This Is the State of Our Union

The President's full speech can be seen here.

     I think the state of our Union is pretty obvious: it's shitty right now.  Sure, it isn't the Great Depression, but it's pretty bad.  Unemployment, although down from 10% in 2009, is still hovering around 8.5%, which is hopefully ending the worst period since 1983.  But no need to fear, Obama is here! Right? Right..?
     In his State of the Union Address Tuesday night, Obama gave us a "Blueprint for an American Built to Last." He outlined his plan to fix our economy, which is more than can be said for most of the Republican candidates right now.  Although it's ridiculous to think that one term in office (assuming his reelection, which is pretty likely) is enough to fix an economy, it's good to see that someone has an actual plan to get us started in the right direction, instead of just saying, "Wow it really sucks right now, we should probably change it or something."
     President Obama made many good points, along with several bad ones, and also several that had the right idea but obviously wouldn't work (at least not with how our tax code is as of today).  I'll analyze his blueprint under three different subtopics: Strict Economics/Taxes, Education Related Economics, and Energy/Environmental Economics.  I'll then conclude about my opinions of the speech as a whole and its probable effects moving forward.

Strict Economics/Taxes

     The most surprising thing I heard come out of the President's mouth (which I suppose I shouldn't be shocked by, really) was that the costs of closing down a factory to move it overseas are tax deductible expenses.  That's right, corporations that outsource their jobs actually get tax breaks for moving out of the country.  This is something that needs to end.  Soon.  Like yesterday.  We can't expect to grow as a nation if we essentially pay our companies to move their labor to other countries.  I'm sure everyone knows our tax code needs some serious revisions, but this should be taken out immediately, and then we can look through the rest of it.  Obama also wants to implement something that I've believed in for as long as I can remember having a political voice: an international minimum tax.  He wants to tax corporations on the profits and labor they use overseas.  And why shouldn't we? They file their taxes here, they're headquartered here, their CEOs live here, and their money determines policy here.  They shouldn't be able to so easily avoid paying US taxes.  A United States tax (with no loopholes to exploit to avoid actually paying it) on top of the taxes of whatever nation they're operating within might be incentive to start moving jobs back here.  In addition to taxing companies overseas, he also wants to give tax breaks, probably those same deductions that went to moving out, to companies that move jobs back into America.  These policies, if implemented, might reduce the incentives of outsourcing enough to alleviate some of our unemployment.  My first disagreement comes at his next point: that we should lower taxes on companies that create jobs here.  I can get on board with helping companies create jobs here, but they should still pay all the same taxes.  Maybe we could afford to lower them slightly if we close some of the loopholes that allow companies to pay as low as -1.4% corporate tax.  Yup, there are companies that, completely legally, are essentially making money where they should be paying it.  If we can close these up and get corporations to pay the full 35%, maybe we could afford to give some businesses that make jobs at home a break, a small one anyway.  But there's no point in lowering a tax that they already don't pay.

     After the talk on corporations, the President decided to talk about the flaws in the tax code for individuals as well.  He pointed out that the Bush tax cuts save the richest Americans. those making $1 million or more per year, on average $103,835, while the average middle class American making $40-50,000 a year saved $909.  I don't think it takes a rocket scientist, politician, or economist to see that those numbers shouldn't look like that.  Because of the Bush tax cuts, Warren Buffett, one of the richest men in the country, pays a lower tax rate than his secretary, who I can assure you is not one of the richest people in the country.  Obama now realizes how unfair these are, and wants to implement what he calls a "Buffett Rule" that would require anyone making more than $1,000,000 a year to pay at the very least 30% in taxes.  It's obvious that the tax breaks in this country have been going the wrong way for too long.  We need to tax the rich because they can afford it, and offer tax breaks to the poor and middle class families that can't.  His final point in this subcategory was that he wants to reduce the influence of money in politics.  To do this he wants to ban insider trading in Congress, prohibit lobbyists from fundraising for candidates and fundraisers from lobbying, among other things.  I found it very funny when he received applause from Congress for this point, because I know none of them are on board with that idea, because it would mean that they would lose money.  But money in politics is one of the big problems with our nation that can be fixed by legislation.  Voter apathy is a bigger problem, that if solved would make money irrelevant, but there can't exactly be a law requiring people to care and be informed, unfortunately.

