October 24, 2005


Miers and Her Money (Henry Blodget, 10/20/05, Slate)

A psycho-financial analysis of the Supreme Court nominee.

What does Harriet Miers' money tell us about her? The Supreme Court nominee has filed financial disclosure forms for the last five years as a requirement for her White House job. The most remarkable fact that emerges from her filings is this: She managed to work for nearly 30 years as an attorney in private practice without getting rich. [...] Miers finds herself at age 60 with a net worth of about $675,000, which unfortunately does not make her wealthy. [...]

Her investing strategy also shows her to be excessively cautious. She has invested her nest egg mainly in cash and Treasuries and is therefore in grave danger from inflation. In today's environment, Miers' IRA probably generates a paltry real return of about 1 percent a year.

Like many Americans, [...] she appears to have raided her retirement funds to cover current expenses. When Miers left Dallas law firm Locke Liddell in 1999—and the $624,000 salary she earned as a managing partner—her IRA (then a firm profit-sharing account) contained between $500,000 and $1 million. Every year since, however, this account balance has mysteriously declined, so much so that it now totals [...] $207,000. It is possible that, in typical American fashion, Miers has mortgaged her future to maintain the lifestyle she enjoyed when she was earning $624,000, instead of the one she should be restricted to now that she gets a government salary of $161,000. But such profligacy seems unlikely, based on the rest of Miers' disclosures. [...]

The [Wall Street Journal] reports that she drives an "older-model Mercedes," and her disclosure form values her cars and other personal property at a grand total of $35,000. No Monets, sloops, or cavernous wine cellars here.

So, where has all that retirement money been going? Perhaps to another expense category depressingly familiar to most Americans: health-care costs. According to the Journal and AP, Miers is the primary caretaker for her 91-year-old mother, who has required in-home and nursing-home care since the mid-1990s. That a decade of her mom's health care could consume several hundred thousand dollars set aside for Miers' own retirement won't come as a surprise to anyone who has had (or paid for) a long-term illness in recent years.

Judging from her financial statements, the difference between Miers' brand of conservatism and the kind exemplified by many of the ex-private-sector moguls who employ her is that it seems truly compassionate, in the sense that Miers seems to be sacrificing some of her own lifestyle and financial security for the benefit of others.

Like any other form of tea-leaf-reading, an analysis of Miers' financial position and investment strategy can only reveal broad strokes. People often behave differently in different areas of their lives, so Miers' decisions regarding her money may shed little light on how she'd make decisions regarding legal matters.

A few things do seem to be revealing, however.
Her sacrifice of her own retirement funds to care for her aged mother, and the decision to provide in-home care, instead of sloughing the old woman off onto Social Security and putting her immediately into a nursing home, reinforce what we know about Miers' religious beliefs, and her commitment to service to others at her church.

Women tend to be very conservative investors in general, particularly women of the Boomer and previous generations, so Miers' loss-adverse proclivities could seem to be just a prudent, patient, rational investment strategy.

However, they're a bit too prudent and patient, as Mr. Blodget notes. Miers somehow made it through the greatest Wall Street bull market of her generation without becoming a millionaire, despite having many hundreds of thousands of dollars to invest, and most of her net worth is in the form of equity in her Dallas home, and a small Virginia condo.

This suggests either that Miers is unwilling to seek out expert advice, or unwilling to follow it, since no mainstream investment advisor would tell a fifty-two year old woman to keep all of her IRA money in bonds during a stock market rally, nor a sixty year old woman to keep two-thirds of her net worth in housing near the end of the biggest real estate boom of the past twenty years.

Still, although $ 675,000 isn't "rich" by American standards, it is a high net worth, putting Miers comfortably among the ranks of the top 5% of U.S. households, in terms of wealth.

Posted by Michael Herdegen at October 24, 2005 8:00 AM

Since the woman is pretty much going to get slammed simply for breathing, if she did have any major stock investments that were not strictly in mutual funds, she would be likely face attack as a tool of the corporae interests at whatever major conglamorate she held shares in. Depending on the corporation(s), the attack could have come from either side and would be shown as proof that she would be either a liberal or an ultra-conservative on the court.

Posted by: John at October 24, 2005 9:15 AM

In home care can be inhumane if it isolates the elderly person or persons.

Posted by: Perry at October 24, 2005 9:49 AM

Perry easily wins today's 'I seemed to have missed the plot' award.

Posted by: JonofAtlanta at October 24, 2005 11:10 AM