Fix the trade deficit

By Scott N. PAUL

Special to The Vindicator

Washington is abuzz with political activity right now. The new Congress and a freshly re-elected administration are already locked in a number of heated policy debates over gun control, immigration reform, and even cabinet appointments. On the opinion pages and the cable news networks, pundits and politicians continue to sweat profusely over the protracted argument regarding our national debt.

All big stories, these burgeoning debates. But the one we really need to have continually gets short shrift. I refer to the other deficit: our trade deficit. Fixing that one goes a long way toward fixing the other.

We run an enormous global trade deficit. In 2011, we bought $738.4 billion more in goods than we sold in the international marketplace, and in 2012 that number grew even larger.

Trusty consumer

For the global market, we’re a trusty consumer. But it’s consumption on a credit card, and we gave up a lot to get that plastic; namely, our manufacturing base and the middle-class jobs that come with it. America shed 5.5 million factory jobs between 2000 and 2009. A lot of those jobs were once found in Ohio. Manufacturing employment here has declined by a third since the mid-90s.

In exchange for what amounts to modestly lower prices at your nearby big box retailer, we gave up long-term economic security and a healthy tax revenue stream.

But despite a decade of body blows, the sector remains vibrant. Between February 2010 and October 2012, manufacturing added over 500,000 jobs — a small step in the right direction after a decade of losses. But it’s only a fraction of our potential.

So what’s holding us back? Frustratingly, it’s our own inaction.

Bear in mind that America’s competitors — whether in Seoul, Berlin, or Beijing — all coordinate national strategies designed to support their countries’ manufacturing sectors and workforces, while Washington does not. If the U.S. government acted on just one issue, halting currency manipulation,we could reduce our trade deficit by $400 billion over three years. And yet we abstain.

A new white paper from the Economic Policy Institute and Policy Matters Ohio found that a reduction of that magnitude would create at least 2.2 million jobs nationwide, increase U.S. GDP by at least $225 billion, and shrink the budget deficit annually by at least $78 billion. In Ohio, ending currency manipulation alone would reduce unemployment by anywhere from 1.3 to 2.7 percentage points.

National policy

And this is to say nothing of the benefits to our economy if we implemented a long overdue national manufacturing policy, one including tax reform that encourages businesses to create jobs at home rather than sending them offshore; a fully funded infrastructure plan to repair our nation’s roads, bridges, and railways; and, federal education dollars for technical and vocational skills programs to keep our workers efficient and competitive.

Our representatives in Washington seem to get half of the argument. During the 2012 elections, the presidential campaigns combined to produce more than 860,000 television advertisements on creating jobs and getting tough on international trade cheats. More than 13,500 of them aired in the Youngstown TV market.

Now that they’ve mastered the rhetoric, it’s time to see some action.

Scott Paul is president of the Alliance for American Manufacturing (AAM).