GDP Growth: Why Should We Care?

The most important current news item is not Cohen’s tape, Putin’s visit, or what the president knew when. The news media is focused on those Trump bashing stories that hardly affect you and me in order to foster their liberal narrative. America’s Gross Domestic Product, or GDP, just increased significantly, and that’s a personal win for us. Of course, the media is playing it down. So what does GDP mean to us exactly?

GDP is the globally recognized measure of a nation’s economy. It is is the market value of all currently produced final goods and services within a country in a year by domestic and foreign-supplied resources. In other words, America’s GDP is every dollar spent on everything purchased by this country’s consumers no matter where it was produced. This includes personal spending by American households, investment spending by businesses, government spending, and net export spending (Americans’ spending on foreign products and services minus foreigners’ spending on our products and services). Last year the U.S. GDP was $19.4 trillion. That is one-fourth of the world’s total economy.

A figure that big is almost meaningless until it is compared to that of other nations. The next highest GDP is China’s at just under $12 trillion. Japan is next at $4.9 trillion followed by Germany at $3.7 trillion. The U.S. GDP is higher than all nations of the European Union combined. By the way, Russia’s GDP is $1.5 trillion.

The more important factor is how we are trending in GDP. Generally, a healthy economy is considered to have an annual growth rate of 4%.¬† For the last three years, the U.S. has posted percentage increases of 2.9, 1.6, and 2.2 respectively. The last time America enjoyed a 4% annual increase was in 2000, 18 years ago. Annual increases during the entire Obama administration averaged 1.6%. Although GDP is an annual statistic, it is measured quarterly. The quarterly measurement is “annualized” to estimate what the annual result of the quarterly numbers would be. The increase just announced for the second quarter (April through June) was 4.1% annualized. In other words, if the U.S. economy continues to perform at the present pace, we would have a 4.1% increase in GDP for 2018. The last quarterly increase north of 4% was in 2014. Almost all economists, regardless of their political leanings attribute the good news to President Trump’s policies of tax cuts, job creation, regulation reforms, and trade negotiations.

What does this growing economy mean to you personally? It means production increases that bring lower prices, more jobs creating upward mobility in the work force and less government subsistence, more government revenue keeping taxes down, more entrepreneurial opportunity, better infrastructure creation and maintenance, hopefully lower national debt, and a strong dollar keeping import prices down. A healthy, growing economy adds quality to the life of every American.

Of course, many factors are involved in the movement of a national economy. We should celebrate the 4.1%, but watch closely what happens in the next quarter. The Trump tariffs and potential trade wars could bring downward pressure on the GDP as could the status of our sanctions on Russia, Iran, North Korea, etc. External realities can offset a lot of good internal policies in shaping our economy. But, don’t get too caught up in all the liberal hype about losing our allies and putting our economic supremacy at risk. No other country or international trade organization is going to do much to provoke a country that holds a quarter of the world’s financial resources.

In my opinion, though, America desperately needs to turn off the soap opera of news stories that distract our attention away from much more important things like the economy. Let’s take a deep breath and focus on what’s good about America.

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Who Is Vladimir Putin Really?

If we put a face on the greatest threat to America today, it has to be the face of Vladimir Putin, president of Russia. He has led a bipolar life. A man of humble beginnings who rose to prominence in the government of the homeland he loves, he is also a maniacal and ruthless leader with scant moral character. Every American needs to know this man and watch carefully the relationships between both countries and both presidents. Here are some facts to consider.

There are more immediate threats to America such as North Korea and radical Islam, but Russia remains the only threat that can virtually annihilate us. It is the only nation with a nuclear arsenal that could total destroy our densest population centers and has shown the capability and willingness to wreck our internet. The country is also assessed to be capable of an electromagnetic pulse (EMP) attack that could destroy our electrical power grids. Only one man in the world could make any of this happen with a nod of his head.

Vladimir Putin was born in 1952 in Leningrad, Russia, to parents of very modest means. He was a troubled child in primary school but began to take his studies and behavior more seriously in high school. He seemed to have developed a personal vision as a teen for doing something great to advance his country. In 1975, he graduated from Leningrad State University with a law degree. He became infatuated with the field of intelligence and in the late 1970’s enrolled in the KGB school in the capital city of Moscow. The English translation for KGB is “Committee for State Security,” which is loosely the counterpart for the American CIA. He advanced quickly to a high level position with the Soviet Union intelligence service.

In 1983, he married Lyudmila Shkrebneva, a flight attendant, just before departing to his first KGB field position in East Germany. They had two daughters, Maria and Katerina. The couple divorced in 2013. Putin is officially single, but a long-standing rumor has it he is secretly married to¬†Olympic gold medal gymnast Alina Kabaeva. In East Germany, he was promoted to lieutenant colonel and assigned as senior assistant to the head of the department. In 1991, frustrated by the fall of the Soviet Union, he crossed over to politics becoming the deputy chairman of city government in St. Petersburg. He realized his future had to be within Russia’s first ever attempt at a fledgling democracy. From there, he move swiftly up the political ladder to Moscow and was appointed in 1999 as Director of the Federal Security Service and Secretary of the Security Council of the Russian Federation.

