World Economic Forum: Why international cooperation is needed to solve the global economic crisis

The beautiful city of Davos, Switzerland is host to the annual World Economic Forum. Photo by Chris Ratcliffe/Bloomberg.

This week, January 23-27, leaders in business, politics, academics, and other areas of society from around the world are gathering for a meeting in Davos, Switzerland. Their goal is to improve the overall state of the world through collaborative discussions focusing mostly on the economy. The annual World Economic Forum (WEF) is a unique opportunity for world leaders to take a sweeping view of how the economies of various countries affect and interact with each other, and thus impact the overall state of the world economy. Many prominent Americans, including athletes such as Derek Jeter, actors such as Charlize Theron, and bank CEO’s such as JP Morgan CEO Jamie Dimon are in attendance.

Photo by Telegraph, UK.

As you know from reading Kitchen Table News (KTN) over the past few months, the U.S. economy is not in a healthy state. The National Debt is at roughly $16.4 trillion and rising. The unemployment rate is hovering close to 8.0%. Growing a business, especially a small business, is difficult under the current taxation laws. Banks have been in a precarious position since the economic downturn of 2008. Profitable investing is difficult, since banks are reluctant to offer interest on investments, and so many banks have gone completely out of business that people don’t want to trust them with their money.

Cartoon courtesy “The Independent”.

The National Debt to GDP ratio is another sign of the weak U.S. economy, with this ratio having recently eclipsed the 100% mark in the U.S. As you know from reading KTN, the National Debt is the amount of money a government has borrowed but not yet paid back to keep the country running. The GDP is the Gross Domestic Product – the dollar amount of product produced in that country that can be sold domestically or exported for sale, and also the dollar amount that companies spend to do business in that country. You can imagine that when a country owes more money than it is worth, that is very bad for the economy.

This chart shows how the increase in national debt has continued to increase the Debt to GDP ratio in the United States. A lower debt to GDP ratio is the sign of a healthy economy, while a higher ratio indicates a weakening economy. Graph reprinted from http://theonethingilearnedtoday.wordpress.com/2011/09/05/whitherusdebt/

Since many items such as cars and clothing can be built less expensively in other countries, many companies “outsource” their production – building that item in a country where labor is cheaper, for example China. Although you may have purchased a shirt from Old Navy, this item is not considered part of the GDP if it was made in China and then imported back into the U.S. so you can buy it at the mall.

The next time you buy a T shirt at the mall, check the label to see in what country it was made.

The U.S. economy is not the only one in trouble. Five countries in Europe have recently suffered severe economic instability: Portugal, Italy, Ireland, Greece, and Spain. The plight of these five countries is so similar that together they were awarded the acronym “PIIGS”.  During the recession that affected the U.S. in 2008, the economies of these five countries were profoundly weakened. Greece especially appeared poised to default on its national debt.

Part of the concern over the failing economies of these five countries is that they are all tied to the European Union – a union of all of the major countries in Western Europe that share the same currency, the Euro. In order to prevent a shock wave through the rest of the European Union, European leaders were essentially forced to bail these countries out. On May 10, 2010, the ECB (European Central Bank) and the IMF (International Monetary Fund) approved a 750 billion euro bailout package for these countries.

Cartoon depicting how the five European nations who have the acronym “PIIGS” are taking advantage of the other countries who share the Euro as currency. Cartoon from brazilanbubble.com.

But since then, the economies of these countries have continued to weaken, with soaring national debt and rising unemployment rates. Dissolving the EU has even been discussed to prevent these countries from destabilizing the rest of Europe who uses the Euro as its currency.

This map depicts the countries that are part of the Euro Zone.

And so, meetings like the World Economic Forum are more important than ever before, as the best and brightest leaders in the world come together to share information, discuss ideas, and gain a greater understanding of how economic decisions made domestically will impact the global economy. The United States is still regarded as the world’s #1 superpower. But if the U.S. cannot find a solution to its own economic woes, then the impact on the global economy cannot be underestimated.

Climate change has been a hot topic for discussion, both in the Obama administration and in Davos. photo from http://video.foxbusiness.com/v/2114304785001/

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Incredible video of wild dolphin seeking help from a diver to untangle itself from a fishing line

The only place dolphins can truly be happy is in the wild.

Everyone loves dolphins. These adorable sea mammals always look like they are smiling. Although dolphins are extremely intelligent, easily trainable, and can form strong emotional bonds with humans, we know that keeping dolphins in captivity is unkind. The World Society for the Protection of Animals (WSPCA) has launched an international appeal to close all dolphin attractions around the world. This includes places like Sea World in Orlando, Florida, where dolphins are trained to perform tricks to the delight of a human audience, and Discovery Cove in Orlando, Florida, where guests actually swim with dolphins in a man-made lagoon.

The WSPCA explains how dolphins are highly social creatures who form intricate social organizations in the wild. The boundaries of a small pool or man made lagoon are not nearly large enough for dolphins to engage in natural behavior, which can include swimming up to 50 miles a day. The largest tank in the world is less than one ten-thousandth of one percent of the natural range of most dolphins and whales. So there’s physically no way that these animals could exhibit natural behaviors in captivity. Unlike dogs, who are completely domesticated and truly delight in being trained and living with humans, dolphins are wild animals who suffer terribly in captivity. The eternal “smile” on a dolphin’s face is not a smile at all, but rather simply the shape of its mouth. Most dolphins do not even survive being captured, with 53% dying within three months of entering captivity.

