America experienced its last surplus of trade in 1975. Since then, through July, the most recent month for which trade data has been released by the U.S. Bureau of Economic Analysis, when adjusted for inflation using the Consumer Price Index published by the Bureau of Labor Statistics, the cumulative trade deficit was $9.93 trillion. Assuming a continuing monthly trade deficit of $45 billion (the current 3-month moving average), it is estimated that the trade deficit has now reached $10 trillion as of September 15th.
The U.S. is on track for its 35th consecutive annual trade deficit in 2010 since its last trade surplus in 1975. The U.S. trade deficit of $759 billion set a record in 2006. With the onset of the global recession in 2007, it fell steadily to $375 billion in 2009, but is expected to rise again to over $500 billion in 2010. Almost half of all Americans alive today have never known an America with a trade surplus.
Through July, 2010, America’s largest trade deficit is with China, at $145.3 billion. The trade deficit with Mexico is second at $38.4 billion. The trade deficit with Japan is third at $31.6 billion. The trade deficit with Germany is fourth at $18.7 billion.
America is $10 trillion poorer today as a result of bone-headed trade policy based on failed 18th century economic theories. That’s $32,250 for every man, woman and child in America – almost $130,000 for every family of four. It’s enough money to solve virtually every financial challenge facing America, including putting the social security fund back on sound footing. It’s enough money to nearly wipe out our national debt.
In 1947, when America signed the Global Agreement on Tariffs and Trade, it was so easy for our leaders to come together and hold hands with the rest of the world, like the old “I’d like to teach the world to sing in perfect harmony” Coke commercial. Now we see what their sappy good intentions and simple-minded economists have wrought – an America in serious decline and a global economy collapsed by enormous trade imbalances. Nowhere is a leader to be found with the courage to undo what our 1947 predecessors stumbled into so blindly. If our founding fathers ever thought it conceivable that our trade policy would be abandoned to a global trade organization bent on pillaging America, they would surely have included in the constitution a requirement for a balance of trade that also made it illegal to join such a global organization.
Never has America been so threatened by neglect of its economy and by a complete failure of leadership. Never has it so badly needed an amendment to its constitution to mandate the inclusion of common sense in its trade policy. (See http://petemurphy.wordpress.com/more-good-stuff/28th-amendment-to-the-constitution-of-the-united-states/ )