The Future of NATO

Shortly before his retirement from the position of U.S. Secretary of Defense, Robert Gates made a speech regarding the future of NATO. Support of NATO has been a fixture of U.S. foreign policy since 1949, but the demise of the Soviet Union in 1991 calls its purpose into question. Even though NATO membership has grown since the end of the Cold War, the United States still provides the lion's share of military support for the alliance. As Gates noted in his speech, there is a "two-tiered" membership structure where there are members "willing to and able to pay the price and bear the burdens of commitments, and those who enjoy the benefits of NATO membership but don’t want to share the risks and the costs." Europe's military spending has continued to drop over the last decade or so in comparison with the United States. Looking at the military budget's of all of NATO for 2010, the United States leads with 687 billion dollars, trailed distantly by France and the UK with 61 and 57 billion dollars respectively. Even if you combine the military budgets of the rest of NATO together, the United States still spends about twice as much each year as all of the rest of the alliance.


Although every member still gets an equal seat at NATO's master planning conference table.

The NATO military interventions in Afghanistan and Libya certainly show the differences in military strength and willingness to fight between the United States and its allies. Looking at Afghanistan, for example, the United States currently has 90,000 soldiers deployed, more than double the rest of the International Security Assistance Force combined. The initial air campaign against the Taliban was also largely led by the United States, including helicopters, carrier-based airstrikes, and AC-130 gunship assaults.


American air-power at work.

Even though every NATO member endorsed intervention in Libya, more than half have not contributed anything at all to the effort. Even the NATO allies that did deploy aircraft to Libya are sometimes placed under severe restrictions by their home countries that limit their usefulness. For example, many allies deploying aircraft to Libya only authorize their air forces to enforce the no-fly zone and not conduct any bombing at all. This means that they may shoot down Libyan aircraft in the air. As there are no Libyan aircraft flying around anymore, that's not a very challenging task.


Mr. Gates sees a problem with this situation.

The question becomes, will the United States continue to provide the bulk of funding and military support for this alliance when the rest of the allies are not contributing an equal share of the budget? Given the current financial problems in the United States, it seems likely that NATO contributions will be one promising area to cut in the future.


After all, these things are expensive!

Conclusion
The contributions of NATO members to conflicts in Kosovo, Afghanistan, and Libya are certainly appreciated by the United States, but the unequal military contributions of the United States and the rest of the alliance will lead to tension in the future. It may reduce the importance of NATO or simply end the alliance altogether. Europe needs to take more responsibility for their own defense and not rely on the United States to take the lead in every major military action.


Particularly when a little bit of ocean separates the United States from the conflict zones in North Africa and the Middle East.

College is an Investment

The current perception in the United States is that a four year college degree is the secret to financial success. Many high schools expect their graduates to move on to a university and continue their education. Students who don't plan to move on tend to be lectured by counselors, teachers, and principals about how they are giving up on their future dreams by not getting a degree. For those who do choose to advance their education, there are many scholarships that can be applied for. Unfortunately, for most students, scholarships alone are not going to be enough to pay for books, tuition, rent, and other expenses. This leaves loans, either through the government or private parties, as the only option to afford a four year degree. This is where it becomes critical to plan ahead when seeking a degree.

The Reality of a Degree
When considering college, the first question to consider is "why am I doing this?" Unless your family is independently wealthy, the purpose is usually to increase your lifetime earnings potential and find a good career. You may also learn a lot of interesting facts, make some good lifelong friends, find a girlfriend/boyfriend, and have other valuable experiences, but your financial future should be one of the primary reasons for attending.


If your degree isn't passing these out, you might want to pass on it.

It's true that those who have a college degree tend to make more money overall than those who don't. Unfortunately, that depends strongly on what degree you get while you're there. Some majors don't leave students with great job prospects after graduation. For instance, you might go through four years of college, get an English degree, and be completely unable to find a job or only find one that barely pays above minimum wage. Additionally, tuition fees have risen dramatically over the last decade and financial aid has not risen correspondingly. For instance, one political science student in this story has $140,000 in debt and was only able to find a position at a non-profit that pays poorly.

It's important to look at what job opportunities are out there for your prospective degree choice. Look through job postings that you would qualify for with that degree, take a peek at the average salary, and evaluate the tuition and fees of your college to see whether you can make a living doing that. Consider whether you're willing to move to find a job or not-if you are you're likely going to have a lot more options. If you live in a state like Michigan that's currently losing a lot of the population, you're likely to have a lot more difficulty finding work than if you live in Texas.

Where to go to School
One factor that makes a huge difference in the price of a school is whether you attend a public or private university. For example, compare the price of one year at private Albion College with the public University of Michigan. One full year of tuition at Albion is about $32,100. A full year at the University of Michigan is about $12,634. If you include room and board, Albion costs significantly less there and the prices become closer, but are still roughly a $10,000 a year difference.

Another significant expense is choosing to attend school outside of the state you have residency status in. At the University of Michigan, Michigan residents pay that $12,634 a year fee, but out-of-state residents have to pay $37,782, about three times as much. Over four years of school, that's a solid $90,000 price difference. Some universities allow certain out-of-state attendees to receive in-state tuition, but it's very important to look into that before picking a school.


You may not need a passport to cross this line, but it will certainly make college more expensive!

Attending a community college, even though it is not as prestigious as a four year university, can save you a huge amount of money. 18 credits for two semesters at Washtenaw Community College is only about $3,500 for a resident. Compared with $12,000 for a year at the University of Michigan that's quite a bargain! One nice way to utilize community colleges is to take classes that transfer to a four year university. That way you get the prestige of a bachelor's degree from that larger university but pay significantly less money.


The only downside is the line for using the Community College's computer.

Where to Live
The final major component of the price of college is housing-and there are important choices to make here too. Living in the housing provided by colleges and universities is rarely a good deal. Usually you will end up paying $5,000-$10,000 for two semesters of housing. Assuming you're at school for about 9 months of the year, that's %555-1,111 a month! That fee also typically includes a roommate and sub-par housing conditions.


Roommates are also typically randomly assigned.

A less expensive option is to live off-campus. Most colleges and universities tend to draw a large number of rental properties in the area, ranging from apartments to houses. With the aid of a few friends, the rent for these living arrangements can be quite reasonable.

By far the best deal, if you can get it, is to live with your parents until you're done with school. It may be a bit hindering but it saves you around $10,000 or so a year in room and board. For a 4 year degree, that's $40,000 in your pocket. For a lot of college graduates I know, that 40K would be enough to pay off all their student loan debt and leave them with no debt as they begin their careers.


Good times!

Conclusion
Before planning which college to attend and what degree to major in, look at what the purpose of college is for you. For most, the purpose is to achieve financial independence and to find a solid lifetime career. Hold that purpose foremost in your thought process when looking for schools to attend and you will graduate with much less debt and a better career future than many of your compatriots.

National Balanced Budget Amendment

One of the more popular ideas circulating to reduce federal government spending is for a balanced budget amendment to be added to the U.S. Constitution. Almost every U.S. state constitution currently has some version of a balanced budget amendment in place. Republican presidential candidate Rick Perry has said that it is one change to the Constitution that he would strongly support. Newt Gingrich and several other presidential candidates agree with Perry, a balanced budget must be a short-term goal for the United States. It's also a popular idea with voters; one poll shows that about 66% of Americans want a balanced budget for the federal government.


Governor Perry's preferred method to deal with federal overspending.

But what is popular is not necessarily a good idea. Let's look at the history of the U.S. budget and show how a balanced budget amendment would work and see if it seems like a great idea for the federal government.

A look at Federal Debt
One important fact to keep in mind when considering a balanced federal budget is that the United States government has always been in debt. Budget surpluses have occasionally allowed for a large portion of that debt to be paid back, but it has never been paid off. Even when it has been mostly paid off, a war usually ensued that rapidly escalated the debt back to a high level. For a recent picture of the debt, here's an image showing it since 1940, with a sharp increase right at the start due to WWII.



Since the United States is still involved with two wars and also invests a significant amount of money into combating worldwide terrorism, it doesn't seem out of place for there to be significant government debt right now. Perhaps once President Obama's withdrawal plan for Afghanistan is completed it will be possible for the debt to be reduced significantly. Wars are expensive, so it shouldn't be a surprise to anyone that the debt has kept increasing.


Military supplies brought to you courtesy of the national debt.

The addition of revenue loss due to the large tax cuts passed during the last decade basically guaranteed that the national debt was going to be quite large. With the description of the current situation out of the way, let's look at the inner workings of a balanced budget plan for the government.

How a Balanced Budget Amendment Works
Fortunately, it's easy to see how a balanced budget amendment works since most states have one in place. They force the state's legislature to make up for any budget shortfalls each year by reducing spending or increasing taxes to ensure that the state does not fall into debt. There isn't much tolerance for increases in taxes lately in the U.S. so states have had to rely on spending cuts in order to meet their balanced budgets. This has resulted in layoffs of state employees and deep cuts in spending due to falling tax revenues stemming from economic turmoil from the recession. Although this has been painful for vulnerable segments of society that are reliant on state programs for support, state spending cuts typically are not that noticeable for citizens who can support themselves financially. Unfortunately, that would probably not be the case for federal spending cuts.

State vs. Federal Balanced Budget Amendments
The biggest reason that state spending cuts are not all that noticeable for most of the population is that a lot of the most important spending, such as Defense, Medicare, and Social Security, takes place at a federal level. The federal government also gives a lot of money to states to fund education and other state programs. So, even if Maryland decided to not spend any money for a year, they would not be vulnerable to foreign invasion since they're still protected by the national military and some services, particularly those directed toward the elderly, would still be provided courtesy of federal spending. Additionally, while it would be painful for residents of Maryland, the rest of the country would likely not even notice.

In comparison, if the federal government needed to cut back on spending suddenly, the entire country would feel the impact. The federal government spends trillions of dollars each year, including billions of dollars that go to each state in the union. The problem with a balanced budget amendment is that the federal government responds to major challenges for the country.


Such as this, for example.

So, if something like Pearl Harbor were to occur today, the states are not responsible for the response to it. It's the federal government that has to rebuild the Pacific fleet and create a military capable of fighting in Asia and Europe. This is why it's acceptable for states to have balanced budget amendments, they are not the level of government that responds to large-scale disasters. Even with major floods and hurricanes, it's the federal government that provides the bulk of the money for rebuilding efforts.

One important point to bring up is that proponents of balanced budget amendments do typically allow for an exception to be made in times of war and national emergency. Congress would be able to vote for a time of national emergency to be declared so that the need for a balanced budget could be ignored for a few years while the war or whatever is resolved. However, the current political environment in Washington shows that it may not be possible for Congress to agree on whether the country is in a major emergency or not. Earlier this year, Republicans and Democrats could not even come to agreement on raising the federal debt limit, even with months of warning, resulting in the United State's credit rating being reduced for the first time. Compromise just seems to be impossible in the government right now, so I wouldn't count on the political parties putting aside their differences to allow a little matter like a major war to determine that the balanced budget needs to be ignored for a year or two.


Particularly when some members of government point to federal spending as being a worse enemy than the Nazis.

The Potential Consequences of a Balanced Budget Amendment
So, let's say the worst case scenario of a major war or other unanticipated and extremely expensive disaster occurs and Congress doesn't agree to lift the balanced budget requirement to deal with the problem. Let's use the example of the wars in Iraq/Afghanistan as a new budget issue. They have cost around $3.7 trillion so far. That number is as large as the entire yearly U.S. budget! Now, that cost has to be spread over 10 years of budgets, but that's still a hell of a large unanticipated expense. Well, here's the budget:


What do you want to cut out?

Basically, no matter what part of the budget you want to cut, it will be a hell of a painful cost for the country. Perhaps that's part of the point of a balanced budget amendment, it makes for some really hard decisions that maybe the United States should have to make. But still, do you really want those decisions to have to be made while we're in the middle of a national disaster? In this instance, I think Rick Perry and other supporters are a little off the mark in what needs to be done to fix the U.S. budget. Yes, it needs to be reduced, but it should not be forced in this manner.


Without a serious discussion on the budget, we may end up not aiming at the right parts to cut.

Why Compromise is Impossible in Washington

Thanks to the political gridlock in Congress, the United States credit rating was downgraded by one of the credit ratings agencies for the first time in history. The most appalling part of this debacle is that it seems like a deal should have been made many months before the one finally passed on August 2nd. As I mentioned in a previous post, it would seem that the most obvious solution would have been to raise some revenues and also cut spending significantly. This solution doesn't give either party everything they want, but it is the only way to try and reduce the deficit without cutting spending, which does improve economic growth and protect vulnerable populations, to the point of crippling the federal government completely.

