I got one of those viral emails that are going around, this one on taxes. It’s full of lies and fudging, is written in funny type and large letters and on a sixth grade reading level. I get these things all the time, usually don’t read them. But I should – this is where the business of the country is going on – it’s an incubator for public opinion.

Here’s are just a few excerpts:

Capital Gains:

MCCAIN: 15% (no change)
OBAMA: 28%
CLINTON:24%

How does this affect you? If you sell your home and make a profit, you will pay 28% of your gain on taxes. If you are heading toward retirement and would like to down-size your home or move into a retirement community, 28% of the money you make from your home will go to taxes. This proposal will adversely affect the elderly who are counting on the income from their homes as part of their retirement income.

Most people don’t have capital gains, though mutual funds often make capital gains distributions that affect small investors. The wealthy set has always been big on this – the type of income that they receive should be set aside and treated different than the type of income that ordinary people receive. Heritage Foundation and Cato Institute, funded as they are by wealthy patrons, each has servants on staff that will vouch for this – income that wealthy people receive is far too important to all of us to tax at regular rates.

The question is, do we let the Bush tax cuts expire and go back to the way we did things before the massive deficits that the cuts engendered? That’s an odd thing about right wing ducks – they talk about taxes on one hand, ignore deficits on the other. That’s far too complex for a viral email.

The part about paying capital gains tax on the sale of your home is a lie. The first $250,000 of gain ($500,000 for a married couple) is exempt from tax. Surely the person who wrote the email, probably somewhere in the depths of RNC headquarters, knew this, but in emails the truth is both incidental and inconvenient.

DIVIDEND TAX

MCCAIN: 15% (no change)
OBAMA: 39.6%
CLINTON: 39.6%

How will this affect you? If you have any money invested in stock market, IRA, mutual funds, college funds, life insurance, retirement accounts, or anything that pays or reinvests dividends, you will now be paying nearly 40% of the money earned on taxes if Obama or Clinton become president. The experts predict that “Higher tax rates on dividends and capital gains would crash the stock market yet do absolutely nothing to cut the deficit.”

Where to begin. One, allowing the Bush tax cuts to expire will not up the tax on dividends to 39.6%. That’s a lie. They would be taxed at normal rates starting at 10-15%, which is where low income people reside. Pensioners mostly fall in those rate brackets. It is true that if the Bush tax cuts expire, the wealthiest among us would pay tax at a top rate 39.6% instead of 35% on the last dollar earned – this is people who have taxable income of around $350,000 – and this is the group that the people who wrote the email seeks to protect.

Also, the experts who predict a stock market crash if the tax on dividends is put back at normal rates are again Heritage and Cato, servants of wealth. And retirement accounts are not taxed on dividends or otherwise. That’s a lie. Life insurance “dividends” are not income and are not taxed, and retirement accounts are not taxed until money is withdrawn, and then as ordinary income. (Dividends and capital gains received by ordinary 401K and IRA investors receive no special treatment now, and would not under McCain.)

INHERITANCE TAX

MCCAIN: 0%
OBAMA: keep the inheritance tax
CLINTON: keep the inheritance tax

How does this affect you? Many families have lost businesses, farms and ranches, and homes that have been in their families for generations because they could not afford the inheritance tax. Those willing their assets to loved ones will not only lose them to these taxes.

One, it is the “estate” tax, and not the “inheritance” tax, which sounds like it affects ordinary people, and two, only the very wealthiest people in the country, like Dennis Rehberg, have to pay it. But isn’t it interesting how they frame this as an issue that affects everyday Joe? Sneaky, eh?

NEW TAXES BEING PROPOSED BY BOTH CLINTON AND OBAMA
* New government taxes proposed on homes that are more than 2400 square feet
* New gasoline taxes (as if gas weren’t high enough already)
* New taxes on natural resources consumption (heating gas, water, electricity)
* New taxes on retirement accounts
and last but not least….
* New taxes to pay for socialized medicine so we can receive the same level of medical care as other third-world countries!!!

Notice how the email suddenly became vague? No more specifics. That’s because every single word in the last part is either made up or wildly exaggerated. Someone at RNC had an important appointment or something and had to quit work early and just slopped together some random lies to complete the email.

But that’s how it works in viralville. There are no rules.

And it leaves me with a question – something I find perplexing about the right wing. You gave us Iraq, but no way to pay for it except to borrow from our grandchildren. Shouldn’t you guys who are so willing to spend tax dollars be willing to pay them?

She is former gymnast and Athens Olympic gold medal winner Alina Kabayeva, age 24. The Russian paper Moskovsky Korrespondent reported last week that former Russian President Vladimar Putin had walked out on his 50-year-old wife, Ludmilla, and was set to wed Kabayeva.

Apparently she looked into his eyes … she was able to get a sense of his soul. He has this power over people….

Putin denies the engagement, and the Moskovsky Korrespondent has been shut down.

58% of Democrats don’t consider Hillary Clinton “honest and trustworthy”. In politics, that’s a death knell. Politicians can use clever advertising to overcome many hurdles – to impart false emotions, false religious faith and false patriotism. However, to make someone untrustworthy into someone trustworthy is very hard to do. Somehow, back in 1968, they did it with Nixon, so it can be done, but Hillary Clinton has at best a steep upward path to the White House.

That’s been the rub with Hillary from the beginning – she has “high negatives” (as does her husband). That’s why Conrad Burns lost – people finally got wind of his backroom dealings, and once those seeds were sown, they could not be gathered in again.

Clinton needs to step aside, but she surely knows that if Barack Obama does not win in November, she can still have a career. If he wins, she’s done. She’ll be too old to run again in 2016. But 2012 would be feasible. So it doesn’t hurt her destroy him to get the nomination. One way or another, she comes out a winner.

That’s the basic math, according to Vichy Democrats, and it makes perfect sense. The Clinton campaign’s negative attacks on Obama are calculated, she knows the outcome, and she doesn’t care.

I was appalled by this Q&A between ABC news correspondent Martha Raddatz and Vice President Dick Cheney. It’s fairly typical of a political interview, in that Cheney appears to be answering the questions he wished she had asked, but is also marked for his callous indifference to the suffering of the families who have lost loved ones in Iraq. It is the president (a man who as a youth blew up frogs with firecrackers for recreation) who suffers the most.

Cheney is a sociopath, in my humble opinion, but more so Bush, who has caused the loss of not just four thousand Americans, but hundreds of thousands of Iraqis. There’s a hall of fame for men like him, but I dare not say it here. Godwin, you know.

MR: I want to start with the milestone today of 4,000 dead in Iraq. Americans. Just what effect do you think it has on our country?

DC: The president carries the biggest burden, obviously. He’s the one who has to make the decision to commit young Americans. But we are fortunate to have a group of men and women, the all-volunteer armed force, who voluntarily put on the uniform to go in harms’ way for the rest of us.

MR: Well, when you talk about the all-volunteer force, some of these soldiers, airmen, marines, have been on two, three, four, some of them more than that, deployments. Do you think when they volunteered they had any idea there’d be so many deployments, or stop-loss? Some of those who want to get out can’t get out because of the stop-loss.

DC: A lot of men and women sign up because sometimes they will seee developments. For example, 911 stimulated a lot of folks to volunteer for the military because they wanted to be involved in defending the country.

Not a word about the families, not an expression of sympathy. It’s not unlike his answer to the question about recent polls that show two-thirds of the country being opposed to the war:

“So?”

It comes down to this: Public opinion is interesting, and I’m sure many government and corporate officials refer to it now and then. But it has no bearing on policy.

Here’s an interesting item from a Rasmussen poll – 63% of Americans want the troops brought home from Iraq within a year, 26% immediately.

In other news, 55% of Americans believe in the “Rapture”, or that Jesus will one day come back to earth on a white horse with a sword, and will start killing us by the billions. Christians will get to watch the carnage from above, and will then come down and have the planet to themselves.