Education Related Economics

     Obama's plans concerning education are fewer, but overall are very good.  He wants to promote partnerships between businesses and community colleges to train skilled laborers for specific jobs in those businesses.  My brother took advantage of a program like this, his tuition being paid in full by Strain Measurement Devices, while he both worked full time for SMD and went to night classes at a nearby college for a degree in Mechanical and Electrical Engineering.  It is jobs like these that are in high demand and growing, and if businesses can help people attend school to get the training, we can put a serious dent in our unemployment rates.  The President also wants to help fund schools in areas hit hard by the recession, where budget cuts have caused the layoffs of numerous teachers.  Mr. Obama acknowledges the high importance of education, and wants to do what he can to protect it.  He wants colleges of education to be more selective, to ensure the highest quality teachers.  He also wants for teachers to be paid on the basis of performance, not just seniority.  This does cause problems in teachers artificially inflating scores in order to improve their salaries, but if we shift away from test scores being the only measure of achievement then this might be avoidable to some extent.

     His education plans are also aimed at students.  He wants to require all high school students to remain in school until they graduate or until they turn 18, essentially eliminating the ability to drop out.  The difference that even a diploma makes in average lifetime earnings is tremendous, and it would be a good thing for a lot of people if they had them.  President Obama also addressed the rising cost of higher education, and made a plan to keep it low.  He wants to increase the number of work study jobs available to students to allow them to more easily earn money in college, but he also has other plans.  He proposed that the government take aid away from schools that don't keep their tuitions under control, he wants to stop the interest rates on student loans from doubling later on this year, and permanently extend the American Opportunity Tax Credit to provide as much as $2,500 a year to some college students and their families.  All of these things can easily increase the quality of life for many Americans.  They can help those that can't quite afford college, especially with tuition rates rising at the rates they have been recently.  And with the increased number of people with degrees and diplomas, more people will be able to get jobs that they previously weren't qualified for.

Energy/Environmental Economics

     The number of ideas President Obama had in the category of energy and the environment is even more limited than what he had to say about education reform, which I think shows what his priorities are.  It is good that he brought it up at all, even though he did so under a more economic lens, emphasizing more about the jobs that could be created and not quite as much the positive impact on the environment some of these policies will have.  He first of all spoke in favor of moving our energy dependence away from oil, especially foreign oil, and towards natural gas, of which we have large amounts under our own soil.  Natural gas is a cleaner alternative to oil, but is still not the best out there.  I like it as an intermediate step towards overall greener energy sources, but we do have to remember that natural gas is still a fossil fuel and we can't get complacent with it.  If we don't continue to invest our efforts into alternative, renewable, greener sources of energy in the meantime, we will eventually run out of gas and have nothing to fall back on.  President Obama is right, however, that investing in domestic gas reserves and also in green technology will produce jobs here, and there is no reason whatsoever we should avoid either of them.

This All Sounds Nice But...

     While I agree with the vast majority of what Mr. Obama suggested in his speech, I don't have much faith that much, if any of it, will come to fruition anytime soon.  Obama has proved in the past three years that he is not a very assertive president.  Even when the Democrats controlled Congress and he could have passed anything he wanted, he still struggled to get healthcare reform passed.  Now, in this severely divided Congress with a Republican majority, I'm not too sure he can get anything done.  Most Republicans have vowed to kill anything Obama suggests on the sole basis that he isn't from their party, which is selfish and not in the best interest of the country or their constituents.  The President's favored line throughout the address was "If Congress gives me a bill that says this, I'll sign it tomorrow."  The problem is that I have no reason to believe that Congress will send him any bills for any of the policies he suggested because of the huge party divide.  If our country wants to progress at all, we need to suck up our pride and deal with the other party to pass legislation that will really help us.  Almost all of Obama's ideas were great, and just like in his campaign he has a great way with words, but nothing has proved to me that he can get any of what he suggested done.

I certainly skipped over many of the President's points in his "Blueprint," I simply couldn't address them all.  You can either follow the link under the picture to watch his speech, or click here to read the outline of his blueprint.

