America’s Trade Deficit Crisis totaling $6.57 trillion between 2000 and 2011 is taking center stage, as the Obama campaign announced plans Wednesday to run a 2-minute ad in seven battleground states promoting what will be called “New Economic Patriotism.
To those who have followed the first five parts of our series explaining the role of Gross Domestic Product in understanding the Economic Health of the nation, President Obama’s new ad campaign should come as no surprise.
With the first of the presidential debates only a week away, the new ad will feature President Obama promoting his economic plan intended to create 1 million new jobs in manufacturing while cutting oil imports and hiring thousands of new teachers to prepare future generation of Americans to compete in the global economy.
A week after the administration filed a formal complaint against China for unfair trade practices, related to subsidized dumping of auto parts imports, the Obama campaign is sharpening its message on the role improving the nation’s trade balance must play in our economic recovery.
Enhancing America’s ability to compete in the global marketplace is actually an issue both parties agree on. Governor Romney’s web site lists his position on free trade thusly; Mitt Romney believes that free trade is essential to restoring robust economic growth and creating jobs. We need to open new markets beyond our borders for American goods and services on terms that work for America.
Opening New Markets
- Reinstate the president’s Trade Promotion Authority
- Complete negotiations for the Trans-Pacific Partnership
- Pursue new trade agreements with nations committed to free enterprise and open markets such as Latin America
- Create the Reagan Economic Zone
Both parties and their respective candidates for president realize that America’s economic future will be substantially impacted by our ability to enhance our net trade balance, net exports – net imports.
If America could reduce her crude oil imports by 50% and increase her exports of goods by the same amount over the next decade, or basically 4% per year, we could actually begin to accumulate a trade surplus within ten years.
While eliminating our trade imbalance over the next decade and adding 1,000,000 jobs through increased export of goods represents a significant goal, pursuing global trade initiatives isn’t going to impact short-term unemployment or fire up the recovery.
To find additional areas within the economy to aid in our recovery, we need to remember GDP = C + I + G + Net exports.
In 2011, GDP was $15.1 trillion broken down into $10.7 trillion personal consumption, $1.9 trillion of private investment, $3.1 trillion of government spending and a net trade deficit of $600 billion. (Data rounded to hundred billion.)
So where do President Obama and Governor Romney believe their respective policies can best enhance GDP excluding Trade policy? Which candidate’s platform has the support of labor, business or the academic community?
Consider joining us as we examine GDP Expanded: Obama vs. Romney concerning the role of Government Spending, Domestic Investment and Consumer Expenditures leading up to the presidential debates:
The first five essays in this series can be found in the Business section of PolicyMic: