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For Obama and McCain, widespread investment means tough choices on bailout

Dante Chinni

Posted: 09.29.2008 / 8:40 AM PDT

As the markets have quaked the past two weeks, a familiar refrain has come from the media and the political world: “Main Street” is being called on to bail out “Wall Street” – and Main Street isn’t happy about it.

But the line between these two Americas – one with dark suits and power lunches and the other with minivans and Wal-Marts – is not quite as stark as many imagine. In the 21st century, people of all stripes are investors.

Looking at stock investment through the framework of Patchwork Nation, we’ve found that in every one of the 11 community types, more than 40 percent of the adult residents have money sitting on Wall Street – from large stock-specific portfolios to mutual funds.

Not everyone is invested equally, of course. But the idea that what happens on the floor of the New York Stock Exchange is divorced from what happens around kitchen tables doesn’t seem to hold up, according to data from the Polimetrix 2006 Cooperative Congressional Election Profile Study.

As one might expect, the wealthiest are the most heavily invested. More than 61 percent of adults in “Monied ’Burbs” – Patchwork Nation’s wealthy, largely suburban counties – have money in the stock market. Also investing are more than 56 percent of adult residents in our growing and diversifying “Boom Town” counties, places that also are above-average in income.

Those numbers carry significance for two reasons. The “Monied ’Burbs” and “Boom Towns” are the two most populous groups in our 11 community types – with 84 million and 38.5 million people respectively. Furthermore, those community types are places where the vote was evenly split in the 2004 presidential race.

Reporting we have done in those locales indicates they will likely be close again this November and could decide the race. They’re therefore critical to both Sens. John McCain and Barack Obama – especially since these communities are heavily represented in key states such as Pennsylvania, Michigan, Ohio, Wisconsin, and Florida.

Does that mean siding with and pushing forward the government bailout will be a net electoral plus five weeks from now?

Judging by Friday night’s debate, the candidates aren’t so sure. Given an opportunity to say where they stood on the bailout, Senators Obama and McCain punted, talking instead in generalities about the need to get the middle class back on track and fix the economy.

In truth, how the bailout affects the election may well hinge on what a final deal looks like and how the markets respond. But those investment numbers for Patchwork Nation communities indicate that the places that hold the most votes – and the most swing votes – have the most to gain directly from the bailout.

Other places, of course, could also gain from the bailout. Nationally, according to the Polimetrix data, more than 54 percent of adults own some amount of stock. Even in our aging “Emptying Nests” counties and our rural agricultural “Tractor Country” places, more than 40 percent of adult residents have money invested in the market.

Last week as bailout talks were bubbling in Washington, loud cries of protest rose from some people. They asked why taxpayers should help out greedy Wall Streeters who had dug their own hole.

Without question, the criticism had a certain logic to it: The bailout could definitely be seen as rewarding bad behavior.

But even if you don’t believe the doom-and-gloom forecasts about what will happen without a bailout, the sheer number of people invested in Wall Street hints at the larger implications of a collapse.

Retirement funds could be sapped mightily. Accounts set up to pay for college could dwindle.

There will almost certainly be voter anger in the event of a bailout. But if there isn’t one, it’s not hard to imagine a lot of voters looking at their October 401(k) statements and shaking their heads.

Protest or no protest, Main Street and Wall Street don’t exist in separate universes. And their interaction with each other is likely to have a big impact on this race.