ENGLISH FOR SENATE POSITION PAPER ON:
Trade Deficit
The trade deficit is the dollar value of the excess of the cost of
imported goods over the dollar value of exported goods. It is the
major component of the Balance of Payments deficit, which adds the
dollar value of financial transfers and services performed by
foreigners (i.e., trips taken abroad by Americans) to the trade
deficit.
The trade deficit has exploded from $100 Billion annually a decade ago
to almost $700 Billion annually, or more than 6% of the Gross Domestic
Product. Much of the cost of financing this deficit is being met
by recycling dollars borrowed from abroad and lending them back to the
United States, which increases its total indebtedness to
foreigners. The remainder is being financed by rapid increases in
the domestic money supply to offset the continuing drain from our
economy of our currency to pay for imports.
This situation is unprecedented in its scope and duration.
Obviously, it cannot continue indefinitely because the debt service
(interest) cost alone from foreign borrowing will eventually become
unsustainable. It is not "free trade", because trade requires an
equal exchange of goods over the longer term, with year-to-year
imbalances being offset by gold transfers between the central banks
(i.e., the Federal Reserve Bank in the United States). Since
leaving the modified gold standard in 1971, the United States has been
sending out tens (and now hundreds of) of Billions of dollars annually
to cover its balance of payments deficit.. Dollars are debt: they
represent claims upon the real economy which ultimately must provide
services or things of value to their holders (or claimants). The
willingness of foreigners to hold dollars for use to pay for imported
oil and as a secondary domestic internal currency in unstable countries
has enabled the United States to defer the real economic cost of
repatriating those dollars back to this country. With the advent
of the Euro and the world now awash with dollars, the willingness of
foreigners to accumulate more dollars is ending as there is now a
credible alternative to substitute for the dollar and foreigners
increasingly worry about the ability of the United States to meet its
financial obligations.
Eliminating the cost of imported oil by its replacement through
renewable domestic energy supplies is becoming an absolute necessity,
both from the financial as well as the environmental (i.e., greenhouse
gas emissions reduction) perspective (see the Energy and Environment
Issue Paper). Tariffs to eliminate profits from human
exploitation should be imposed upon imports produced by workers
receiving slave labor wages and enduring substandard employment
conditions. The revenue from these tariffs should be used to
compensate American workers displaced by foreign slave labor. If we
don't tolerate such treatment of human beings in this country, how can
we morally justify condoning and encouraging treatment of other human
beings abroad by purchasing products made with their labor?
It is
impossible for American workers to compete on this basis even if
they were to be forced to accept similar treatment because our workers
could not survive in this country under such conditions. In the
1920s, imports from the Soviet Union were banned because the Congress
said that they were produced by slave labor. Why doesn't the
Congress use the same rationale toward slave labor produced imports now?
Finally, the United States must increase its exports to achieve a trade
balance with China and other countries that now hold hundreds of
billions of our dollars to reduce the foreign debt service costs and
stimulate our economy. These countries should be forced to buy
American made wind powered electicity turbine generators and E-85
powered motor vehicles, a solution which would benefit both the United
States and its foreign creditors as well as the world's environment by
reducing future fossil fuel consumption and greenhouse gas emissions.
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Designed by Imad-ad-Dean,
Inc.