Grand Old Party
Even though the Republicans lost the battle to sink health care reform and it could cost them at the ballot this fall, they won an important demographic victory for the future of the party. Older voters who fear diminished Medicare benefits liked the GOP’s willingness to fight tooth and nail against a change which they felt would impact them negatively. Coming on the heels of the Republicans’ 2005 Medicare drug benefit increase, the GOP has firmly established itself as the party that will go to bat for older Americans.
This is very important to the Republican pary. In 2008 McCain lost the college graduate vote by 8 points. Obama is the first Democratic presidential candidate to win this voter group since LBJ in 1964. Bush sr. won this demographic by 25 points in 1988. Also, Obama lead among 18 to 29 year old voters by 34 points. The voting demographics that held the nation in a fairly even electoral balance since Nixon’s presidency are breaking down.
To counter this the GOP is going to have to build on it’s 4 point lead among voters over 60 in the 2008 presidential election. The concerns of senior citizens are going to be the concerns of the Republican party. This is going to have some far reaching consequences for economic policy.
In order to ride the older vote to victory in 2016 or 2020 (2012 doesn’t look too good) the Republicans are going to have to shift their thinking on tax policy significantly. Retired voters don’t care about employment related income tax. They care about investment related taxes. Expect to see the libertarian “It’s my money” and the fiscaly conservative “trickle down/consumption encouragement” talking points about tax policy to be replaced by serious discussion of how to encourage economic growth by driving investment with tax policy. Bankers and older voters will love this.
But the biggest issue that seniors will face is stagnating asset prices. Historically, as a large population lump like the baby boomers retire, asset prices of all kinds fall. Retirees will be selling stocks from their 401ks, selling family homes, and selling any other assets that they have managed to pile up during their decades of toil. Due to the sparsity of defined benefit retirement plans coupled with the swiftness of the demographic shift, the current generation of retirees will feel the stagnation or dip in asset prices more keenly than previous generations.
If Republicans advocate policies that counter this trend, they can build a solid lead among retired voters. If their big thinkers can’t find a way to do this without balancing the budget on the backs of younger workers then expect the Grand Old Party to become the party of higher income taxes, lower capital gains and dividend taxes, and the SARP (Senior Asset Relief Program) because some people are too old to fail.