Instead of having this type of logical discussion and making a long-term solution, Congress chose to make ultimatums for weeks on end and eventually pass a half-assed plan that, if nothing else, did at least cut spending a little and raise the debt ceiling. It will also require both parties to have this same discussion in a couple years when the second round of deficit reduction occurs.


Delay is also known as success in politics.

This brings up the question, why does it seem like no one is willing to compromise at all in the federal government?

Requirements for a Compromise
Whenever people or groups disagree on what they want, a negotiation has to occur in order for a deal to occur. In order for a successful negotiation to take place, there has to be some overlap in goals, otherwise a compromise will not occur.

Let's use the example of Bob wanting to purchase a car from Adam.


Adam seems like a reasonable fellow to deal with.

Bob can afford to spend $5,000 for a car at this point. Adam's car is priced at $7,000, but he is willing to go as low as $4,500. As you can see, there is overlap in the price ranges here so a sale can theoretically take place.


A successful negotiation is possible, the car may be sold to Bob.

Now, if you change that same scenario but instead make Bob only willing to spend $4,000, look at how the picture changes.


No overlap here, a deal cannot be reached.

The problem is that the current Washington environment is the latter scenario. Both parties agree that spending cuts need to occur, to defense, social spending, and many other areas. Where the parties are split is on the issue of revenue increases. The Republican party, particularly the Tea Party faction, is completely unwilling to consider tax increases of any sort, even those caused simply by removing loopholes in the tax system. The problem is that so many Republicans have signed pledges with Grover Norquist's Americans For Tax Reform group stating that they will never ever vote to raise taxes in any way that they are left with no room to negotiate on the budget. If they choose to negotiate, they are harshly criticized by Norquist's group, which seems to have a great deal of power with the conservative base of the Republican party.

So, here's the image of the possible negotiation options for revenue increases right now:



It's enough to make you need a cigarette.

Illegal Immigration

I know this is a bit on the old news side of things, but I just found this great essay by Jose Vargas, an illegal immigrant who became a Pulitzer Prize winning reporter for the Washington Post.


I guess he isn't the happiest looking fellow out there either.

In Mr. Vargas's case, he was brought over by his grandparents and parents so he did not even know that he wasn't supposed to be in the United States until he applied for a California driver's license and his fictitious documentation did not pass muster. After living in the U.S. for that many years I certainly wouldn't see moving back to the Philippines to be "legal" as a viable option either. I will use Mr. Vargas's story to refute a few of the common stereotypes about undocumented workers.

Claim 1: They steal jobs from real Americans!
This claim is just silly. While it's true that there may be a few unemployed American citizens who want to do a job that is currently being performed by an undocumented worker, many do part-time farm labor or other sorts of menial jobs that don't pay that well, don't offer benefits, or are dangerous.

However, the main flaw with this argument is just that if you add more people to your community that means there is more work that needs to be done, thus creating jobs that way. For instance, let's say a town of 1,000 people grows to 1,500 people because some illegal immigrants move in. In one stroke there is a huge demand for housing, food, and all of the other services that the old residents use. This may increase competition for existing jobs for a short period of time, but the increased demand for products and services will eventually create new positions and careers.


This home brought to you by illegal immigration!

Claim 2: They don't contribute anything to the United States!
Well that is patently false. If illegal immigrants are performing a job they are certainly giving something back, even if it isn't much more than picking strawberries or mowing lawns.


Although they may have to take steps to conceal their identify while mowing.

In Mr. Vargas's case, he delivered many exceptional news stories throughout his career, including being part of the team that won a Pulitzer Prize for coverage of the Virginia Tech shootings. That's a hell of a lot more than I've contributed to society thus far.

Claim 3: Illegal immigrants use all our public services, commit crime, and drive states into bankruptcy!
This claim is one that I cannot refute out of hand, as there is some truth to it. For example, undocumented workers are only around 7% of Arizona's population but make up nearly 15% of people in their prison system. They also contribute to healthcare costs to some degree because they rarely have any form of health insurance. This is older data, but apparently around 59% of undocumented adults do not have insurance. The actual end cost for this is unknown. One estimate from the same article says that it costs California $1.4 billion a year, but two other groups that looked at California only found costs of $31 million and $17 million respectively.

