Forgive me but I am still fuming about what is going on in Washington with our money. Money that is disappearing faster and faster. No matter how much our representatives cut taxes and extend benefits, it is meaningless. What is the good of having twice as much money when it is worth only half.

Welcome to Washington D.C. -- home of the Great Pretenders.

We just think that our Capitol sits atop solid ground. I think if you swept away the top soil you would find a giant cardboard box because our leaders are certainly playing the biggest game of three-card Monte of all time.

A press release that was sent out by the American Small Business League (ASBL) in late December 2007 is pitting American small businesses against the interests of large and wealthy venture capitalists. The press release states that indicated potential policy changes and Obama administrative appointments are sending a clear message that when it comes to government monies, small businesses should brace themselves for being left out in the cold.

The PR Newswire press release, which I encountered at the Las Vegas Business Press website, claims that potential Obama policy seeks to rewrite the federal definition of a small business. Currently, that definition describes small businesses as being independently owned. The release indicates a belief that by changing that technical definition, the doors shall then be thrown open for a small group of wealthy venture capital firms to compete head to head against small businesses in bidding on billions of dollars worth of contracts which have traditionally been reserved specifically for small businesses. Additionally, the ASBL release hints at some favorable reductions in capital gains taxation for these venture capital firms.

The ASBL press release states, in part: "The Obama Administration's new pro-venture capital policy could virtually repeal the Small Business Act for legitimate American small businesses... Under the proposed Obama Administration policy, "independently owned" will be changed to include firms that are not independently owned, but are actually controlled by wealthy investors and possibly some of the nation's largest venture capital firms."

It remains to be seen whether or not ASBL advocates are indeed correctly interpreting these potentially devastating changes. However, one thing appears to be quite clear already; with President-elect Obama's appointment of wealthy venture capitalist Karen Mills to the lead position of the Small Business Administration, it would appear that Mr. Obama intends to put small businesses well under the thumb of big business. This revelation certainly shall not make many of our next president's middle class supporters very happy.

John McCain went on CNBC this morning to argue -- once again -- that the key to reviving the economies lies with keeping taxes under control, especially the capital gains tax. The Arizona Republican yet again accused Democrat Barack Obama of being a tax-and-spend liberal, the type of boogeyman that would send shivers down the spine of most CNBC viewers.

And you know what? These tactics are failing miserably. Polls indicate that baring any huge cataclysmic event, Barack Obama will be the next president of the United States. According to Bloomberg News, McCain "goes into the campaign's final weekend a bigger underdog than any victorious candidate in a modern election."

As he prepares to accept the Democratic presidential nomination, Barack Obama's allies in organized labor are worried that he is becoming too friendly with Wall Street types such as former Treasury Secretary and current Citigroup, Inc. (NYSE: C) senior executive Robert Rubin.

According to Bloomberg News, a recent presentation by Richard Trumka of the AFL-CIO argued that unfettered global traded and inadequate government regulation resulted in lost manufacturing jobs. "It will do us little good if, when the next Democrat moves into the White House, Wall Street takes command of our country's economic policy," Bloomberg quotes Trumka's presentation as saying. The story adds that there is no doubt that Trumka is taking a shot at Rubin.

Trumka is unapologetic. The AFL-CIO already is flexing its political muscle and began looking at candidates for cabinet posts including the Treasury and Energy Departments along with the Federal Reserve. Obama's advisors deny that Rubin or anyone else has any particular sway over his economic policies. But there definitely is a tilt toward the center going on.

In an interview with CNBC's Maria Bartiromo, Presidential candidate Barack Obama started to spell out his economic plan. Obama said that he would raise capital gains taxes, "Well, you know, I haven't given a firm number. Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would--and my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15 percent."

Just because the Senator got rich from his book doesn't mean that the rest of us should be punished for trying to grow our savings and our investments. Why should the middle-class have to pay higher capital gains tax so that Obama can bailout irresponsible home buyers?

Hasn't he learned economics? It's pretty clear that if you punish and make it harder for wealth creation and investment, that there won't be as much, and as a result the economy will get much worse.

As I posted last month, Blackstone Group's CEO Stephen Schwarzman gave an interview to the Wall Street Journal with a compelling theme -- Schwarzman is the Napoleon of private equity. Napoleon-watch tracks his moves on the business battleground.

The New York Times reports that Blackstone Group LP (NYSE: BX) is making things tough for itself and its peers in the eyes of Congress. That's because Blackstone used a loophole to avoid paying tax on $3.7 billion -- most of which was raised in its IPO last month.

Although they will initially pay $553 million in taxes, Blackstone's partners will get that back, and $200 million more, from the government over the long term. In a nutshell, the partners used the writeoff of goodwill -- the difference between the book value and market value of an asset -- to shield their gain from tax.

The details are rather complex but fiendishly clever:

• the Blackstone partners paid a 15% capital gains rate on the shares of Blackstone's management company they sold last month in the IPO
• Blackstone then arranged to get deductions for itself for the $3.7 billion worth of goodwill at a 35% rate. They taxed low and deducted high.
• The deductions must be spread out over 15 years. And the original Blackstone partners are getting just 85% of the tax savings, leaving the other 15% to outside investors. The deductions on the $3.7 billion to the partners are $1.1 billion over 15 years.
• If these tax savings were paid as a lump sum this year, the partners would get $751 million, which is $198 million more than the taxes the partners will pay on the $3.7 billion of goodwill.

These guys didn't get to be billionaires for nothing. Meanwhile my proposal for putting half their pay in escrow for 10 years to cover the costs of bad deals is gaining tiny amounts of support.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Blackstone.

The New York Times [registration required] reports that KKR partner, Henry Kravis, is belatedly and ineffectively entering the battle to keep Congress from raising his taxes. At issue is the 15% capital gains rate which private equity firms pay on the 20% of the profits their funds generate, known as carried interest. Congress wants to tax this 20% as ordinary income -- meaning Kravis and his pals would pay a 35% tax.

Despite his arguments about the jobs KKR created in Rep. Sander Levin's home state of Michigan and his claim that a tax increase could hurt the investment returns of the pension funds which invest in KKR, Kravis appeared not to have dissuaded Levin in his drive to raise the tax rate from 15% to 35%.

I wrote an e-mail to Rep. Barney Frank (D-MA) who chairs the House Financial Services Committee. My suggestion, on which I posted earlier, is that the real problem is that private equity firms and their bankers get rich by taking risks -- such as borrowing too much money -- and they often leave society to pay the costs of failed deals -- as they did with the $150 billion bailout of the junk-bond fueled collapse of the Savings & Loan (S&L) industry.