Tuesday, December 31, 2013


Stay tuned. More wrong headed appeasement or just another wrong report? (See 1 below.)

This from a liberal friend of mine.  (See 1a below.)
Some Social Security calculations to chew on and the bigger the size of government the more you are likely to be cheated out of your own money.

Furthermore, had you been allowed to invest in a selected broad based mutual fund you would have probably doubled your monthly return, helped the nation to grow through Capitalism and increased employment.  (See 2 and 2a  below.)
George Friedman and Victor Hanson discuss  America's Middle Class saga.  (See 3 and 3a below.)
Hillary and 2013. (See 4 below.)
Finally, some interesting statistics which raise some legitimate questions.  (See 5 below.)
Shortly after becoming President, Obama was given a Nobel Peace Prize in anticipation of the great things he would accomplish. (See 6 below.)
1) Report: Obama to Hand Over Christian Holy Sites to Palestinian Thugs
Jim Hoft - Gateway Pundit

Once again Barack Obama is going to push Israel to hand over half of Jerusalem, the Wailing Wall, The Temple Mount, Old Jerusalem, and the tomb of Jesus Christ to the Hamas-Fatah terrorists.
Obama wants to hand over Christian holy sites to the Fatah-Hamas thugs.
Barack Obama believes giving the terrorists more land will result in peace.
It’s as if the Gaza transfer and disaster never happened.
The Times of Israel reported:
US Secretary of State John Kerry will offer Israeli and Palestinian negotiators a political trade-off: Israeli recognition of the 1967 lines as a basis for the future Palestinian state, in return for Palestinian recognition of Israel as the state of the Jewish people, Palestinian sources told the Saudi daily Al-Watan on Sunday.
According to the sources, the mutual recognition will constitute the core of a framework agreement to be signed by the end of January, and negotiated in greater detail during the following months.
“The coming weeks will be difficult for the Palestinian and Israeli sides, since they will need to make tough decisions,” a source told Al-Watan. “On the one hand, Israeli Prime Minister Benjamin Netanyahu will need to live with a text speaking of the 1967 borders, and the Palestinians, for their part, will need to live with a text speaking of Israel’s Jewishness.”
Kerry is to visit the region later this week and is expected to present the sides with the framework plan, which is meant to keep peace talks alive.

Top of the Agenda: Israel Releases Prisoners, Plans Settlements as Kerry Returns to Mideast
Israel released twenty-six Palestinian prisoners Monday night after its Supreme Court rejected a last-minute petition by victims' families. This is the third tranche of prisoner releases, which Palestinians made a precondition of peace talks in July in exchange for dropping a demand to halt settlement construction; a fourth, final one is expected in April (Haaretz). U.S. secretary of state John Kerry, scheduled to depart on New Year's Day for his tenth trip to the region to push for an agreement, will propose a framework for addressing core issues between the parties (AP). However, his visit may be undermined by an expected Israeli announcement this week of plans to build 1,400 new housing units in the West Bank and East Jerusalem (NYT).
"[The prisoner release], which in a rare occurrence in the history of the Israeli government's moves is likely not expected to yield any benefit in the future, is the big mistake made by Netanyahu, Livni, Ya'alon and their friends. They had a choice between a temporary settlement construction freeze and the prisoner release, and they picked the second option. They basically had to choose who and what they are more afraid of: the fury of rightists and settlers in Judea and Samaria, or the bereaved families' cry of despair. The prime minister is experienced, and he knows that the uproar over a prisoner release is very short, and disappears after a day or two," writes Eitan Haber for Ynet.
"'Don't delude yourselves. We don't have a partner on the Palestinian side for a two-state solution.' That was how Defense Minister Moshe Ya'alon summarized his take on the peace negotiations. … Rejection of the Palestinian partner is a deception aimed to delude the public into thinking the Israeli government's hands are clean. It is amazing how Israeli politicians who are steadfast in their mantra of 'no partner' fail to comprehend a basic fact about negotiations between adversaries: Partners do not grow on trees, they are created through hard work; that building process is their job," Haaretz writes in an editoral.
"In politics and in life, there's often a fine line between self-delusion, commitment to any enterprise with long odds, and actual success. But Kerry has put himself in the middle of this mix and just doesn't seem willing to give up. This kind of commitment in a strange way creates an infectious reality that can help risk-averse parties to a negotiation actually believe in its viability," writes Aaron David Miller forForeign Policy.