On the flip side, there are many wonderful stories about how dolphins have come to the aid of humans in the wild. Many stories include pods of dolphins battling sharks to protect humans in the ocean. Dolphins are also known to be friendly to humans on boats, and then happily swim away into their natural habitat.

About one week ago, a group of snorkelers and divers were diving off of the coast of Hawaii on a manta ray observation dive. Suddenly, a bottle nosed dolphin swam right into their midst, squealing loudly. The lead diver, Keller Laros, immediately noticed that the dolphin had a long length of fishing wire wrapped in its mouth and tangled in its pectoral fin. The dolphin swam right up to Laros and rolled over, giving Laros access to the wire. To all watching this amazing story unfold, it was clear that the dolphin was asking Laros for help.

Even more amazing is that after Laros had untangled part of the wire, the dolphin swam up to the surface to get air, and then swam back down and returned to Laros, who was then able to use a scissors to cut away the remaining wire.

This entire event was captured on video! Click below to watch. About 4 minutes into the video is where the diver begins to untangle the wire.

Algerian hostage crisis underscores Islamist militant fighting in North Africa

Malian people watch as a French armored tank deploys to the north of Mali in the fight against Islamist extremists. The French President Francois Hollande was quoted as saying, ““What do we plan to do with the terrorists? Destroy them. Capture them, if possible, and make sure that they can do no harm in the future.” Getty Images, Eric Feferberg.

While many people think of Afghanistan and Pakistan as the strongholds for Islamist terrorists, what many don’t realize is that the northwestern corner of Africa has increasingly become a haven for these jihadists, or Islamist extremists. While fighting between French militants and Islamist militants in the country of Mali has been unfolding over the past week, it was the brazen attack on a natural gas plant in the neighboring country of Algeria on Wednesday that has thrust this story to the forefront of the news. Details are still sketchy, partly due to the extremely remote location of the gas plant in the middle of the Sahara desert.

This map of Africa illustrates the proximity of Mali, where the French conflict is waging, and Algeria, where the hostage crisis is unfolding.

What we do know is that on Wednesday, approximately 20 gunmen calling themselves “The Battalion of Blood” ambushed a bus carrying gas plant workers to their job, and took them as hostages. The hostages are civilians from many different countries, including Britain, France, Japan, Norway, and the U.S. The international citizenship of these hostages has quickly dragged many governments around the world into this conflict.

The natural gas plant in Algeria where the hostage standoff with Islamist extremists is occurring is jointly operated by BP, the British Petroleum company. Photograph: Kjetil Alsvik/AP

The leader of this terrorist act is thought to be Mokhtar Belmokhtar, a rogue Islamist extremist with close ties to Al Qaeda. U.S. officials have said that the perpetrators of this hostage crisis are the same terrorist group responsible for the attack on the U.S. consulate in Benghazi. A statement sent to a North African news agency by this Al Qaeda – linked terrorist organization described the deliberate kidnapping of at least 40 “crusaders” – non Muslims – and demanded an “immediate halt of the aggression against our own in Mali”. The aggression is referring to the French military resistance to Islamists attempting to seize power in Mali. So, the hostage crisis in Algeria is apparently in retaliation for the aid the French government is providing in Mali to fight the Islamist extremists.

Mokhtar Belmokhtar is a rogue Al Qaeda terrorist thought to be responsible for the hostage crisis in Algeria. Photo courtesy Associated Press.

Mali had been a French colony until 1960, so France has a vested interest in its successful and peaceful democracy. Furthermore, a terrorist haven in West Africa would be closer to Western Europe than the Middle East or Afghanistan, and far thus more dangerous. The New York Times recently reported that the United States has spent between $520 and $600 million in the past four years in an effort to prevent West Africa replacing Afghanistan and the Middle East as a new Islamist terrorist base.

The proximity of Mali and Algeria to Western Europe, as compared with Afghanistan (far right side of map, east of Iran) makes it a much more dangerous location for an Islamist terrorist stronghold.

As the Islamist extremists have continued to advance in Mali, Mali’s interim President Dioncounda Traore made a desperate appeal to France to come to its aid.

Interim Mali President Dioncounda Traore is scheduled to attend a summit in Abidjan, Cote d’Ivoire to meet with leaders of the Economic Community of West African States (ECOWAS) on the Mali crisis. ECOWAS has decided to send 3,300 troops to Mali.

Thus, one week ago, on January 11, France launched a joint military offensive with Malian fighters in an attempt to defeat the Islamist terrorists. This military offensive has included full-scale air and ground attacks by the French military. The Islamist terrorists were outraged, warning France on Monday that it had “opened the gates of hell” by its intervention. Paris has “fallen into a trap which is much more dangerous than Iraq, Afghanistan or Somalia,” a spokesman for the MUJWA group of rebels told a European radio station.

French soldiers walk past an airplane hanger in Mali this week in preparation for more air strikes against Islamists. Photo courtesy Reuters.

And so, this brings us to the events of the past two days. In an attempt to rescue the hostages and defeat the terrorists, on Thursday Algerian militants launched a helicopter strike on the gas plant. The attack was conducted without the knowledge or consent of the countries whose citizens were hostages, among them the U.S., Japan, and Britain, hence these governments were not too happy about it. CBS News reported this morning that Islamist militants have claimed that among the dead are 15 captors and 35 hostages. And CNN has reported this morning that Algerian special forces claim they have freed 650 hostages, 573 of them Algerian, but this report has also not been confirmed.

