Running the numbers on the nation’s other dangerous deficit

Now comes the other deficit. It’s a cousin to the budget deficit, and it, too, has been taking bites out of the economy for decades. During that time, some people ignored the balance of trade deficit and others deluded themselves into thinking it was a good thing because it allowed consumers to buy lots of stuff cheap. But no matter how cheap something is, a consumer needs income to buy it, and the best way to accrue income is to have a job.

Well, by one estimate, every $1 billion in trade deficits costs 12,000 American jobs. Another estimate puts the loss at 8,000. So for the sake of argument, let’s agree that 10,000 is reasonable. That’s $100,000 per job.

That makes trade policy a major factor in economic growth and recovery.

And that makes the latest trade figures a very sobering bunch of numbers.

The U.S. trade deficit increased 4.4 percent in June; at $53.1 billion, that’s the largest imbalance in almost three years.

The increased deficit was attributed to U.S. exports falling 2.3 percent to $170.9 billion, while imports slipped only 0.8 percent to $223.9 billion.

Most of the decrease in the import figure was attributed to a drop in oil prices. Imported oil has long been an important part of the trade deficit story, but it’s the importation of manufactured goods that represents the greatest transfer of jobs from our shores.

Annual projection

The Associated Press reports that the deficit through June is running at an annual rate of $576.6 billion, 15.3 percent higher than the 2010 imbalance.

Using our yardstick of 10,000 jobs for every $1 billion, that means we’re on track to export more than five million jobs. There are 14 million Americans out of work, with about 7.5 million collecting unemployment.

Bringing our trade into balance would go a long way toward ameliorating our unemployment problem. It would also help with the budget deficit because our economy would grow well above its present anemic rate, and growth is really the key to a nation’s working its way out of crippling debt.

As has been the case for years, the largest single deficit was with China — $26.7 billion in June, a 6.8 percent increase and the highest since last September. That’s equivalent to about a quarter of a million jobs lost through a trade imbalance to just one country in just one month.

The amazing thing about this summer’s budget deficit battle was that so many people in Washington pretended to be surprised by the numbers. Suddenly, it seems, they realized that there are consequences to the huge deficits we have been amassing for decades.

When will Washington have a similar epiphany about the damage that huge, chronic trade deficits have on a nation’s economy and its people?