The Bearish Veep

Chatterbox observed two months ago that a recession would be good for the candidacy of George W. Bush and bad for the candidacy of Al Gore. But now Al Gore has cleverly figured out a way to hedge his bets should the stock market crash: By pointing out, in advance, that Dubya’s Social Security privatization plan, under which individuals would invest in stocks of their own choosing, is reckless! Check out this snippet from a May 17 Gore campaign press release:

What if people make poor choices? Or the Stock Market Dips Just as They Retire? How would Bush avoid massive bailouts? Poor investment choices on the part of some individuals or a downturn in the stock market could force massive government bailouts. These bailouts would likely be financed out of taxpayers’ pockets and could cost hundreds of billions of dollars.

Gore’s new “” Web site goes so far as to quote a 1998 General Accounting Office study that says during the previous 70 years, “stock returns were negative in nearly one out of four years. There is no guarantee that investing in the stock market, even over two or three decades, will yield the long-term average return …” Curious to see where that sentence was headed, Chatterbox looked up the original GAO report and found the ellipse to be superfluous; the sentence ends with the word, “return.” Perhaps the ellipse was inserted to put some distance between the quoted sentence and the unquoted next sentence, which is a little more emphatic (and, if endorsed by Gore, might conceivably cause the stock market to crash): “According to economic and financial literature, there are reasons to believe that future stock returns could be less than the historical average.”

Bush’s Social Security plan is a bad idea, for precisely the reasons Gore states. Beyond the merits, though, Gore (who, for ethical reasons, owns no stock himself, and whose campaign delightedly pointed out this week that Bush economic advisor Larry Lindsey has gotten out of the market because it’s too volatile) is probably positioning himself politically to gloat about Bush’s fiscal carelessness should the stock market crash. That, in turn, might somewhat minimize whatever advantage Bush would reap. If a crash were to cause a recession, though, Chatterbox thinks Gore would still be screwed.