Author: A.T.

No one thinks more clearly about money, or with more common sense, than Jane Bryant Quinn. So what do you think of this? (Thanks to John Bakke for bringing it to my attention.)

Tomorrow: Saving for College; Hank Gillette for President

David Hierl, libertarian: “So you’re worried that if the estate tax is repealed it will be difficult to reinstate it during the next recession. Previously you have argued that we shouldn’t cut taxes now because the economy is doing too well. Just when would you cut taxes? Never, I suspect. The extortion will continue regardless of which one of these bozos wins.”

☞ A recession could be an excellent time to cut taxes, to stimulate the economy. But not the estate tax — cutting that would be a pretty lame way to put immediate cash in the average consumer’s pocket. I do think the estate tax should be simplified, with the cut-off lifted to $3 million or $5 million, and then adjusted for inflation, so truly just a handful of very fortunate folks would ever have to worry about it.

But, taking you larger point, I think you should also allow for the possibility that people can prosper and thrive even if taxes AREN’T cut. Their after-tax incomes can go up, their assets can grow, their air can grow cleaner, their kids attend better schools — the ultimate test of prosperity isn’t necessarily lower tax rates. (Is it?) There was no income tax at all in 1912. Were most Americans better off then? For that matter, were they better off during the Bush years, when the top bracket was significantly lower?

If we leave the current top rate where it is and limit our tax cuts to lower- and middle-income folks, as the Vice President proposes, we’ll have surpluses in good years that we can use in part to pay down the multi-trillion-dollar debt we piled on the last time tax rates for the rich were slashed.

If we ever did pay down much or all of the National Debt, and did get our schools into great shape, and did secure the future of Medicare, and did revitalize our military, and so on — and STILL we had surpluses — well, then, that could be a great time to slash taxes for the top 1% or 2% or 5% of taxpayers. But we’re not there yet.

So for now, let’s turn at least a largely blind eye to the plight of those who are best off. At least the top bracket, at 39.6%, is shade lower than the 90% rate under Eisenhower and the 70% rate under Kennedy, Johnson, Nixon, Ford and Carter. Let’s have, instead, a tax cut mainly for the low- and middle-income folks, with special incentives to help them with things like day-care, senior care, college tuition, and an incentive to save to supplement Social Security when they retire.

Emmett Redd: “You said, ‘Time estimated that the average middle class American family would get the equivalent of about two cans of Diet Coke a day from Bush’s tax cut.’ Cans of Diet Coke are probably higher where you are, but at $0.50 per can here, that amounts to $365 per year. That is about a 15% reduction in my tax bill, if I am average. (From what TurboTax tells me, I am below.) And 15% is not insignificant. ”

☞ No, it’s not. You might well get this much or more under the Gore plan, depending on your circumstances. Both plans help people in the middle, albeit with different approaches. The stark difference is that the Gore plan, frankly, does nothing for the folks at the top (other than helping to assure their continued prosperity), while the Bush plan, in Time‘s words, “heaps most of its benefits onto wealthy Americans.”

Wealthy Americans — unless they’re gay or have gay kids, or care deeply about a woman’s right to choose or tobacco or guns, or worry about the environment or the gap between rich and poor or the capacity of the President to handle major international crises and make sound decisions in complex matters when his advisors disagree — should vote for Governor Bush.

Bob Fyfe: “I saw a Bush campaign ad last night on TV which showed that a person currently earning less than $35,000 would pay zero income tax under Bush’s economic plan. This is probably true — most people currently earning less than $35,000 will be out of work due to the recession caused by Bush’s plan being put in effect.”

☞ Well, that’s a bit strong. But at the end of the day, a majority of Americans are not going to vote to go back to the Reagan/Bush economics of much lower taxes for the wealthy — that resulted in a tripling of the national debt. An extra $4 trillion in debt that you and I and our children have to pay interest on.

Voodoo economics, some called it. Trickle-down economics others called it. It didn’t work terribly well. The current balance has worked much better. It features a top tax bracket (39.6%) that is much lower than the 90% and 70% brackets that prevailed under Presidents Eisenhower, Kennedy, Johnson, Nixon, Ford, and Carter, but somewhat higher than the top bracket under Reagan/Bush. And it’s served us pretty well.

No one is proposing that we raise the top bracket. I, for one, think it’s plenty high enough. But I wouldn’t lower it much, either. I think we’ve found a pretty good balance.