How many hostages have been killed and exactly how many remain is still unclear, but we do know that this crisis is not yet over. Some news outlets are reporting that as of Friday morning, 100 of the 132 hostages have been freed, but this has not been confirmed. The militants, meanwhile, allegedly offered to trade two captive American workers for two terror figures jailed in the United States, according to a statement received by a Mauritanian news site that often reports news from North African extremists. But U.S. Secretary of Defense Leon Panetta has flatly refused to negotiate, saying there would be “no place to hide” for anyone who looks to attack the United States.

This map shows the location of the natural gas plant seized by terrorists on the Algerian – Libyan border. It also shows the proximity of the French military resistance in Mali.

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Seven-Time Tour de France winner Lance Armstrong admits to using performance-enhancing drugs

Lance Armstrong, shown here in a photo from 2010 sporting his LIVESTRONG bracelet, has made a shocking and risky confession this week about his PED use. Photo by Timothy Clary, Getty Images.

Many of you probably know Lance Armstrong as one of the greatest athletes of this generation, dominating the sport of cycling in ways no one else has. He has won the grueling Tour de France, a three-week, 2,000 mile bike race through France, a record seven times. His battle with cancer and subsequent recovery launched a highly successful cancer charity called “LIVESTRONG.” No doubt you have seen the rubber yellow bracelets that so many people purchased and wore to support the organization.

The Tour de France is one of the most unique, grueling sporting events in the world.

Lance Armstrong’s continued dominance and superhuman performances over such a long span in the competitive cycling world led many people to question whether he was using “performance enhancing drugs”, or PED’s. The use of these drugs is also called “doping”. A PED is any chemical that can be injected or ingested to improve the physical capabilities of an athlete.

Generally speaking, these chemicals are drugs that are only prescribed by doctors to treat sick people in very specific cases. The fact that they happen to confer super-powerful strength or physical ability as a side effect make them very tempting to athletes, since using these PED’s will enhance their performance beyond what can be achieved through just regular training. Using PED’s gives an athlete distinct advantages over competitors who train using legal and natural methods. Hence, PED’s are strictly banned, and using them constitutes cheating.

EPO, or Erythropoietin, is a pharmaceutical drug used to stimulate red blood cell production in patients with anemia, but athletes, particularly cyclists, have been known to use it to artificially increase their cardiovascular fitness.

Dating back to Armstrong’s first Tour de France win in 1999, numerous people had been accusing him of doping. His supporters were defiant, claiming the accusations were baseless and rooted in jealousy. Thus began a long and complicated campaign to prove these accusations. While all competitive cyclists must submit to tests for PED’s at regular intervals, no news of a positive result on any of Armstrong’s tests ever surfaced.

In the meantime, Armstrong’s teammates on his Tour de France cycling team sponsored by the U.S. Postal Service had begun to grant interviews alleging that Armstrong not only doped regularly, but that he insisted his teammates dope as well in order to keep pace with him. Furthermore, they claimed that he personally acquired the illegal PED’s and orchestrated the entire doping program for the team.

Lance Armstrong’s teammate Floyd Landis publicly accused him of doping in 2010 when his own positive drug test resulted in sanctions against him.

Armstrong vehemently denied any allegations about his PED use publicly, even attacking his accusers and bringing lawsuits against some of them for “defamation of character”.

In October of 2012, the United States Anti Doping Agency (USADA) publicly presented its findings in an excruciatingly thorough 1,000 page document, called the “Reasoned Decision” in the case against Lance Armstrong. In their statement, they said, “The evidence shows beyond any doubt that the US Postal Service Pro Cycling Team ran the most sophisticated, professionalized and successful doping program that sport has ever seen. The evidence … includes sworn testimony from 26 people, including …(firsthand) knowledge of …doping activities. “

Armstrong consistently argued that the USADA system was rigged against him, calling the agency’s effort a “witch hunt.” He continued to defiantly deny any doping allegations against him and attempted to discredit anyone claiming otherwise.

The ICU, or International Cycling Union, quickly accepted the findings of the USADA and stripped Lance Armstrong of his seven Tour de France titles. Armstrong reluctantly said that he would no longer fight the accusations, despite continuing to deny them, and he promptly resigned from the board of his corporation LIVESTRONG so as not to cause them any more embarrassment. Major sponsors such as Nike quickly dropped Armstrong.

Before being dropped by Nike, Armstrong was always seen with the famous swoosh on his attire.

Now, just as followers of this saga had assumed it was over, one of the most shocking confessions in professional sports took place this week. In a two and a half hour surprise interview with the highly respected talk show host Oprah Winfrey, Lance Armstrong has apparently admitted to all of it – the PED use, the orchestration of his team’s PED use, and the staggering lies that he has repeatedly told over the past decade.

This interview is slated to air on the Oprah WInfrey Network in its entirety on Thursday January 17 and Friday, January 18. The interview took place on Monday, January 14, and while no clips have publicly aired as this post goes to press, Oprah Winfrey has already publicly confirmed the details of the interview: that Lance Armstrong admitted to the doping and to the lying about it all in the interview with her.

Oprah Winfrey has been humble and gracious about scoring the interview everyone in the journalism world would have liked to have had.

Armstrong has already been banned from the sport of competitive cycling for life. These admissions might possibly reduce that sentence to eight years. However, the admissions are more than just embarrassing and degrading to Armstrong. Since the U.S. Postal Service sponsored Armstrong and his team, the U.S. Justice Department is debating whether to formally charge Armstrong under the False Claims Act. At issue is whether Armstrong and others defrauded the U.S. Postal Service of approximately $30 million when it sponsored his team. If convicted, Armstrong may be required to pay back millions of dollars.

