International Finance - who pays for what?

Money-Money-Money
Because we are retired and living on fixed incomes managing income and spending is important to our future. The way the United States and the world's income and spending are managed is important to everyone. The USA is the richest country in the world and by far the most militaristic. Today's post may make your eyes glaze over, but bear with me.
Spending Principles - Georgie Anne Geyer made me stop and think with her 2/3/06 piece in KeepMedia entitled,
"Simple Economics Principles Elude Bush Budget Drafters." To quote,

. . . I do know certain things. I know that if I overdraw my bank account, or have too many debits on my credit cards, somebody will come after me; at the very least, I will soon be paying everything I earn to cover the interest on the loans, and my credit rating will sink lower than the winter sky.
I know, for instance, that when I was traveling in Europe two years ago, I could roughly calculate the dollar at about 1.2 to the British pound and that, for a long time, the dollar and the euro stayed about equal. (This fall, the pound and the euro were closer to 2-to-1 for the dollar. It sure seemed like a warning to me, as I sadly realized I had to cut down on future trips.)
Now that may be ALL I know. But although I admit to being a rank, but attentive, amateur in the business of paying one's way, these elementary economics principles seem to escape the originators of the administration's 2005 budget.
In the version just presented by President Bush, we have a $2.4 trillion budget for next year, which sees a parallel rise in the federal deficit (the government's version of our debts and credit card bills) to a humongous $521 billion, of which the Bush tax cuts account for $272 billion.
This does not include additional funds for Afghanistan, Iraq or other military adventures (we are now talking about attacking Pakistan to rid them of al-Qaida) still perking in the White House. Those are to be dealt with, as earlier surreptitious war costs, in a hidden $50 billion separate supplementary request to Congress. This budget also reduces 65 federal education and social programs of the sort that President Bush, when he was governor, seemed so enamored of.

We are the largest economy in the world - Gross Domestic Product figures for U.S.A. for last quarter of 2005, quoted from the Bureau of Economic Advisors website,

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 4.2 percent, or $129.6 billion, in the fourth quarter to a level of $12,735.3 billion. In the third quarter, current-dollar GDP increased 7.6 percent, or $227.7 billion.
2005 GDP -- Real GDP increased 3.5 percent in 2005 (that is, from the 2004 annual level to the 2005 annual level), compared with an increase of 4.2 percent in
2004. The major contributors to the increase in real GDP in 2005 were personal consumption expenditures (PCE), equipment and software, exports, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased in 2005. . . .
Current-dollar GDP increased 6.4 percent, or $745.1 billion, in 2005. Current-dollar GDP increased 7.0percent, or $763.1 billion, in 2004.
During 2005 (that is, measured from the fourth quarter of 2004 to the fourth
quarter of 2005), real GDP increased 3.1 percent. Real GDP increased 3.8
percent during 2004. The price index for gross domesticpurchases increased
3.4 percent during 2005, the same increase as during 2004.

Comparing the economies of China and the EU - Quoting from eurota, the 2005 GDP figures comparing the top ten EU nations and China (in Euros) are also very interesting. [For comparison the U.S. GDP in the fourth quarter was at $12,735,300,000,000. If converted to Euros (see Geyer's estimate of two dollars for one euro), it is 6,367,650,000,000 euros, or 2.89 times the size of Germany's].

1. Germany = 2,206,305,000,000
2. China = 1,780,000,000,000
3. France = 1,498,386,100,000
4. United Kingdom = 1,139,608,700,000
5. Italy = 958,078,900,000
6. Spain = 651,365,800,000
7. Netherlands = 395,124,400,000
8. Belgium = 267,143,700,000
9. Sweden = 250,327,300,000
10. Austria = 227,710,600,000

Military spending is our core reality - From Global Issues.org (2-8-06) comes this piece from which I quote:

In Context: U.S. Military Spending Versus Rest of the World, consider the
following: . . . sources compare the given fiscal year budget request with the latest figures for other countries, which are sometimes two years old. Still using those statistics for other countries, however, a comparison can be made here of the US Fiscal Year 2005 spending against other equivalent data:
The US military spending was almost two-fifths of the total. The US military spending was almost 7 times larger than the Chinese budget, the second largest spender. The US military budget was almost 29 times as large as the combined spending of the six “rogue” states (Cuba, Iran, Libya, North Korea, Sudan and Syria) who spent $14.65 billion. It was more than the combined spending of the next 14 nations.
The United States and its close allies accounted for some two thirds to three-quarters of all military spending, depending on who you count as close allies (typically NATO countries, Australia, Canada, Israel, Japan and South Korea)
The six potential “enemies,” Russia, and China together spent $139 billion, 30% of the U.S. military budget.

Military spending (in billions of dollars) by the top 10 nations is as follows (same source):

1. United States - $420.7 @ 43% of total.
2. China - $62.5 @ 6% of total
3. Russia - $61.9 @6% of total
4. United Kingdom - $51.1 @ 5% of total
5. Japan - $44.7 @ 4% of total
6. France - $41.6 @ 4% of total
7. Germany - $30.2 @ 3% of total
8. India - $22 @ 2% of total
9. Saudi Arabia - $21.3 @ 2% of total
10. South Korea - $20.7 @ 2% of total

The International Space Station completion needs 16 flights. Because we have not been able to afford to carry the space programs by ourselves, the international community has had to come to our financial aid for the space station. Quoting from the story:

The heads of space agencies from Canada, Europe, Japan, Russia and the United
States announced March 2 that the International Space Station will be completed by 2010, without major changes to the original design. The partners met at Kennedy Space Center in Florida to review space station cooperation and endorse a change to the station configuration and assembly sequence. NASA Administrator Michael Griffin said the main change is that use of the station will be deferred as the partners assemble the station piece by piece in a series of missions to come.

Foreign Aid is Down - We, as well as other rich countries, have fallen short of what we needed to have contributed in aid to poverty-stricken foreign countries. A shortfall of $2.5 trillion in foreign aid since 1970 is documented in this story from The US and Foreign Aid Assistance site. Further,

The shortfall is potentially even higher, given that in recent years official aid has included items that it is not meant to, and does not always go to the poorest countries, but instead to the ones of most strategic interest to the donor.

We have it backwards - The United States has its spending priorities all wrong. We are in debt to the hilt, and spending too much on war. We neglect our own vulnerable citizens, poor nations and outer space. We are not following the principles that could make us the fiscally and morally sound nation we have been for the past several decades. We need to get back on track, and fast. This is just crazy.
Tags: economy U.S. budget European Union military International Space Station foreign aid
My "creative post" today at Southwest Blogger is called, "The Five Sides of the Pentagon."