Within a year, Russian President Boris Yeltsin appointed him as prime minister of Russia. Within a few months, Yeltsin stepped down and Putin became president never having been elected under the relatively new Russian pseudo-democracy. He was later overwhelmingly elected as president in 2000 and reelected in 2004, both by wide margins. Due to term limits prohibiting a third term for Putin, Dmitry Medvedev was elected president in 2008 and immediately appointed Putin as his Prime Minister. Many in Russia considered Medvedev to be a figure head with Putin still running the government. Putin ran again for president in 2012 for a newly legislated six year term. He won handily again in 2018 and will be president until at least 2024.

Western analysts no longer consider Russia a real democracy due to political corruption that gives Putin a land-slide victory every election. Elections have become more of an exercise of fear than of freedom. He is known to torture his opposition or even assassinate them. The recent nerve agent poisoning of a former Russian spy and his daughter living in England was the latest in a long list of those who ran afoul of the Kremlin and suffered or died under suspicious circumstances.

Putin seems to be pursuing a foreign policy of slow, long-term of geographical expansion much like the old Soviet Union of his earlier years. In 2014, after several military incursions into Ukraine, Russian soldiers in unmarked uniforms invaded the Ukraine’s territory of Crimea and claimed it for Russia. Since then, Ukraine has had many armed conflicts with Russian backed separatist forces in their country. Then in 2015, Russian forces moved into Syria to help prop up the Syrian leader Bashar al-Assad. The Russian forces are also assisting the Iranian forces there.

So, here we have a man cultured in the dictatorial and empire-building Soviet Union who has risen to power through corrupt elections and thuggery, but earnestly wants to be legitimized and respected on the world scene. President Trump’s approach to try to form a friendly relationship with Putin is a very long shot. The President’s personal policy in dealing with our enemy heads of state seems to be to open more lines of communication with them while keeping them at arms length (ala Kim Jong- un). I’m for giving him a chance as long as he keeps the pressure on with continued serious sanctions and requirements of concessions. Putin must also feel the wrath of America if he encroaches on another country again. Being a buddy with a despot can backfire if not handled very carefully with eyes wide open. Go for it, Mr. President. But, America is watching closely.

 

 

 

 

Hey World, It’s Not Business As Usual for America Anymore!

 

After decades of other nations taking unfair advantage of America’s generosity, President Trump is reducing the outflow of our tax dollars to other countries and holding them accountable for more of their own security and prosperity. It isn’t setting well with nations which have been enriching themselves on our resources for generations. This will be a painful process for America and the rest of the world, but the adjustment is crucial for the future of all nations. Here is what it will require.

Most of the current inequity began with America’s compassion and goodwill demonstrated in the post-WWII reconstruction of Europe and Japan. Our subsequent prosperity during the 50’s and 60’s placed us head and shoulders above the rest of the world in economic and military power. Our Judeo-Christian values led us to share our blessings through foreign aid, the World Bank, imports, defense alliances, liberal immigration, response to disasters, etc. By and large, the rest of the world’s governments became dependent on us to supplement their subsistence. Allies depend on our military to supplement theirs. The oppressed depend on us to take them in. Foreign businesses expect to export to us without barriers, but don’t reciprocate. Even our enemies assume we will feed their economy while they threaten us. A world game-changing adjustment is well overdue.

Of course, America must always be America, the nation that shares its incredible blessings with those less fortunate both domestically and throughout the world. We have a moral responsibility to heed the words of Jesus, “Everyone to whom much was given, of him much will be required.” But, when the giving gets way out of balance and enables others to neglect their own responsibility, such enabling is wrong and the giver is to blame.

The controversial NATO Summit just concluded exemplified the new order of international relationships with America. Since 1949, western European nations have trusted in the U.S. to protect them from the former Soviet Union and now Russia. Although all the nations have military forces, the U.S. contributes well over half of the investment of those forces. The chart above shows that, of the 29 NATO nations, ours funds over 70% of the total military capability. Defense spending as a percentage of GDP is probably a fair comparison of skin in the game. Even at that, we spend 3.6% of our GDP on defense–much more than any other member country. All NATO countries agreed at the 2014 NATO Summit to spend at least 2% of their GDP on their military annually. Only four other countries are doing that. Yet the Russian threat is in their back yard and an ocean away from America.

Some European governments argue that all of their defense spending is in support of the NATO region while much of U.S. spending funds forces obligated to the Pacific and other areas of the world. That argument doesn’t consider the fact that, if Europe were attacked, almost all of our forces would be immediately deployed to the European theater.

