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Monday, October 21, 2013

The War On the Middle Class



If interest ever returned to 1997 levels, at say 6.6%, we’d be paying over a trillion dollars a year in debt service. In crude terms, the winners of this Ponzi scheme are the very wealthy connected to Wall Street, which is flooded with foreign and domestic capital. It need not do much of anything more than outperform a pathetic 1% return on savings accounts. 
The poor benefit from the vast increase in federal spending and exemption from federal income taxes. In contrast, the middle class still pays high interest on its student loans, credit card, and, to a lesser extent, car debt, receives almost no interest on its meager savings accounts, and is not so ready, after 2008, to dabble in real estate and the stock market. 
In some sense, holders of U.S. Treasury debt and passbook savers are giving up hundreds of billions of dollars in interest returns (cf. the difference, say, between 1% and a more normal 5%) to subsidize the redistributive policies of the federal government. 
The lack of interest, or de facto negative interest, keeps the near-retired working and hampers job prospects of the young; discourages thrift, savings and investment; and plays an underappreciated role in the slow economic recovery. The Democrats must deal with the contradiction of needing zero interest rates to service their recent extra $6 trillion in debt, and higher interest to encourage savings, investment, and job growth. 
... over 300 million people are going to find their health care analogous to a DMV visit. The logic of Obamacare was always redistributionist; those who had health care were obligated to give up some of it so that others might share the same benefits, regardless of the circumstances, fair or unfair, under which such differences first arose. Washington has decided that, with more money and employees, it can decide who has too fine a health care policy and who too little insurance, and then make the necessary redistributive adjustments. 
... [Immigration reform] is not about giving the Korean engineer a chance to become a legal skilled employee, or allowing the Romanian doctor to practice without fear of deportation. 
It is not about giving the Mexican national, who is a National Merit Scholar, a chance to attend MIT without worry of deportation. At least not entirely. 
Instead the bill is politically and ethnically chauvinistic. ... it favors Latin American nationals over others entirely on the basis that they have already broken federal immigration laws, are residing here illegally, and share the same ethnic background as their leaders in the Democratic Party. 
It hurts the lower classes, many of them minorities, who compete with cheap labor of foreign nationals. It burdens state budgets that must allot hundreds of billions in entitlement costs to allow rough parity to the vast majority who arrive from Mexico and Latin American illegally, without a high school diploma and without English. 
It will ensure Democratic majorities in the American Southwest for a generation and turn Nevada, Arizona, New Mexico, and perhaps Texas into something akin to the politics of California. The bill is ethnocentric, championed by corporate elites and ethnic chauvinists, and central to Democratic Party strategy.

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