Commentators viewed President Obama’s final State of the Union address as the opening volley of his reelection campaign. Considering the economic state of the country, the speech conveyed an optimistic tone. His theme was for all Americans, the Republican lawmakers specifically, to work together to keep the American Dream alive and save the middle class at the same time. Of course, we are not so naïve to think that any of the Republican’s will cooperate. The Republican’s rebuttal was to reiterate that the country’s condition remains grave.

It was not surprising that Obama’s speech was packed with programs that require the government’s hand to implement. Tactically, he takes the fight to his opposition saying the time for excuses is past and action is needed now. Senator Daniels gave the Republican rebuttal and presented a doom and gloom, pessimistic picture of America’s chances.

Taxes played a big part in the speech. The payroll tax vote still is waiting in the wings, and time is running out to keep the $80 a month in the paychecks of 160 million working Americans. Obama proposed raising taxes on taxpayers earning over $1 million a year. He suggests a 30% tax rate for the wealthiest in the US.  The income tax proposal probably hit home for many Americans watching since Republican presidential candidate, Mitt Romney, just released his tax returns. The Romney’s federal income tax rate in 2010 was 13.9%. Their income ranks them among the top tenth of the infamous 1%. The president also proposed doing away with the alternative minimum tax. Imposed in the 60’s, without any cost of living safeguards built into it, this tax was intended to keep the most wealthy with plentiful deductions and tax credits from avoiding income taxes, but now it affects mostly the upper middle class making over $250,000 instead of the millionaires or billionaires, who were the intended target.

Daniels, as the representative of the loyal opposition, agrees that every American should contribute to the recovery. He pointed out it is dumb to raise taxes within a broken tax system, far wiser to eliminate tax breaks and benefits for those that do not need them.

Incentive tax breaks for businesses were Obama’s proposed method for enticing businesses to hire American workers instead of sending needed manufacturing jobs overseas. He proposed doubling tax deductions for manufacturers to make products in the US and providing extra incentives for opening a factory in the struggling rust belt or other communities that lost manufacturing jobs. He intends to take tax breaks away from companies that continue to send jobs outside of the country and impose a minimum tax on all multinational companies that shelter their profits overseas. Those taxes should fund the policy of lowering taxes on the companies that insource jobs and put Americans back to work.

Republicans disagreed with the president’s views on the economy. From where they sit, though he bears no blame for the problems he inherited, his policies made the situation worse. However, their performance is lackluster. Their own poll numbers are plummeting. Though the opposition was careful not to seem disrespectful, Congressional Republicans need to work on their poker faces.

The president offered to work with anyone, but even before the election was on the near horizon, the chances for agreement on anything serious were so small as to be invisible. The list of proposals is an election year gambit. He makes a very public effort to work with Congress. Cynically, we all know it is doomed to fail, but it frees him to accuse the GOP for obstructing his programs and plain doing nothing during the campaign.

Newt Gingrich received 40.4% of the votes in the South Carolina Republican primary.

Former frontrunner Mitt Romney secured just 27.8%.

Much was made of Gingrich’s handling of the allegations from his ex-wife about his desire for an open marriage. Perhaps, it won him the state. Gingrich turned the attack around on the moderator with a diatribe on the media.

The big media outlets tend to be liberal. Therefore, Republicans, as a whole and conservatives in particular, historically bear the brunt of their barbs. This has been going on since 1962, and the days when Nixon lost the California governor’s race. Conservative Republican voters love the tactic and usually meet such comments with thunderous applause.

Attacking the media works as a defense against unflattering news coverage and a way to deflect attacks by his opponents. Attacking the media pushes the actual issue of Gingrich’s marital problems into the background. Romney’s attacks are attributed to his liberal leanings.

This strategy may not work as well with the general electorate, though. Most voters have a very different attitude towards the big media outlets. So, he should not get too comfortable with its success.

It is somewhat ironic that the first debate opened with a question that gave Gingrich an opening for a media attack, and he did not use it. Instead, he questioned Romney’s record of job creation as governor of Massachusetts. Remember Newt is coming off his successes at skewering Romney about his Bain history and putting Americans out of work.

