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Budget Deficit Follows Trade Deficit | Green Energy News

September 26, 2011

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August 29, 2011 – Vol.16 No.24

BUDGET DEFICIT FOLLOWS TRADE DEFICIT. by Bruce Mulliken, Green Energy NewsSpending a little helps pay the way for many. Buying a candy bar helps pay the wage of the laborer on the candy bar production line. It doesn’t stop there. Down the candy production and distribution chain a fraction of a cent from the purchase went to the wage of the machinist who built the candy bar making machine. Another fraction went to the worker in the mill that made the steel for that candy machine. A fraction of a fraction of a cent went to the iron ore miner or the worker in the steel recycling facility providing the raw material to make the steel to make that machine. Of course some made profits too.The nation’s economy is helped when the candy bar, the candy bar machine and the metal for the machine are made at home. The economy is further helped if candy, machine, or steel is exported to foreign markets. Exports bring new money into an economy, money that wasn’t there before. Imports see money go away. Money completely disappears from an economy when imports exceed exports for a long period of time. The U.S. has had an annual trade deficit for more than 30 years. No surpluses in all those years. The last trade surplus was in 1975. It was only a few years later, in the early 1980s, that annual federal government budget deficits, and the cumulative national debt, began to skyrocket. Maybe there’s a connection.The reliance on foreign oil and its increasing price has raised havoc on the trade deficit in recent years. In the years 2001 through 2010 the U.S. imported $1.79 trillion’s worth of oil out of the total accumulated “trade debt” of $5.6 trillion. In the later years, 2008, 2009, and 2010 oil made up roughly half of our annual trade deficits, according to data from the U.S. Census. In 2001 oil imports were only 20 percent of the trade deficit for the year.Warren Buffett, of Berkshire Hathaway said in 2006, “The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them.” (Is the Tea Party political turmoil?)Buffett, the third wealthiest person in the world, thinks taxes should raised on the wealthy to help the US get out of debt. Other wealthy folk probably agree. Concerned about the mounting national debt, and trying to make political hay, the U.S. Congress is now poised to begin arguments on spending cuts. Capitol Hill is expected to be a ugly place in coming months as foul words fly across the political aisle. Don’t expect efforts to rein spending to help retain or create new jobs though. Some spending cuts will mean layof

via Budget Deficit Follows Trade Deficit | Green Energy News.

3 Comments leave one →
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