Warren Buffett has been quoted as saying, "The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil...". No economic issue today is more pressing than the U.S. Trade Deficit. This predicament should be America's top priority. It is also a key reason why we have high unemployment. Yet most people in America do not understand this Silent Killer or what they can do about it. Even most economists are very defensive of our free trade policy, yet none of them can defend free trade's 1000 pound Gorilla in the room" the U.S. yearly trade deficit. This article will outline the frightening facts and provide the reader with a number ways to make their voice heard to congress in an effort to create change on this U.S. economic crisis in favor of Fair and Equal Trade.
Here are important key facts on why the Trade Deficit now threatens our future:
1) First and foremost, there is absolutely no history that shows that any country including the U.S. can long sustain large yearly trade deficits without putting its future at risk. However, there are instances where empires have fallen due to trade deficit failures including the 17th Century Spanish Economy and a trade deficit was partially responsible for the fall of the great Roman Empire .
2) In the last 10 years the trade deficit has averaged $0.55 trillion. The U.S. Trade Deficit since 1971 is over $7.5 trillion and $6.5 trillion in just the last 20 years. By comparison, the national debt is now about $13 trillion.
3) This year the current trade deficit through May is $0.170 trillion on track for about $0.4 trillion. It's only lower than average due to the lingering modern recession. The NAFTA (from 1993 through 2003) free trade agreement displaced a reported 879,280 jobs. Since the entrance of China, the U.S. has lost another 2.4 million jobs. The two combine for about 3.5 million total jobs lost due to the free trade policy allowing for these large deficits. This number is growing as more and more outsourcing is occurring. Last year 60% of the U.S. trade deficit was with China.
4) The free trade deficit profits have allowed foreigners to buy up America. According to the Grant Thornton report, "total assets at foreign-owned companies increased 15% to $9.2 trillion in 2005 from $8.0 trillion a year earlier and was more than three times the 1996 total of $3 trillion. Foreign-owned assets totaled just $37 billion in 1971".
5) Foreign-owned companies in the United States have a work force of about 5.3 million, or some 3.5% of all workers. According to the last note (2005), they owned 15% of all U.S. businesses but only employ 3.5% of the workforce. Extrapolating this to 100% ownership (that we are on a crash course for) this would only equate to 25% employment in the U.S. This is our future.
6) Most of the U.S. trade deficit is with China and their ownership is the largest share of U.S. businesses and debt. Thus the U.S. is slowly being sold mostly to China from trade deficit profits dollars obtained from U.S. consumers.
7) The U.S. has a national debt crisis of about $13 Trillion. However with the massive trade deficit job losses, this author estimates lost tax revenues of about $1 trillion dollars. Thus the trade deficit contributes significantly to our national debt. Free trade is really not free!
8) We have a viscous cycle, we outsource jobs, increase unemployment, this creates tax losses, the U.S. goes further into debt from these lost tax revenues, the U.S. must then sell more treasury bonds to China and foreigners, consumers are forced to purchase more and more foreign imports with few U.S. made alternative products, this enables foreign to make huge trade deficit profits, which allows them to purchase more U.S. businesses and debt, foreign owned business pay far less taxes then U.S. equivalent businesses and hire fewer American employers, this creates higher unemployment and more tax losses, and the cycle continues.
9) Economic global greed is excessive; the U.S. free trade policy encourages foreigners to cheat as every country wants a piece of America. Well known is unethical trade deficit problems related to: Currency manipulation by U.S. trading partners, 2) Excessive Job outsourcing by U.S. businesses, 3) Product subsidies by foreign governments, 4) Unfair non tariff trade barriers by our trading partners, 5) Lack of intellectual property rights protection, and 6) Product counterfeiting.
10) Because of these massive trade deficit tax losses, this is like a reverse tariff that U.S. citizens must pay on trade deficit goods. These lost revenues cause increase tax programs. Every citizen must pay more taxes which means in part we are actually supporting all the unethical foreign greed issues cited above.
Finally the U.S. trade deficit is not just unethical, it is unconstitutional. The subtle reason why it violates U.S. constitutional law is fully explained at the website, CitizensForEqualTrade.org