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Feldstein, adviser to the Romney campaign, refutes the assertion based on computer models that the Romney Tax Plan of a 20% across the board cut in taxes cannot be paid for by limiting the deductions of high income tax earners. His own analysis based on IRS data, shows taxpayers with adjusted gross incomes of over $100,000 made itemized deductions of $636 billion in 2009. By taxing these deductions at a 30% marginal rate, additional revenue of $191 billion can be raised to pay for the Romney Tax Plan's static revenue loss of $181 billion. A smaller revenue loss of $148 billion is predicted based on increased incomes and taxes from the behavioural effects of lower taxes on earners. He says this was the thinking behind the Reagan tax cuts of 1986 and the Simpson-Bowles commission plan that would generate economic growth by reforming the tax system's distortions.

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WSJ reporters Corkery and Yoon give a remarkable account of the individual homeowners and investors inside one toxic subprime mortgage security from Countrywide Financial Corp. named CWABS- 2006-2007. There is Amanda Gavini of Fort Myers who continued making mortgage payments against the odds after a illness and death in the family. And a couple Donald Mudd- Patricia Starr who were approved by Countrywide for a $171,000 adjustable rate mortgage loan at 8% with a $10,000 down payment for a home in Port Charlotte, Florida. The approval came only 3 months after the couple emerged from personal bankruptcy in 2006, and by 2009 Mudd was missing payments. Other borrowers such as Mrs. Gavini in Florida took out two loans at 7% and 11% in 2006, have continued making payments and are still unable to refinance under the HAMP or HARP government programs. It is because of these homeowners who continue to make payments helping the security price recover, that one of PIMCO's funds which owns a stake in this security has made good returns. Hedge fund Marathon Asset has also made good returns on this security because of the U.S. government's Public Private Investment Program to help banks recover by providing government incentives for purchase of these securities from banks. This was a way to get banks holding these subprime securities to resume normal lending in financial markets....

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This WSJ editorial points to the median income levels for 2014 being 6.5% below the level in 2007, median income level declining in 2011 and 2012, stagnant in 2014, according to the Census Bureau, as a reason why there is so much economic anxiety for average Americans. The appeal of Sanders and Trump reflects this anxiety and anti-establishment feeling. The official poverty rate at 14.8%, means 46.7 million Americans are below the poverty line. About 34.5% of the people experienced 2 or more months below the poverty line in 2009-2012, showing how it is hitting the middle class.

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Earnings of the typical American man working full-time year round declined in 2010, and is now in inflation adjusted terms below the level in 1978, according to the U.S. Census Department. The income of a typical Ameircan family has declined for three consecutive years and is now at $49,445 for 2010. This is the level reached in inflation adjusted terms in 1996. 15.1% of the American people lived below the poverty line in 2010, and 22% of children lived below the poverty line. The poverty line is set at $22,314 for a family of four in 2010. Statisics from the U.S. Census Department.

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Austin Goolsbee says the overvalued currencies of Italy, Greece, Spain and Portugal and the lack of growth under austerity plans proposed for these countries create impossible odds for resolution of the financial problems in these countries. The German position is that profligate spending and irresponsible accounting in Greece, and structural issues in Italy ranging from entitlement spending to tax evasion, need to be resolved.

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Galston focusses attention on the major problem facing democracies in Europe and the U.S.- that of providing decent paying jobs and improved economic prospects for lower and middle income households. He cites the surveys from the Pew Research Report and the U.S Bureau of Labor Statistics showing how middle income households median net income remains stuck at levels of 1997, and lower income households at levels of 1996. The median net worth of American households adjusted for inflation presents an alarming picture of being at $96,000 in 1983 and $98,000 in 2013 for middle income families, and being at the level of $12,000 for lower income families the level of 1975. Most of the new jobs as much as 95% are being created in the low wage service sector and the BLS statistics show the future looking much the same- with huge numbers of low wage jobs, fewer decent manufacturing jobs because of automation and jobs shifts to low cost locations overseas, remaining manufacturing jobs in the U.S shrinking by another 800,000 to 7% of the workforce by 2025. The result is the alarming rise of populist politicians like Trump in the U.S., Le Pen in France , and populist politicians in Hungary and Poland. Cultural liberals in the Democratic Party and the Republican establishment are both threatened by the rise of cultural illiberalism, xenophobia, and nationalism, as economic anxiety increases, and fears of terrorism and immigrants add to this anxiety. Progressive tendencies in the Republican party since the days of Theodore Roosevelt and of professional elites in the Democratic Party could become endangered if no serious effort is made to come up with solutions to the problems these trends present. The disconnect between the concerns of the working and middle class and the professional elites as the gap widens and the social compact in America and Europe breaks apart, means a new mindset will be required in America and Europe to deal with this. ...