Governor Bush sees it differently. He understands the plight of high-income people. He feels their pain. He knows what a rough eight years it has been for America’s elite. (“You folks are the haves and the have-mores,” he told the well-heeled assemblage last week at a charity dinner in New York. “Some call you the elite. [Long pause.] I call you my base.” It was funny and charming and well-delivered. And not far from the truth.)

As Time wrote September 4 in sizing up the two plans, “Bush’s tax cut is almost three times as costly as Gore’s and heaps most of its benefits onto wealthy Americans.”

That may be fair in theory. The rich pay more in taxes, so why shouldn’t they get more back? The estate tax is, at least partly, “double taxation.” We know the arguments. So it may be that the minimum-wage busboy is really exploiting the overtaxed restaurant patron he serves (and should perhaps not be guaranteed a minimum wage at all).

But common sense suggests that the gap between the private-jet-set and the Texas farm worker, with his $3.35 an hour minimum wage, may be just about as wide as we want it. (And common sense suggests that the projected surplus is hardly assured . . . and that once we eliminate the estate tax on the rich, it will be hard to reinstate. So in a recession, we’ll probably just cut back on things that aid the middle class and the poor, or go deeper into debt.)

The truth is, compassionate conservatism seems to generate more and more compassion as the income and wealth of the object of that compassion rises. In the case of Bush’s famous “waitress Mom,” earning $22,000 a year, his tax cut provides nothing, because she pays no taxes to cut. No compassion there. (Vice President Gore would expand her earned-income tax credit several hundred dollars, and help her with day care and health insurance.)

Time estimated that the average middle class American family would get the equivalent of about two cans of Diet Coke a day from Bush’s tax cut.

But look at all the compassion for the truly wealthy. Someone like Dick Cheney, who earned $20 million over the past decade as an oil industry CEO — roughly $2 million a year — would see his taxes cut not by a couple of diet Cokes each day but by a brand new color TV.

Plus, at his death, his heirs would get a further multi-million-dollar tax break, as Governor Bush would totally eliminate the so-called death tax.

Two diet Cokes a day for low-income families desperate to make ends meet; a Sony a day for Dick Cheney, plus total elimination of the estate tax. (That latter little change might save the Forbes family $250 million or more. Which would be fine — I like the Forbes family — except there are just more crucial things that need doing with that $250 million, like paying down the debt and improving the schools and helping seniors afford life-saving drugs and shoring up the military.)

Cheney, being a model of compassionate conservatism, and blessed with the aforementioned $20 million in income (and no state income tax where he lives), gave away fully 1% of his income — one percent! — to the various charitable, educational, environmental and social-justice causes that so deeply animate him.

It is this kind of private generosity to which the disadvantaged can look once Republicans get government out of the ill-advised business of lending a hand.

I’m sorry for the sarcasm, but I think it’s appalling — especially for a guy who by all accounts is smart and decent and well-meaning, as I truly believe he is. Yes, it’s his $20 million, not mine. I know that. Yes, he is fully entitled not to give a dime of it to things he cares about — and, for that matter, fully entitled not to care about things. I know that, too.

But what kind of example does this set, and what does it say about compassionate conservatism?

Anyway, I think we’re going to win.

Here is Molly Ivins’ take on all this, as usual, much better than mine.

I am becoming an ever more reliable indicator. When I become really gloomy and point out the possibility — the possibility — that we may not yet have seen the bottom . . . well, pretty reliably, that means we have seen the bottom. At least temporarily.

My October 13 column was one of those. The NASDAQ had closed the night before at 3074, and on October 13, the day of my column, it jumped to 3316.

The NASDAQ did fall to an intra-day low of 3026 five days later, on the 18th, but it closed out the week at 3483.

That doesn’t mean the market will keep rising, of course, though I have some smart friends who think it will; only that I don’t know where it’s headed.

The day before, I had made fun of some of yesteryear’s high-fliers — companies you may remember with names like Priceline.com, down from 105 to 5. I was crowing about being, finally, right. (Even I get ’em right once in a while.) But then I went out on a limb and let you know that I was short a few shares of Juniper — an astonishingly exciting company (and I mean that without sarcasm), but a company that, at 206, had a market cap over $60 billion. That seemed awfully rich for a still fledgling company.

