Friday, February 10, 2012

US Persists With Big Twin Deficits Into 2012

Those of us who grew up in the America of the 1980s remember persistent political handwringing over America's big twin deficits in foreign trade and the federal budget.  Well, a few of us remember, while many others in Generation X were doing something else.  My admiration for public television came partly from informative reports on the MacNeil/Lehrer NewsHour (now the PBS NewsHour), Nightly Business Report, and Wall $treet Week. The alarmist tone of these reports throughout the Reagan Administration all mentioned how the nation's competitiveness and national wealth would suffer if America could not curb its appetite for deficits.  I remember it like it was yesterday.

That was yesterday.  Tomorrow is here.  The twin deficits are worse than ever today.  The trade deficit in December 2011 widened despite the current Administration's stated goal of doubling exports by 2015 or whenever.  Maybe they also meant that imports should quadruple in the same time period so our trade deficit can continue unabated.  The federal budget deficit is also persistently large despite the political theater of Super Committees and debt ceiling fights.  The warnings about the harm these deficits would do to our economy went unheeded.  Now America suffers from wide-scale structural unemployment partly hidden by statistical tricks; the transfer of value-added manufacturing capability to strategic competitors; and a growing willingness among our largest trading partners to use anything but the U.S. dollar as a means of exchange.

America is about as serious as Greece when it comes to impulse control.  No ambitious country ever overspent its way to dominance but every former empire overspent itself into decline.  Partisans can nitpick over whether the absolute deficit numbers recorded by the current Administration are comparable to the percentages of national debt added by previous administrations.  Such a debate is akin to arguing over whether more lifeboats should have been installed while the Titanic is sinking.  A good debate could start by examining countries with healthy economies to see if low debt-to-GDP ratios are a factor in their success.  I am a patriotic American.  I care enough to keep sounding the alarm.