SOPA and PIPA

     As websites such as Wikipedia.org, Reddit.com, and Google.com, among others, have demonstrated in the past 24 hours, the Stop Online Piracy Act (SOPA, H.R. 3261) and Protect IP Act (PIPA, S. 968) are a very real threat to our freedoms on the Internet.  They are essentially the same bill, one in the House of Representatives (SOPA) and one in the Senate (PIPA).  The stated objective of the bills is not inherently evil or wrong, in fact, as inconvenient for many of us as it may be, it is morally right.  The bills aim to reduce or eliminate online piracy and theft of copyrighted intellectual property, such as music, movies, TV shows, etc.  However, the potential consequences of bills such as these passing into law are the things to worry about.
     First of all, a major problem with these bills, aside from the very negative side effects they may carry that I will outline shortly, is how ineffective they will be at achieving their stated goals.  There are already many laws on the books to try and stop online piracy, and look how well those work.  Granted, none of the current laws are quite as extreme as SOPA and PIPA in what they allow the government and copyright holders to do, but they are still very ineffective.  Piracy is extremely prevalent, and those that take part in it tend to be very clever, especially the big suppliers.  Those who download a movie or a new album here or there aren't really doing enough wrong to be bothered with, and those who upload mass quantities of media are good enough at it to not get caught.  We have to look at the two sides of this war.  The pirates are young people that have grown up surrounded by the Internet and technology their entire lives.  They know how to move around on the Internet undetected.  The ones fighting the pirates, the ones that drafted and support these bills, are a group of people, with an average age of 58, that have no real expertise with the Internet and technology.  They are not the products of the digital age like their enemies are.  To put it in context, they are the British Army, standing in line firing waves of musket shots, and the pirates are the American rebels, adept at hiding in the dark and avoiding direct conflict.  (NOTE: This is not to say that the pirates are starting a revolution and should be supported, just that they are better at adapting to the new environment.)  Finally, even if these bills were perfect at stopping piracy, they do not even touch upon file sharing.  There is nothing in them, and possibly nothing exists to really fight it, to stop people from simply giving each other files.  Ripping and burning DVDs and CDs, copying legally downloaded files into Dropbox or onto flash drives.  There will always be a way for those who want to find it.
     Now we have to look at what is truly dangerous about these bills: The destruction of a free Internet.  Essentially, these bills would allow for the government and/or copyright holders to file court orders against websites they deem to be enabling, allowing, or facilitating copyright infringement.  If a judge finds the website guilty of the alleged offenses, it could potentially force Internet service providers (ISPs) to block access to the website.  This would mean torrent sites such as ThePirateBay and Demonoid would be shut down definitely and almost immediately, but it also means something else.  Websites that allow user content, such as Reddit, Youtube, blog sites, and even Facebook, are subject to being blocked.  All of these websites have instances of copyrighted material being posted for free, and could effectively be shut down.  These bills are essentially attacking free speech on the internet.  A worst case scenario would be that the government and corporations use these bills to broadly interpret something, anything, on a site that they don't like as copyrighted material, or even allowing for copyrighted material, and they can shut it down, eliminating opposing opinions.  Anything with a comment box could be torn down.  Since the drafting of the Constitution, the United States has stood for freedom of speech as one of its core rights.  This freedom extends to the internet, and we need to protect it.  Internet censorship is one of the most frequent criticisms we make of nations like China, so why are we following in its footsteps?
     There is good news however.  The most recent polls show that the number of Congresspeople in both houses opposing these bills outnumbers the ones supporting them.  This doesn't necessarily mean they won't pass, because all of those Congresspeople except for maybe Ron and Rand Paul could flip their positions if given an...incentive...by corporations.  Obama has also come out against SOPA recently, making it clear that he will veto any bill like it.  He said the same thing about the 2012 NDAA, the bill that allows for indefinite detention of American citizens without charges, but then passed it when he saw Congressional support.  We'll see if he takes a stand for something this time.  Hopefully he does.

On Reaganomics

It's no surprise to anyone that this election is a battle of economics, specifically about who has the best way to improve the economy.  It seems like every Republican candidate's idea is that Reaganomics is the way to do this.  The core policies of Reaganomics are:

1. Reduce government spending

2. Reduce income tax and capital gains tax

3. Reduce government regulation

4. Control money supply to reduce inflation

The first point is pretty easily agreed upon by almost everyone: if we want to have more money, we need to stop spending as much.  It's like making a savings account for yourself.  One of the few things I agree with the Republicans on fiscally is reduced government spending, although where those cuts would be made is a matter of contention that I may address another time.  It should be obvious, however, that if we continue spending more than we have, then we cannot improve our economic condition

That is where my agreement ends, however.  The next point essentially says reduce government revenue.  How does that improve our economy? It means we are making less money.  It can be argued that if we are spending less, then we don't need to make as much either.  But why cut taxes and slow the recovery time when they can be left alone to speed up the process?  I will agree that in order to decrease the number of people below the poverty line and increase the number of citizens spending money, taxes on certain low income levels should be cut.  I am not going to choose what the cutoff point should be, because to be honest, if I did it would be completely arbitrary.  However, on the opposite end of the spectrum, there is a certain point where taxes need to be raised as well.  No one needs to be making billions of dollars every year.  The high end of incomes like that should be taxed extraordinarily, because really it isn't hurting them that much.  Even Warren Buffett agrees.