By the close Friday, it had risen to 232 and added another $8 billion in value — $1 billion a day. (After 22 years, Apple Computer has a market cap of $8 billion. JNPR added this much to its market cap in a week.)

On one of the financial-chat message boards, the analysis was that JNPR would easily run to 300 on anticipation of the next split, then to 400 on panicked short covering (mine!), and then to 500 upon inclusion in the S&P 500, when all the index funds would have to buy it from the still more terrified shorts. That would mean nearly an extra $100 billion in market value for the company based on . . . well, nothing.

“Nothing,” because a split adds no fundamental value to a company. Short-covering adds no fundamental value. Inclusion in the S&P adds no fundamental value. But, this message-poster argued, these three factors could drive Juniper’s market cap up another $100 billion, which is more than the value of all the gold in Fort Knox. (Interested in gold? Read Peter Bernstein’s wonderful new book.) And he may be right!

To show me how old-fashioned I have become, my good friend Joe Cherner (who also thinks some of today’s valuations are bonkers) posed this challenge: “See if you can rank the market cap of these four companies in the correct order.”

The four companies he selected:

SUNW — Sun Microsystems
IBM — it makes computers and stuff
EMC — memory storage
VOD — Vodaphone — mobile phones

Go ahead. Give it a try.

Can you do it?

Seriously — give it a shot!

Don’t cheat! (I didn’t cheat, but I didn’t get it right, either.)

I have to keep writing these short paragraphs so that the answer is down below the bottom of your screen and out of sight.

Have you tried it?

Are you pretty sure you’re at least close to being right?

Have you written down your ranking?

Is it your final ranking?

Well, as of Friday night, these four companies stacked up this way:

Interesting, no? Poor little IBM.

Poor little Xerox, meanwhile, once one of the most valuable companies in the world because of its exciting near-monopoly technology, was valued at not quite $6 billion Friday, selling at a price/earnings ratio around 11. And Polaroid? Back in 1972 it was one of the Nifty Fifty with a fabulous price-earnings ratio. Today, the market values Krispy Kreme — the donut people — at twice as much.

So what’s a company worth?

In theory, a company is worth the sum of all the future dividends it will ever pay, plus some eventual final pay-out if it is ever acquired or liquidated — all discounted back to today’s dollars. (You “discount” the value of those future payments because a $2 dividend check 20 years from now is not something you’d pay $2 for today. If you demand an 8% return on your money — if that’s the number you set as your discount rate — then you should be willing to pay 43 cents today for a 20-year-distant $2 dividend check. Or so sayeth the Present Value key on my pocket calculator.)

But companies don’t pay a lot of dividends any more — certainly not the four ranked above (IBM will toss you half a dollar every year and Vodaphone, a quarter, but that’s it for now) and it’s hard to imagine companies of this size being acquired, let alone for cash.

So you value companies of this type as best you can based on your guess as to future earnings and the price those earnings will command . . . or based on your guess as to when the stock will split, when the shorts will panic, and when the company will be added to the S&P 500 Index.

When you think about it, it’s a marvel of abstraction. Money itself is based on nothing more than trust. No longer backed by gold, dollars are just paper. And not even paper, for the most part — electronic blips that make the balance in your account go up or down.

You then take this money to buy shares in enterprises that you’d just as soon paid you no dividends, hoping, instead, that the share prices of the enterprises will increase as the enterprises grow.

Amazon may finally begin to make money, now that prices have risen sharply — I’m almost as happy ordering from Amazon at 20% off as I was at 50% off. But then again, it may still not make a profit, let alone pay a dividend. Things may work out well, but it’s conceivable that this company, which went from zero to a $40 billion market cap, might never make a profit. Or might never pay an appreciable dividend if it does make a profit. Can huge fortunes be rationally made owning shares in companies that never make a profit? Ultimately, no. But along the way? Big-time.

Might the EMCs of the world prosper magnificently for a while but eventually just sort of peter out, as Xerox and Polaroid seem possibly to be doing? Might they never pay out a dime before being rendered obsolete 20 or 30 years from now? (Xerox and Polaroid have paid dividends for a long time, but probably not enough to have justified their 1972 stock prices. Today’s high-tech companies might pay even less in the way of dividends, because, at least for now, the market doesn’t much care about them.)

It is on this cashless and in some cases profitless foundation that huge fortunes are built. May it remain ever thus.

