If demand is low ... then one might ask why. Right now Americans are saving & paying down debt because they are uncertain about their future (near future of the economic situation.

If your neighbors are unemployed, and you still have a job, you just might be thinking that you should do some debt reduction & saving, and defer anything but necessary purchases.

Uncertainty about the economy is also at the root of lending rigidity. Banks don't want to lend to homeowners who may lose their jobs or to companies whose continued existence may be in question.

I would have to disagree with Newt that reducing (or not raising) taxes on the middle class serve no purpose. The middle class may not create jobs, but if they have to live on a smaller paycheck, they will buy even less beyond basic necessities.

I'd suppose there is an overlap to some degree ... a "middle class" person (earning under $250K/year) could easily be a small businessperson. If small businesses are responsible for the majority of jobs (and statistics always seem to indicate that), then we may very well have to protect those people in the $150K to $250K earnings category; perhaps more so than those earning $1,000,000/year. I'm sure the guy making $60K could view the $200K fellow as "rich". I'm also pretty sure that professional athletes earning tens of millions each year aren't actually creating a lot of jobs when people can't afford tickets to the games because they've lost their jobs?

If there is any solution to America's labor cost problem ... I think of the fact that consumers have always been willing to pay more for products that excel in quality. Toyota grew on that premise. Sony was long known to have top quality in electronic products (I don't know if that's still true). They cost more, but they were worth the cost. My Panasonic microwave finally bit the dust after 28 years. I replaced it with, YES, another Panasonic ... which was 2X the cost of some other brands I could have purchased.

So, if US workers are paid more, and the products they produce cost more, then we expect them to be worth it. That also requires a commitment on the company to provide product designs that are commensurate with the quality labor that builds them.

Other countries capitalize on quality over price in products. When you have a quality product that isn't considered "disposable", then it also makes jobs for those who repair those quality products.

I buy a lot of clothing from Lands End and LL Bean. I'm really ticked off that their quality is not what it used to be years ago. If they had maintained their previous quality, I would spend the extra $ for it ... even if I had to buy fewer pieces of clothing.