Monthly Archives: January 2011

Thoughts on SOTU

What follows is a series of questions that were posed on a message board that I frequent, concerning President Obama’s recent State of the Union Address.  The questions were not posed to me, but I felt compelled to toss my $.02 into the discussion.

…[W]hat are your thoughts on Obama ignoring the promise of vast new natural gas reserves within our borders, but asks congress to eliminate whatever subsidies now exist for conventional fuels and turn them over to less efficient producers of alternative energy?

I think it’s a mistake. I think that we are probably a good decade (maybe more) away from even the beginning stages of what will prove to be a long process of converting the entire nation to renewable energy sources. In the meantime we should focus on exploring untapped resources and developing ways to refine them more cleanly and use them more efficiently.

Tax breaks and incentives for companies working to develop renewable energies and clean fossil fuels are a must. The US has one of the highest corporate tax rates in the world. And yet we give tax breaks to companies who send their businesses overseas and bolster foreign economies, and then we allow them to defer all taxes on foreign-earned income.

At a time when the economy is in the toilet, people are out of work and our deficit is increasing by the day, we can not afford to send jobs and money overseas. Give businesses incentive to stay in the country, pay taxes, provide jobs for Americans, and bolster the economy by spearheading American development of, what will eventually prove to be, the burdgeoning “green” industry.

What about his plan for more spending on education when that spending on education has increased more rapidly than any other sector other than alternative energy. He did however mention that America continues to fall behind the rest of the world in education.

As of 2001-2002 (the latest set of numbers I could find) the US was ranked 39th in the world for education spending as a % of GDP. Based on the latest set of scores compiled by OECD, the US is middle of the pack in overall scores amongst industrialized nations. Some countries (Poland, Canada, Japan) who spend less on education (as % of GDP) scored higher on the OECD test. While others (Latvia, Mexico, Israel) who spent more, scored lower. We can also look at Norway and Israel, who spent 7.6% and 7.5%, respectively. However, Norway finished in the top 15 of OECD nations, while Israel fell to the bottom of the middle, scoring statistically significantly lower than average in all categories. Or look at finland, who doesn’t spend that much more that the US (6.4% compared to 5.7%), and yet finished 3rd in overall test scores.

The point that I am getting at is that there is no clear correlation between the effectiveness of an education system and the amount of money spent on it. Instead of throwing more money at the problem, how about we take a look at how to most effectively use the money already being spent on education.

For starters, what percentage of tax dollars are going towards funding sports programs and extracurricular activities that do not relate to the education process?

How much money is being spent on teachers that are ineffective at their jobs?

Why do we force kids, who have no interest in higher education, to complete a high school education program that has largely become ineffective at preparing them for the rigors of university study? Dropping out and/or obtaining a GED is fast losing it’s viability in the job market. Why not increase the availability and effectiveness of vocational and apprenticeship training as an alternative to a high school diploma? It would free up time and money being spent on students who do not want to be there and have no interest in furthering their education in this manner, increase the ranks of a young and job-ready workforce, and allow us to increase the standards of education for those who truly want to receive a higher education.

In terms of straight dollars, we spend quite a bit on education in this country (mostly because we are so populous). But at 4.6% of the federal budget it is miniscule in comparison to other forms of government spending. I think the answer is not to cut our investment in education (as it will do little to stem the tide of the rising deficit), but to invest more wisely.

Freeze discretionary federal spending for five years at 2010 levels?

It’s a start, but it ain’t enough. Defense, Social Security, Medicare/Medicaid. If we’re not willing to make the cuts where they will be effective, we are doomed. But cuts to those programs will not be enough in and of themselves. I believe that we are past the point of no return. We need to increase revenue as well. I know conservatives don’t like to hear that (mainly because it implies tax increases), but I don’t think that we have much of a choice anymore.

The deficit in 2011 is predicted to hit $1.066 trilion. That is equal to 43% of our mandatory spending and 77% of our discretionary spending in 2010. Or, to look at it another way, more than what is spent on Social security, and nearly equal to the combined cost of defense and medicare. Deep, and I do mean deep and meaningful cuts in these areas (as well as cuts across the board) may be enough to close the gap, but there will still be a $14 trillion debt to contend with after that.

“We do big things”?…other than the mention of several small businesses, I didn’t hear any mention of corporations like IBM, Microsoft, Boeing, Apple, Exxon-Mobile or GE??

Well, what are these corporations doing? How many people have these corporations laid off? How many new jobs have they created?

IBM has laid-off thousands of US employees since the recession and is scheduled to lay off 12,000 more in 2012. This is from an American company that, according to estimates, employs more people outside the US than in it.

How much did they contribute to the saturation of the job market with jobs that added nothing to the economy? These jobs went away during the recession and have yet to return even though real GDP is at its highest point in US history (except for during the housing boom of 2007-2008), private sector wages are up 60 cents and hour since the end of the recession and holiday spending returned to pre-recession levels this past season.

Now, don’t get me wrong. These companies are still providing jobs, goods and services for Americans and are adding to the economy. But I can’t think of a single great thing that they have done in the area of job creation or economic stimulation in the past year.

Small businesses, on the other hand:

  • Represent 99.7 percent of all employer firms
  • Employ just over half of all private sector employees
  • Pay 44 percent of total U.S. private payroll
  • Have generated 64 percent of net new jobs over the past 15 years
  • Create more than half of the non-farm private gross domestic product (GDP)
  • Hire 40 percent of high-tech workers (such as scientists, engineers, and computer programmers)
  • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
  • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited

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