Every parent know that there are actually three certainties in this world: death, taxes, and my teenager will do something stupid. It does not matter how often or loudly teens are warned about the dangers of drugs, alcohol and unprotected sex. They will inevitably and reliably make some kind of dumb mistake ... like their parents before them, and their parents before them. Explaining the 60's is an awkward thing at the dinner table for a lot of Baby Boomers.
 
This is worth remembering as we face a barrage of electioneering on the benefits of tax cuts. Around 1980 a lot of Baby Boomers were going through a second kind of post adolescence: call it their economic teens. They were old enough to make some money, but still short on adult judgment. Which is precisely when Reagan offered up some instant gratification in the form of major tax cuts and the now famous trickle down theory - it turned out to be one of the great economic bong hits of all time.

The problem with trickle down theory: it is a great deal for people at the top of the economic food chain, and a lousy deal for everyone else. Cutting taxes gives the rich an increase in marginal income that produces a variety of huge long term and long lasting advantages. Their increased economic might helps them make their insular little worlds even more insular. What really trickles down to everybody else is a lot less opportunity over the long term.

Consider the impact of that poor economic decision making in 1980's on today's teenagers and their education. Little Muffy from the land of McMansions goes to a really good private high school (figure on $30k per year). She's college bound, so she gets tutored on the SAT and works with a pricey private college admissions consultant (figure another $10k per year). Muffy's folks can do this because the Reagan tax cuts allowed them to put $25k away every year since their darling daughter was born.

Those same 1980's tax cuts gave Joe, the neighborhood plumber, an extra $5k per year ... which he used on home improvements. Joe Jr., his son goes to the local public school, the one that Muffy fled, and hopes to be the first member of the family that goes to college. But Joe is jumping into an application game he doesn't understand, without any good coaching, and where he is badly out-muscled. He doesn't know it but his team is already behind by 50 on the scoreboard, late in the first quarter.

Joe, Jr. will go to college wherever his raw talent and drive will take him. With a bit of luck and lots of hard work he might land in a corporate training program with a starting salary of $50k. Of course, he will also have a mountain of student loans to pay-off.

Muffy is going to Harvard ... and getting an MBA from Wharton that will lead to a consulting job with a starting salary of $125k. And she starts that career debt free.

Some might call this a "structural disadvantage" and it highlights a bitter irony in this election season: It is John McCain - the rich conservative trying to sell us an across-the-baord tax cut - who has labeled education as "the civil rights issue of the 21st century."

Hmmmm, parents.  Maybe this time, when the bong gets passed, we should "just say no."

I'm not just sick of Joe the Plumber, I'm starting to feel kind of sick about him.  Joe is a tool ... of a great big machine that he doesn't understand and will never be a part of.  So he's actually kind of a sad figure on a personal level.

John McCain ought to be slapped for the way he's flogged this poor schmuck.  He knows full well that Joe is way too stupid to run the business that he's breaking the candidate's balls about.  Given his thousands of years in the Senate, what he may not know is: if Joe really understood anything about being an actual entreprenuer he would have been too embarrassed to ask the silly questions that someone probably put into his mouth.

Reality #1: We're talking about an exceptionally successful business here, not just an average or pretty good one.  Take home ain't gross.  If Joe's plumbing business generates $250k in taxable profit, he is probably generating a minimum of $2.5 million in revenue.  It is only on Wall Street and in the Fed's databank that this is a classified as struggling little Mom&Pop.  It is an extraordinarily successful operation, a one-in-thousand kind of success by any other measure.

Reality #2: Who died and left Joe enough money to buy this business?  Buying a business is no different than buying a house.  You gotta have a down payment.  If the business is going to generate enough revenue for Joe to take out $250K per year, a conservative guess is that he is going to need at least $200k to $400k in ready cash.  Otherwise, it would appear that Joe thinks he can do this as a sub-prime buy.

Reality #3: Joe is going to get himself a much, much smarter tax advisor.  And anybody worth the couple of thousand that Joe will pay them is going to find a whole lot of ways to reduce taxes.

 

Reality #4: if Joe owns the business his taxable income will drop by at least $25k, immediately, regardless of how much the business nets.  Owners get all kinds of deductions that employees can only dream about: such as the cost of a car, its insurance, cell phones, computers and internet access, etc.

Reality #5: Unless Joe is the single most ethical plumber in the history of mankind (doubtful based on his tax liens), he's likely to take in at least a couple of bucks in undeclared revenue; does the phrase "if you make that check out to cash, I'll forget the sales tax" sound familiar?  So Obama's big time socialist tax increase will, in reality, not be an issue until Joe's real income hits something around the $350k level ... which means his topline revenue is probably around $4 million.