During the first debate, Perry had not withdrawn yet. He brought up Bain, and Romney’s record as a vulture capitalist. Lots of irony here; once again his opponents are attacking him for being a capitalist which normally is a plus among Republicans. He also called for Romney to release his income tax records. Romney sidestepped the subject. The moderator asked him directly later whether he would release his tax records. He did a little dance around the subject seesawing back and forth. Eventually ending with maybe, if I am the nominee, I’ll release them in April. Audience members had to wonder what exactly he was hiding. The next week they knew, but that’s for the Florida primary next week.

South Carolina was the first state to secede during the Civil War, and the candidates seem to be playing around the edges of deep-seated beliefs about minorities. The moderators play the race card with Gingrich who called Obama the food stamp president. He previously stated that poor kids need to learn a work ethic. One of the moderators, a minority member himself, pushed about that statement. Gingrich replied that he realizes it is considered politically incorrect to raise uncomfortable facts about minorities.

The debate covered many topics, but foreign policy never came up. The economy is the paramount issue in the country’s mind, but the Presidency comes with the duties of Commander in Chief. With the instability of the leadership of Iran, it is not outside the realm of possibility that some sort of military action may be required to keep the flow of oil moving for the world, especially since the EU has promised to boycott Iranian oil as well. Call me old fashioned, but it would be nice to hear the candidate’s views while there is still a choice.

The unemployment rate dropped to a three-year low of 8.5%. This is the fourth month of declines in the unemployment rate. The sixth consecutive month of 100,000 or more jobs’ gains posted, according to the Labor Department. 200,000 jobs were created last

month, well above the prediction of 155,000 from an industry survey. 2011 saw the most jobs created since 2006 at 1.64 million; the job figure works out to an increase of 1.3%.

There are two caveats to remember here, though. Many Americans have stopped looking for jobs, and this group is not covered by these latest figures. The other issue is seasonal jobs. The government experts do their best to adjust the figures to consider these temporary jobs, but they do not always get it right. One area where this problem may lie is the figures for transportation. Holiday time sees additional hires for messengers and couriers; these jobs may disappear now that the seasonal rush is over.

The American job market has a long road ahead to regain the remaining 6 million jobs lost since the recession began. The public and private sectors basically swapped numbers with public shrinking and private gaining. The figure for the loss of government jobs was greater than the entire growth of manufacturing and construction combined.

Three factors played an important role in the workers who were hired age, education, and industry. Education and industry also defined the types of jobs created. The largest boost came from business services, which encompass a variety of highly educated white-collar employees. Administrative support positions in temporary agencies also made up much of the growth. Health care, social assistance and the hospitality businesses much of them in food services gained many new jobs, too.

The key element for workers landing jobs was their education. More than half of the jobs added went to Americans with a college education. Meanwhile, workers with only a high school diploma lost half a million jobs.

A troubling dichotomy is developing in the nation’s workforce. Jobs requiring higher education are increasing on the upper end of the wage scale. On the lower end, service jobs are proliferating as well. This leaves the middle wage bracket sluggish. The manufacturing growth we saw replaced a very tiny fraction of the jobs that disappeared over the course of the recession.

Age of workers was the next segment that showed a marked split. The unemployment rate for both sexes over 20 was approximately 8%. In sharp contrast, the 16 to 19 age bracket’s rate was 23.1%; the good news is it was down from 25.2% just over a year ago.

Despite the troubling lack of mid-wage jobs, economists are cautiously optimistic that a phenomenon called the virtuous cycle may be developing. When more unemployed US workers land jobs, they have money to spend, and it gets pumped into the local economies and disperses in a ripple effect. This encourages businesses to create even more jobs and begin another round of hiring. The cycle repeats—more jobs, more spending, and increased business demand.

Of course, the opposite happened during the recession and is underway in Europe.

As workers lose jobs, they spend less money. Businesses see their sales fall off and layoff more workers. This starts up another round of decreased spending and more layoffs.

The signs are encouraging, but experts predict it may take years regain job losses over the past three years.

Whatever you feel about the Occupy Movement, the figures coming out from the federal government keep reinforcing their claims about the dichotomy between the 1% of the very rich and the 99% of the rest of us. Truly, to be fair it’s more like 90/10. For most of that 90%, real median income fell again last year for the third year in a row. Real estate values keep sliding and the stock market has been down more than up. Given that, no one should be surprised that household wealth dropped again in the second quarter.

The situation is now assuming a worrisome level in American’s minds. A substantial gulf exists between the wealthy and those of average means or less, and many feel there is a conflict between the two groups of society.

A new survey by Pew research reveals 66% of US respondents believe there is a strong or very strong conflict between the haves and have nots. The same level of conflict for question was the response of only 47% in 2009. The next level of conflict, not very strong, was selected by 23% of Americans taking part in the survey. The smallest group of 7% saw no conflict between lower income US residents and the wealthy. 2,000 people countrywide participated in the study.

The conflict between income classes now is the biggest concern overshadowing other social issues like racial or cultural conflicts. However, there was no support for solutions like government action to address income equality.

US residents have not changed their minds about how the wealthy amassed their personal funds. Many, 40%, still think that wealth is inherited or earned by attaining positions or opportunities through influential individuals that the wealthy know. Those who believe the wealthy attained their financial status through hard work and parleying their education into high income positions were nearly the same percentage.

Currently, the responses do not indicate that Americans bitterly resent the dramatic gap in personal household levels. However, the issue may still influence the way they vote in the upcoming election.

The wealth of members of Congress compared to their constituents is an issue that has been receiving media attention and even surfaced in the GOP debates. Research showed that nearly half of the nation’s lawmakers are millionaires. The same study revealed that personal wealth of members of Congress has grown over the past six years. This encompasses the time period of the Great Recession and the average American’s wealth declined during the same period.

The Republican Party’s frontrunner for the presidential candidacy, Mitt Romney has one of the largest personal fortunes of a candidate in years. His joking offer of a $10,000 wager with fellow candidate Newt Gingrich drew jibs from his opponents and media commentators. Republican lawmakers did not do themselves any favors during the recent Social Security payroll extension voting when they gave the impression of opposing a tax cut for the average American taxpayer. The Republican House members publically trivialized the savings, while Obama took the fight to social media asking what the loss of the average $80 a month would mean to families.

Another issue that may affect voter’s behavior that is influenced by the income gap may be the perceived fairness of taxation. Many large corporations pay little or no corporate income tax, and wealthy Americans get many of the same tax breaks as average income US residents. In fact, Warren Buffet, made headlines when he challenged the “billionaire friendly Congress” to quite coddling the extremely wealthy and make them pay a larger share.

Historically, the nation’s lawmakers were wealthier than most Americans. In the past, however, a segment did represent the blue-collar class. Recent financial disclosures reveal that today’s denizens of Capitol Hill have widened the gap between their incomes and that of their constituents.

In the past 35 years (1984-2009), roughly a generation, the average net worth of a House member more than doubled. The actual numbers come in at an increase from $280,000 to $725,000 (adjusted for inflation and excluding home equity).

Now for the bad news, (you knew it was coming, right? American families’ wealth barely changed. In fact, the small change in the same period was a decline from $20,600 to $20,500, in 2009 dollars.  Figures like this make the Occupy Movement’s slogans appear more credible.

A couple of facts about the figures are important. The year of 1984 was selected because it is the earliest one that has across the board wealth figures for the country’s representatives. More importantly, home equity figures are excluded because they are not required under the reporting process. Of course, despite the decline in real estate values, if the equity data were included, the gap would probably be even wider. This assumption is based on the fact that lawmakers live in the better parts of their districts. Higher end properties, by and large, did not devalue as much as the average suburban property.

We have pointed out previously that our lawmakers seem to be out of touch with the realities of American’s day-to-day financial circumstances. These figures bring that contention to life. Of course, they would view $80 a month, which is the amount represented by the social security tax cut, as a trivial sum; it’s hardly pocket change for them.

In 1984, the top 10% of US families were worth six times the average family’s wealth. Thirty-five years later in 2009, the personal wealth of the top 10% grew to 12 times the average family’s net worth. Both sets of these figures include home equity.

The economic inequality in American society is also present in the microcosm of society that peoples the nation’s chambers of government. It’s a given that average personal wealth has grown. In addition, the ratio of House members that had little personal assets beyond their home equity has dropped. In 1984, one in 5 had zero or less net worth. In 2009, that proportion is one in 12. Remember, home equity is not taken into account in these figures.

