The U.S. trade deficit surged 15% in July to $50 billion due to resurgent oil prices and the outsourcing of American jobs.
Every time the economic recovery starts to fire up, rising oil prices smother the flame. The deficit represents no more and no less than the wholesale redistribution of American working class wealth.
We’re not talking about money that’s going to someone else in America in the form of wages or profits. We’re talking about money that’s being funneled out of our national economy and into other national economies.
The global economy is in bad shape, and our national economy is in tatters – at least from the perspective of the vanishing middle class. People don’t have much to spend but we’re still on pace to run a more than $600 billion annual deficit this year.
Oil and outsourcing.
In 1973, the year OPEC discovered it possessed a de facto monopoly on oil, we ran a trade surplus of $1.9 billion. By the time Ronald Regan, the great destroyer of the middle class, was in office the balance of trade had turned negative to the tune of $19.4 billion.
This is when the outsourcing bug really got its start.
By the time Reagan left office we were running a deficit of $114.6 billion. It’s been soaring ever since.
When George W. Bush took office in 2000 the deficit was at $376.7 billion. By the time this close friend of the Saudi royal family left it was $693.3 billion.
Oil prices and offshoring.
When people talk about the good old days what they really mean are the days when we ran a trade surplus with the rest of the world and our quality of life was on the rise. It’s not a coincidence that the quality of life for working American has plummetted as our national trade balance has plunged into the red.