Gore Enjoys Major Support
From Wall Street Bigwigs
By RANDALL SMITH Staff Reporter of THE WALL STREET JOURNAL
Wall Street often is viewed as a Republican stronghold. But a surprising number of Masters of the Universe these days back Democrat Al Gore.
From Richard Fuld of Lehman Brothers Holdings Inc. to James Dimon of Bank One Corp. to Steven Rattner of Quadrangle Group, Mr. Gore and his running mate, Joe Lieberman, have attracted the support of a range of Wall Street bigwigs. Some say it is the strongest support for a Democratic presidential ticket in decades.
Why? It's the stock market, stupid.
Well, that is one reason, anyway. There also is the residue of robust economic growth during the Clinton years, Wall Street's high regard for former Clinton Treasury Secretary Robert Rubin -- now a senior Citigroup Inc. executive -- and the view that Mr. Gore's economic proposals are less likely to jar the current prosperity and dissipate the federal budget surplus than the steeper tax cuts advocated by Republican hopeful George W. Bush. (Republicans contend that Mr. Gore's antibusiness rhetoric, together with his recent rise in the polls, actually is scaring the market.)
"There is a real appreciation on the Street of the growth of the last eight years," says Marc Lackritz, president of the Securities Industry Association, a trade group. "There's very strong support for the fiscal policies of the Democratic administration because they've really been quitegood for the economy and the capital markets."
It isn't as if a band of staunch Republicans suddenly switched stripes. And there is no question that the roster of supporters claimed by Mr. Bush includes quite a few more Wall Street heavyweights. Among them: Charles Schwab, Credit Suisse First Boston Chief Executive Allen Wheat, Goldman Sachs Group Inc. co-President John Thain, the two top executives of Donaldson Lufkin & Jenrette Inc., John Chalsty and Joe Roby, and Bear Stearns Cos. CEO James Cayne.
Still, the Street's Democrats have been more active than some Republican bigwigs in talking up their candidate. Mr. Gore "has real strong support because he is viewed as extending the current policies," Mr. Lackritz says. When did a Democrat last enjoy as much Wall Street support? Some hark back to the Lyndon Johnson landslide over conservative Republican Barry Goldwater in 1964.
Even the most rabid Bush supporters concede that Wall Street support for Mr. Gore is unusually high. "I would prefer to see more of my peers with Bush," says Donald Marron, chairman and CEO of PaineWebber Group Inc., one of the highest ranking Wall Street executives supporting Mr. Bush.
Not all of Mr. Marron's peers agree. Mr. Rubin himself, of course, is one of Mr. Gore's most significant backers. A Goldman alumnus who recently sat with the candidate as he unveiled a new set of economic proposals, Mr. Rubin warned in an article prepared for Monday's editorial page of The Wall Street Journal that the Bush plan "offers spending proposals and enormous tax cuts" that would create a federal budget deficit. The Gore plan, he added, is designed to eliminate the federal debt by the year 2012 and "proposes responsible, targeted tax cuts for savings, home-ownership, and college."
Tax cuts were a mantra for Reagan-era Republican supply-siders, but Messrs. Clinton and Rubin managed to lower interest rates and eliminate the budget deficit by raising taxes. Thus, "there is little support on Wall Street for a big tax cut," says Robert Hormats, a Gore supporter who is vice chairman of the Goldman Sachs (International) unit of Goldman Sachs Group. Before Clinton, he adds, "you would have had a lot of difficulty getting Wall Streeters for a Democrat."
Mr. Rubin's role in the strong economy of the past few years isn't the only reason for Wall Street's more favorable view of Mr. Gore. As a Senator from Connecticut, Mr. Lieberman forged close ties to the insurance business that also have helped his ticket garner Wall Street support. Messrs. Fuld and Dimon, chief executives of Lehman and Bank One, respectively, co-hosted a breakfast for Mr. Lieberman in Manhattan on Sept. 15.