It’s clear that members of Congress are getting richer compared to the average American worker. You might be surprised to learn they are also outstripping other wealthy Americans outside of Congress.

The average personal wealth of members of Congress jumped 15 percent from 2004 to 2010.  At the same time, the net worth of the top 10 percent was essentially flat.

According to financial industry experts, the average net worth of the other 90% of the American population declined 8% since 2004.

All across the country, states are facing huge budget deficits because of dramatically plummeting tax revenues. California is facing some of the toughest decisions.  Currently, unemployment is not so golden with figures above 11% –well above the national average of 8.6%. The value of the state’s real estate remains tarnished with record declines in once sky-high property values. So, the governor started looking around at programs to cut. Redevelopment agencies took their place on the chopping block. Two laws virtually eliminated the programs unless they paid the state a portion of their budget allocations. These agencies, which received what amounted to a death sentence, utilize tax money to renovate blighted neighborhoods.

There are approximately 400 such agencies in counties and municipalities within the state. These entities receive a percentage of property tax proceeds to improve sections of their districts sliding into blight. California’s thinking is to eliminate the property tax drain, which then would be pumped into schools. California does subsidize school districts with tax revenue; so, returning these funds to the school budgets reduces the state’s contribution. This is where the savings will materialize. The move may save the state more than $1 billion in the current fiscal year, which ends June 30.

The way this story plays out should be filed under the “be careful what you wish for file”. Now you may not care too much about California, if you do not live there, but you may see other states (including yours) copying the idea. It seems logical that all the states are looking at each other’s programs for ideas to get out of the hole.

Of course, it is no surprise, given that California is one of the most litigious states in the nation, the threatened agencies sued to preserve their turf and funding. The California Supreme Court struck down the ‘consolation prize’ law that allowed agencies to remain in business if they shared their revenue with the state. Much to the entities’ chagrin, the main law, which wiped out the agencies in the first place, was upheld. According to the court, since the state has the right to create such agencies, it also has the authority to abolish them when it deems them unnecessary.

County spokespersons throughout the state supported the state’s action. Of course, eventually, they will reap the benefits of the money formerly funneled into the redevelopment agencies coffers. Some county officials claimed that the redevelopment programs evolved far from their intended altruistic purpose–instead of eliminating blight, they benefited private commercial and moneymaking ventures.

The irony of the situation is the lesser law ruled unconstitutional would have allowed redevelopment agencies to continue their programs if they shared their revenue with the states. The one that dissolved their existence after February 1 was upheld. Representatives of the agencies would have preferred the decisions to come down in the opposite order. You do not get to pick and choose when it comes to the law, though.

Experts postulate advocates for the agencies will return to the Legislature to ask lawmakers to recreate them, probably under a similar revenue-sharing format to the one that was overturned by the court.

Nationwide, the recession has blasted nearly every state’s tax revenue on multiple fronts. As a result, states are trying to reduce the damage by cutting services and long established funding programs. One of the areas hardest hit is higher education. It is a numbers game, public school districts are running in the red; K through 12 programs take more and more of the education funding. The foremost public universities (public ivies) are losing their ability to compete with prestigious private universities. In the decade since 2000, state spending has dropped to one-fifth less per public university student (adjusted for inflation). This has social consequences; traditionally, these schools provide lower and middle class students with the tools for upward social mobility.

Five public universities occupy this group. Berkeley, UCLA, and the Universities of Virginia, North Carolina, and Michigan together educate many more students than their Ivy League counterparts. All by itself, Berkeley enrolls as many low-income students, based on data from federal Pell grant applications, as the Ivy League Universities accept collectively.

The dwindling funding numbers are troubling. In 20 years, state funding at U of VA shrank from 26% to 7% of the school’s operating budget. During the same period, the drop in state funding for the U of MI was even more dramatic—from 48% down to 7%.