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2) I'm sure most of you have seen some version of this but its a good recap.



Remember, not only did you and I contribute to Social Security but our employer did, too.

It totaled 15% of your income before taxes.

If you averaged only $30K over your working life, that's close to $220,500.

Read that again.

Did you see where the Government paid in one single penny?

We are talking about the money you and your employer put in a Government bank to insure you and me so we would have a retirement check from the money we put in, not the Government.

Now they are calling the money we put in an entitlement when we reach the age to receive.

If you calculate the future invested value of $4,500 per year (yours & your employer's contribution) at a simple 5% interest (less than what the Government pays on the money that it borrows).

After 49 years of working you'd have $892,919.98. If you took out only 3%per year, you'd receive $26,787.60 per year and it would last better than 30 years (until you're 95 if you retire at age 65) and that's with no interest paid on that final amount on deposit!

If you bought an annuity and it paid 4% per year, you'd have a lifetime
income of $2,976.40 per month.


Just because politicians borrowed the money for excessive government spending, doesn't make my benefits some
 kind of charity or handout or entitlement

Remember Congressional benefits? --- free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days.

Now that's welfare, and they have the nerve to call our social security
retirement payments entitlements?

They call Social Security and Medicare an entitlement even though most of us have been paying for
 it all our working lives, and now, when it's time for us to collect, the government is running out of money.

Why did the government borrow from it in the first place?

It was supposed to be in Gore's lock box, not part of the general fund.

2a)Americans on Wrong Side of Income Gap Run Out of Means to Cope

Rising income inequality is starting to hit home for many American households as they run short of places to reach for a few extra bucks.

As the gap between the rich and poor widened over the last three decades, families at the bottom found ways to deal with the squeeze on earnings. Housewives joined the workforce. Husbands took second jobs  and labored longer hours. Homeowners tapped into the rising value of their properties to borrow money to spend.

Those strategies finally may have run their course as women’s participation in the labor force has peaked and the bursting of the house-price bubble has left many Americans underwater on their mortgages.

“We’ve exhausted our coping mechanisms,” said Alan Krueger, an economics professor at Princeton University in New Jersey and former chairman of President Barack Obama’s Council of Economic Advisers. “They weren’t sustainable.”

The result has been a downsizing of expectations. By almost two to one — 64 percent to 33 percent — Americans say the U.S. no longer offers everyone an equal chance to get ahead, according to the latest Bloomberg National Poll. The lack of faith is especially pronounced among those making less than $50,000 a year, with close to three-quarters in the Dec. 6-9 survey  saying the economy is unfair.

“I’ve had good jobs and bad jobs. But it always seemed like something would come along and keep me from getting ahead,” said Diana Kraft, 54, a homemaker in Denton, Texas.

Unemployment Benefits

Adding to challenges for lower-income individuals is the loss of unemployment benefits, which were supporting 1.3 million long-term jobless people in the U.S. before their expiration Dec. 28. While Congress failed to pass a renewal before adjourning earlier this month, Democratic lawmakers will press in early 2014 for an extension of the benefits, the Senate’s second-ranking Democrat, Dick Durbin of Illinois, told reporters Dec. 17.

The diminished expectations have implications for the economy. Workers are clinging to their jobs as prospects fade for higher-paying employment. Households are socking away more money and charging less on credit cards. And young adults are living with their parents longer rather than venturing out on their own.
In the meantime, record-high stock prices  are enriching wealthier Americans, exacerbating polarization and bringing income inequality to the political forefront. Even independent government agencies like the Securities and Exchange Commission and the Federal Reserve have been dragged into the debate.
‘Defining Challenge’

“The basic bargain at the heart of our economy has frayed,” Obama said in a Dec. 4 speech in Washington. “This is the defining challenge of our time: Making sure our economy works for every working American.”
Democratic lawmakers also intend to press next year for a higher minimum wage to tackle the yawning gap between rich and poor, Durbin said.
Republicans aren’t ceding the issue.

