use this approach, Gore must admit the election may be slipping away.
Reality: Some additional evidence suggests that this line might have the added advantage of being true. For the past two years, the Scene has tracked and reported on the “Gore Index,”which seeks to distinguish between the overall performance of the stock market and the performance of a basket of stocks that one would expect to be hurt if Gore were elected president. The overall market has done about 25 percent better during that period, indicating that the overall market was not particularly fearful of a Gore presidency. During the current slump, however, the anti-Gore stocks have staged a relative rally and the outperformance factor for the index has fallen back by 20 percent.
As for falling behind, while various polls showing Bush edging ahead have not yet broken through the statistical significance barrier, the number of polls leaning Bush’s direction certainly give credence to the conclusion that Gore has lost momentum.
Spin No. 3: “This is just a reflection of the troubled world situation with conflict in the Middle East and rising oil prices.”
Virtue: This gives the opportunity for further ranting about the coziness of the Republican ticket with Big Oil as well as a chance to play the dunce card once again.
Vice: Reaction to the debates has shown that while most Americans may recognize that Bush isn’t a college professor, he also isn’t as dumb as late night television led them to believe.
Reality: The market always tends to slip back in times of crisisand more often than not, the crisis is in the Middle East. The market also tends to recover pretty promptly from those sorts of things once the situation clarifies. In 1990, it tumbled in response to the invasion of Kuwait, then began a 10-year rally in response to the beginning of the bombing campaign.
As for how it all reflects on Bush, there’s really no debate that Bush is no intellectual; but that’s different from not being intelligent. At the very least, he was shrewd enough to get within hailing distance of the presidency, and he has surrounded himself with the best Republican advice that money can buy. But he is callow in a way that Gore is not. Voters seem to recognize this without placing too much stock in it. What his colleague, Dick Cheney, might refer to as a big-time crisis could alter that.
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