UC Berkeley, long considered the most prestigious of this elite group of public universities, is feeling the pain because California is teetering on the edge of bankruptcy. Unemployment is over 11%, and housing which was one of the main assets in the states’ economic wealth has tanked. Since 1991, the state contribution to the university diminished from 47% to just 11%. To make up the shortfall, the university has doubled tuition in the last 6 years. Berkeley is admitting more out of state undergraduates, who pay 3Xs the resident tuition to obtain the cachet of a Berkeley degree. In a mind-blowing reversal of the university’s former budget funding, this year UC Berkeley collected more money from student tuition than it received from the state of California.

In an effort to win back resident applications, Berkeley instituted financial aid offers to families with household incomes up to $140,000. The revolutionary Middle Class Access Plan, places the university on a comparable level with Harvard and Yale by capping parental contributions at 15% of household income.

Recent cuts to the University of California annual budget, which has already lost nearly a billion in funding since 2007, will amount to an additional $100 million decrease in state funding. At this rate, Berkeley’s resident tuition could nearly double in four years from this year’s tuition cost of $12,192 to $22,000.

As it is, seniors pay 50% more in tuition and fees than when they started as freshmen. Yet, class size is rising. In 5 years, the ratio of students to faculty members increased from 15 to 17. Students often have trouble getting the classes they want. Many classes have wait lists as long as the class size. More and more Berkeley students must make the hard choice between a less relevant alternative and putting off graduation; choices students at community colleges make far more frequently than university enrollees do.

Berkeley is the jewel of a higher-education system that rewarded merit above wealth, access before privilege. This was far more ambitious than mere public education. Only Harvard rivals Berkeley’s graduate programs. The university consistently tops academic rankings of public institutions. Its campus has parking spaces reserved for Nobel Laureates.

The housing debacle was a major force in the economic crash that swept through the world beginning in 2007. The system of high-risk loans converted into securities affected banks, countries around the world, pensions of billions, and millions of American homeowners. Through it all, there have been bailouts and obscene salaries and bonuses but not much accountability. The Securities and Exchange Commission aimed to change that when it recently filed civil suits against six former executives from federal mortgage lenders Fannie Mae and Freddie Mac. The action alleges the lenders’ top officers kept the extent of the institutions’ holdings made up of risky mortgages secret in the pre-crash period.

Driven by greed, the excessive risk-taking permeated the lending industry, and the bank crashes nearly drove the nation into a depression. The American people and the government want a scapegoat for the past 4 years of financial turmoil. The two agencies are very visible symbols of all that went wrong. Their actions are even more embarrassing to the nation’s financial credibility, since the two entities are arms of the federal government’s housing programs.

According to SEC representatives, the two federal lenders misrepresented their sub-prime exposure. Okay, that is legalese speak that means they lied, allegedly. Why?

Because they wanted investors to continue to put money into their securities. You don’t tell individuals or investment firms that your offerings are built on a house of cards.

Sub-prime loans were rampant throughout the lending industry in 2007. These loans required very little /no documentation from borrowers. Essentially, these mortgages were funded without any proof that the homebuyers had the ability to repay them. Surprise, surprise… Many could not and the foreclosure cycle began.

According to the complaint, Fannie Mae owned up to only about one tenth of the loans held by creditors ‘with weak credit histories’ that were carried on its books in 2007. The lender even went so far as to tell some investor groups that the securities they were buying had no ultra-risky loans in the package.

To date, the SEC has filed 38 complaints against lenders and other financial institutions.  In the four years since the financial crash, public opinion ran high against the government watchdog because it failed to uncover the risk and take steps to prevent the collapse.  Many also think the effort to hold offenders accountable is too slow. Investigation of the two federal lenders took more than two years. One wonders how fast these critics think any government agency moves. If it takes two years of digging after the effects of the misconduct are public to file charges, how realistic is it to expect the bureaucracy, armed only with suspicions, to pierce the web of underreporting and misrepresentations that permeated an entire industry quickly enough to stop the train wreck.

The SEC settled a similar action with Angelo Mozilo, former CEO and founder of Countrywide Financial. The $22.5 million settlement represented the largest judgment levied against a senior executive of a public company. Forfeiture of an additional $45 million in compensation was a condition of the fine. Of course, Mozilo did not admit or deny any wrongdoing.