“The American dream is certainly more in doubt than in decades,” House Speaker John Boehner of Ohio said in response to Obama’s speech. “But after more than five years in office, the president has no one to blame but himself.”

Income inequality has been rising more or less steadily since the mid-1970s. The Gini coefficient, a broad-based measure of inequality, stood at a record high last year, according to Census Bureau data dating back 46 years.

Bear Market

The recession actually interrupted the trend and temporarily narrowed the gap between rich and poor. Wealthy Americans were hurt by the bear market in stocks as the Standard & Poor’s 500 Index fell more than 50 percent, while the poor benefited from increased payments from the Medicaid health program and other government programs.

The disparity has widened since the recovery began in mid-2009. The richest 10 percent of Americans earned a larger share of income last year than at any time since 1917, according to Emmanuel Saez, an economist at the University of California at Berkeley. Those in the top one-tenth of income distribution made at least $146,000 in 2012, almost 12 times what those in the bottom tenth made, Census Bureau data show.
Economists have posited a variety of explanations for the growing differences in incomes. Manufacturing companies moved once high-paying jobs abroad, to China and elsewhere. Technological advances led to the loss of clerical and office work, especially relating to routine tasks. The decline of unions — 11.3 percent of workers were represented in 2012 compared with 20.1 percent in 1983 — has advantaged bosses at the expense of their employees.

Middle Collapsed

“The middle has really collapsed,” said Lawrence Katz, an economics professor at Harvard University in Cambridge, Massachusetts, and a former chief economist at the Labor Department in Washington.
Even those with college degrees are having trouble keeping up, he said. While they earn more than those with less schooling, they’ve seen no real wage growth in recent years. The median income of men 25 years of age and older with a bachelor’s degree was $56,656 last year, 10 percent less than in 2007 after taking account of inflation, according to Census data.

“It’s very difficult for anyone middle-income and lower,” said Ryan Sekac, 26, a mechanical engineer in Westerly, Rhode Island. “There was a time when it was easier.”
Highest Skills

It’s the richest of the rich who are reaping the most benefit as an increasingly interconnected and technologically sophisticated world puts a premium on those perceived to have the highest skills — a phenomenon dubbed “winner take all” by Cornell University Professor Robert Frank.
Government policies also play a role. The Treasury Department, for instance, taxes capital gains racked up by the wealthy on the sale of shares, bonds and other assets at about half the rate of ordinary income. The top 1 percent captured 95 percent of the gains in incomes in the first three years of the recovery, based on analysis of tax returns by Saez.

Those less well-off, meanwhile, are running out of ways to cope. The percentage of working-age women who are in the labor force steadily climbed from a post-World War II low of 32 percent to a peak of 60.3 percent in April 2000, fueling a jump in dual-income households and helping Americans deal with slow wage growth for a while. Since the recession ended, the workforce participation rate for women has been in decline, echoing a longer-running trend among men. November data showed 57 percent of women in the labor force and 69.4 percent of men.

Jobless Women

Women who became unemployed during the recession and its aftermath have been slower to find new positions. Among women losing jobs they’d held for at least three years between January 2009 and the end of 2011, 50 percent were re-employed by the start of 2012, while the share for men was 61 percent, according to a Bureau of Labor Statistics report released in February.

Households turned to stepped-up borrowing to help make ends meet, until that avenue was shut off by the collapse of house prices. About 10.8 million homeowners still owed more money on their mortgages than their properties were worth in the third quarter, according to Seattle-based Zillow Inc.

The fallout has made many Americans less inclined to take risks. The quits rate — the proportion of Americans in the workforce who voluntarily left their jobs — stood at 1.7 percent in October. While that’s up from 1.5 percent a year earlier, it’s below the 2.2 percent average for 2006, the year house prices started falling, government data show.

Household Formation

Millennials — adults aged 18 to 32 — are still slow to set out on their own more than four years after the recession ended, according to an Oct. 18 report by the Pew Research Center in Washington. Just over one in three head their own households, close to a 38-year low set in 2010.