And, there are other ways America is moving from business as usual to fairness and equity in international relations. For years, foreign governments have placed excessive tariff charges on imported U.S. products to keep their domestic businesses competitive. Then, their businesses enjoy exporting products to the U.S. with little or no tariff charges by us. That is a big reason we have such a trade deficit with other countries. We import much more than we export due to unfair trade barriers of our trading partners. President Trump’s tariff increases may cause some discomfort to our own citizens in the form of higher prices. Trade wars may make certain items scarce. But, it is a necessary temporary pain in order to ultimately create a level playing field for international trade. Free trade must be fair trade.

We are also seeing adjustments to the long-running open borders that have allowed almost anyone and everyone to enter our country, often illegally. We have long-established legal processes for reasonable immigration and asylum. But, millions of illegal immigrants have entered our land and are siphoning our resources. Business as usual trespassing on America is starting to be denied although not without major opposition from the liberal faction among us.

The U.S. GDP is greater than that of all European countries combined and almost twice that of the second highest nation, China. The U.S. military comprises over a third of the entire world’s fighting forces. There is almost no possibility of losing our world leader status anytime soon. Other nations will continue to look to America for help and direction for the foreseeable future, and we are morally obligated to maintain that role. However, the time has come for a global reshuffling of commitments and an environment of fairness among the nations. Mainstream media will decry it as betraying our friends, and protests will abound both here and abroad. But, just sit back and watch an essential and healthy cultural shift take shape. “Make America Great Again” is not a motto of arrogance; it is a reset toward fairness. It’s not Trump’s isolationist doctrine; it’s Trump’s fairness doctrine.

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Reshaping the Supreme Court

The main reason many voted for President Trump is about to be justified for the second time in 18 months. The president’s nomination and Senate confirmation of Justice Kennedy’s replacement will change the dynamic of the Supreme Court significantly. Let’s examine the Court’s current makeup and how this new justice will impact America.

America’s highest judicial body, the Supreme Court, consists of nine justices nominated by the president and confirmed by the Senate. Presently, they are (above, front row, left to right) Ruth Bader Ginsburg, Anthony Kennedy, John Robert (Chief Justice), Clarence Thomas, Stephen Breyer, (back row, left to right) Elena Kagan, Samuel Alito, Sonia Sotomayor, and Neil Gorsuch.

Although justices and judges are supposed to be unbiased in their decisions based on the letter of the law and legal precedence, they are human with principles and values shaped by life experiences, education, and environment. Four of these justices, Robert, Thomas, Alito, and Gorsuch usually lean to the conservative view of sociopolitical issues. Four of the others, Ginsburg, Breyer, Kagan, and Sotomayor lean mostly to the liberal view. Justice Kennedy, a conservative nominated by Reagan, often favors the liberal view in decisions and has been labeled the “swing vote.” So, many Court decisions are 5-4 with Kennedy breaking the tie in favor of either a liberal or conservative ruling. Recently, he was the deciding vote in favor of gay marriage and abortion rights.

With Justice Kennedy’s resignation, President Trump’s choice will be a stronger leaning conservative. This should portend a 5-4 decision favoring the conservative world view on many more issues. If any of the justices are considered a swing voter in future rulings, it will probably be Justice Robert who is a stronger conservative than Justice Kennedy.

Then, there is considerable likelihood that Justice Ginsburg will resign voluntarily or due to poor health during President Trump’s term in the White House. She is 85 (Justice Kennedy was 81). She is the most staunch liberal on the Court. That would result in a conservative majority of 6-3, or 5-4 with a swing vote toward the liberal side. The president will nominate a relatively young justice. His nomination of Gorsuch seated the Court’s youngest justice at age 50. Therefore, 5 or 6 strong conservative justices should be on the bench for many years.

This is a tectonic shift from the liberal-leaning Supreme Court of the last few decades. It will be a reversing trend away from liberal rulings on social issues such as abortion, gay marriage, LGBT rights, prayer in schools, religious freedom, universal health care, immigration, etc. Legislation from the bench will be returned to its rightful place in the legislative branch. The Constitution now often viewed as an evolving living document will be reinterpreted by the Court as a firm foundational standard.

Because of this judicial shakeup, the liberals are apoplectic over this nomination. Many liberal leaders are calling for voters to deluge the Senate with insistence that they oppose any and all nominations from President Trump. Suddenly, Roe v. Wade has become the most important legal precedent in America. Look for the wildest confirmation process in the history of Supreme Court nominations. Fortunately, conservatives can thank former Senate Majority Leader Harry Reid and the Obama administration for declaring the “nuclear option” in a previous justice confirmation when it benefited liberals. This procedural option of requiring a simple majority of 51 votes rather than a super-majority of 60 votes is now the precedent for confirmations. It will also eliminate the filibuster.

The long-term positive impact of this administration’s second new justice (and perhaps a third new one soon) on the survival of America as a free capitalist republic is immeasurable. Thank God for the election of 2016 and pray for a continuing conservative White House and congressional majority.

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