The main problem with this claim is that illegal immigrants usually are in groups with a lower socioeconomic status than regular citizens. Among American citizens, those who are in poverty also are disproportionately in prison and uninsured. The other issue is that it ignores any revenue that these undocumented workers may be providing to the government, such as paying sales tax on goods. I don't have the exact figures for any of this, and I imagine such data would be difficult to collect, but it's something to consider instead of just looking at the bits of data about undocumented workers that are easy to collect.

Claim 4: They just don't belong here, they should stay where they were born.
The problem with this claim should be obvious, unless you are a native American you are a descendent of immigrants to North America. If the native Americans had had an immigration office, you would also be a descendent of illegal immigrants, as the Europeans certainly did not ask for permission to enter the area.


The face of illegal immigration!

Conclusion
I congratulate Mr. Vargas on his courage in coming forth with his story; hopefully it will help some people realize that illegal immigrants are people who can contribute to the United States, not people "stealing" jobs and public services from Americans.

The Consequences of a Smaller Government

In the ongoing US budget discussions, one issue that does not seem to be addressed often is what the actual consequences of a smaller government presence will be for citizens. The main arguments are about taxes, social security, medicare, and other large budget issues for the federal government. However, federal budget reductions will also result in a smaller state and local government, as a lot of discretionary spending that seems likely to be axed is given to these groups. With the current anti-tax rhetoric spewed by people like Grover Norquist, it seems unlikely that extra local taxes will be approved to maintain services in most areas. So, what happens when government is "small enough to strangle in a bathtub?"


Die government!

Well, one example is that over the last couple of months in my city the public safety budget has been targeted for reductions. A few police officer positions were removed and the fire department has been reduced in size as well. A few people complained about this, but for the most part people were willing to let it go instead of having to pay higher taxes.


Maybe the government would have more success with tax hikes if they hired a nicer guy to implement them.

Unfortunately, last weekend five sexual assaults took place, including two rapes. The immediate reaction, of course, was that the reduction to the public safety budget was a terrible idea and the money should have been taken from somewhere else. The problem is that there is nowhere else to take this money from-there just isn't very much discretionary spending left in most budgets. Almost every state and local government has been facing budget issues for years now, there isn't any fat left to trim.


The four or five old guys have retired, everyone else is kind of important.

For another example, almost every government agency that I've been to has a ridiculously long line. Getting the title transferred on my car takes about one to two minutes of actual work, but it took about two hours due to the government office that I had to go to only having four employees to handle dozens of people. As it seems likely that more employees are going to be laid off or not replaced when they retire, the problem is only going to get worse. Maybe I need to order a pizza next time I need to get my driver's license renewed.


Looks like Mr. Norquist would like one too.

Conclusion
It's easy to say that government should be smaller. After all, it saves you money in taxes. The problem is that a smaller government means that when YOU need help you're not going to be able to get it. After all, one man's lifesaving government service is another man's discretionary spending.


What? You want a fire department? What kind of wimp are you!

The US Budget Discussion and Your Taxes

I felt this would be an appropriate topic given all of the ongoing federal discussions regarding what changes need to be made to the federal budget in order for an increase in the national debt ceiling to be approved by Congress and the President.


Discussing the federal budget is one of those topics that always brings members of both parties closer together.

I've heard many suggestions from people on the internet and in person on where budget cuts should be made. We should stop funding Pakistan. We should stop all foreign aid. We should pull out of Iraq and Afghanistan completely. We should cut spending all over the place but also not increase taxes at all. All of Congress should not take salaries and lose all their benefits until the budget is resolved and social security is saved. Maybe some of these suggestions would be logical, the problem is that I've never heard the people proposing them actually give any numbers on how much money these cuts would save.

Fortunately, I found a website, Third Way, that let's one see how much money the government spends on each of these areas and many more. Below are screenshots that are a summation of spending on each area of the budget:




Looking at the actual numbers, one can see how silly a lot of the easy budget cut proposals really are. Foreign aid sounds like a logical area to cut, after all if we can't afford to keep our own country running why should we be paying for Pakistan? Unfortunately, foreign aid is only 0.6% of the total budget and thus even completely cancelling all aid would not help much to resolve the problem. It would also have some consequences that I don't think most people who propose this consider. Foreign aid is one way that the United States, which, like it or not, is a leading power in the world, holds prestige and stature in the world. Cutting all of our foreign aid would make many countries unhappy with us, potentially resulting in losses of trade and influence throughout the world.