Oprah Winfrey has said that this is the biggest interview of her long, illustrious, respected career, if for no other reason, because of the exposure it is expected to receive worldwide. And while no one is disputing that Armstrong did confess to Oprah, the question everyone is asking is, why now? Why did he steadfastly deny these charges for so many years, and then completely reverse course and confess to all? Perhaps the answer will be revealed when the interview airs worldwide.

In her brief comments about the interview scheduled to be aired later this week, Oprah has said that she wants viewers to make their own decisions about Armstrong’s confessions and character. Photo Twitter/CBS Morning News.

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Unemployment rate and the U.S. economy: the example of “Comfy Dog Beds”

“Comfy Dog Beds”, a fictitious dog bed company, worries about how the unemployment rate will affect its business.

One of the hottest topics in current events these days is the economy. Most recently, the primary focus has been on the fiscal cliff – you can click here to read the Kitchen Table News post on this topic. Although a deal on the fiscal cliff was reached on New Year’s Day (see the previous Kitchen Table News post), the higher taxes that many families will still have to pay, along with the National Debt continuing to spiral upward, has a lot of people worried that the country might still decline into a recession.

In late 2008, early 2009, the U.S. economy tumbled into a recession. This graph of U.S. stock market performance (the Dow Jones Industrial Average) shows how stocks declined during the recession. While stocks have returned to their previous levels, the economy is still in a very fragile state.

In a recession, people have less money, so they are spending less money, which hurts the economy in a cyclical way. For example, let’s say there is a business that sells dog beds, called “Comfy Dog Beds”. If the country is not a recession, and people are making enough money, then they would most likely be able to afford a “Comfy Dog Bed”. But let’s say a family is making less money – for example, because Mom’s employer could not afford to give her a raise, or worse, because Dad lost his job. Now this family has less money, so they have to make stricter decisions on how to spend it. Chances are the family dog would then need to be content to sleep on the floor, since a dog bed is really a luxury, not a necessity. So now, “Comfy Dog Beds” sells less dog beds, and hence makes less money, so the owner of the company has less to spend, and the effect trickles down.

Because many people are jobless or making less money, now the family dog has to sleep on the floor. A “Comfy Dog Bed” is now a luxury they can’t afford.

People who could work but have no job are considered unemployed, and the percentage of people who could work but are jobless is “the unemployment rate”. One of the biggest reasons that so many people are unemployed in this country is that there are simply not enough jobs for all of the citizens. The dearth of jobs is related to the weak economy, since only businesses that are thriving are able to create new jobs. If people with less money are less likely to buy a dog bed, then unemployed people with no income are most definitely not going to buy a dog bed. The fact is, some of you reading this post might even be in a family where one or both of your parents have no job, or you might know someone whose parents are unemployed.

Lowering the unemployment rate is always a top priority for any government administration. If the economy were to improve, that would help a lot to lower the unemployment rate, because companies could create more jobs. One thing the government could do to stimulate the economy is to encourage citizens to spend money by offering incentives for people who do so.

Let’s go back to our dog bed company example. Imagine that “Comfy Dog Beds” was started by a stay at home Mom who knows how to sew. To make the dog beds, she would go to the fabric store, buy the stuffing and the fabric, and put the dog beds together by hand. She could make about one dog bed a week in this way.

Now imagine that the economy is improving, because the government is allowing people to keep more of their money (i.e. they allowed taxes to remain low), or because the government is offering a tax discount to people who invest money into their businesses. The increase in “discretionary income” – buying things you want instead of only things you need – means more people in the community are able to afford a dog bed. Gradually, the demand for “Comfy Dog Beds” increases such that Mom needs to hire an employee to keep up with the increasing demands. So the fact that other people had more money to spend enabled her to create a job, thereby reducing the unemployment rate.

As the demand for “Comfy Dog Beds” increases even further, the Mom decides to to buy a sewing machine to be able to make the dog beds faster. Therefore, she just helped to stimulate the economy, because she helped the company who sells the sewing machines.

The owner of “Comfy Dog Beds” can now make dog beds even faster with her new sewing machine, and the sewing machine company makes more money because they are selling more sewing machines.

As other businesses are making things faster as well, sales increase for the sewing machine company, and they are able to give their employees a raise. Perhaps now a man who works for the sewing machine company who didn’t have enough money before might now be able to afford to buy a bed for his dog. Hence, the demand for “Comfy Dog Beds” is even higher, so the owner of the dog bed company needs to hire an employee just to answer the phone and handle all of the order taking and the billing. So yet another job has been created.

This man works for the fictitious sewing machine company. Business has improved for the sewing machine company, so his company gave him a raise. So now, he can afford to buy his dog a “Comfy Dog Bed”.

In this way, it would theoretically be possible for the government to help stimulate the economy. Through Obama’s first four years as President, it appeared that he did help the economy and decrease the unemployment rate. But is this really true?

Below you will see a graph depicting the trend in the unemployment rate over the past 10 years. As you can see, the unemployment rate had somewhat been holding steady from 2002 to 2008. Then, late in 2008, the country tumbled into a recession. As a result, many people lost their jobs suddenly, and the unemployment rate spiked. (When someone loses their job because the company could no longer afford to pay them it is called “getting laid off”.) You can see this effect reflected in the graph, where the unemployment rate jumps  from about 5% in mid 2007 to 10% in early 2009. This happened right before President Obama took office, so he inherited quite a mess.

At the height of the recession, the unemployment rate skyrocketed from about 5% to about 10%.