Still, I’d pay off my car loan and credit card balances before I plunged into the New Economy to build a fortune of my own.

UNCLAIMED PROPERTY

Kelly Karasek: “Well, when I saw that unclaimed property link you ran, I had to check it…Wahoo! $220 in old phone deposits, etc. But the neatest thing was checking for friends. I found OVER TEN THOUSAND DOLLARS. (Alas, $8000 of it goes to a recent Schwillionaire — Schwab Millionaire).

☞ Good heavens. I had no idea anyone would actually get anything from this. This is turning out to be such a nice little windfall for at least a few of you, I have decided to double my subscription price. Heck — you can afford it.

BADLY MANAGED BUREAUCRATS

Ralph Sierra: “You wrote: > You could have added one more caveat: Ultimately, all lousy organizations owe their performance to poor leadership. Whether it is the caliber of service that’s given or the hoops customers are made to jump through, the blame can be laid squarely at the feet of the boss. In the case of government bureaucrats, it is a combination of the administration that runs things and the legislature that makes the laws (and in my opinion, it is generally, more the latter).

☞ Well said.

OFF-TOPIC COLUMNS

Gene Daly: “Please rename your web site ‘Demystifying Gore’ until after the election.”

☞ The truth is, I haven’t the technical skill to do it, and my web master is up to his elbows demystifying something else right now. So you will just have to suffer. That said, the outcome of this election will have a big impact, I think, on the economy and your finances. So “getting it right” may be worth some time thinking about. I have nothing but admiration for those of you who strongly disagree with me yet consider my views anyway. I try to do the same with yours.

THE PRESIDENCY PAYS WHAT?

Click here.

UNCLAIMED PROPERTY

Nancy: “Found six accounts my deceased mother-in-law had in Kansas via your unclaimed property link.”

Albert Fosha: “Your paragraph from the guy trying to get a small bit of unclaimed money back from Georgia struck a nerve with me. Last year I got a notice from Illinois (I now live in Washington State) that their unclaimed property office had an insurance dividend from my deceased father’s insurance. The value was around $250.00. And they sent detailed instructions as to what they needed in order for me to get it. After three tries — each time they would come back with a request for additional information, I sent them a letter telling them to keep it and give it to the deserving poor or whatever it was they did with these funds. The legal stuff they wanted would have cost almost as much as the claim. This was evidently what they were waiting for as I never heard from them again. In my estimation a bureaucrat is the lowest form of life on the planet.”

☞ I think maybe there are two kinds of bureaucrats. Those who deserve the negative image the term connotes — like the ones you encountered. And others — perhaps equally numerous — who do a good job and deserve some other nomenclature . . . perhaps, “public servants.” Down with the former (or give them the incentives and flexibility to think more creatively and do a better job), up with the latter!

UNTAPPED COMPUTING CAPACITY

Randy D.: “First you could help search for aliens with SETI. Now your computer can help fight AIDS in its spare time.”

☞ Check out Salon’s story or jump straight to fightaidsathome.org and get to work.”

UNPROTECTED UNTIL THE NEW POLICY IS IN FORCE

Maura Murphy: “You forgot to tell Beth not to cancel her existing policies until the new one’s in place. It would be terrible to hear that the underwriters for the new term policy found that she had some uninsurable condition, and her old TERRIBLE but in force policies had already been cancelled.”

☞ True!

UNDERWHELMED BY HER BROKER

Gerry: “The stockbroker wanted to talk with me about some investments. I had been doing some reading, specifically, the newest edition of [a certain investment guide], so I had an idea of what I did not want to hear from him. Before I left my office for the appointment, the local credit bureau flyer arrived and, in perusing it, I noticed my broker’s name listed with a $7,000 final court judgement against him! Oh boy! I did not bring that matter up with him nor did he happen to mention it. But it was interesting that all he could offer me during the meeting were annuities, loaded mutual funds, unit trusts, and so on and so on; everything with high fees! I suppose a cynical person might think that maybe the broker thought this little gray haired lady would buy some of these gems and generate some good fees for the broker! Not on your life. I just said NO and referred to what I had learned from reading your book. Of course, he had a set, slick comeback (something about how financial writers just don’t understand annuities, etc). He also tried to dazzle me with charts and graphs and tax savings . . . blah, blah, blah. Had I thought to bring your book with me, I could have fended him off like Van Helsing did Dracula with the crucifix. (Sorry for the Dennis Millerism there!). Anyway, I found a good discount broker. I will settle with T-bills for now (thru Treasury Direct), see how the markets shake out and give myself some more time to figure out what I want to invest in.”