Stopping the wars in Afghanistan and Libya and cutting our remaining aid to Iraq is another popular solution. This is a somewhat fair point, as active combat operations take up around 5% of the total budget, or 25% of the total defense budget. However, it's not possible to just get up and leave without leaving a potential disaster behind. Additionally, it would be quite harmful to America's image in the world if we pulled out and the countries went to hell a couple weeks later. Besides, Barack Obama has already made progress with a withdrawal of most combat troops from Iraq and a scheduled withdrawal from Afghanistan. This proposal is rapidly becoming a moot point, we'll be out soon anyway, it's not going to help with the budget discussion.

As for Libya, it's a relatively minor commitment of US military power that probably won't cost more than a few billion dollars at the maximum. Sadly, that's almost nothing to the defense budget.


The rough equivalent of you throwing a couple staples in a trash can to the Pentagon's budget.

The common call for Congress to fuck off and give up their salaries and benefits, although understandable, also would have no impact on the budget. Congress's total cost is 0.2% of the federal budget and the largest portion of that is for the Library of Congress.

So with these easy decisions off the table because they won't help, what's left? Unfortunately, there are no easy, pain-free ways to solve the problem. The largest five categories of the budget are social security, defense, medicare, low-income assistance, and medicaid. Cutting any of these is obviously problematic, as they will affect the ability of the elderly to retire and reduce already low fixed incomes, affect national security, and potentially leave many without healthcare. The other option would be to increase revenues, most likely through a tax increase of some sort.

This leaves two main proposals by the Democrats and the Republicans. The Democrats http://www.blogger.com/img/blank.gifhave offered to reduce spending in many areas in exchange for some tax increases achieved through removing loopholes that many wealthy individuals use to avoid paying high tax rates. The Republican proposal, stimulated by some of the Tea Party representatives, is much less balanced; no tax increases allowed, fix the budget through spending cuts alone. Additionally, although Democrats have been willing to compromise, the Republicans seem much less willing to allow any ground on tax reform.

It is instructive to look at the state of Minnesota, whose state government is currently shutdown due to budget deadlock, to see why the Republican no compromise stance is problematic. If you're unfamiliar with this issue,


and Governor Dayton would prefer that you not be familiar with this issue,

here's an article summarizing the problem.

Essentially, the Republicans refuse to allow any income tax increase proposals while the Democrats refuse to pass a budget that would require harsh spending cuts to the Minnesota budget that would gut a lot of departments. The current result is that Minnesota has 22,000 state workers laid off for a few weeks now and has lost millions in state revenues http://www.blogger.com/img/blank.gifdue to closed state parks, the lottery being closed, and other productivity costs. The state's credit rating also took a hit due to this situation, going from AAA to AA+, meaning that any borrowed money will have a higher interest rate in the future. I'm sure that will help with the budget problem a lot.

Although I don't think the Republicans are going to let the same thing happen in the national government, as common sense would hopefully suggest that it's not a great idea to hurt the United State's credit worthiness for a Pyrrhic victory, it does indicate a problem in the government that more and more Americans are noticing. The GOP's polls have worsened due to the budget discussions as it becomes obvious that the Republicans aren't looking for a compromise but are instead seeking an ultimatum-budget cuts and nothing else or the United States has to default.

This is a juvenile move because the cuts that would be needed to balance the budget would have to come from those budget categories mentioned earlier-meaning that they would have a huge negative effect on senior citizens, national security, and the unemployed and extremely ill. The only logical course of action, even if it's still unpalatable, is to increase revenues and cut spending. This allows for the cuts to not be draconian while still setting the United States budget up for the future so that we don't have to have this discussion again in five years.

My fear is that Congress and the President will end up making a compromise like what looks to be happening in Minnesota. Instead of actually fixing Minnesota's budget problems, the compromise is that future revenues will be used now so that the state government can resume operation. While that's nice in some ways, it means that the government might shutdown again in a year or two when that money runs out.

So what can you do? Well, tell your senator or representative that you aren't going to stand for a half-assed compromise for the budget and instead go for a long term solution to the U.S. budget. Yes, it won't be pleasant for either party, but it will be a hell of a lot better than setting the country up for a worse budget crisis in a few years when the compromise money runs out.

That also reminds me, another proposal a lot of people have come up with is to not pay their taxes until the government stops screwing up. That's not a great idea, as one notable actor discovered recently. Pay your taxes.


Even vampires couldn't stop Wesley Snipes, but the IRS managed to do it.