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U.S. Senate majority leader Mitch McConnell tells the Washington Post in an exclusive interview that the dynamics surrounding the Trans Pacific Agreement pushed by president Obama have changed. He sees little prospect of it passing Congress before president Obama leaves office, and says it will be up to the next president to take it up after Obama leaves office in Jan. 2017. McConnell said that there is a lot of pushback all over the place. The Republican frontrunners Trump and Cruz both oppose the TPP, and all Democratic candidates including Hillary Clinton oppose it. In addition tobacco interests in McConnell's home state of Kentucky and pharmaceutical interests backing Senator Orrin Hatch, the Republican Finance chairman also oppose aspects of the negotiated deal. Labor unions, the automobile industry, environmental groups, and public interest groups, have strongly opposed provisions of the TPP that hurt workers and the public interest from the beginning, making it a risky proposition for Congressmen coming up for reelection in 2016. The divergence between the Republican establishment and the presidential front runners Trump and Cruz also have diluted support in Congress on the Republican side, making it a no win proposition....

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This editorial in the WSJ points out the dangers to the Republican party in taking the stand on immigraton along the lines suggested by Donald Trump in August 2015- deportation for all illegal immigrants, no birthright citizenship for children of illegal immigrants, and no remittances allowed for illegal immigrants to their home countries. It points out that remittances actually improve the economies of the countries south of the U.S. border in Latin America and reduce illegal immigration. There is a need for seasonal workers in farm areas where there is a severe shortage of workers even at $17 an hour. Reducing immigration is better accomplished by more guest worker programs. A likely result would be the move of farms and factories to regions with low cost labor in Latin America or other countries. For the Republican Party this type of policy would bring back the period of the 1920's, says the WSJ, when Irish and Italian immigration was opposed by the party, alienating the two ethnic groups till they were won back in the Reagan period- a sure way to lose in 2016....

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The first of a series of quarterly reports put out by the Federal Reserve Bank of New York, on the subject of household debt and credit. It shows that the process of unwinding consumer debt in the US is a slow and painful one. The figures tell the story, which touch every aspect of the US economy and business, with ripple effects through the world economy. Total consumer debt is $11.7 trillion as of June 30, 2010, which is down 6.5% from the crest reached in the third quarter 2008. Credit card accounts are down 23% from the high reached in second quarter 2008, and mortgage obligations down 6.4% from 2008. By mid 2010 11.4% of consumer debt was delinquent, and this was up from 11.2% in 2009. $1.3 trillion of consumer debt is delinquent, and $986 billion is seriously delinquent- that is 90 days late. Serious delinquencies are up by 3.1%. Other figures fromt he Fed report: Half million people in the USA had a foreclosure added to the credit reports for the period March 31, 2010 to June 30, 2010. This was up 8.7% above the figure for first quarter of 2010. New bankruptcies showed up in credit reports for 624,000 people during that quarter, an increase of 34%. Another major problem stacked on top of this for consumer spending- the Fed's interest rate policy according to Todd Petzel, chief investment officer of Offit Capital Advisors, burdens consumers with a tax of $350 billion in income lost from low to zero interest rates. This creates two problems of its own. Not only does it depress consumer spending. It also makes consumers reach out for riskier investments. This figure was calculated by taking $14 trillion in debt issued by Treasury, federal agencies and municipalities. Rates are near zero on short term Treasuries compared to 3% average over the years. Taking 2.5% on $14 trillion, the figure of $350 billion was arrived at. Or 2% of gross domestic product. Analysts say that it would be better not to save a few zombie banks at the expense of consumers and pension funds. It lowers the cost of the deficits through the lower interest rates the government pays on its debt, but lower consumer spending and a limping economy hurt tax revenues and increases the deficit....

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Washington Post editorial on the Obama Georgetown speech of April 13, 2009. It questions whether President Obama has the candour and courage to tackle the tough issues of deficit reduction and entitlement reform. New healthcare spending for coverage itself will add to entitlement, and it says some of the savings mentioned by the President are phony or already needed for new spending for the economic recovery and health care. At the same time the paper gives Obama good marks for his clarity and grasp of the crisis and steps for recovery, and the policy agenda in the areas of health care, energy and education. The questions about courage and candor also raise all the questions about facing upto the facts about insolvent banks that Krugman, Rosenfeld, the Economist and others have raised. Is Obama dodging the hard choices, is he dithering? On the toughest issues like foreclosures, insolvent banks, global regulation pushed by the Europeans, will he end up making inadequate or faulty choices, and when he comes around to making the tough choices, will he have lost so much valuable time as to prolong the crisis and stretch it out to many years....