While a 5% increase in unemployment may not seem like a lot, that translated to more than 15 million people in this country being unemployed, as opposed to 7.5 million people unemployed. So you can quickly see how “Comfy Dog Beds” would sell many fewer dog beds.

Many unemployed people in this country are also homeless, which means they don’t even have a bed for themselves, let alone their dog.

Recently, the White House has been trumpeting its success in lowering the unemployment rate. They say they have gotten it down to about 7.7%. But is this really accurate? No. The reason this number is not accurate is, there are many people who have been looking for a job for so long that they have given up looking entirely, and those people are not counted as part of the unemployment rate. The Labor Department measures unemployment only as the number of people currently looking for a job who can’t find one. People who have been looking for a job for more than four weeks but still have not found one are called “Discouraged Workers”. The group of unemployed people who have looked for a job for so long that they have simply given up looking is called “Hopeless Workers”. Five years ago, before the recession began, about 2.5 million people said they wanted a job but hadn’t searched for one in at least a year. Now, that number is around 3.25 million.

While “Discouraged Workers” are counted as part of the unemployment rate; “Hopeless Workers” are not counted at all. Photo reprinted from money.cnn.com.

So, while the unemployment rate may appear to be declining, implying that more people who want jobs have found them, the number of people looking for a job who have given up entirely has increased. So really, the unemployment rate is much higher than the government says it is. If you want more information, you can click on this chart to see what the true unemployment rate is. What you will find is that the actual unemployment rate is closer to 14.4%.

So as a Middle School Student, you and your friends will one day have the responsibility of creating value in our society, and creating businesses which will help our economy and our society overall. By taking an interest now, you can create the future you want for your friends and yourself.

The future of America is our Middle School Students. Photo reprinted from Wreaths Across America. http://usoonpatrol.org/frontlines/2010/12/08/wreaths-across-america-day-4-r

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Senate votes on a deal to delay the fiscal cliff

Vice President Joe Biden and Senate Republican Leader Mitch McConnell are all smiles after the deal they negotiated to avert the fiscal cliff was passed by the Senate in the wee hours of New Years Day. Photo reprinted from The Washington Post.

While the east coast of the United States had already rung in the New Year, the Senate voted at approximately 2 AM on a deal to temporarily avert the fiscal cliff. Although the deadline of midnight on December 31 was technically missed by two hours, the bill can easily be made retroactive to December 31. (click here, or scroll back to November archives to read the Kitchen Table News article on the fiscal cliff).

Elected officials in Washington had been working almost non-stop throughout the entire month of December in an attempt to reach a deal that would be palatable to both Republicans and Democrats in Congress. Although the Democrats have a majority in the Senate (53 Democrats vs. 45 Republicans) and Republicans have a majority in the House (234 Republicans vs. 201 Democrats), the job of elected officials in these situations is to come together through compromise. People have criticized the members of Congress during Obama’s first term for often failing to work together, and many people doubted that this Congress would be able to reach a deal that satisfied both sides. As New Years Day 2013 dawned, it appeared that a deal had been reached, at least in the Senate.

The vote passed in the Senate by an overwhelming margin of 89-8. Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky are credited with sealing the deal.

According to cbsnews.com, here are some of the key known details of the deal:

Income tax rates: Current income tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000. This means that people below these income levels will not have to pay higher taxes than they do now. This was a key concession for both Republicans and Democrats. Democrats wanted the threshold for tax increases to rest at $250,000, and Republicans didn’t want marginal tax rates to increase for anyone. For people whose taxes are going up, the rate will increase from 35% of income to 39.6%, the rate when Bill Clinton was President. An income tax is a tax on the money an individual earns in a given year, usually from salary. Corporations also have to pay income tax on their annual earnings.

Tax Deductions: Families making more than $300,000 annually will have a limit, or a “cap”, on how much they are allowed to claim in deductions. Deductions are dollars that people are allowed to subtract from their income before paying taxes on the final number. They are essentially tax credits for spending habits which help the economy or the country in some other way – for example, a property mortgage strengthens the banking system, and high efficiency home heating systems use less energy, thus creating a more green society.

The estate tax: It was set to increase from 35% to 55% in 2013. Instead, the compromise sets the new rate at 40%, with the first $5 million worth of property exempt from being taxed. An estate tax is a tax that a person must pay to the government when he or she inherits property or other items of value from a deceased person or relative.

Capital gains tax: Capital gains and dividend tax rates will increase from 15% to 20%. A capital gains tax is a tax on the profit from the sale of an investment, usually property. A dividends tax is the tax on the profit from the sale of stocks or bonds.

Alternative Minimum Tax: A permanent fix to the tax that would hit middle class families. The rate will be permanently adjusted to account for inflation.

Unemployment benefits: Unemployed workers will receive their benefits, which expired over the weekend. This refers not to a tax, but to a spending cut which was supposed to happen, but is now being extended.

Click here to read a cbsnews.com article on a timeline of how this deal was finally sealed.

After the vote was passed by the Senate, it was sent to the House of Representatives for a vote, where it was expected to meet with more resistance. The House met twice on New Year’s Day. After the first meeting, they came out asking for an additional $323 million in budget cuts. Republicans correctly noted that raising tax rates on some individuals (see income tax rate, above) will barely make a dent in the Federal Deficit, which now stands at $16.4 trillion (click here to watch it rise before your eyes). What the government really needs to do, they said, is to reduce spending. While the Republicans conceded to raise taxes on incomes over $400,000 (their original offer was to raise taxes on incomes over $1 million), the Democrats barely reduced spending at all.

