Anxious In Sioux Falls

A high-school history teacher in Sioux Falls, S.D., Wade Tirrel was trained to take the long view. So in 1998, at 28, he established a 401(k) with his wife through her employer. Their goal: added retirement security for themselves, so they could free up more money for their 2-year-old son Cole's college education. Four years and two more children later, Tirrel isn't regretting his decision to get into the stock market. But as he strolled the midway at the Sioux Empire Fair with Cole last week, the stomach-churning rides around him were all too emblematic of his experience as an investor. His 401(k) account is down--by half. "We've taken some hits," he said glumly. "It kind of gets to you after a while." With the stoicism of a sodbuster and the optimism of youth, Tirrel isn't about to bail out. But he believes that the government has a duty to protect him: with Dakota-style frontier justice for corrupt CEOs and a solvent Social Security in its traditional form as a retirement safety net. Before we rely more on the markets, he said, average Americans need to know how they work. "People need to get educated," he said.

Voters are getting educated all right--in the school of hard knocks. Travel the Plains and you'll hear, beneath the unflappable dry humor, deep concerns about a wide range of kitchen-table economic issues: skyrocketing health-insurance premiums and prescription-drug prices, rising college costs--and ruined savings plans of all varieties. Even if no "double dip" recession is at hand, the fall election season is likely to be organized around the economic question brought about by the gyrations of the Dow: is it wise to rely on market forces to handle social-insurance tasks usually administered by governments? For voters and for candidates in South Dakota, the answer is a very definite "maybe."

South Dakota might seem an obscure place to hunt for developing patterns in the weather map of politics. In fact, it's perfect: the most argued-over territory in the battle for Congress, with dirt-cheap TV-advertising rates and bulging campaign budgets in the tightest of all Senate races. Though it voted strongly for George Bush in 2000, it's also the home turf of his Democratic nemesis, Sen. Tom Daschle. Economically, South Dakota is as schizophrenic as the country--boom times in high-tech, diversified Sioux Falls and destitution in the rural equivalent of the Rust Belt, the vast, drought-stricken farm-and-ranch territory west of the Missouri River. President Bush has been to the state twice since 2001. He is returning this week, to talk about homeland security at Mount Rushmore and listen to tales of the drought as told by the locals. He'll probably make another trip this fall.

In the meantime Bush will preside in Texas this week over what amounts to an educational seminar on the risks and rewards of the stock market. For years he's touted "market-based" solutions for myriad social problems, ranging from school vouchers to privatization of Social Security. But then the scandals on Wall Street singed him--and Vice President Dick Cheney. That, in turn, convinced presidential political guru Karl Rove that to make market solutions credible, Bush had to be seen as vigilant and concerned about the economy and business regulation. At the "economic forum" in Waco, the president will preside over the "plenary" session. Among the other speakers: Charles Schwab.

But selling market solutions these days isn't easy. In South Dakota, at least, no amount of Schwabian cheerleading is going to make most seniors accept the notion that insurance companies should run a prescription-drug program--if and when there is one. Driving from town to town last week on his annual tour of the state's 66 counties, Daschle encountered nursing administrators and patients who said they preferred the program to be handled solely by Medicare, though no love's lost for the mammoth program. Insurance companies aren't helping their case by jacking up overall premiums, says Daschle. The best way to use market power, he says, is to make the government the purchasing agent.

If there's any support for privatizing Social Security, you can't tell by the rhetoric of the Senate candidates: incumbent Democrat Tim Johnson and his Republican challenger, Rep. John Thune. When they aren't busy bashing each other for proximity to presumptively evil drug companies, they accuse each other of lusting for the destruction of Social Security. Johnson signed a solemn-sounding "pledge" recently to protect the program as it is--a document Thune refused to sign. But on the theory that the best defense is a good offense, Thune aired spots last week accusing Johnson of wanting to "privatize" Social Security--"a breathtakingly incorrect" reading of ancient theoretical musings, according to Johnson. At the Sioux fair, the two men stood within yards of each other, greeting fairgoers for hours at a farmers' picnic. But in a cousinly state, where everyone seems related, they only icily acknowledged each other's presence.

Seniors and near-seniors, who tend to turn out to vote, want Social Security to remain as it is. But out on the midway last week, younger voters--moms and dads with children on their shoulders or in strollers--were cautiously open to the idea of funneling some payroll-tax money into private savings accounts. Some doubt that Social Security will even exist by the time they retire. "I want to be able to invest some of that money myself," said 38-year-old James Moore, a lawyer. "I'm not going to put 100 percent of it into an Enron." It's the possibility that other Americans might do just that that worries Tom Smith, 37, a local route manager for Frito-Lay. "I think I'm a safe investor," he said. "But who knows what foolish things people are going do with that money? When the market goes wrong, and they lose their savings, they'll demand a federal bailout. That means we'll have a new geriatric-welfare program, which is what we were trying to avoid." A good point--and one that the president might want to address in Waco this week.

Anxious In Sioux Falls | News