For three decades, the United States has been buying more from foreigners than it sells to them. Now come 12 Americans, picked by the U.S. Congress, to answer the question: Do we have a problem here?
Washington's latest blue-ribbon commission, which holds its first public hearing today, has been given the job of figuring out what causes trade deficits, what is their impact on the U.S. economy and what should be done about them.
The group's chairman, Murray Weidenbaum, who was head of the Council of Economic Advisers in the Reagan administration, says he believes the panel will reach a consensus in a single report rather than one split between the six Republican-appointed members and the six chosen by Democrats.
| Looking back |
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U.S. trade balance in merchandise and services. A minus sign means the country ran a deficit for that year and a plus sign shows a trade surplus. The figure for 1999 is an estimate based on results so far this year.
1999: -$225 billion US estimate
1998: -$164.3 billion
1997: -$104.7 billion
1996: -$108.6 billion
1995: -$99.9 billion
1994: -$100.9 billion
1993: -$71.9 billion
1992: -$38.7 billion
1991: -$30.9 billion
1990: -$81.1 billion
1989: -$92.2 billion
1988: -$115.9 billion
1987: -$153.3 billion
1986: -$140.6 billion
1985: -$121.9 billion
1984: -$109.1 billion
1983: -$57.8 billion
1982: -$24.2 billion
1981: -$16.2 billion
1980: -$19.4 billion
1979: -$24.6 billion
1978: -$29.8 billion
1977: -$27.2 billion
1976: -$6.1 billion
1975: +$12.4 billion
1974: -$4.3 billion
1973: +$1.9 billion
1972: -$5.4 billion
1971: -$1.3 billion
1970: +$2.3 billion
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| Source: The Associated Press |
"We go in with a united determination that we are not going to issue two separate reports. That would be the easiest way out, but not very helpful," said Weidenbaum, an economist at Washington University in St. Louis. But the very existence of the U.S. Trade Deficit Review Commission, created by a provision in last year's budget bill, underscores the deep divide in U.S. trade policy. Politicians often turn to study panels to handle political hot potatoes.
President Bill Clinton, who won office as a centrist Democrat, has seen his trade agenda stymied for more than two years by members of his own party who have twice turned back his efforts in the House of Representatives to win authority to negotiate new global trade deals. Even Republicans, normally backers of free trade because of its support in the business community, have seen a growing split on the issue.
Campaigning for the Republican presidential nomination, conservative commentator Pat Buchanan points to the soaring trade deficits and says, "America's working men and women are being sacrificed to the global economy."
While the United States last enjoyed a trade surplus in goods and services in 1975, the deficits recently have been skyrocketing as the Asian economic crisis has dried up export markets for American manufacturers and farmers. In addition, the booming American economy has increased demand for manufactured goods such as cars, trucks and minivans built in Canada to machinery and steel from Europe and consumer goods from Japan and China.
Last year's deficit hit an all-time high of $164.3 billion US and this year's deficit is running at an even higher annual rate of $225 billion. Such figures have politicians in both U.S. parties worried about a backlash, especially if the economic boom begins to slow and the unemployment level, now at a three-decade low, starts creeping back up. "Congress has become deeply fragmented on trade policy," said Greg Mastel, an economist at the National Policy Center, a Washington think tank. "The consensus that kept trade policy moving in the same direction since the Second World War has really begun to erode." ...
For the U.S., even the existence of perennial deficits was not viewed as a problem because foreigners have been happy to exchange their products for U.S. dollars, which they invest in U.S. financial markets, thus pushing American stock prices higher and helping hold down U.S. interest rates. But those rising trade deficits have triggered a flood of dollars into foreign hands, and some economists have begun to worry what the future might hold should foreign investors suddenly rush for the exits.
"If we keep running trade deficits of the magnitude we have been running, at some point it will hurt the economy," said Lawrence Chimerine, economist at the Economic Strategy Institute in Washington...
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