Yet, by 11 PM, concerned about the drastic effect “going over the cliff” would have on the economy, enough Republicans conceded and voted “yes” on the deal, including Republican Speaker of the House John Boehner. The final vote passed by a margin of 257-167, with only 85 Republicans voting “yes” on the bill. Alternatively, Democrats largely supported the bill, with only 16 voting against it.

House Majority Leader Eric Cantor, R-Va., left, and Speaker of the House John Boehner, R-Ohio, arrive to a second Republican caucus meeting at the U.S. Capitol in Washington, on Tuesday, Jan. 1, 2013. Photo by Jacquelyn Martin reprinted from AP.

By voting “Yes” on the deal, Mr. Boehner risked alienating enough members of his party that they may choose not to re-elect him as Speaker of the House (Did you know that the Speaker of the House is second in line for the Presidency after the Vice President?) One of the most outspoken Republicans against the deal was House Majority Leader Eric Cantor, who pointed out the stark reality that not cutting spending will only continue to increase the deficit. The delay in sequestration (this means spending cuts) will only be valid for two months, while lawmakers try to figure out other solutions to address the deficit without sending the country into a recession.

Immediately after the vote was taken, President Obama boarded Air Force One to Hawaii to rejoin his family who is vacationing there. He is expected to sign the bill into law when he returns. Photo reprinted from USA today.

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Egypt votes to approve new constitution

A woman cuts another woman’s hair in protest of the new Islamist-based constitution passed in Egypt. Photo reprinted from The Boston Globe.

This past week, Egypt voted to pass a new constitution. While this would seem like a cause for celebration, there are still many people in Egypt who feel the new constitution does not grant sufficient freedom to certain minorities, including Christians and women. Despite the victory for a democratically passed constitution, bitter debates and protests have been waged against the ratification of this new constitution.

Only about 33% of eligible voters turned out to vote on the referendum. Of the 16.2 million people who voted, approximately two thirds voted to approve it. The constitution passed by a higher margin in rural areas, where there are more Muslims, than in the capital city of Cairo, where more minorities opposed it.

The constitution was heavily endorsed by the Islamist President of Egypt, Mohamed Morsi, and his Islamist backers, the Muslim Brotherhood. Morsi was elected in June of 2012, almost a year and a half after the previous President of Egypt, Hosni Mubarak, was forced to resign during a bitter revolt by the citizens in February of 2011.

A cover story in Time magazine in early December declared Mohamed Morsi to be “The Most Important Man in the Middle East”.

As the first democratically elected Islamic leader of Egypt, Morsi was expected to restore economic stability and domestic peace, while representing the interests of all of its citizens. However, minorities in Egypt have worried that Islamist law, or sharia law, will become synonymous with national law. Christians and women have complained that Morsi is already showing signs of favoring Islamists and creating laws that will discriminate against them.

In November, Morsi issued a decree stating that no authority or court can overturn any decisions he has made since taking office until a new constitution is adopted and a parliament elected. Muslim Brotherhood officials, with whom Morsi is allied, said the measures were necessary to ensure the country’s full and healthy return to democracy. However, many people saw this move as a grab for more power, and even accused Morsi of declaring himself “Pharoah”. “God’s will and elections made me the captain of this ship,” Mr. Morsi said.

Demonstrators line the streets of Cairo to protest Mohamed Morsi’s November decree granting himself practically unlimited, dictator-like powers. Photo reprinted from arabianbusiness.com.

The approval of the new constitution was supposed to be a move toward revoking some of Morsi’s self-appointed powers. But the bias toward Islamist law in the new constitution has worried many people that a shift toward an Islamist-biased government is proceeding.

Even supporters of the constitution admit that it was drawn up in haste, and Morsi himself finally made a public statement this week. According to a New York Times articles on December 26, “President Mohamed Morsi of Egypt took responsibility on Wednesday for “mistakes” during the run-up to ratification of the new constitution and urged Egyptians to appreciate the fierce disagreements about it as a “healthy phenomenon” of their new democracy.” He added, “As we all welcome difference in opinion, we all reject violence and breaking the law.”

This New York Times photo shows members of the Egyptian Upper Parliament meeting to discuss the new constitution on Wednesday, December 26.

While Morsi’s statement was praised by Western supporters of democracy, the opposition did not believe a word of it. “Even if this Constitution is considered approved legally,” the opponents said, “it lacks moral legitimacy, political legitimacy and popular legitimacy because it lacks national consensus.”

Another big problem with the approval of this disputed constitution is that it is weakening Egypt’s already weak economy even further. Since President Hosni Mubarak’s ouster in February 2011, the country has lost more than half of its foreign currency reserves — from $36 billion in 2010 to around $15 billion currently. Perhaps in anticipation of further financial woes, Morsi issued a decree on Christmas Eve that bans people from leaving Egypt with more than $10,000 or its equivalent in other currencies.

So, even as Egypt struggles to establish a peaceful Democratic government that fairly represents all of its citizens, namely Muslims and Christians alike, the road to achieve this is still long and winding.

Note to students: Kitchen Table News has posted several stories about Middle Eastern Countries recently. Click here to take a fun quiz on Middle East geography.

Click here to take another fun quiz and see how much you’ve learned about recent changes in Egypt’s government.

Tragedy in Newtown, Connecticut

A line of children from Sandy Hook Elementary School in Newtown, Connecticut, bravely follow teacher directions after the shooting rampage.