☞ Giving yourself time is a fine idea. People who invest because money burns a hole in their pocket generally regret it. But “seeing how the market shakes out” implies you may wait until it seems safe again. Often it’s when it seems safest — buoyed by general confidence — that it is riskiest. I’m beginning to sound like a fortune cookie.

Richard Allen: “That was the most disgusting smear I have ever seen. I am Canadian, so the American campaign is only a something to watch for me, but that was too much. I don’t like Gore, because of Tipper’s censorship stand. And, I think Bush is a dead-end. But that does not mean you should attack him like that.”

Jonathan Betz: “Al Gore has better experience in national and international affairs. Al Gore has sound plans for the government. Al Gore understands how Washington works. But Al Gore is part of an administration that arrogantly abused the trust of the American people. Every time he misspeaks on fact, or makes a statement that gets misinterpreted (Love Canal, the Internet, etc), he looks like another man who will say what he needs to for his own personal advancement. You’re the Treasurer of the Democratic National Committee. Tell him that if he would come out between now and Election Day saying that he stands against Bill Clinton’s behavior in 1998, his poll numbers will soar and he will sweep George Bush in a landslide.”

Jason: “Your liberal vindictiveness bleeds through every word on the page. How do you live with so much hate inside of you?”

Alan Waldock: “I probably won’t have been the first to bring this to your attention, but option #7 is interesting at 1-800-888-3999. I mention it because (i) it’s free, and (ii) it has at least a tenuous relevance to matters financial. [Unlike] some of your recent columns.”

Rulison Evans: “As a lifelong Republican, I must say, I seriously doubt that I will be voting for Gov. Bush. This is not to say that I have converted. Just that, this time around, given the two choices, I agree more with the things that the VP believes in and less with the Gov.”

I had this B-School pal who went on to Morgan Stanley and then Lehman Brothers and then came this close to going to jail for insider trading. He pleaded guilty in 1980, but managed to avoid serving time. It was quite a celebrated case. (On the eve of the indictment, he married the daughter of the then chairman of Twentieth Century Fox.)

Now comes news, two decades later, that he is one of 11 defendants in a new insider trading case, this one involving the 1995 takeover of U.S. Shoe. (According to the SEC, it was my old pal’s prior experience with insider-trading investigations that helped him fend this off so long.)

If insider trading is bad — and it is — then why does one guy risk going to jail and another risk becoming President?

Not to say that George W. Bush was ever charged with, let alone convicted of, insider trading. He was not. But here’s what U.S News & World Report, the most conservative of the three national newsweeklies, had to say (March 16, 1992):

“Bush sold [his entire] $828,560 worth of Harken stock just one week before the company posted unusually poor quarterly earnings and Harken stock plunged sharply. Shares lost more than 60% of their value over 6 months. When Bush sold his shares, he was a member of a company committee studying the effect of Harken’s restructuring, a move to appease anxious creditors. According to documents on file with the Securities and Exchange Commission, his position on the Harken committee gave Bush detailed knowledge of the company’s deteriorating financial condition. The SEC received word of Bush’s trade eight month’s late. Bush has said he filed the notice but that it was lost. “

An SEC probe ended without charges being filed.

Now, come on. A coincidence that an insider enmeshed in all this stuff, and on the three-man audit committee, would sell out a week before the bad news hit?

I’m not suggesting that anyone in the SEC might have gone easy on the President’s son . . . but it’s conceivable, no?

Before running for Governor, Bush obtained a letter from the SEC saying that “the investigation has been terminated as to the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated with respect to him.” According to the Washington Post (July 30, 1999), “Bush took that as vindication. ‘The SEC fully investigated the stock deal,’ he said in October 1994. ‘I was exonerated.’ . . . Hiler, however, was more cautious. His statement said it ‘must in no way be construed as indicating that the party has been exonerated . . . ‘”

Exonerated . . . not exonerated — whatever.

The fact is, I think we should leave all this alone. Bush may not have had a perfect decade or two after college — there may be people serving long prison terms in Texas right now for doing drugs in their youth that the Governor declines to say whether he did when he was young and irresponsible. And perhaps he did engage in blatant insider trading, as the facts would seem to suggest. But I don’t think we should launch $40 million taxpayer-financed multi-year investigations.

