Some records we might not want. "The United States ran a record trade deficit in 2006 for the fifth consecutive year, the Census Bureau reported Tuesday, in an announcement that quickly reignited the dispute between the White House and Democrats over the value of past and future deals as well as trade barriers."
While I am not among those who see the deficit as a large economic problem, it does have political consequences. "Democrats used the latest trade numbers to demand what the Speaker of the House of Representatives, Nancy Pelosi, called "a new direction" in trade policies, placing more emphasis on opening foreign markets to American goods, protecting American products from counterfeiting and helping American industry become more competitive.
"The consequences of these persistent and massive trade deficits include not only failed businesses, displaced workers, lower real wages, and rising inequality, but also permanent devastation of our communities," Pelosi wrote in a letter to Bush that was signed by other House Democrats as well.
A much tougher stance was taken by consumer, environmental and labor groups that called on Congress to let the president's negotiating authority expire and to reject the various pending trade deals and the philosophy of free trade that led to past accords like the North American Free Trade Agreement, or Nafta, with Mexico and Canada.
"The 2006 midterm elections showed that members of Congress bear the political liability for this failed trade policy," said Lori Wallach, director of Public Citizens Global Trade Watch. She called on Congress to respond by "permanently burying" the "fast track" approach.
Put together, these statements suggested that a division remains among liberals and within the Democratic Party in Congress foreshadowing what could be a similar disagreement among Democratic presidential candidates over the issue of trade."
I wish that the political debate reflected a basic understanding of the difference between macroeconomics and microeconomics. The current account deficit is a macroeconomic issue (too little savings relative to investment) and not a microeconomic issue (too willing to liberalize trade). Consequently, "burying fast track" will correct the U.S. current account deficit.