Obama has proposed a raft of policies to attack the widening wage gap — from simplifying the tax code and increasing exports to enhancing worker training and boosting pre-kindergarten education. Yet in a divided Washington he hasn’t made much progress pushing them through.

The president’s renewed focus on income inequality has more to do with politics than policy, said Douglas Holtz-Eakin, president of the American Action Forum, a self-described center- right institute in Washington.
Demagoguing Inequality

“It’s great politics to demagogue income distribution and complain about the rich getting ahead and the poor falling behind,” said Holtz-Eakin, a former Congressional Budget Office director. “The substance of what he’s actually done doesn’t match the enormity of the problem as he’s portrayed it.”

The wage-gap debate has reverberated to other parts of Washington, as the SEC published a rule Sept. 18 that would compel public companies to reveal pay ratios between chief executives and their employees. While businesses have decried the requirement as overreach, some investors welcome the data as a way to help assess a company’s health.

“Income inequality and a shrinking middle class are real and important issues that our country needs to address,” Michael J. Sacks, chief executive officer of Chicago-based Grosvenor Capital Management, which oversees $23.8 billion in assets, said in a comment letter to the agency. The pay ratio data “can be helpful in allowing investors to more accurately judge the effect of pay structure on company performance, inform investors’ votes on executive pay and help regulators.”
Bosses’ Compensation

Across companies in the S&P 500, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, according to data compiled by Bloomberg in April.
The Fed also has been caught up in the debate over growing income disparities. Lawmakers from both parties have questioned whether its bond-buying policy, called quantitative easing, has benefited the rich at the expense of those less well-off by boosting prices of stocks and other assets.

“Wall Street is roaring and Main Street is struggling,” Representative Kevin Brady, a Texas Republican and chairman of the Joint Economic Committee, said in an interview. “Quantitative easing has really exacerbated income inequality.”

The S&P 500 stock index has risen 29 percent in 2013. The richest third of U.S. households account for 89 percent of all equities ownership, according to the Center for Retirement Research at Boston College.

Defending Fed

Janet Yellen, nominated to take over as Fed chairman next year, defended the central bank’s actions at a Senate Banking Committee hearing on Nov. 14.

“The policies we’ve undertaken have been meant to generate a robust recovery,” Yellen told the committee.
The growing calls for action to reduce income inequality have translated into a national push for a higher minimum wage. Fast-food workers in 100 cities took to the streets Dec. 5 to demand a $15 hourly salary.
Latoya Caldwell, 30, of Kansas City, Missouri, is among those who took part. She’s been employed at a Wendy’s Co. restaurant for six years and earns the state’s minimum wage of $7.35 an hour. Working 25 to 30 hours a week, she has asked for more shifts to help support her four children, with whom she lives in one bedroom of her aunt’s house. 

More older workers — including one over 65 years — as well as college-educated are joining her team, showing that rough economic times have swelled the ranks beyond the typical teenager at the register, Caldwell said.

“We’re making barely enough to even survive,” Caldwell said. “We’re not even surviving — we’re dependent on state assistance while our CEO makes $5.8 million and he’s sitting in an office.”


By George Friedman
When I wrote about the crisis of unemployment in Europe, I received a great deal of feedback. Europeans agreed that this is the core problem while Americans argued that the United States has the same problem, asserting that U.S. unemployment is twice as high as the government's official unemployment rate. My counterargument is that unemployment in the United States is not a problem in the same sense that it is in Europe because it does not pose a geopolitical threat. The United States does not face political disintegration from unemployment, whatever the number is. Europe might.
At the same time, I would agree that the United States faces a potentially significant but longer-term geopolitical problem deriving from economic trends. The threat to the United States is the persistent decline in the middle class' standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power.