America is a capitalist country. All businesses are seeking profits. The laws of supply and demand created the proliferation of sub-prime loans. Yet, judging by the financial institutions’ methods, ethics appear to be a thing of the past. It is disturbing that these executives continue to hop from one company to the next, spreading the contagion throughout the industry. The fines seem like a lot of money to the average American, but it’s not enough when you consider the misery the industries’ actions caused and continues to cause for millions of American households as well as all the government entities that depend on their tax revenue.

Capitalism and privatization is coming to space travel. The US space program wound down over the past two decades. In its early days, it fired the imagination of generations. The entire nation was spellbound when man first orbited the earth and again when we walked on the moon. Astronaut costumes were a perennial favorite with children for Halloween, and for years, an astronaut was a popular answer from kids when asked, “What do you want to be when you grow up?”

Perhaps, it is memories from those days coupled with years of space television shows and movies that prompted a handful of executives with unlikely job histories to enter the commercial cargo and future space travel for private citizens industry. Many of the men heading up these companies made their money in computers and on the internet. The giant aircraft maker Boeing also has a commercial cargo and citizen space-travel program.

Recently, Paul Allen, formerly at Microsoft, unveiled his plan, which utilizes a huge plane reminiscent of Howard Hughes’ Spruce Goose. Using the giant twin-fuselage plane is a safer, more efficient and cost-effective launching system than the ground launch rockets used by NASA in the past. The ETA for its first flights is five years. The first phase intends to send government and commercial payloads, with manned flights to follow within another five years. 2016 seems to be the year for frequent private space flights, as all the players in this story have a five-year plan.

This is not Allen’s first foray into the commercial space industry. He was a major investor in the development of SpaceShipOne, which accomplished the first spaceflight from the private sector in 2004. SpaceShipOne pioneered the concept of launching a rocket from an aircraft already in the atmosphere. The technology is still alive in Sir Richard Branson’s Virgin Galactic project. The program is building SpaceShipTwo, which will pioneer space tourism.

The plane, which is the centerpiece of Allen’s Stratolaunch, could be the largest craft to fly ever. The specifications include a wingspan of 385 feet (longer than a football field) and it will weigh 1.2 million pounds gross. Six Boeing 747 engines will lift it into the atmosphere. The plane will need a 12,000-foot runway just to get into the air. With a flight range of 1,300 nautical miles, it is capable of flying high into the atmosphere. The craft will carry under its belly a space capsule with its own booster rocket and drop it into the atmosphere where the booster rocket will propel the capsule into orbit. This method does away with a launch pad facility and the expense of rocket fuel for liftoff.

The company of another Internet tycoon, Elon Musk of PayPal, will build the space capsule and booster rocket.  Musk’s Space Exploration Technologies, based out of California, already builds a successful commercial rocket.

Another company looking to fill the void created by the retirement of NASA’s space shuttle is Boeing Corporation. The company’s ship resembles the space capsules we are all familiar with. The program favors the more traditional ground launch method and will use Atlas 5 rockets; the rocket is a proven workhorse with 100% launch success.

Boeing’s vehicle does not have an official name. It is referred to as CST-100. CST stands for crew space transportation, and the 100 represents 100km the boundary between earth’s atmosphere and space. The first two flights of Boeing’s craft will be unmanned; the third, expected by the end of 2015, will make a flight to the International Space Station to practice docking, manned by a pair of Boeing astronauts. As long as these first three flights are uneventful, Boeing plans commercial flights by 2016.

Of course, the bottom line for all these companies is to continue the NASA’s tradition at a much lower price, and Boeing is no different. Eventually, private space travel and independent private space laboratories will make the transition from a dream to reality.

NASA is providing funding to Boeing. Though the space agency is not sending astronauts into space anymore, it still has federal funding and intends to use part of the budget to support private for-profit commercial programs at bargain rates. Eventually, NASA can continue its space research and exploration by purchasing the best seat at the right price from these new pioneers in space travel.

It is a familiar scene resonating with most American’s childhood memories and numerous movie excerpts:  A child on Santa’s lap reciting the wish list of desired Christmas gifts.

The recession rattles its chains like Bob Marley’s ghost casting a pall over the joyful aspects of the season. The impact of America’s financial woes is present in the first changes made to the training program of one of the more famous Santa Claus’ Schools in 75 years.

Aspiring Santas learned quickly to estimate the financial standing of the child’s family.

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