I am really sad to see Fox news reporting in the same bogus way about the trade deficit that one sees on Buchannan-eque nativist sites.
The Trade Deficit is not financed.
When you by the Chinese VCR at Walmart, the money goes immediately to the company who manufactured it. There is no borrowing and no real deficit to speak of. You get a VCR that you wanted in exchange for the $10 you paid for it.
The fact that the US sells more or less products overseas than those sold to US consumers borders on meaningless.
In fact, if it means anything, the US economy is booming. In fact, there is nothing to say that huge amounts of foreign items are re-sold inside the US by domestic manufacturers and are yet counted as DEFICIT.
I fervently hope and pray freepers are not believing these bogus panic stories.
The US economy is booming and the Bush bashers are pulling out the stops to induce a counter panic.
So, back when the US was running a trade surplus, our economy was really hurting?
It would depend on what economic indicator/(s) you would select to define a state of economy and whether the indicators you selected seem to have predictive power. Robert McTeer, the head of Dallas Federal Reserve, in October of last year defined two ways to address the current account deficit 1) either US incomes would have to shrink so that consumers will buy less foreign imports or 2) the dollar would have to weaken. At the same time Warren Buffett has taken large short positions against the US dollar.
If there is a balance of trade, there is no net gain or no net loss to the economy due to trade.
When there is a trade deficit, there is a NET LOSS to the economy due to trade. That means that money which would otherwise be spent in this country, goes out of country.
Now a high deficit doesn't bother the people involved in international money transfers, they make money whether money is going into or out of the US. In fact they dislike it when money stays in the US because then they don't get to take a cut off the top, so to speak.
A trade deficit is bad to a domestic economy because it means that more money is going out of the economy than is coming in. It is a redistribution of wealth.
Congress and recent white house administrations have tried to hide the loss of money to the US economy due to the trade agreements they have signed, by rewriting our rules about foreign ownership to allow foreign agents to invest in this country. This investment hides the true harm the trade deficit. Because now, instead of trading little pieces of green paper for hard goods, we are trading our real property for little green pieces of paper.
The trade deficit does matter, and is harming us and will harm our posterity.
"The fact that the US sells more or less products overseas than those sold to US consumers borders on meaningless. "
"...the Bush bashers are pulling out the stops to induce a counter panic."
I think you might be confusing the issue. Just because someone says something about the trade problem doesn't mean they are bashing Bush. In fact, private and government economists have been cautioning about this problem for years, long before Bush.
Oh, and this trade problem isn't "meaningless".
Many years ago when I worked for a Large Computer Company, we were selling computers to Japan, but due to regulations, these (about $100,000,000/year) did not count against the trade deficit. By not counting them against the deficit, the Japanese allowed some American apples (the fruit, not the computer) to be sold in Japan.