Throughout the election year, while money in the stock market shivered at any hint of the GOP victory, media attention -- and campaign rhetoric -- continued to focus on Bush's trillions and Gore's lockboxes, fuzzy math calculations and proposed expenditure against still-unearned government surpluses. Even now, as the NASDAQ has plunged to less than 60 percent of last year's value, the pundits and the American public continue to place their economic hopes and fears on the congressional tax cut debates and Alan Greenspan's interest rate reductions.

But the focus on the Congress and the Fed obscures a far more important flow of money on Wall Street -- a politically inspired and electronically executed flow of dollars away from the new and into the old economy, from Hollywood and Silicon Valley toward heavy industry and defense contractors, and out of the hands of the corporate backers of the Democrats into the hands of the corporate backers of the Republicans. Investors, it seems, are taking their cues from the White House.

Smart investors have anticipated the predictable changes in government spending patterns coming from the change of administration and placed their bets on the companies and sectors that are most likely to benefit from the Bush administration: defense, energy, tobacco. Meanwhile, entertainment and technology stocks, the pillars of both economic growth in the past decade and of the Democratic Party's campaign funds, are quickly crumbling in Wall Street.

Sectoral shifts of this magnitude cannot easily be offset with tax incentives and interest rate reductions. Paul Krugman has calculated that the negative wealth effect from the recent collapse in share prices will more than offset any plausible increase in consumption from George Bush's proposed tax cut.

So, what is actually going on in the stock market? The story is much less complicated than pundits would make us believe. Wall Street is simply following the trail of campaign contributions and electoral outcomes.

It's a cliché that the 2000 election revealed a country divided, but one division still rarely discussed is the widening sectoral gap between the old economy firms that favored the Republican Party and the new economy firms that favored the Democrats. During the 2000 presidential campaign (according to data from the Center for Responsive Politics and the Center for Public Integrity) around 80 percent of campaign contributions by oil, gas, agribusiness, automotive and tobacco firms went to Republicans, as did two-thirds of defense industry money. In contrast, money from the Hollywood entertainment complex, cable TV, toy companies and their associated California hardware and software firms went 3-to-2 to Gore and the Democrats.

Unlike the rest of their corporate peers, who on average gave 60 percent of their money to the GOP, computer and Internet firms gave less than half of their money to the Republicans. Equally telling, the only financial sector that favored the Democratic Party -- by almost a 3-to-2 margin -- was venture capital. Voting patterns have mirrored this corporate old economy-new economy split. Gore won about three-fourths of the highest-ranking states on the Milken Institute's index of high technology and education, and in the stereotypical new-economy counties of San Mateo and Santa Clara, Calif., he outpolled Bush 2-to-1. By contrast, Bush's heartland was rural America, where guns outnumber cellphones.

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