Sometimes the news can be a little dull. Sometimes, it feels like the news doesn’t relate to us, especially if it is something happening halfway around the world. But sometimes, something will happen in the news that is so close to home, and so close to your normal routine, that you can’t help but sit up and take notice.

As you know by now, a terrible tragedy happened in the little town of Newtown, Connecticut. At about 9:30 Friday morning, a 20 year-old man entered an elementary school with guns. He then performed what the Prime Minister of Australia called a “senseless and incomprehensible act of evil.” He began shooting people. And the people were not just adults, they were children, too. By the time he was finished, 20 children and six adults had been killed. Before going to the school, he had performed another unspeakable act. He had killed his own mother. Then, after killing all of those people at the school, he turned the gun on himself and killed himself.

This tragedy is the worst school-age shooting rampage in our country’s history. Things like this just don’t happen very often. But when they do happen, communities come together to reassure each other, and to ensure that things like this will not happen again.

The red dot on this map shows the location of Newtown, CT, in relation to other major cities in the Northeast.

The gunman’s name was Adam Lanza. Authorities are still trying to sort out the details. What was Adam’s relationship to the school? What was his mother’s relationship to the school? Where did Adam get the guns? And most importantly, why did Adam want to do this?

Adam has a 24 year-old brother, Ryan. Ryan lives in New Jersey. So far, Ryan has no idea why his brother would do this. Adam’s father, who was divorced from his mother, lives in another town in Connecticut. So far, Adam’s father has not spoken about the tragedy.

The children at Sandy Hook Elementary School all acted very bravely. In fact, if not for the quick thinking of teachers, more people might have been killed. As soon as the shooting began, all of the teachers locked their classroom doors, and huddled the children into the classrooms and told them to crouch down and be very quiet. If children and teachers had run screaming through the hallways, that would have created a lot more chaos. But thanks to very well behaved children and very calm and level headed teachers, the shooting was confined to only two classrooms.

When President Obama spoke to the nation about the tragedy, he had to stop several times, unable to fight back the tears.

President Obama addressed the country on Friday afternoon. “Our hearts are broken today for the parents and grandparents, sisters and brothers of these little children, and for the families of the adults who were lost,” he said. “Our hearts are broken for the parents of the survivors, as well, for as blessed as they are to have their children home tonight, they know that their children’s innocence has been torn away from them too early and there are no words that will ease their pain.”

He also said, “we’re going to have to come together and take meaningful action to prevent more tragedies like this, regardless of the politics.”

When things like this happen, everyone feels terribly sad. Grown ups feel sad and worried, and kids do, too. You have to remember that all of the grown ups in your life love you and care about you. Every day, the adults in your life are doing things to keep you safe, whether it is making you wear your seatbelt, or teaching you not to talk to strangers, or locking the door to your house at night. School is and will continue to be a safe place. If anything, after a tragedy like this, school will be even safer than it was before.

As a Middle school student, you are probably not allowed to watch R-rated movies or certain television shows. This tragedy is worse than anything that could happen in a movie, and yet you are reading about it. Be sure to talk to your parents and teachers if you have any questions or any feelings you want to discuss. If it seems like an extremely difficult event to comprehend, that is because it is. Sometimes, the news is just the news, and the news can be very, very sad. The saddest news seems to be news like this – when a fellow American – only 20 years old, a child himself – could engage in this kind of senseless violence against an innocent community – a community of children.

One lucky father hugs his daughter tightly as they leave the school.

Susan Rice withdraws her name from consideration as U.S. Secretary of State

Susan Rice was President Obama’s top choice to be the next Secretary of State.

As Kitchen Table News reported a couple of weeks ago, current U.S. Secretary of State Hillary Clinton is planning to resign from her post when the new administration takes office in January. While the head of the Executive branch of government, Barack Obama, will of course be returning, many cabinet posts will have new appointments by the President.

The barrage of criticism by Republican senators over the alleged misleading information Ms. Rice provided in the early days following the terrorist attack on the Libyan consulate in Benghazi has continued in the last two weeks. Ms. Rice finally decided that the nomination process for the next U.S. Secretary of State was too important to allow it to be turned into a political agenda for others. In a letter to President Obama, she said, “the confirmation process would be lengthy, disruptive, and costly — to you and to our most pressing national and international priorities. That trade-off is simply not worth it to our country.”

Obama had defended her, describing the criticism from several key Republicans as “outrageous.” “If Senator (John) McCain and Senator (Lindsey) Graham and others want to go after someone, they should go after me,” Obama said at a White House news conference in late November. “When they go after the U.N. ambassador, apparently because they think she’s an easy target, then they’ve got a problem with me.” In light of her withdrawal, President Obama responded by commending Susan Rice on her graceful and dignified decision, and for putting the interests of the country first.

John Kerry, D-Mass., was the Democratic party’s nominee for President in 2004, ultimately losing to George W. Bush.

John Kerry, the Democratic senator from Massachusetts, is now considered the front runner for the nomination. While serving in the U.S. Senate, he has been the chairman of the Foreign Relations Committee. He also served two tours of duty in Vietnam.

Republicans have already expressed support for Kerry, should confirmation hearings proceed. Many people believe this is because if Kerry vacates the Senate seat in Massachusetts, then a special election would need to be held to fill the seat, and Republicans hope that a fellow Republican would win. Currently, Massachusetts has two Democratic senators: John Kerry, and the newly elected Elizabeth Warren, who unseated incumbent Republican senator Scott Brown in the most recent election. Scott Brown was a popular senator in Massachusetts, and he would have a good chance of winning a special election like this one, especially since he is still riding the wave of his 2012 campaign, where he had many supporters, despite losing the election.