Americans are now officially tired of this war, but that’s not important. Americans always tire of long wars. Americans tired of the Vietnam War in 1968, at Tet, but that war went on into 1975. The important thing was the initial push, the mobilization that got us into the war, the huge propaganda campaign. For Vietnam, is was Tonkin, a staged incident. For Iraq, it was WMD’s, a lie. These things always work because they tap into our basic instinct – we like war, killing, and blowing things up. We just don’t like the aftermath too well.

With Iraq, perhaps that 55% also believed that it was part of the end of time, leading to Rapture. Imaginary white horses have played a role in in all our wars.

Let’s be frank. Americans like war. This perhaps explains the phenomenon of our distaste for protesters even as we support the ideas of the protesters. Americans may be tired of this war, but not war in principle.

We’re a confounded lot, but surprisingly easy to manage. Now that we are at odds with our leaders, politicians are somewhat of a bind. We’re not leaving Iraq – not now, not until the oil is gone. But it’s voting time, and public sentiments have to be taken into account. We’re currently given three choices – two candidates who voted for the war, one of whom said she made a mistake but didn’t really and won’t apologize anyway, one who supports the war and wants it to go one for one hundred years, and one whom we just don’t know about, since he never really voted on it.

The likelihood is the any one of the three will keep us in Iraq. We’ve built bases now capable of housing 100,000 troops, and we’ve got 180,000 mercenaries there, working off-camera and probably involved in acts of terrorism, torture, subversion and infiltration. If Iraq is a place where we want democracy to flower, it doesn’t add up. But if oil is the prize, then the Iraqi people are the enemy (just as the Vietnamese were), the occupation as permanent, and it all makes sense.

We’re staying. Get over it. The question is, what to do about public opinion? Frankly, and as any true leader will tell us, the public is not to be consulted in matters of serious policy. We are emotional and fickle and uninformed, lacking depth. There’s nothing to be mined in public opinion – it only need be managed. Opinion against the war is troublesome, but will not dictate policy. So if one looks closely at Obama’s or Clinton’s policies on Iraq, it will become readily apparent – they are hedged to the hilt. Each calls for phased withdrawal as circumstances permit, and trust me, once elected they will discover that circumstances do not permit.

I find myself supporting the Obama candidacy – I get caught up in emotion too, I like his wife, and he is saying all the right things. But he’s offering food to a strange dog – I’m hungry, but I don’t trust. I’ve lived through Bill Clinton, I’ve seen how candidates can turn on a dime, screw their own followers, and still command their loyalty. And I’ve seen how little real policies matter in politics. So I am ever so tentatively edging closer to him, ready to take the morsel.

Enter Lucy, the football is in place. I’m ready to give it a go. Metaphors sufficiently mixed, I’m enthusiastically supporting Obama. He’s our savior.

In politics, things are seldom as they appear. That’s a given, since the profession is largely run by the advertising business. Every public appearance, every stump speech, and especially every TV advertisement is meant to have an effect, never openly stated. The key to understanding politics is to ignore everything that is said, and concentrate on actions.

Bill Clinton gave us NAFTA, an agreement designed to allow American corporations access to cheap labor and resources in Canada, but mostly Mexico. Underdeveloped countries need to protect their markets and native industries. Trade may be their friend, but free trade is their enemy. NAFTA was meant to bring our labor costs down, to displace American workers with Mexicans, to open up markets in which to dump American surpluses, and prevent countries that supply us with cheap labor and resources from developing. All the while protecting our vital assets – the markets we want to protect, generally falling under the heading “intellectual property”. That’s our seed and manufacturing patents, the formula for Coca Cola, and weapon system designs. The things we do best.

It’s a neat formula – we get theirs while protecting ours. We used to call it “imperialism”, but we’ve advanced beyond that.

NAFTA was controversial, and it is typical of American politics that both parties favored the treaty while the public was mostly opposed. An outsider, H. Ross Perot, upset the apple cart by opposing it, and built a large public following in the process. Perot kept George H.W. Bush from having a second term, and harmonized with American workers. He was clearly dangerous.

The parties dealt with Perot and others like him in the only way the knew – they took over the presidential debates from the League of Women Voters, and from 1996 forward, prohibited third parties from participating. Never again would an outsider be allowed to challenge the two-party system to the degree that Perot did. Never again would a third party be given that kind of visibility. He almost undid them. He scared them.