Other Gore supporters include Margo N. Alexander, chairman of PaineWebber's Mitchell Hutchins money-management unit, and Michael Schlein, a former top staffer at the Securities and Exchange Commission, now director of corporate affairs at Citigroup, who helped organize podium operations at the Democratic Convention.
Mr. Bush's backers, meanwhile, say his party should get the credit for the recent boom. Mr. Marron of PaineWebber says the seeds for the Clinton-era bull market were sown during the Reagan-Bush era from 1980 to 1992. He argues that the bigger Bush tax cut would return more of the projected budget surplus to taxpayers; the Bush plan also allows some future social security beneficiaries to invest part of their contributions in the stock and bond markets and would cut inheritance and gift taxes.
Such "down-to-earth economic issues," Mr. Marron says, are at the heart of this year's campaign partly because more Americans have a greater stake in the economy. With the popularization of self-directed retirement accounts in the 1990s, he adds: "My own view is that Wall Street and Main Street have come together on the issues in the last 10 years. Many Americans have a direct stake in the outcome of the markets and the business climate."
Mr. Marron's firm, PaineWebber, ranked near the top among donors in securities and investments with $552,650 in soft-money contributions to the political parties in the first 18 months of the presidential cycle from January 1999 to June 2000, according to Common Cause, a Washington policy group. Most of that, $401,550, went to the Republican party. Though Mr. Marron declined to discuss whether he might join a Bush administration, which has been rumored on Wall Street, his employment agreement with UBS AG, which is acquiring PaineWebber, provides for that possibility.
Certainly Wall Street hasn't been afraid to put its money to work for causes it favors. The $24.2 million donated to the political parties by securities and investment firms was tops for any business category in that period, notes Common Cause President Scott Harshbarger. That is, at least partly, because Wall Street was pushing for financial-reform legislation, enacted by Congress last fall, dropping barriers between banking, securities and insurance. The biggest beneficiary of that bill, Citigroup, which has interest in all three areas, was the biggest financial-services contributor in the same period, at $1.1 million. Its largesse was pretty evenly divided, $552,954 went to Democrats and $567,295 to Republicans.
Some Wall Street analysts, particularly Republicans, warn that the antibusiness themes in the Gore campaign pose a threat to the markets. In his acceptance speech at last month's Democratic Convention, Mr. Gore lambasted drug, tobacco, oil, pharmaceutical and health-management companies, not to mention "big polluters." He warned: "Sometimes you have to be willing to stand up and say no so families can have a better life."
Christine Callies, chief U.S. investment strategist at Merrill Lynch & Co., says: "If you add up all the industries that Al Gore is against, you probably come up with 80% of the Standard & Poor's 500." While she doubts Mr. Gore would be as antibusiness as his rhetoric, she is concerned that the debate is shifting toward "allowing government to grow bigger and consume a larger portion of [the economy]."
Lawrence Kudlow, chief U.S. economist of the ING Barings unit of ING Groep NV, and a sometime Bush economic spokesman, says Mr. Gore's "campaign against big business is really starting to damage the stock market, and ultimately it's going to backfire for Gore." Individual investors, he believes, "are going to say, 'What's wrong with businesses? They create jobs.' " Mr. Gore, he says, "is using the populist rhetoric that Jimmy Carter used to use against the oil companies."
Mr. Kudlow's views are partisan, of course. Still, bond traders say they have noticed that campaign rhetoric from both candidates -- about tax cuts by Mr. Bush or new spending by Mr. Gore -- could mean higher interest rates.
Some Wall Street veterans aren't concerned about Bush-Gore policy differences because they believe adverse market reactions will act as a brake on any policy initiatives that would hurt the economy. Something like that, they say, helped scuttle the ambitious Clinton health-care plan.
For some on Wall Street, the best result simply would be the "gridlock" that can result when the White House and Congress are split between the parties. Not much gets done that way, which often is just fine for the economy and the markets. After all, the economy improved only after Republicans gained control of Congress in 1994.