The Crisis of the American Middle Class

The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000. Take-home income is a bit less than $40,000 when Social Security and state and federal taxes  are included. That means a monthly income, per household, of about $3,300. It is urgent to bear in mind that half of all American households earn less than this. It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. This is where the difference in the meaning of middle class becomes most apparent.
In the 1950s and 1960s, the median income allowed you to live with a single earner -- normally the husband, with the wife typically working as homemaker -- and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.
Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans  to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher. At a 5 percent mortgage rate , that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn't cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and closing costs on his home. There would be little else left over for a week at the seashore with the kids.
And this is for the median. Those below him -- half of all households -- would be shut out of what is considered middle-class life, with the house, the car and the other associated amenities. Those amenities shift upward on the scale for people with at least $70,000 in income. The basics might be available at the median level, given favorable individual circumstance, but below that life becomes surprisingly meager, even in the range of the middle class and certainly what used to be called the lower-middle class.

The Expectation of Upward Mobility

I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending crisis. People below the median took out loans with deferred interest with the expectation that their incomes would continue the rise that was traditional since World War II. The caricature of the borrower as irresponsible misses the point. The expectation of rising real incomes was built into the American culture, and many assumed based on that that the rise would resume in five years. When it didn't they were trapped, but given history, they were not making an irresponsible assumption.
American history was always filled with the assumption that upward mobility was possible. The Midwest and West opened land that could be exploited, and the massive industrialization in the late 19th and early 20th centuries opened opportunities. There was a systemic expectation of upward mobility built into American culture and reality.
The Great Depression was a shock to the system, and it wasn't solved by the New Deal, nor even by World War II alone. The next drive for upward mobility came from post-war programs for veterans, of whom there were more than 10 million. These programs were instrumental in creating post-industrial America, by creating a class of suburban professionals. There were three programs that were critical:
  1. The GI Bill, which allowed veterans to go to college after the war, becoming professionals frequently several notches above their parents.
  2. The part of the GI Bill that provided federally guaranteed mortgages to veterans, allowing low and no down payment mortgages and low interest rates to graduates of publicly funded universities.
  3. The federally funded Interstate Highway System, which made access to land close to but outside of cities easier, enabling both the dispersal of populations on inexpensive land (which made single-family houses possible) and, later, the dispersal of business to the suburbs.
There were undoubtedly many other things that contributed to this, but these three not only reshaped America but also created a new dimension to the upward mobility that was built into American life from the beginning. Moreover, these programs were all directed toward veterans, to whom it was acknowledged a debt was due, or were created for military reasons (the Interstate Highway System was funded to enable the rapid movement of troops from coast to coast, which during World War II was found to be impossible). As a result, there was consensus around the moral propriety of the programs.
The subprime fiasco was rooted in the failure to understand that the foundations of middle class life were not under temporary pressure but something more fundamental. Where a single earner could support a middle class family in the generation after World War II, it now took at least two earners. That meant that the rise of the double-income family corresponded with the decline of the middle class. The lower you go on the income scale, the more likely you are to be a single mother. That shift away from social pressure for two parent homes was certainly part of the problem.