Reality #6: If Joe is bring home $350k he's got at least 20 people on his payroll.  In a small business those folks are not machines; they're family.  Any real entreprenuer knows that you look out for their interests at least as much as your own ... because without them you ain't making even 10% of that money.  So if Obama is helping them a lot and only hurting you a little, you actually end up on the winning end of the deal.

Reality #7: A real enterprenuer always puts business above politics.  Customers are your livelihood.  Money rules and politicians drool.  If Joe knew any thing about running a small business he would never, ever risk offending or alienating even a single customer by wearing his politics on his sleeve.

The whole Joe the Plumber schtick has smacked of national campaign stupidity and counterfiet authenticity from the get go.  But when an entrepreneur stops and really think sabout the issues it is clear that Joe is a lousy straw dog.  He is a bit of very ineffective, and really kind of insulting bit of political theatre that doesn't stand up to even cursory inspection.

It is sad.  But it speaks volumes about the people who keep throwing this poor dummy's name out into the poltical hurricane ... without any hint of concern for their economically-underage poster child.

"Safe junk bond" is a financial oxymoron.  Safe usually describes high quality, conservative investments.  Junk bonds are the polar opposite; they are speculative investments that offer high yields to offset lousy credit ratings.

Unwittingly - or maybe half-wittedly - the McCain campaign has morphed into a Conservative junk bond.  They are promising huge "yield": winning two wars, creating jobs, fixing education, expanding health care choice, reforming Washington and achieving energy independence ... and cutting taxes at the same time.  Unfortunately, in the last few weeks their credit rating has gone down the toilet.

Credit ratings matter a lot, as we painfully learned in the last month.  A massive break down in the bond market credit rating system is largely responsible for that whopping bail-out package; sub-prime mortgages merely exposed the flaw.  So it is worth taking some time to figure out what goes into a credit rating that is relevant to this election.

One of the first problems assigning a credit rating to the McCain bond is figuring out just exactly who is the "issuer."  There are so many voices, often with conflicting messages, that it is not entirely clear if the campaign is speaking on behalf of the John McCain, de facto head of the Republican Party and anointed successor to George Bush; or John McCain, the maverick who claims to abhor much of what Lee Atwater and Karl Rove turned the Republican Party into. 

Then there is the problem of figuring out exactly what proven business model, large margins and/or cash in the bank is going to secure the interest payments and principal.   McCain's repeated use of "maverick" plus his fighter pilot penchant for daring, unexpected maneuvers - think surprise VP choice, subtle shift from for bi-partisan social moderate to wedge issue conservative zealot, abrupt campaign suspension (sort of), multiple economic policy switches, etc. - do not suggest the kind of solid predictability required for the top investment grade. 

The rating services also tend to be pretty fussy about (to paraphrase Moody's) the mix of protective elements that ensures the security of the investment across a wide variety of changing circumstances.  It does not help the McCain credit rating that he is an old man with medical issues.  And it helps even less that this bond's primary insurance policy - that's the VP candidate - offers nothing reassuring.  And perhaps most troubling, a good portion of the Conservative intelligentsia - a not very objective third party team of credit analysts - has basically deemed this insurance policy worthless. 

So imagine this: we have a corporate bond that is promising a 20% annual return.  But, it might be from GM, or it might be from a newly spun-off company called Hummer.  So it might come with billions of dollars in pension and health care liabilities; or it might be supported entirely by the cash flow of a gas guzzling truck losing about 10% of it sales every week; or it might depend on a completely new line of motorcycles.  No matter, because the business model and cash flow that supports this bond depends entirely on one particular CEO who has no insurance coverage. 

A bond with that kind of pedigree is not going to get an AAA rating from S&P or Moody's.  The McCain bond may be Conservative, but by any objective measure it is pure "junk."

The crap going on at the McCain campaign rallies is going to be all over Al Jezera and every terrorist web-site in the next couple of days.  While the Republicans are busy calling the mainstream media biased, they forget that there is a very large and very influential network of decidely non-mainstream media that is hanging on their every word.

The radical clerics are going to whip up there own brand of hate rally:  Want definitive proof that Americans hate all Muslims and Arabs?  Want proof that they think we are scum who must be annihilated?  Watch this clip from the leading candidate for President (yes, they'll lie too), my brothers in terror.  The American public is waging jihad against us.

Hate begets hate in ways that you never imagine; or in the case of the irresponsible foreign policy idiots in the McCain campaign, in ways they really ought to have considered ahead of time.  And unfortunately, the internet gives some of our worst enemies access to some of the darkest corners of the American closet.