The country has truly had enough of the politics of personal destruction.

So let’s leave this stuff alone . . . but on BOTH sides, not just Bush’s.

Was Bush lying when he claimed to have not known about Harken’s impending bad news? I truly don’t know. I like to think not.

I do know it’s inconceivable that Al Gore was “lying” when he said he co-sponsored the McCain-Feingold campaign finance reform bill.

(He should have said “strongly supported,” and that he had “co-sponsored earlier campaign finance reform legislation.” But is that a lie? Gore’s main point: he favors broad campaign finance reform. Which is true. And that the Republicans don’t. Which is one of the many reasons they are trying so hard to tear down his credibility, so he can’t win the election and fight for it.)

Several of you pointed me to Bill Bennett’s op-ed in last Wednesday’s Wall Street Journal in which he actually — repeatedly and directly — called the Vice President a liar. He cited lots of supposed examples to prove his point — like the “co-sponsored” one above. But he omitted three of the most famous: “inventing the Internet,” Love Canal, and Love Story. Why?

My guess is that Bennett — who fancies himself a great judge of virtue — grudgingly recognizes that these juicy, funny, popular charges, which have pulled so well in Republican direct mail, are simply untrue. (By Bennett’s standard, one might even call them lies.) But if that’s the reason he omits them from his op-ed, then what does this say about George W. Bush? Bush has used the Internet line over and over, almost surely knowing that Gore deserves serious praise for his role with the Internet, not ridicule. Bush has allowed his campaign to use the Internet and Love Canal and Love Story as cornerstones in their effort to suggest that — just as Jerry Ford was a klutz (he wasn’t) and Dan Quayle was an idiot (he isn’t) — Al Gore is a untrustworthy. Well, I don’t buy it, and neither should you.

I would not argue that Ford was the most sure-footed man ever to hold office, although he was apparently a hell of a college football player. And you’ll never find me arguing that Dan Quayle is a genius — or that Al Gore is a man who never gets a fact wrong, embellishes a story, or fudges when he’s put on the defensive. But I’d argue that Quayle is certainly as bright as Governor Bush, and that Vice President Gore is certainly as honest as Governor Bush. It’s just that their honesty takes different forms.

Gore is honest — indeed, impassioned — on the big, substantive stuff: He strongly favors campaign finance reform. He wants to avoid squandering a large chunk of the hoped-for surplus on a big tax cut for the top 1%. He wants your parents and grandparents to be able to get the prescription drugs they need and still be able to eat. He wants smaller class sizes. He wants to see America ratify the Comprehensive Test Ban Treaty. He wants to raise the minimum wage. He wants to draw on the talents of all Americans, including openly gay and lesbian Americans. He wants women to retain the right to choose. And so on.

Around the edges, he is sometimes too quick to assert something that, on reflection, is misstated, like saying “co-sponsor” instead of “support” — or saying he flew with James Lee Witt to inspect the Texas floods.

Geez, what a whopper that was! According to Margaret Carlson in last week’s Time, the VP toured the floods with FEMA’s regional director, not James Lee Witt himself . . . although he had gone on 17 other trips with Witt to disaster areas. Bill Bennett is outraged! How can we trust a man who mixed up which disaster trip was with which FEMA official? It wasn’t Witt at all on that trip! It was a different FEMA guy!

Some of the “gotchas” around which the Bush folks have tried to undermine Gore’s credibility are simply false, like the three famous ones Bennett omitted. Some are technically true but trivial, like the co-sponsor thing. The Buddhist temple? Read the recent extensive New Yorker story. You will find in it no reason to withhold your vote from Gore.

Bush, by contrast, never exaggerates or misspeaks or gets defensive on the small stuff. Well, he does, of course — we all do — but with him the presumption is it’s just innocent human error. (So what if he says we have to step up exploration in Mexico to decrease our dependence on foreign oil? Or if he says “this man has outspent me” when it’s simply untrue.)

What matters in this election are basically two things:

• First, competence. (And, please: does anyone think Bush is the more competent of the two? Sure, he’ll turn to his running mate and to his cabinet secretaries to tell him what to do — but what if they disagree? Then who decides? In a dangerous world, this is not a trivial question.)

