Kudlow's income is based in the market. The market has done well in the last few years. The market did well under Clinton too. The recession was mild and the markets weathered 9/11 well. The problem with this market based view is it ignores the cost of these gains to the US and the non-rich (less than 20 million? in net worth)

Easy money Greenspan permitted business to profitably borrow money to fund operations. In the past, borrowing was done primarily to fund capital improvements that were profitable in the mid to long term and good for everyone. Capital improvements are a good thing and the tax structure rewards these by cushioning the blow of the investment to the bottom line. Under Greenspan the markets rewarded the use of credit for consumables. This has little effect on the workers income because the company is not rewarding them for hard work or making the company better. The executives get rewarded because they improved the bottom-line without doing anything but borrow money. The apparent profit drives up the stock price which permits the companies to use their equity to buy up other companies, not reward the workers.

The consumer has done the same thing. Cheap credit has permitted the consumer to easily borrow against their home equity and spend it on what ever they want. This is good for the markets because consumers drive the economy. The US savings rate is now negative yet consumer spending continues to rise. As a result, we have no savings, high debt to income rations and extreme vulnerability to a rainy day economy.

We are extremely vulnerable to China. Under Clinton we did not need to borrow much from foreign investors because we did not need to. We did not rely on China to fund the government. Democrats tend to be tax and spend party but Republicans have become the borrow and spend party.

Since Bush took power, we have borrowed a trillion dollars from the Chinese. The Chinese don't like us much but do like our money which flows freely from the consumers buying Chinese goods. (note that we borrowed to buy those goods.) The Chinese now hold the cards on our economy. If they were to dump our paper on the open market we would have to raise interest rates to get anyone to take the debt. The Chinese just bought control of the US economy to be used at a later date. They can us into the ground when they don't need us anymore.

Paulson is a consummate deal maker. That is all he has done. He got 300 million for his excellent deal making. He is so good that he frequently represented both parties in the deal. He is using that skill to forestall any measures to control the Chinese both because it would aggravate them, and, all this cheap labor and goods from China is great for the multinationals bottom line and thus the market.

Note that China buys oil from Iran and Chavez with money they make on our treasuries and manufacture of goods we buy. This means that the tax payers and consumers are supporting Iran's rise to power. Kinda ironic.

So the average American has made little to no gain. The only workers families that saw significant increases in income were the folks on wall street. Take that away and the average family income in the US declined against inflation.

We are now beholding to the Chinese. Wal-Mart, if a country, would be the number 8 trading partner with China. The consumer in the US loves this cheap stuff and is willing to risk their future economic well being to buy it. The profits go off-shore and even to the terrorists.

The markets do not care much how much the tax payers spend on the immigrants as long as they keep borrowing and spending. It is essentially a corporate subsidy and increases profits because they do not have to pay health care, workers comp, etc. on illegal aliens. Good for profits, good for the market, bad for the US.

Good for Kudlow and the markets, bad for most Americans.