Trickle Down Economics Doesn't Work

The Theory
One of the most heralded theories behind Republican economic policies of the last few decades has been trickle down economics. Basically, the theory holds that wealthy individuals pass down a significant portion of their income to lower income brackets. Thus, what is good for the wealthy will also be good for everyone else. After all, someone has to mow their lawns and prepare their meals right?

The theory is also applied to large corporations and companies. Policies beneficial for them should also be good for smaller businesses and consumers.

In Practice



Unfortunately, in practice there isn't much of a trickle down to the lesser classes. With the exception of some celebrities and dictators, most of the wealthy tend to place their wealth in places like this:



This is great for their personal net worth, but unfortunately wealth has to be spent in order for it to trickle down to the middle and lower class. The wealthy also have access to all sorts of ways to keep their money in places where it cannot be taxed at all or is not taxed at a very high rate. This results in the middle and lower classes bearing a larger share of the tax burden needed to finance the government than the upper class, (yes, the wealthy still pay more total dollars in all likelihood, but as a PERCENTAGE of their total wealth they do not). Corporations are also fond of moving their corporate headquarters around the world to dodge taxes as well.

So how has the last couple decades of removing regulations and lowering taxes for the wealthy played out in terms of the finances of the common folk? Since the wealthy are, by any standard, doing better than ever, if the trickle down theory holds true regular people should also see their situation in life improving.


A Rolex for everyone right!?

It isn't trickling down
Here's an image of the actual income distribution in the United States.



The top 20% of incomes hold about 80% of the wealth in the country. The bottom 60% of Americans hold around 5% of the total wealth. If trickle down economics really worked that would not be the distribution.

Another unsurprising but depressing statistic came out recently, the average worker's share of national income produced by businesses has dropped to a record low. This trend began in the recession following 9/11 and has continued to this day.




This is despite the fact that corporate profits have been rising significantly over the last year or so, with massive gains reported in late 2010. However, rather than using that money to create jobs, raise pay, or promote workers, companies have chosen to use it to expand their infrastructure by purchasing new equipment and software. Although this may improve productivity it doesn't create many jobs. Even worse, many are simply holding on to their profits as a cash reserve.

Why has the worker's share of revenue decreased so much?

Partially it would seem to be the end result of the shift of millions of well-paying manufacturing and technology jobs overseas. With the benefit of strong, tough unions, laborers used to make good wages and solid benefits building automobiles and other items, but shifting jobs overseas allowed companies to hire cheaper workers and not have to pay union salaries. This helps companies profit handily but the workers who held such jobs are stuck with poor career choices. In many cases, they have to train for an entire new career. I know several nurses who used to work in the automobile industry but they saw the changes that were coming and realized they would have to find a new career if they wanted to keep a job.

Another possible explanation is that unions have declined in power lately. In many cases, they have been successfully cast by conservatives as being a villain fighting hard against corporations valiantly trying to create jobs.


After all, the Communists had a union too!

One of the most successful smear jobs was against the U.S. automobile industry, where union wages and benefits were blamed for why U.S. automakers were uncompetitive. Some popular myths included the "fact" that auto workers were making $70 a hour. It actually was blatant misinformation that included all benefits in the hourly wage, but that was conveniently ignored. Besides producing inferior vehicles for a period of time, the main reason that U.S. automakers are in trouble is that they have a lot of retired workers to support whereas foreign automakers haven't been around as long in the United States so they do not have hundreds of thousands of retiree's worth of pensions and healthcare to cover.

Yes, unions create vexation for many companies, but they are one of the few ways workers have to negotiate with large multinational corporations. If anyone thinks Domino's Pizza will talk to one of their delivery drivers who has a problem with how they do things, they're talking out of their ass. However, they will have to listen if all of their delivery drivers together have a problem with the way they're doing business. If you are in a business without a union, asking for a raise with all of the current economic fear is a good way to lose your job. This is especially true when all sorts of companies and even the government are hemorrhaging positions, forcing early retirements, cutting pay, and slashing benefits.

How could this problem get any worse?

Expenses are Rising
Well, unfortunately the price of most basic commodities like fuel and food have also been rising lately.


The data is still coming in for how Rolls Royce prices have been affected.

As pay isn't improving in line with price increases, the spending power of most Americans is reduced. Given that the average salary of the bottom 90% of Americans is around $30,000, that poses a bit of a problem.