• Second, issues. And that is where I believe the Vice President is being forthright and the Governor gets into trouble.

Gore is attempting to alert the voters to the fact that Bush’s tax plan is too large (Alan Greenspan has agreed with that) and too heavily weighted toward the wealthy (John McCain has agreed with that). These charges are true and they are important, and Bush just brushes them off as “fuzzy math.” That’s dishonest. And in a very fundamental, substantive way.

The money Bush would direct toward eliminating the estate tax for the top 2%, and for slashing their income tax — nice though these cuts would be — would divert hundreds of billions of dollars from things that most voters would agree are more urgent.

Bush does everything he can not to be honest about this. He could say, “Hell, yes, 30% of my tax cuts would go to people who make more than $1 million a year. But those people work hard. And I believe life has been too tough on them these last 8 years. I want to do something for these people.” He could say, “Yes, most of my tax cut would go to the people at the top, but they pay the most taxes, so why not? You’ll still get something, too.”

He could say, “It’s true Gore’s budget calls for twice the increase in spending on military procurement that mine does. But somehow I’ll still do it better.” Instead, he makes it sound as if, even after his big tax cut, he’ll be able to devote more resources to the military than Gore. How?

C’mon, guys. The only fuzzy math here — like the old voodoo economics that cut taxes for the rich and swelled our National Debt by $4 trillion — is trying to make people think that lowering Steve Forbes’s taxes by millions doesn’t wind up taking those millions from someplace else. Like defense or health care for kids or prescription drugs for seniors.

Nor is it only economics where he’s being less than forthright. From the exchange in last week’s debate, you’d never know that Bush promised religious conservatives he wouldn’t knowingly hire gays or lesbians (the previous Bush administration didn’t either). Or that he supports the Texas law under which his running mate’s daughter could be imprisoned for loving her chosen partner in the privacy of their own bedroom. Or that in the wake of the James Byrd, Jr., dragging-to-death, he was prepared to sign a Texas hate crimes statute — but only so long as it didn’t cover gays or lesbians.

My bottom line is that both men are decent folks who love their families and their country. But that Gore is every bit as honorable and principled as his opponent. Perhaps, when you consider the seriousness with which he has devoted his life to public service, and the seriousness with which he has thought through economic, environmental and foreign policy issues, he is even more so.

Perhaps his having the guts to enlist in the Army, with no assurance he would not see combat — enlisted men do not choose their own assignments — should count for something more than ridicule from the guy who stayed home to defend Texas. (Personally, I would not have had the courage to enlist or to fly a fighter plane — I had a high draft number — so my hat is off to both of them.)

So enough with the character assassination. And who cares how good or bad the VP’s make-up is tonight? The world faces serious challenges in the years ahead.

Do you want at the helm, as we chart our course into the future, the guy who really did take the lead in Congress championing what would become the Internet? Or do you want the guy who deliberately twists this achievement into a cheap laugh?

Do you want Trent Lott un-vetoed? Jesse Helms un-vetoed? A dramatically more conservative Supreme Court over the next 25 years? If so, Bush is your man. But, please: not because he’s of higher moral character. He is not. And neither is Bill Bennett.

I spent all weekend raising money when I was supposed to be writing my column. Sorry! The one I planned to do for today will probably be tomorrow.

In the meantime:

RADIO MOSCOW

Mark: “Listen to radio stations from around the world! Fun site!”

☞ I got to the site with no trouble and found lots of Portuguese, Russian and Malay stations to listen to. Simply select one, click PLAY, and — if you’re old and stupid, like me — you get silence and: PAGE CANNOT BE DISPLAYED. But I have no time to listen anyway, so I’m OK with this.

TAX-LOSS SELLING

Bad Timing: “I recently started building my own portfolio of stocks. This is purely a long-term investment strategy. Unfortunately for me I acquired most of the stocks (including Intel, Cisco, IBM and Microsoft) before the recent tech thrashing. I am tempted to sell these stocks and take the (significant) capital losses and then buy them back in thirty days under the theory that it seems extremely doubtful that they will be able to make up those losses over that 30 day time period. Is this a good idea?”

☞ If the commissions are low, and you wait 31 days to avoid the IRS “wash sale” rule, that would disallow the losses otherwise, it’s a good idea. There is a real chance the stocks will have rallied and you’ll regret it. But I’d say there is an equal chance they will have slumped further, with more tax selling. So from the standpoint of logic this could work.