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Some startling statistics on U.S. wages and incomes and the increase of part-time workers, by the publisher of U.S. News and World Report, Mortimer Zuckerman. He cites the Pew Research Center reports that show one third of Americans identifying themeselves as lower class or lower middle class compared to one quarter before 2008. This affects social mobility with the increasing gaps in incomes, education and social behaviour acting to reinforce each other and leading to even lower future mobility. Industries that are showing growth are in low wage occupations. The Bureau of Labor Statistics shows growth in future in industries noted for low wage part time work- health care, social assistance and retail, with some jobs lacking minimum wage and overtime protections. Revealing in this respect is that in the last 2 years fully 43% of net employment growth is in the 1.7 million jobs added in low wage work in food service, retail and employment services industries. The number of Americans working full time declined by 5.9 million since Sept 2007, part time workers increased by 2.6 million. The effects of higher part time workers and job recovery predominantly in lower wage industries is likely to affect consumer spending and slow growth....

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The median net worth of Hispanic and Black families has been severely affected by the recession. Because minorities hold a much larger part of their assets in household equity the foreclosure crisis and the recession have had a devastaing impact on both minority groups. The median net worth of Hispanic families dropped by two thirds and black families by half after the 2008 recession from the 2005 figures, and was around $6000 for 2009 for both groups, according to data from the Pew Research Center. The Pew report shows median net worth of a white family is 20 times that of a black family, and 18 times that of a Hispanic family, with the gap between these minorities and whites twice as large in 2009 compared to the period before the recession in 2005. This was even true for Asian American families, whose median net worth dropped by half from 2005 to 2009, to $78,000. The figure for whites dropped much less from $135,000 to $113,000 during the same period. Another significant finding is that within each group the share of the wealthiest 10% of the people increased between 2005 and 2009, for all households this went up from 49% to 56%, for Hispanics from 56% to 72%, for Blacks from 59% to 67%....

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Jenna Wortham asks the question do tech companies have undue influence in Washington especially when they are pursuing their own ecosystem expansion, citing an example from Facebook app Free Basics. There is another question that comes with the election campaigns of Sanders, Trump and Clinton, and issues of upward mobility. With this issue raised also by Janet Yellen of the U.S. Federal Reserve of the loss of intergenerational mobility in the U.S. at a conference in Oct. 2014. This question is whether the tech world in California can be sensitive to the problems of cities depending on manufacturing in the midwest and the eastern U.S. that are recovering from deep recession, because the environments are so different. Working in the tech world in California is so different from the rest of the country, almost a different way of life. It also has deep political implications, because the priorities are different. Sometimes as with the TPP trade agreement they may conflict- this includes an industry such as the auto industry that also is incorporating technology at an accelerating pace and which has employed many times more people than does the tech industry in California, and in many states. This leads to president Obama's support for the TPP trade agreement, an agreement which analysis by some experts shows is more beneficial to the tech industry in California than to the auto industry in the midwestern states. The NYT's Krugman says overall for the U.S. it is marginally helpful as most of the gains in free trade are already behind us. See Lyrarc using search terms-Trans Pacific Trade Agreement, Trans Pacific Partnership. Yet it remains a mystery why president Obama has made it a part of his legacy, when Hillary Clinton realizing the issues in this election has clearly stated she will not support it. It has other implications as well, as it has given rise to demagogic rhetoric in this election, where other issues far more significant such as the condition of western democracy are at stake. ...

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At the height of the Eurozone crisis in December 2011, David Brooks points out that it is important not to forget what the Germans are saying in this crisis. They are arguing for truth in accounting, which the government in Greece failed to do, and which may have more to do with negative opinion in the media and with the public in Germany about Greece than any other factor. They are arguing against speculative excesses that enabled Greece to borrow recklessly. And they are making the argument that the only way to put the finances of the eurozone on a sound basis is to have the financial discipline that is necessary for a sound currency. Anthony Faiola pointed out recently that one estimate for tax evasion in Italy is $340 billion a year- Washington Post, 11/25/2011. Greece has a similiar problem, which needs to be addressed. This view has credibility and the backing of every principle of sound financial practices, irrespective of country or region. For ordinary Germans who have gone through years of wage restraint during the period of high unemployment, their attitude is captured in one German workers response to Greece's situation - when she said there are "poor children in Germany also." Years after reunification were a difficult experience for Germany, and left parts of the country still affected by the experience. The period of high unemployment is still a fresh memory, as the economic recovery is fairly recent. There is a feeling that the situation is precarious, depending on exports, as the 2009 downturn showed. These facts remain even when one considers the criticism levelled at Germany. Germany benefitted from the bubble in the economies of Southern Europe through surging exports- from a currency that was undervalued in relation to neighbors- because of the common currency. German banks lent heavily to Greece, Ireland, Italy, Spain, and Portugal, along with French and British banks, and bear responsibility for reckless lending and not doing due diligence for loans to Greece and other countries. Germany also carries the burden of memories of hyperinflation in the 1920's, and the sense along with France that partnership is necessary for peace in Europe. Germany's position on austerity measures also has one underlying weakness - if this leads to shrinking economies in southern Europe in the name of fianncial discipline, then the plan fails as tax revenues decline and budget deficits increase. Given this experience Germany faces the challenge of convincing neighbors of the need for good governance and sound spending practices for long term stability of the currency, even as it leads the effort for providing short term funding. In the short run this reaps criticism for Germany, including criticism for some members such as Greece having to leave the euro as a way to regain competitiveness and growth. Experts have suggested that this would be a better option for Greece than a shrinking economy after strong austerity measures, and the referendum proposed by former prime minister Papandreou on strict austerity measures is likely to have gone in this direction. ...

