As I watched a bit of Bush's speech to the Women's Entrepreneurship forum in Cleveland, Ohio yesterday, I thought I had heard yet another Bushism, but when I checked the official White House transcript this morning, it turns out that the President said what he meant to say:
I want the world to buy America.
Now the transcript adds quotes around "buy America," and I've taken the statement out of context, but that sentence is still startling given that our nation set yet another new trade deficit record in January: $43.1 billion. What does this number mean? Peter DeFazio (D-OR) points out that trade deficits have consequences:
The story on the trade front is similarly grim. The U.S. trade deficit in 2002 was nearly $500 billion, the highest deficit ever recorded. The deficit equates to a loss of approximately $1.5 billion per day in U.S. wealth. Yet, the President wants to expand the failed U.S. trade policies that have exported millions of jobs and entire industries to low wage havens overseas.
The large trade deficit means the U.S. is increasingly in hock to bond holders and foreign investors. Today, foreigners hold 40 percent of U.S. Treasury debt, 24 percent of U.S. corporate bonds, and 13 percent of U.S. stocks. The cumulative debt we owe to foreign investors skyrocketed over the last decade from $49 billion to $1.5 trillion.
Mark Weisbrot of the Center for Economic and Policy Research that all this foreign borrowing at the rate of $420 billion a year (4.2% of GDP) is placing an unsustainable burden on future generations. Why do we do it? Weisbrot writes:
As for the ballooning trade deficit, to even raise the issue is to risk being called a "protectionist." In the post-Seattle climate of pro-globalist McCarthyism, most pundits and politicians would rather be seen as "economically correct."
At the same time, powerful financial and multinational corporations have an interest in keeping the U.S. dollar overvalued. (It is the overvalued dollar that causes our trade deficit, since it makes our exports more expensive and our imports artificially cheap). The strong dollar makes foreign investment - and overseas sweatshop labor - a bargain. And the cheaper imports help keep inflation down, which is always a plus for the big bondholders.
Those hurt by the trade deficit - the majority of workers whose wages are pushed downward, or even worse, those who lose their jobs - have little voice in the American political system. So the next time you hear a politician ranting about how the federal budget deficit is stealing from our children's future, just ask him: What about the trade deficit?
I guess Bush's policies are accomplishing exactly what he wants because the world is indeed buying America or at least it's holding the mortgage.
Maybe that's what he's discussing with all those foreign leaders he brings to his ranch in Crawford. "Hey, Vlady, you'd look good in a pickup truck, and I'm willing to finance 80% of the purchase price over 15 years."