Or do this: Sell some of your issues now and use the proceeds to double up on the others. Wait 31 days. Buy back the ones you sold; sell the original shares you doubled up on. That way, unless you’re really unlucky, you’ll likely net out much of the effect of market movements. (If the market jumps, you’ll do well enough on the ones you doubled up on to make up for the ones you sold and now have to buy back at higher prices.)

YET ANOTHER REASON TO LOVE BARNES& NOBLE
Long-time readers know I have plugged Honest Tea from time to time, not least because I am one of this itty-bitty firm’s itty-bitty backers. (Expect a spider to emerge in this imagery at any moment.) Honest Tea is not for the corn syrup or high-octane-caffeine crowd, but it continues to win awards (yes! there are awards for iced tea!) and to make itty-bitty progress. Most recently, Barnes & Noble has begun stocking it in all 400 of its cafes. I’m told it has already shown up in New York and will be arriving nationwide in the next couple of weeks. If you like cinnamon, try the Gold Rush. (“An herbal cinnamon infusion with rooibush, rosehips, chamomile, cinnamon, peppermint, ginger, orange peel and natural flavors. Brewed in spring water with a touch of raw cane sugar and malic acid, caffeine-free.”) Like ginger? Well, naturally, the Jakarta Ginger. I’m a fool for the Moroccan, Kashmiri Chai and First Nation. Not crazy about the Black Forest Berry, but that’s just me.

I am very hopeful the stock market will quickly rebound “as it always does,” and that the euphoria will resume “because it’s different this time.” But it doesn’t feel that way. (Of course, it never does when the market’s fallen sharply.) In the old days, long bull markets were followed by not-brief bear markets. And long economic booms were followed by recessions.

Every seasoned investor knows that “it’s different this time” are the four most dangerous words in the English language, but you may have seen one brokerage firm’s current TV ads actually concluding: “It is different this time.” And maybe it is.

Yes, we’re the world’s only superpower, which takes away some of the uncertainty, and gives the world something of a leg up for “stability” — always a good thing for financial markets. It also means our defense budget can remain at a relatively low percentage of our GNP compared to its decades-long Cold War level. That frees up perhaps 3% of our GNP for more productive pursuits (i.e., devoting more like 3% than of 6% of our GDP to defense). In that sense, “it’s different this time.”

But how many superpowers rivaled our strength between World War I and World War II (none, I think), and how good was our economy, with its relatively low defense expenditures, then? (I’m no historian, so if I’m off base on this, let me know.)

And, yes, the breakthroughs in technology are beyond dazzling. But it’s possible to wonder just how profits will be squeezed out of all this to enrich investors. Price competition, which is terrific for consumers and efficiency, is tough on profits. What will be the model by which you and I finally pay for all this wonderful Internet stuff we enjoy? Where will the profits come from to support all the players and justify even today’s stock prices?

(There was a time in the last century — like, say, four years ago — that 10,000 on the Dow would have seemed more a fantasy than a floor.)

I truly don’t know what will happen, and I am immensely optimistic about the decades to come. I may never be able to make myself invisible or fly like Superman — next to immortality, the top of my wish list — but short of that, almost anything now seems possible.

But that doesn’t mean Goldman Sachs guru Abby Joseph Cohen is correct in predicting we’ll soon be back to record highs. Then again, the last time I doubted her, on “Face the Nation,” I was wrong and she was right.

I recognize that I’m not giving you much guidance here. But I do know that the sorts of valuations that peaked in April, and that I have been making fun of for some time, were absurdly high. And I also know that the stock market tends sooner or later to go to both extremes, and that we are nowhere near absurdly low prices and despair. (Not that the bearish extreme is necessarily the next stop on the market’s journey, though it might be.)

So you still shouldn’t mess with margin. You should still pay off your car loan and credit cards before investing a dime in stocks. You should still search for value, if you choose stocks yourself, or else continue your steady program of investing a regular amount every month in two or three carefully chosen, no-load, low expense mutual funds. (Index funds are usually best.) The further the market tanks, the better you can feel about buying new shares “on sale.” And if it snaps back to old highs, better still. Either way — especially if you are young enough to have time on your side — you can find a reason to be pleased.

Monday: Which Candidate Can You Really Trust? (I Read Bill Bennett; Now — Fair’s Fair — You Gotta Read This)