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Trade Deficits - product of failed economic policy 

Bush Economic Policies - Screen doors on submarine - same concept ...
by Mike Crane

Today the Commerce Department released the February 2005 Trade statistics and guess what, they are higher than expected by the pundits. Well folks the true surprise is that the so called pundits are surprised.

Of course these same pundits and the new age rocket scientists called "economists" say the same thing month after month (See: Failed Bush Economic Polices - Trade Deficit grows, grows, grows ...). We are beginning to wonder what it takes to get one these plush jobs - just the ability to act surprised once a month?

The truth is that the economic policies of the Bush Administration are failing - failing badly and no amount of wishful thinking is going to change the results. President Bush's Economic policies can be compared with putting screen doors on a submarine and taking it for a test dive:

Down, down, down and nothing will stop the dive until the screen doors are changed.

Just as no amount of wishful thinking will make screen doors prevent the submarine from flooding, President Bush's economic policies will not hold water either. Our Trade Balance is going to keep on going down, down, down ...

To repeat the basics:

Trade in Goods

Factories are moving to foreign countries. Empty factories do not produce goods to be exported, even if President Bush tells us this is good for us, empty factories just do not produce much! When Americans need the products those factories used to produce they have to buy imports. As long as more factories move to foreign countries than move to our country, we will export less and import more!

Trade in Services

Every time an American company outsources jobs to a foreign country, those services are no longer available to sell to foreign companies and are now imports. While we still have a trade surplus in services it is shrinking and at the current trend will be a deficit around the end of this year.

Agriculture

Agriculture has been producing a positive trade balance for decades. But even this mainstay of American Trade is sliding toward a negative balance. American companies are shunning agriculture products grown in our country under high standards to import food stuffs grown with much lower standards.

In conclusion every component of international trade is on a downward trend. There is one category that shows the extent to which President  Bush's economic policies are destroying our international trade position - advanced technology. Now most would believe that our country leads the world in advanced technology, which at one time we did. But no longer:

Advanced technology products (ATP) exports were $14.9 billion in February and imports were $18.3 billion, resulting in a deficit of $3.4 billion.

Even in advanced technology products  - empty factories and development centers do not generate much!

Now this is a lot of facts and figures to digest. As long as you are gainfully employed and everything seems to be going well it is so easy to just say "Ho hum" and turn on the football game. But the odds are increasing that you are going to face the music some day.

American jobs that are sent to another country have something in common with empty factories, call centers and development centers. A lot of Americans who used to think every thing was going well  - used to work there.

Today they do not!

Even if you are still gainfully employed you may be feeling the impact and if you are waiting for the Republican and Democratic leadership to tell you - you have a long wait coming. The following is one aspect that affects all Americans and is not even covered on Fox news between Michael Jackson updates.

One of the impacts of the failing Bush economic policies is the decline of the dollar versus other currencies. "Ho hum" say most people. The complexities of international currency exchange rates is not very exciting. But if you so inclined to just "Ho hum" the subject you ought to be grabbing your wallet at the same time.

Lets give an example: To pick a round number lets use 30% as the amount that the dollar has declined against major currencies such as the Euro and Yen. It is actually higher but 30% will do for this example. Every time you pull in to a gas station and fill up your tank you are paying a price for the failed Bush economic policies.

The dollar is worth 30% less (the percentage used for this example) and when this decline started oil was selling at $33.00 per barrel. So a drop of 30% in the value of the dollar means that the value of a barrel of oil is now $42.90. So the first $9.90 of the increase in a barrel of oil does not have anything to do with being ripped off by Arabs, it is a hidden charge compliments of the failed Bush economic policies.

But he would rather let you blame the Arabs!

Of course this applies to virtually all imports, as the dollar declines they will become more expensive, this comes directly from your wallet.

The continuing downward trend of our Trade Deficit is a formula for disaster.

Until the failed policies are changed - there is nothing to stop the downward trend! Just like the example of the submarine with screen doors, it will sink until it hits bottom.

It is up to you the American citizen to decide how long you are going to let it continue. In fact in the next few months unless you do something it is going to get worse. The Bush Administration is lobbying very hard for an expansion of his defunct trade policy - the CAFTA treaty. The Central American Free Trade Agreement will only accelerate the free trade benefits to another whole set of foreign countries. Perhaps you should consider urging (or better - demanding) that your US Senators and Congressman vote against CAFTA.

The Southern Party has released a position statement that would change the failed free trade to one of FAIR Trade (See: A Southern Party of Georgia Position on solving our country’s Trade Deficit). If you are concerned about the information presented above we hope you will take a few minutes to read this position statement.

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Excellent Reference site:

The Grandfather Economic Reports - http://mwhodges.home.att.net/

Several of the charts and graphs that are used on the Southern party web site are from this excellent web site. We recommend that you visit it frequently and spend some time reading the variety of economic reports available.