Trade deficit with China

The U.S. government is unwilling to tax appropriately and spend wisely.

The U.S. trade deficit with China is increasing by $1 billion a day. Chinese imports make up 7.5 percent of spending by Americans on consumer goods. From 80 percent of toys, to 85 percent of footwear, to 40 percent of clothes sold in the United States, Americans are investing heavily in China’s growing economy. Once spent, U.S. consumer dollars are placed in Chinese state-controlled institutions and then used to buy U.S. treasury notes. As a result, Americans can buy more than they sell and the U.S. government can spend more than it collects in taxes.

Just as the average U.S. household has more than $8,000 in credit card debt, the U.S. government is also living on credit.

The U.S. economy lost 17,000 jobs in January, the first monthly decline in employer payrolls in over four and a half years. As the U.S. economy continues to struggle, sustained investment by the Chinese in America is not certain – especially as the U.S. dollar is weak and there is a presumed recession. Also, after falling for years, prices of Chinese goods sold in the United States have increased for the last eight months. This 2.4 percent rise in costs is attributed to a 2.5 percent increase in U.S. inflation.

Chinese investment in the United States has meant cheaper goods, lower interest rates, reduced mortgage payments and a lesser tax burden.

President George W. Bush recently proposed a $3.1 trillion budget for the 2009 fiscal year, the largest amount ever requested by a U.S. president. According to the White House, the budget deficit will increase from $163 billion last year to $400 billion a year in 2008 and 2009. Since the proposal will increase funds for the military, add border patrol agents and help rebuild New Orleans, Bush has proposed a wide range of domestic funding cuts – from reducing rural health care programs by 87 percent to ending a $645 million housing, nutrition, education and job services program for low-income people.

The U.S. government’s unwillingness to tax appropriately and spend wisely has sacrificed domestic programs for disadvantaged Americans and has compromised the country to China and other countries, with an ever-growing debt. U.S. dollars are spent abroad, instead of reinvested in the United States.