re: I am so confused about the Country we live in

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Our kids cannot pray in school

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I'm pretty sure they can. It just isn't school sanctioned, unless you go to a religious school. I went to a Catholic school. There was lots of praying.

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Our kids cannot pledge of Allegiance in school anymore because of "One Nation Under God"

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Is this officially taken out of school? It's kind of silly if you think about it. Children who are too young to understand the ramifications taking an oath.

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We celebrate the birth of Christ for Christmas but we cannot say Merry Christmas

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I didn't get this memo. I say "Merry Christmas" every year.

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Whenever anything tragic happens, everybody says "Let's Pray for the families"

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Some people do. Even though I don't really believe in that stuff I appreciate the sentiment. I don't really see what your point is.

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Whenever anything tragic happens to America, everybody says "God Bless The USA"

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Again some people do. It's their right to express themselves how they want.

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I hear Atheists I know always say "God Damn" but why are they saying this if there is not a "God?"

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It's an idiomatic expression. Language and how it has developed is interesting. You should look into it.