Regulations are another issue I don't entirely agree upon.  Most of the Republican candidates are in favor of smaller government, with Representative Ron Paul leading at the extreme.  However, although decreasing regulations will make it cheaper for corporations to use domestic labor, they are, for the most part, there for a reason.  There are almost certainly some superficial regulations that could be eliminated (although I don't claim to know what they are) but most of them are necessary.  We need regulations on corporations because those corporations are run by people, and people are not inherently ethical beings.  Environmental regulations are some of the most expensive, but if we eliminate those then we reduce the time we have to enjoy any economic benefits that would result.  Other regulations, like protection of workers' rights such as a minimum wage, are necessary so that the domestic labor gets paid enough to live on and treated well.  Both Newt Gingrich and Rick Santorum made a specific point of cutting the corporate tax rate.  Speaker Gingrich specified reducing it from the current 35% to 12.5% in an effort to encourage corporations to bring labor back to the United States.  However, what they seem to ignore is that corporations are exploiting loopholes in the tax code to avoid the 35%, in some cases actually profiting off of taxes.  What then, would encourage them to pay 12.5% instead of pay 0% or even less?

Finally, controlling the money supply to avoid inflation is important, but not in the way some look at it.  Most notable on this issue is Ron Paul, who wants to revert to the gold standard.  This is more control than I tend to see fit.  Of course we shouldn't just keep printing money to try and make the recession go away, that won't work.  But there are times where an extra boost of currency is exactly what we need, and the gold standard prevents that.  Many even argue that the gold standard played a role in prolonging the Great Depression.  The Federal Reserve could not increase the amount of money or decrease interest rates because of the gold attached to the currency.  We do need to know when to increase the money supply and when not to.  In fact, inflation can even work to our benefit when used correctly.  Franklin D. Roosevelt inflated the value of gold during his presidency in order to increase the amount of money goods cost, which therefore increased the income of everyone selling those goods.  We need to be able to manipulate our money supply, but only at the right times and not on a whim. 

New Hampshire Proves All the Wrong Things

As the results start pouring in from all of the precincts in New Hampshire, the Granite State is not surprising me, or anyone else it seems, very much.  After 73% of the votes have come in, Mitt Romney, at 38%, leads his closest opponent, Ron Paul, by over 14%.  This was reflected in the attitude of Governor Romney in my time in New Hampshire as well.  Every other candidate that we heard, Newt Gingrich, Ron Paul, Rick Santorum, and Fred Karger, all did their best to relay their basic points to the crowd, trying to win the votes of the people of New Hampshire.  Romney, however, didn’t play the same games.  He was so confident that he would win this primary, and probably the nomination in the end, that he didn’t feel the need to address his stance on most issues.  His idea was simple: get out there, look pretty, and sound confident.  And why shouldn’t he? It is more than likely that he will win the nomination.  So likely, in fact, that he didn’t bother attacking his fellow Republicans, he went straight for Obama himself.  After his rally, I had to remind myself that it was January 8^th and not November 4^th.  The most surprising thing about these results is how well Jon Huntsman is doing, considering how much more conservative his opponents are compared to himself. 

            However, the Hofstra Goes to New Hampshire trip was a rewarding experience, even if it did reinforce some preexisting beliefs.  It didn’t give me any real insight into our political process, or prove to me that the system and the candidates within it are getting better.  It also didn’t prove to me that there is a good candidate for the presidency that can actually fix our existing problems without creating new ones.  In fact, it proved the opposite, and I wholeheartedly include President Obama in that statement.  It confirmed to me that the Republican Party is still way too out there to get my vote, and that anyone who isn’t quite so out there isn’t going to have the money to really run.  Meeting Fred Karger was probably the best part of the trip, because it renewed my faith in the Republicans.  It proved to me that there could be a moderate conservative with a fairly liberal view on social issues, and that not every single one of them is going straight down the party lines on everything.  OK, maybe Ron Paul proved the second half of that statement already, but Karger proved it in a good, non-government destroying way.  The other good part of the trip was the interaction with the conservative and right-leaning students on the trip.  All of the ones I talked to were very intelligent people, and weren’t raving right wing lunatics.  This gave me faith that, even though it seems we are doomed to another four years of either a president with great ideas and no force behind them, or one with plenty of force but no good ideas, maybe in the future when some of the people that joined me on that trip are the ones running we can have one that combines the good elements of both of those bad presidents.