Trade Deficit

TRADE DEFICIT -- (House of Representatives - October 25, 2005)

The SPEAKER pro tempore. Under a previous order of the House, the gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.

Ms. KAPTUR. Mr. Speaker, America's economy has an internal rot that threatens our actual independence as a republic. I want to talk about that tonight, and I rise to draw attention to the astronomical and growing current account deficit that grows every day. This is a chart that shows the trade deficit that has been getting worse and more and more red ink every year.

In the year 2004, that deficit rose to $668 billion of more foreign imports coming into our country than our exports going out. This red ink drags down economic growth, results in job loss, wage stagnation and actual cuts now in people's benefits for health and retirement and, indeed, wages themselves.

This deficit has been clearly increasing. Again, just in the first half of this year, by almost 20 percent more at $394 billion. This represents the equivalent of 2 billion more dollars per day or $1.5 million more per minute in foreign debt. We are literally cashing out America.

The tourniquet gets tighter each year, and Americans can feel it. Wages do not go up, your health benefits are more expensive, everything costs more, and you seem not just to be running in place, but running and falling behind. Given the rising cost of oil imports, a significant increase over last year's record high figure is an absolute certainty this year.

According to one report, the higher price of oil could add an estimated $60- to $90 billion more to the Nation's trade deficit in 2005. Unbelievable. America, wake up. America's independence is at stake.

This deficit not only represents lost jobs in our communities, more and more each day, it is a very real threat to the economic security of our country for the future. The fundamentals are seriously out of whack.

Curiously, our sky high and growing trade deficit results in a growing U.S. debt held by foreigners. These foreign investors now hold over half of the publicly traded U.S. securities, and that number has been growing in recent years to the highest in American history. If you look, this is just a listing of some of the countries that own a piece of the rock, a piece of America: Japan, with holdings of nearly $700 billion. Europe, $427 billion. China, Hong Kong, nearly $300 billion this year. That is the fastest growing. That number is going up astronomically. The oil exporting countries own over $134 billion of us, all down the list.

If a large number of those investors decided to sell off those public securities at the same time for any reason, or even a portion of them, whether it was due to a sudden lack of confidence in our economy or to a coordinated political offensive, America would face a widespread financial crisis. We are in uncharted waters.

In addition to this insecurity, job losses due to increased imports are a reality in every one of our communities. One estimate suggests for $1 billion of trade deficit, we lose 20,000 more jobs in this country. Delphi, and its struggles, are not a fairy tale.

In my community in Ohio, workers and businesses are losing out as we struggle to save production. Companies like La-Z-Boy, companies like Clay, reforming firms, Delphi most recently, Ford Thunderbird, so many companies are literally struggling or have closed their doors.

As Princeton economist Paul Krugman noted last week, when corporate executives say they have to cut wages to meet foreign competition, workers have every right to ask, why do we not cut the foreign competition instead.

During prior decades, America held a surplus in automotive parts. But last year, we had turned that surplus into a trade deficit of over $24 billion, and that deficit grows even more this year. That is why I am now drafting a bill, the Balancing Trade Act of 2005. It would require the President to renegotiate trading relations with a country, if America's trade deficit with that country reaches more than $10 billion for 3 consecutive years. This initiative would require action on the $45 billion deficit we already have with Mexico, a country we enjoyed a small trade surplus with when NAFTA passed in 1993. It would require the President to take action in the face of deficits, like our current $162 billion deficit and growing deficit with China, which has almost doubled since PNTR was passed in 2000, just a short 5 years ago.

Each new trade agreement, while expanding U.S. markets so slightly, has brought in a flood of new imports that cancels any gains we make. Not only cancels, but pushes us further behind, resulting in the ownership of the rock by foreign investors.

The only action we have seen so far in this administration's efforts to expand the flawed NAFTA in two more countries in this hemisphere was through CAFTA. Look at their effort to muscle that through just about a month ago by one vote here in this chamber, and it was not on the legit. They had to wring arms for every single vote. If the American people were inside these chambers, that never would have passed.

Mr. Speaker, I say to the American people, wake up, America's independence really is at stake.

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