 

Is an ethics violation like some kind of initiation test you have to pass before you can be a real Republican?  Is that why McCain choose Palin ... he knew she was a shoe-in to become one of the tribe?

The Republican honor roll of politicians with who have been identified as ethically-challenged is really an impressive thing.  The streak that Nixon started reached its zenith in the Bush White House; Rove and Cheney will long be remembered as the gold standard in this arena.  But early indications are that the McCain/Palin ticket would hit the ground running -- if we were so blessedly stupid as to give them the opportunity.   

Michelle Obama on Larry King last night (from the CNN recap of the interview): King asked Michelle Obama about the McCain camp bringing up her husband's ties to William Ayers, and if she knew him. Obama said did know Ayers and that her husband served on a Chicago education board with him. "I don't know anyone in Chicago who is heavily involved in education policy who doesn't know Bill Ayers," she said. "But, you know, again I go back to the point that, you know, the American people aren't asking these questions." What a beautiful, two-sentence shot upside the head to McCain & Co. If the Ayers association makes Barak a terrorist you're also slinging mud at the whole of Chicago's educational community. And by the way, don't we have more important things to talk about? She didn't belabor it; she didn't need to. My wife and I were really impressed with this performance. Michelle was poised, articulate, smart and gracious at every turn. Barak should be really happy that McCain did not find this kind of a woman for a running mate.

Has Team McCain suddenly given us strong reason to believe that their candidate would be a lousy Commander In Chief?  Did they just clearly tell the whole country that McCain’s leadership style would be a replay of the Bush/Cheney movie?

Surfing a couple conservative blogs this morning has started me thinking that many of us have misread Palin's impact on her party.  Her populism isn't energizing the base at all.  What's really going on it that her Couric interviews unleashed a deadly virus that is killing Republican brain cells by the gazillions. All that hyperkenetic adulation is just the most visible physical symptom (and may be a precursor of full-fledged foaming at the mouth) of this highly contagious epidemic.

Consider this gem I found on Red State from (no need to embarass the guy, afterall no one wants this to get personal):(

The genreal mood in America is that they want "change." I put that in quotations because Obama won't change anything a liberal democrat president would do. There would be higher taxes, cuts in defense, and increased entitlement spending. The main point is that people don't really care about all of that since the economy is in shambles, and everything is perceived to by Bush's fault.

Hmmm, gosh and golly, where to begin:
- I don't think we have a liberal democrat president right now ... so wouldn't Obama be "change"?
- Could the author possibly be suggesting that McCain will change all the things a conservative republican president would usually do?  The base ain't gonna like that.
- Or does it mean he would be a non-change republican and run around touting tax cuts, more defense spending and lower entitlement spending -- oh wait, I think I've read that somewhere.
- Updating 70's rhetoric like "entitlement spending" would be a welcome change ... unfortunately, the thinly vieled racial undertone isn't much of a change at all
- "Increasing", "cutting", and increased" are all words that sound like "change" to me, but maybe I'm just being one of those English-as-official-language kind of popular elitists.
- So what he's really saying is that: Americans say they want "change" but are so concerned about the economy that they won't care if Obama actually "changes" something?  I'm so confused now.
- That "economy is in shambles" thing, well yeah that strikes me as a bit of a "change" from where we were ... even 8 years ago.

But maybe this is exactly the kind of "change" McCain was talking about when he added Palin to the ticket.  Because just as soon as she came on board he and all of his surrogates began sounding so incredibly confused. 

This month you should take me really, really seriously as a candidate for VP of the US because:
- As a hockey mom on the side lines of a soccer game told me, and as an executive small town international experienced mayor, I can tell you that the surge will work in Afghanistan and help create more jobs that Barack Obama wants to give to terrorists by reducing taxes and cutting those gosh darned earmarks which only  true mavericks that John McCain and I can fix in health care
- I get all my campaign strategy briefings on critical issues like the Michigan pull-out only from USA Today, which also allows me to use email that Barak Obama will use to raise taxes
- I faithfully promise to deliver the kind of racially tinged political smears that folks like me – who actually know how to drink those six packs that glass ceiling Liberals only talk about – can understand on issues that I remember from my many profound political discussions with that great American, should I be so blessed and honored to meet, John McCain … in nursery school
- I can read and repeat everything my boss, Tucker Bounds, writes for me without ever leaving the slightest trace of lipstick on my teeth or loosing my fake accent
- And most importantly, I wink flirtatiously waaaay better than any of the old guys in this campaign

Brain freeze is acceptable in 9th grade.  Lordy, lordy please save this child who was in fact Left Behind.  And someone please explain as they escort her from the stage: Prom Queen is not an AP course that will get you college credit.

