Feb 22 2007
Ask 100 economists the impact a trade deficit will have on a nation, and you are likely to get 100 different answers. For certain, a trade deficit - the monetary difference in how much we export versus how much we import - does not signal the impending doom of a national economy.
In the United States, we have not had a trade surplus since the mid-1970s. In the 30 years since then, we have experienced two economic booms - once in the 1980s and another in the 1990s.
That said, our national economy has seen more change in the last decade than in recent history as the effects of globalization have started to hit home.
Sen. Richard Shelby, D-Ala., spoke briefly yesterday in Linden about his concern over the U.S. trade deficit. He sounded the warning about a worrisome trend, especially as it relates to China.
Shelby's concern is well-founded. For the past five years, U.S. economic policy has led to record-setting growth in our trade deficit each year. Compare that to the 1990s, when our trade deficit increased marginally from year to year.
In 2006, we ended the year with a total trade deficit of $764 billion - an average of more than $2 billion per day. Since 2000, our trade deficit has increased $3.4 trillion, as compared to $1.1 trillion in the previous six years.
The most worrisome trend of the past six years is that as our trade deficit has grown at record-setting rates, the number of jobs we have outsourced to foreign countries has increased at break-neck speeds as well.
Corporate outsourcing has a direct correlation on the trade deficit. The fewer goods we make in the U.S., the more we must import from foreign nations.
Our national dependency on foreign oil is also a problem. Last year, we spent $303 billion on petroleum imports. That acounts for nearly 40 percent of our trade deficit for 2006.
What we did not hear from Shelby is the answer to curbing this deficit. It will take several changes in our economic policies. First, we should consider limiting the president's ability to form free trade pacts with foreign nations. Second, we turn serious attention to finding alternative sources of renewable energy. And finally, we find a way to re-energize the manufacturing sector of our economy.
The last point is key to our area. The factory jobs will make our nation stronger; they are the jobs that make the products we are currently importing. But the factory jobs, unfortunately, are the very jobs we are outsourcing.