Well, the solution to that should be easy right? Get a better education and you can get a higher paying job! That would be a great solution except that the price of college has also been rising dramatically. I was fortunate in that my parents made wise investments for my college education so that I graduated debt free, but I know many friends who are $40,000 or more in debt and will have to try and pay that off with dubious job prospects on the horizon. But, hey, maybe the answer is to take out some more loans and go to grad school!


Possible back injury risk not included in tuition and fees.

Will it get better?
There is certainly a problem with the distribution of wealth in the United States. It used to be that one decent salary was able to support an entire family back in the 1950's. I'm not going to pretend that it was a golden age for the United States, as there was a great deal of wage and job discrimination toward women and minorities, but the actual distribution of wealth was much more equitable.

Jobs should offer a decent living wage. It isn't right when families with two wage earners, who are possibly working more than one job each, are worse off than families who had just one position fifty years ago. Unfortunately, many of the jobs that are being created at this point tend to be in the service industry category-jobs with low pay, poor to no benefits, and minimal room for advancement. These aren't the types of positions that are going to solve this problem.

It's somewhat understandable that companies are reluctant to make new, well paying jobs right now. The economy's recovery is still uncertain. However, it's also a fact that until unemployment goes down Americans will not feel confident in the economy. Maybe if companies tried hiring some employees it would help move us in the direction of a recovery.

Missile Defense-A waste of effort

I was surprised to see that one of the successful results of President Obama's trip to Portugal was that NATO would support the construction of a missile shield over Europe. Since Ronald Reagan initiated the Strategic Defense Initiative during his presidency, the United States has spent well over $100 billion on attempts to create a successful missile defense program and has not had a great deal of success.


Emblem of the Strategic Defense Initiative

The ideas for defense against enemy ballistic missiles have been quite varied. Some have included modifying already existing antiaircraft systems-such as the Patriot missile launcher-to target and destroy incoming missiles. These systems were tested in the Gulf War against Iraqi Scud missiles with reports of some success. Unfortunately, this success was considered post-war to be the interception of only a few of the 40 Scuds launched by Iraq during the war. That isn't a great ratio if you're relying on this system to stop the destruction of a major city.


Patriot missile system in action

Another problem with these systems is that they have had issues with friendly fire, on several occasions they have shot down friendly aircraft that were misidentified as enemy missiles.


Oops

Another route that has been pursued is to have ships equipped with the AEGIS missile tracking system shoot down missiles before they are able to land. They have been involved in successful tests, but only against one or two missiles at the most. Again, if more than one or two missiles are launched, this system doesn't strike me as being likely to see much success.


AEGIS cruiser

Another approach that has been proposed is to have a system of satellites in orbit that can destroy enemy missiles with laser type systems. This was never seriously pursued, mostly just put out there as an idea. However, this is the main view that many had of missile defense around the time it was proposed, hence why the concept was derided as being "Star Wars."



Artist's rendition

Anyway, from the ideas that have been posed, ground and sea based systems seem to be the most successful. Unfortunately, their success rate is unlikely to be very high if more than a handful of missiles are launched at the same time. One massive problem to the concept of a missile shield is that Russia is estimated to have more than 3,000 strategic nuclear weapons along with an unknown number of tactical nukes. An additional problem is that at least a significant portion of these are designed to be delivered by bombers or by submarines, two methods that missile defense shields are not designed to defend against. Even if a system was able to achieve a 90% success rate of missile defense, that still leaves a few hundred nuclear weapons available, sufficient to destroy most of the United States and Europe.

On the other hand, the main goal of the proposed missile defense system in Europe is to stop an Iranian ballistic missile from being able to hit a major target. These systems are likely to have a much better chance of halting an attack like that. Personally I think the much greater deterrent is the fact that Iran would be turned into glass if they launched a nuclear weapon at all. I don't think any country in the world is insane enough to make a nuclear attack with the full knowledge that they would be utterly destroyed by the counter-attack. All that the missile defense system in Europe will accomplish is to antagonize Russia.


And you don't want to antagonize Russia

The potential benefits of a missile defense shield are not worth the price, which includes both money and foreign relations. The system has not been proven to have a great deal of success so relying on it does not make any sense. The possibility of widespread nuclear death has been around for decades and it has been successfully stopped through the use of a secret, high tech weapon.



Let's keep using it.