Scott Brown and Elizabeth Warren spent more than $71 million combined in their respective campaigns, making it the second most expensive Senate race in the country in 2012 and by far the most expensive Senate race in Massachusetts history.

Currently, Democrats hold a majority in the Senate, with 53 seats. Republicans have 45 seats and Independents hold two. If a Republican were elected to the Senate in place of John Kerry, this would bring the Republicans one step closer to the needed 51 seats to hold a majority in the Senate, and would provide additional Republican support when the Senate votes on bills.

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U.N. votes to grant Palestine “non-member observer status”

Photo: Last Thursday, November 29, Palestinian Authority President Mahmoud Abbas celebrated a victory at the U.N. when the General Assembly voted 138-9 to grant Palestine “non-member observer status”.

Editor’s Note: This blog is intended as a summary of what is being reported in American newspapers. It is not intended as a stance for or against a Two State solution in the Middle East. However, as a Jewish American, I fully support the State of Israel in her quest for peace, and in her right to defend herself. Jodie Cutter.

Two major events occurred in the past week regarding Israel and Palestine that impact the resolution of the conflict in the Middle East via a “two-state solution”. The first was a vote by the United Nations last Thursday to grant Palestine “non-member observer status”. Then, the following day, the Israeli government announced that it will be constructing 3,000 new housing units just east of East Jerusalem, in an area known as the E-1 corridor.

Just what exactly is “The Two State” solution? It would be the creation of two independent states in the Middle East, Israel and Palestine. For thousands of years, these two nations have fought over who should occupy and rule the land now known as Israel.

Map: The tiny country of Israel, shown in green bordering the Mediterranean Sea, has been the center of controversy in the Middle East since biblical times.

In 1948, Israel was approved by the United Nations as a sovereign Jewish State. This decree displaced thousands of Palestinians who had also called this land their home. While the United Nations General Assembly did vote to create Israel as a Jewish state 33-13, all of the Arab countries opposed this move.

In an attempt to pacify the displaced Palestinians, the U.N. created a Partition Plan for Palestine in 1948, which would allow Palestinians to remain living in parts of Israel. The parts are shown in yellow in the map below.

The parts awarded to the Palestinians include the Gaza Strip, the West Bank (so named because it is the west bank of the Jordan River), and a section of East Jerusalem. The Golan Heights, previously a part of Syria, has been occupied by Israel since 1967.

This vote to elevate Palestine to non-member observer status happened to occur on the 65^th anniversary of the U.N. voting to declare Israel a state. While non-member observer status does not elevate Palestine to full statehood, many Arabs view it as a positive step by the world’s nations toward being recognized as a legitimate state.

In his speech to the General Assembly, Palestinian Authority President Mahmoud Abbas said, “we do not seek to delegitimize an existing state—that is Israel; but rather to assert the state that must be realized—that is Palestine.”

Among the nine nations opposing this move were Israel, the U.S., and Canada. It is important to note here that the United States, along with Canada, who usually votes with the United States, are the only major members of the United Nations to support Israel in opposing the vote on Palestinian Statehood. The U.S and Israel both sharply criticized the vote, saying it was “counterproductive” and “unfortunate” and would only hinder the peace process.

Photo: In casting a “no” vote for Palestinian non-member observer status, U.S. Ambassador to the United Nations Susan Rice said, “This resolution does not establish that Palestine is a state”.

Then, last Friday, the Israeli government announced that it would immediately begin construction on new settlements in a controversial area of East Jerusalem known as E-1. While some people maintain that the timing of this announcement comes as a coincidence, others contend that the announcement is a form of retaliation for the U.N. vote on Palestine. Click here to read more from the New York Times. As part of its demands, Palestine has long asked for a part of East Jerusalem to be handed over in order to make it the capital of the Palestinian nation they hope to someday have. If Israel builds settlements in E-1, then this can never happen.

This map shows the Israeli-occupied areas, in light blue. E-1 would effectively join the Israeli settlement of Ma’Ale Adumin with East Jerusalem.

Secondly, by building in E-1, Israel would be connecting scattered Israeli settlements in the West Bank, thereby separating the two Palestinian halves of the West Bank from each other. This would make the creation of a Palestinian state extremely difficult, given that Palestinian settlements in the West Bank would no longer be contiguous.

Photo: A settler looks from the proposed E-1 building site toward the existing Israeli city of Ma’ale Adumim.

The United States condemned the proposed construction of new settlements in E-1. A spokesman for the National Security Council, Tommy Vietor, said. “We believe these actions are counterproductive and make it harder to resume direct negotiations or achieve a two-state solution.” Secretary of State Hillary Clinton concurred, saying, ““These activities set back the cause of a negotiated peace.” Even former Presidents George W. Bush, a long time friend to Israel, and Bill Clinton objected to settlements in this area during their presidencies.

The Palestinian government released a statement saying, “At a moment where the Palestinian leadership is doing every single effort to save the two-state solution, the Israeli government does everything possible to destroy it.” In response, Israeli Prime Minister Benjamin Netanyahu said, “No Palestinian state will exist without a declaration of an end to hostilities, and no Palestinian state will exist without real security arrangements that will protect the State of Israel and its citizens. None of these things are remotely mentioned in the Palestinian petition to the U.N.” What Israel wants in this region, like the U.S., is a solution for lasting peace.

Vocabulary:

sovereign

pacify

legitimate

assert

retaliation

contiguous

concur

imminent

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