Free trade agreements are the staple of both parties. Bill Clinton gave us a little syrup to help us swallow NAFTA by negotiating meaningless environmental and labor side agreements. But NAFTA was meant to be be a hard-wired policy and a wave of the future. Other free trade agreements would follow, each controversial, each supported by both parties, opposed by the public and native populations in targeted countries. The trick would be in the implementation in the face of public opposition. Candidates would have to publicly oppose the agreements while privately supporting them.

Now comes Colombia. Hillary Clinton says she opposes the Colombia free trade agreement. Not likely. But we’ve had a “gaffe” (def: accidentally saying something true) – her trusted senior strategist, Mark Penn, is also working for the Colombian government in promoting the agreement. It’s created a stir. But in every press report I have read about the gaffe, such as this one over at Huffington Post, they refer to the treaty that Hillary Clinton opposes. They take her at face. It’s their job not to be suspicious, and they are good at their job.

Forget what they say, watch what they do. The Colombian Free Trade Agreement was obviously low on Clinton’s horizon, not something she much thought about except to know not to touch it for fear of getting shocked. The fact that Penn is there, that he is actively working for the treaty speaks, and we should listen. Most likely if she were elected, it would sail through, and because it would be early in her term, she could easily withstand the damage. Democrats love being in power, and as with Bill Clinton, will suffer any amount of humiliation to have a “D” behind the person in power.

Hillary Clinton is pro-free-trade, pro-NAFTA, pro-CAFTA, and pro Colombian Free Trade Agreement. I know she doesn’t say this, I know we are to take her at face when she brazenly lies to us, but I see what I see. It is what it is.

We’ve had a gaffe, they’re in damage control mode now, but the Colombian free trade agreement is safe and on track.

We had an interesting discussion below, three of us, and it devolved, as it usually does, into a discussion of the nature of wealth creation. In the end I defaulted to Abraham Lincoln, who famously said

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration.”

I believe that labor is the source of all wealth, though I am told by fancypants conservatives that the concept is trite and long discredited, perhaps even Marxist. (Did Lincoln read Marx?) But it’s pretty much bedrock – everything we have is the result of someone’s labor. The fact that I own stock means that I tap into a pool of wealth creation. The mere fact that I purchased the stock means nothing.

But I don’t want to discount the contributions of forms of labor that achieve greater benefit for all of us – I regard creativity as the highest form of labor. The fact that Steve Jobs made a small computer in his garage, or that Henry Ford devised a way to make cars more efficiently opened up new horizons for workers, made necessities of luxuries, and opened up new commercial potential. These men gave us jobs and made life better for everyone. Creative geniuses are amply rewarded, and should be.

Administrative skill is also a form of labor that reaps higher benefits. Those who are able to recruit and discipline management personnel to create organizational efficiency are highly rewarded in our society. But they are not creating wealth – they are merely harnessing the creative engine. Nonetheless, we need them and should reward them. But all too often, administrative ‘creativity’ is nothing more than arbitrage – putting a Chinese worker at a lower wage in the place of an American, allowing investors to pocket the difference. That type of managerial activity deserves no reward, in fact, ought to be penalized.

Ordinary workers who create wealth by working eight hour shifts are low on the scale, and the lowest skilled jobs are poorly rewarded – in fact, would be a form of slavery were it not for minimum wage laws. (Slaves, after all, did receive food and housing in return for their labor.) But these jobs, even as they depend on the creative skills of those who design the machines they operate and the managerial skills of people above them, are still wealth creation engines. In fact, in theory anyway, every working person is paid less than the sum of the wealth created by his labors, otherwise our economy would collapse. What business can survive by paying more for labor than labor pays in return?

Where does this leave investors? Do we need them? Surely we do need them, to allocate wealth among various endeavors – as one sector of our economy falters, investors will move their resources to another, or as a new invention comes along that harnesses human energy in new wealth creation, investors rush to benefit thereby and put seed capital in the new industry. In short, we need investors as a resource allocation tool. But conservative economists have reversed the natural order of affairs, and will tell us that by the mere act of investing in an activity, that investors are creating wealth. Nonsense – they are organizing it, harnessing it, and if lucky, harvesting it. If unlucky, they lose everything.

