Your history is somewhat flawed. Yes, the Soviets did launch the first satellite. They launched the first man in space, as well as the first woman, the first 2-man crew, and the first 3 man crew. They also performed the first spacewalk, built the first space stations (ultimately, they built and flew 8 of them). All and all, they have a lot to be proud of in their space program.

Do you have anything to back up your claim that the Mercury capsule was designed by Soviet defectors, because, quite frankly, I think you're very wrong on that. NACA (later NASA) had a small group of engineers assigned to design the Mercury program as part of the MISS (Man in Space Soonest) as far back as 1958. Mercury was designed as a minimal system to carry a single small man into space for a brief mission. The basic work was done by a few dozen people, and none were Soviet defectors.

The Soviets did a lot of copying on their version Shuttle. Their version had some good points like not putting the equivalent of the SSMEs on the orbiter. Putting jet engines for a go-around capability was considered for our Shuttle but considered unnecessary given the experience of 199 X-15 flights. Jet engines on an orbiter would result in thousands of pounds of dead weight, leading to less payload capability. Ultimately, their Buran orbiter only flew once. It never even had a life support system installed.

What the Soviets did and what the Russians continue to do is to build some of the best rocket engines anywhere. They have a robust family of launch vehicles with proven track records. They have a solid manned spaceflight capability, although it currently only does 2-3 flights per year. Many of their satellites are somewhat lacking technically, but what they lack in sophistication or longevity, they make up for with cost effective performance on most systems. Their Molniya 1 and Molniya 3 communications satellites are good examples of Soviet engineering. They're simple, they're cost effective, and they work quite well.

Some of their systems, like their GPS copy called GLONASS, weren't quite so successful. In the early days, they struggled to get a 2 year lifetime out of their satellites (ours typically last 5-10 years, with some much older). When you're talking about a constellation of about 21-24 satellites, you'd need to launch about 10-12 of them a year to maintain the constellation if the lifespan is only 2 years.