Re-engineering the Corporation

But there was, I think, the crisis of the modern corporation. Corporations provided long-term employment to the middle class. It was not unusual to spend your entire life working for one. Working for a corporation, you received yearly pay increases, either as a union or non-union worker. The middle class had both job security and rising income, along with retirement and other benefits. Over the course of time, the culture of the corporation diverged from the realities, as corporate productivity lagged behind costs and the corporations became more and more dysfunctional and ultimately unsupportable. In addition, the corporations ceased focusing on doing one thing well and instead became conglomerates, with a management frequently unable to keep up with the complexity of multiple lines of business.
For these and many other reasons, the corporation became increasingly inefficient, and in the terms of the 1980s, they had to be re-engineered -- which meant taken apart, pared down, refined and refocused. And the re-engineering of the corporation, designed to make them agile, meant that there was a permanent revolution in business. Everything was being reinvented. Huge amounts of money, managed by people whose specialty was re-engineering companies, were deployed. The choice was between total failure and radical change. From the point of view of the individual worker, this frequently meant the same thing: unemployment. From the view of the economy, it meant the creation of value whether through breaking up companies, closing some of them or sending jobs overseas. It was designed to increase the total efficiency, and it worked for the most part.
This is where the disjuncture occurred. From the point of view of the investor, they had saved the corporation from total meltdown by redesigning it. From the point of view of the workers, some retained the jobs that they would have lost, while others lost the jobs they would have lost anyway. But the important thing is not the subjective bitterness of those who lost their jobs, but something more complex.
As the permanent corporate jobs declined, more people were starting over. Some of them were starting over every few years as the agile corporation grew more efficient and needed fewer employees. That meant that if they got new jobs it would not be at the munificent corporate pay rate but at near entry-level rates in the small companies that were now the growth engine. As these companies failed, were bought or shifted direction, they would lose their jobs and start over again. Wages didn't rise for them and for long periods they might be unemployed, never to get a job again in their now obsolete fields, and certainly not working at a company for the next 20 years.
The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented. Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level. It was not a question of making the economy more efficient -- it did do that -- it was a question of where the value accumulated. The upper segment of the wage curve and the investors continued to make money. The middle class divided into a segment that entered the upper-middle class, while another faction sank into the lower-middle class.
American society on the whole was never egalitarian. It always accepted that there would be substantial differences in wages and wealth. Indeed, progress was in some ways driven by a desire to emulate the wealthy. There was also the expectation that while others received far more, the entire wealth structure would rise in tandem. It was also understood that, because of skill or luck, others would lose.
What we are facing now is a structural shift, in which the middle class' center, not because of laziness or stupidity, is shifting downward in terms of standard of living. It is a structural shift that is rooted in social change (the breakdown of the conventional family) and economic change (the decline of traditional corporations and the creation of corporate agility that places individual workers at a massive disadvantage).
The inherent crisis rests in an increasingly efficient economy and a population that can't consume what is produced because it can't afford the products. This has happened numerous times in history, but the United States, excepting the Great Depression, was the counterexample.
Obviously, this is a massive political debate, save that political debates identify problems without clarifying them. In political debates, someone must be blamed. In reality, these processes are beyond even the government's ability to control. On one hand, the traditional corporation was beneficial to the workers until it collapsed under the burden of its costs. On the other hand, the efficiencies created threaten to undermine consumption by weakening the effective demand among half of society.

The Long-Term Threat

The greatest danger is one that will not be faced for decades but that is lurking out there. The United States was built on the assumption that a rising tide lifts all ships. That has not been the case for the past generation, and there is no indication that this socio-economic reality will change any time soon. That means that a core assumption is at risk. The problem is that social stability has been built around this assumption -- not on the assumption that everyone is owed a living, but the assumption that on the whole, all benefit from growing productivity and efficiency.
If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated. Other superpowers such as Britain or Rome did not have the idea of a perpetually improving condition of the middle class as a core value. The United States does. If it loses that, it loses one of the pillars of its geopolitical power.
The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you.
The agility of the American corporation is critical. The right will argue that allowing the free market to function will fix the problem. The free market doesn't guarantee social outcomes, merely economic ones. In other words, it may give more efficiency on the whole and grow the economy as a whole, but by itself it doesn't guarantee how wealth is distributed. The left cannot be indifferent to the historical consequences of extreme redistribution of wealth. The right cannot be indifferent to the political consequences of a middle-class life undermined, nor can it be indifferent to half the population's inability to buy the products and services that businesses sell.
The most significant actions made by governments tend to be unintentional. The GI Bill was designed to limit unemployment among returning serviceman; it inadvertently created a professional class of college graduates. The VA loan was designed to stimulate the construction industry; it created the basis for suburban home ownership. The Interstate Highway System was meant to move troops rapidly in the event of war; it created a new pattern of land use that was suburbia.
It is unclear how the private sector can deal with the problem of pressure on the middle class. Government programs frequently fail to fulfill even minimal intentions while squandering scarce resources. The United States has been a fortunate country, with solutions frequently emerging in unexpected ways.
It would seem to me that unless the United States gets lucky again, its global dominance is in jeopardy. Considering its history, the United States can expect to get lucky again, but it usually gets lucky when it is frightened. And at this point it isn't frightened but angry, believing that if only its own solutions were employed, this problem and all others would go away. I am arguing that the conventional solutions offered by all sides do not yet grasp the magnitude of the problem -- that the foundation of American society is at risk -- and therefore all sides are content to repeat what has been said before.
People who are smarter and luckier than I am will have to craft the solution. I am simply pointing out the potential consequences of the problem and the inadequacy of all the ideas I have seen so far.