Last month everyone was really mean to me just because:

-         I just kinda forgot what papers I read everyday to help me do my job as the governor of the most important oil-producing clean green natural gas state on earth … that I live in

-         Golly how’s a gal supposed to remember that that all my Joe Six-Pack constituents, who are just like Americans everywhere and we love ‘em to death because they believe that government is the real problem not the solution, let the most Liberal SCOTUS ever cheat them out of a couple hundred billion dollars in punitive damages

-         I was annoyed that people expected me to specifically actually answer questions, especially from journalists who the vast majority of Americans don’t listen to

-         Some American-hating liberal elites, they think don’t believe it is patriotic for understanding the wisdom our beloved constitutional founding fathers and respecting subpoenas from terroristic judges

Sometime actions don't just speak louder than words, they scream truth!  The VP spokesmodel is upset that Team McCain is pulling out of Michigan. 

Why?  Well, first there's the problem that she only found out about it from the newspaper.  Second, that means no one in campaign management was vaguely interested in her input on the decision.  Third, despite her plea to go out and fight, it looks like the campaign simply doesn't trust her out there in the field of a fierce battle ground state all by her lonesome.  And fourth, whatever else you think of McCain's campaign people, they are not babbling idiots; they didn't do this without a lot of careful thinking and they certainly aren't doing it happily ... so it's real hard understand why or what Palin thinks she knows that they don't.

This could make a girl all paranoid.  Like maybe they don't think she can handle any intellectual heavy lifting.  Wink, wink, wink.

Ok, Palin did better than I expected.  But my expectations were so low it would have been hard not to beat them.

After listening, however, I have new and scarier concerns.  It is pretty clear that Palin has been spoon-fed (maybe force-fed is more apt) a load of talking points and pre-fabricated answers-to-questions-that-weren't-asked.  I came away with absolutely no sense of what she really believes or how capable she is of forming any independent points-of-view.

Which raises two important questions: who's views and policies are we really hearing?  And, if she actually got into a position of power, who would really be occupying the office of the VP?  Right now she looks like a complete sockpuppet to me.  But I can't clearly see the person standing behind the curtain ... and that's what worries me.

The one thing I am absolutely sure of: whoever it is behind that curtain is not a small-town, folksy, down-to-earth, Joe Six-Pack, feel good kinda person.  This puppet master might be from that great big city called NeoConville, or an elite graduate of the Cheney School of Business Accomodation.  You could speculate that it is McCain; but his messaging has become so scattered it's not always clear if he's not channeling someone else as well.

My concern has shifted from whether Palin is capable of assuming the responsibilities of the Presidency if she had to.  Now I am starting to be more concerned about who actually would be in charge if she did. 

Does anyone else see the eerie similarities between the end of the USSR and what may well be the end of the USSC (as in, US Stubborn Conservatives)?  Obama called the current crisis the result of a “failed ideology.”  But if you are a true believer, a card-carrying Party member, this is a whole lot worse.  In fact, in some deeply, er, faithful conservative corners this is the End of Days stuff. 

So cast your mind back to the glory days of that most revered of former USSC Supreme leaders –  Reagan – and remember:

- The army had been hunkered down in Afghanistan for years
- Military spending, poor central planning and rampant corruption had the economy teetering on the brink of disaster and the average comrade scared to death
- There was a moderate old party hack floundering around trying to rescue Orthodoxy from the supreme incompetence of the current Supreme leader
- The hard liners became ever more recalcitrant, and fell back on platitudes of dead leaders from a bygone era (Old Joe wouldn’t let this happen!)
- There was an ideological war at the Parliament building … where the turn-over rate, incidentally, was actually greater than the US Congress
- There was wild speculation that the country’s fundamental political structure was being legislated into oblivion
- And worst of all, in the face of just too much real-world evidence the central tenets of the Party philosophy were being judged an abysmal failure

Hyperbole?  Consider this: once we get past all the fireworks associated with this “bail-out” bill, Congress is likely to turn its attention on the task of stabilizing our financial markets for the long term.  Hmmm, it all ends with the rebuilding regulatory walls to free us from the tyranny of market abuse?  That just might turn the toppling of the Berlin Wall into one of the most post-ironic metaphors of all time … or at least this month.
 
I dunno know.  Maybe I'm the only one shouting at the Republican TV-talking heads: it’s your world view, stupid!  But I kinda doubt it.

Does anyone else see the eerie similarities between the end of the