Flight Of The Investor Class

Defections are endangering the GOP's hold on power

The investor class is souring on George W. Bush and the Republicans. People who call themselves investors (and they aren't all rich) are part of the reason Bush's approval ratings have dropped to an all-time low. Hitoshi Tada has voted for the President twice, but the 27-year-old St. Louis resident and mutual fund investor says he's disappointed by Bush's "seeming lack of direction or progress on any front." Tada, who describes himself as "conservative across the board," isn't impressed by the management skills of America's first MBA President. "He certainly delegates and lets others screw up," Tada says. He calls the scandal- ridden Republican Congress "a hapless, self-serving mess."

Pollsters say 35% of voters belong to the investor class, a group that helped put Republicans in power but now seems restless. The investor class cuts across income levels and age ranges. It includes union members, soccer moms, and a growing share of Latinos, Asian Americans, and African Americans. Within each group, investors are more Republican than noninvestors. Among union investors, for example, 56% voted for Bush in '04, while 63% of labor's noninvestors backed Democrat John Kerry. The only good news on this front for Bush and his party is that most investors think even less of the Democrats. "I have no idea what their policies are," says Tada, an animal caretaker for a pet care service. House Minority Leader "Nancy Pelosi really freaks me out."

The President, who received the votes of 61% of investors in 2004, now gets favorable job approval ratings from just 43%, according to Zogby International Inc., a nonpartisan polling firm. Investors' complaints include the Administration's handling of Hurricane Katrina and the Dubai Ports deal, the management of the Iraq war, the $8.2 trillion national debt, soaring gasoline prices, and immigration policy. "A comfortable investor class votes its values and favors Republicans," says pollster Thomas H. Riehle of RT Strategies. "A nervous investor class votes its fears and punishes Republican incumbents."

That's what Republicans worry about most in 2006. Defections among this group could hugely affect midterm elections. Even if Republicans win a bare majority of investors by holding half of those who have soured on Bush, the decline from past levels would amount to a 3.5 percentage point shift in the national vote toward Democrats. "It could make the difference between winning and losing in a number of congressional districts," says GOP pollster Tony Fabrizio.


For now, many investors seem stuck in limbo. They're alienated from Washington and skeptical that Democrats would do any better on economic issues. "They have the same old, tired socialist message: no tax cuts for the rich," says Norman Bush, 63, of Cranberry Township, Pa.

But that's cold comfort to Republicans, who realize that an increasingly diverse investor class could be their Achilles' heel. Since 1980, the percentage of Americans with mutual funds has soared from 5.8% to more than 50%. Although most investors are economic conservatives, many are more liberal on social issues than the Religious Right loyalists who dominate the national GOP.

For Bush, the fall has been swift. Pollster John Zogby says the President's decline started with the bungled reaction to Katrina. Two years ago investors were 20 percentage points more likely to vote for Bush than were noninvestors. Now investors' views of Bush more closely mirror national norms. "To investors, Katrina turned out to be more of a defining moment than 9/11," says Zogby.

While investors say they're doing pretty well financially, they are worried about the direction of the country. "In general, the President has been good for investors," says Carolyn Fermoyle, 56, a program manager for Indiana University's South Bend Division of Continuing Education. But "I am very worried about jobs and wages in this economy. I still think that part of the economy is a house of cards." In November she plans to vote against her Republican congressman, Chris Chocola.

Bruce Bagley, 53, a small-business owner in Santa Rosa, Calif., is more afraid of what would happen if Democrats take Congress. Investors would have "a bull's-eye on [their] back," he claims. If anxious investors stray from the GOP, they could help Bagley's nightmare come true.

By Richard S. Dunham

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