3a)The orphaned middle class
By Victor Davis Hanson 

On almost every left-right issue that divides Democrats and Republicans — as well as Republicans themselves — there is a neglected populist constituency. The result is that populist politics are largely caricatured as Tea Party extremism — and a voice for the middle class is largely absent.
The problem with Obamacare is that its well-connected and influential supporters — pet businesses, unions and congressional insiders — have already won exemption from it. The rich will always have their concierge doctors and Cadillac health plans. The poor can usually find low-cost care through Medicaid, federal clinics and emergency rooms.
In contrast, those who have lost their preferred individual plans, or will pay higher premiums and deductibles, are largely members of the self-employed middle-class. They are too poor to have their own exclusive health care coverage but too wealthy for most government subsidies. So far, Obamacare is falling hardest on the middle class.
Consider the trillion-dollar student loan mess. Millions of young people do not qualify for grants predicated on either income levels, ancestry or both. Nor are their parents wealthy enough to pay their tuition or room-and-board costs. The result is that the middle class — parents and students alike — has accrued a staggering level of student loan debt.
Universities are of no help. Their annual tuition costs have usually gone up faster than the rate of inflation. On too many campuses, vast increases in well-paid administrators, and lower teaching loads for tenured professors — as well as snazzy new campus recreation facilities — were all predicated on students obtaining more federal loans and going into astronomical debt to pay for those less accountable and far better off.
Illegal immigration also largely comes at the expense of the middle class. The supporters of amnesty tend to be poor foreign nationals who desire amnesty. Corporate employers and the elites of the identity-politics industry do not care under what legal circumstances foreign nationals enter the United States. Instead, the two kindred pressure groups seek cheap and plentiful labor and plenty of ethnic constituents.
Lost in the debate over “comprehensive immigration reform” are citizen entry-level job seekers of all different races who cannot leverage employers for higher wages when millions of foreign nationals, residing illegally in the U.S., will work for less money. Likewise, few worry about would-be legal immigrants without political clout who have played by the rules and are still waiting in line for a chance at U.S. citizenship.
Middle-class taxpayers are most responsible for providing parity in subsidized housing, legal costs, health care and education for those who entered the country illegally, especially once corporate employers have let their undocumented older or injured workers go.
There is a populist twist to new proposed federal gun-control legislation as well. The wealthy or politically influential, who often advocate stricter laws for others, usually take for granted their own expensive security details, many of them armed. In contrast, new gun control initiatives would mostly fall on the law-abiding who hunt and wish to defend their own families and homes with their own legal weapons.
Energy policy has become a boutique issue for the wealthy who push costly wind, solar and biofuels, subsidized mostly by the 53 percent of Americans who actually pay federal income taxes and are most pressed by the full costs of higher fuel, electricity and heating costs.
Yet the best friends of the middle class have been frackers and horizontal drillers taking their own risks on private lands. They — not the government and not environmentalists that oppose such exploration — are mostly responsible for the recent drops in gasoline, natural gas and propane costs to the consumer.
The Federal Reserve's policy of quantitative easing and de facto zero interest rates have stampeded investors desperate for even modest returns from the stock market — to the delight of wealthy Wall Street grandees. The poor are eligible for both debt relief and cheap (and often subsidized) mortgage rates that remain near historic lows.
The real losers are frugal members of the middle class. For the last five years they have received almost no interest on their modest passbook savings accounts. In other words, we are punishing thrift and reminding modest savers that they might have been better off either borrowing or gambling on Wall Street.
In the last election, Republican Mitt Romney was caricatured as a voice of the wealthy pitted against Barack Obama, a redistributionist railing for more subsidies for the poor. But millions of Americans in between are not so worried about capital gains cuts on stock sales, or more food stamps and free phones. And no one is Washington seems to be listening to them.
Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and the author, most recently, of “The Father of Us All: War and History, Ancient and Modern”