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The Economist points out (in this cover issue on India-Pakistan relations) several fundamental facts. The first is that the current state of relations betweeen India and Pakistan hurts Pakistan the most. It makes a much smaller country and smaller economy bear the burden of defense against a large neighbor- defense takes up much needed allocation of funds for infrastructure and development, education and healthcare. It also weakens democratic institutions and their development by an overdependence on the military for governance. Poor India-Pakistan relations have significant adverse effects on the U.S. In fighting the Taliban U.S. forces are fighting a force that Pakistan's military helped create and support from its early beginnings as a way to counter Indian influence. With an Indian-Pakistani peace settlement of issues in Kashmir and other outstanding issues the U.S. would be in a significantly better position to disengage from the region, especially when the entire Middle East is moving in a new direction in 2011. Consider the difficulties in establishing peace in Northern Ireland, and between Turkey and Greece, and the difficulties of establishing peace between India and Pakistan cannot be considered even more difficult. Pakistan and India muddle along- neither side is doing much to take the initiative. For the U.S. disengagement from South Asia can be best achieved by pushing for a settlement between the two countries. Pakistan and India have much to gain from a settlement. Considering the progress made in Ireland, such places as Yugoslavia, and in Turkish-Greek relations, there is a lot more that can be done and should be done to bring India and Pakistan together. In Ireland diplomatic efforts were made by U.S. envoy George Mitchell, and in Yugoslavia U.S. envoy Holbrooke made diplomatic efforts towards the Dayton accords. Greek-Turkish relations have advanced to the point where Erdogan and Papandreou, the Greek and Turkish prime ministers, discuss solutions to the Greek debt crisis. This includes options to reduce Greece's defense expenditures in the light of Turkey's new foreign policies. The lack of such efforts to break the deadlock between India and Pakistan by the U.S,. the U.K. and other countries involved in the NATO mission in Afghanistan, the emphasis on a military solution supported first by Gen. McChrystal, and then by by Gen. Petraeus, all show a lack of understanding of the real issues that need to be tackled- issues relating to a peace settlement between India and Pakistan....

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Erskine Bowles, a former chief of staff under President Clinton, and Alan Simpson, former senator from Wyoming, say the U.S. Supercommittee members should remember that their personal priorities and the common good are not at odds. The authors of the Bowles-Simpson Presidents Commission for deficit reduction say there is growing discontent among voters with politicians who are obsessed with gaining partisan advantage. Using issues of national importance that require a common approach from all parties as a way to score political points will only backfire on these politicians. Personal priorities of members of Congress are now no longer at odds with the common good, they are converging. It is upto the Congress, members of both parties, to push back against the special interests and partisan politics, and show leadership on the deficit. The eurozone crisis has shown the dire consequences of any sluggishness or procrastination. The failure of the political class and leadership in Italy and Greece, and in other nations of the EU, has put the fate of these countries in the hands of markets, which have relentlessly pushed up the borrowing rates of Greece, Italy, Spain and other countries, and taken future direction out of the hands of politicians. Erskine and Bowles say don't wait for a fiscal crisis to take action because it will be disastrous economically and politically, with everyone as losers and no winners. Timidity is not an option, leadership is required to take action that is big and broad, tackling tax expenditures, entitlement expenditures, defense, across the board....

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John Lewis, is the last surviving speaker of the March on Washington in 1963, when Martin Luther King gave his historic speech. Here he describes how Martin Luther King would see today's America. Foremost he points out is that MLK would want to see justice not just as racial justice, but justice in a broader sense that says something about the dignity and value of human beings. And this means, says Lewis, the president getting away from advisers and polls, and talking to ordinary people. It means focussing on jobs, the unemployed and people facing foreclosure, and seniors struggling on limited incomes. He calls for a "freedom budget" that would pool resources for infrastructure and investments that would create a better environment for people to live in.