For that reason, prior to 1981 or so, investment income – dividends, interest, and (off-again on-again) capital gains were taxed at higher rates than income from labor. It was called “passive” income, meaning that the wealth (fruits of someone else’s labor) would flow to the owner of capital regardless of whether he was actively involved or not. No matter that Andrew Carnegie was on a cruise in the Caribbean, his wealth flowed in without a hitch. Congress therefore saw no harm in taxing this type of income at higher rates than that from the sweat of the brow.

Perhaps the greatest achievement of the conservative revolution in this country has been to change our basic attitude about the nature of wealth creation. Where once labor was taxed at lower rates than passive income, we have reversed course now. Dividends and capital gains, the primary source of income for our wealthy classes, are now taxed at a top rate of 15%, while labor is taxed as high as 43%. (Why other forms of passive income like interest, rents and royalties were not given preferential treatment as well is a mystery to me. It’s probably in our future.) And the means by which this reversal in tax policy was achieved was by implanting a meme in our thought processes. Conservatives have sold the idea that the mere act of investment is a wealth creation activity, while payments of wages is a drain on our health. It’s bizzaro world.

The postwar period in America, from 1945 to the early 1980’s, was perhaps the most egalitarian in our history, as more people participated in the rewards of our wealth creation engine than ever before. I grew up in a small post-war stucco tract house – hard to imagine, but I was privileged by earlier American standards. We had strong unions, and higher wages rippled out from those unions, and even lowly factory workers made good salaries. But since Ronald Reagan, there has been a change of course – inequality is on the rise, and has been since he took office. Unions are at a low ebb, and forming a union in the United States is is probalby as hard as forming a business in the old Soviet Union.

It’s a game – it’s about harvesting wealth as it is created. Unions capture wealth created by labor for workers before it moves up. Conservatives, though they don’t openly say so, believe in trickle down theory – the idea that wealth is created at the top and flows in the other direction. They believe we are feeding the sparrows though the cow. But reality is more like a system of percolation – wealth is created by labor at many levels, highly intelligent labor, and the grunt variety, and works its way up. It is finally harvested by investors, who take credit for making it in the first place.

I’m not a Marxist – I don’t see a world without investors. We need them, but should not overvalue their function. Right now, as a result of our system of campaign finance, they have control of politicians, and our wealth allocation system is being skewed in their favor. As a result, we have created a society with a leisure class building ever-larger mansions and driving Hummers, while more and more of us are barely hanging on at the bottom. All the while, the safety net for those at the bottom is under attack. We are not even allowed to make a health care system that benefits all of us.

It helps to understand the basic makeup of our economic system and the reason for our well being. Then we can put investors in their place, and tax them accordingly. We need them, but they need us far, far more.

We live in a time of “conspicuous consumption”, a phrase Thorstein Veblen coined at the turn of the twentieth century. It’s largely made possible by the Bush tax cuts – much capital has been freed up and has no useful purpose, and so is put out to pasture. It’s an odd phenomenon, not unique to that time period, to wit:

I usually imagine people that drive Hummers as either repressed homosexuals or straight dudes with inadequate equipment. Compensation is definitely the underlying theme. But here’s where it helps to have lived as long as I have. I remember that nothing really changes, people are always the same. To wit:

Bottom line: For all their talk of investment and fantasies about “job creation”, having a lot of money is really about leisure time and expensive toys. Typically, the clerk at Burger King and the Mexican gardener are working harder and are more important to our economic well-being than any WalMart heir or trust baby. If millionaires were to go on strike, John Galt be damned, very few of us would notice outside the country club. But if the sanitation workers go out, or the police, or the retail clerks, we would quickly disintegrate into chaos.

That’s why we should not be too uppity when we see this:

It’s probably driven by a guy who makes our days run a whole lot smoother, someone whom we depend on and rarely acknowledge, except to sneer at and say “Get a job”.