A tale of two countries: trade and budget deficits

It was the best of times; it was the worst of times. Actually it depends on your place in society. If you work on Wall Street, for a Washington DC lobbyist, for a politician (or you are one), or high-up in a multinational corporation, you are living in the best of times. If you work in a field which is susceptible to outsourcing, i.e. any field except medicine, you are living in the worst of times.

Most people hear of our trade deficit with China and never give it a second thought. Not until one sees a graph of the trend can one understand the magnitude of the problem. In 1985, coincidentally the earliest year data is available, trade between the USA and China was roughly equal. In 2008, China exported to the USA just under five times as much as the USA exported to China. The following chart shows the damage.


Next, look at the import/export data for the USA, the UK, China, Germany, Canada, and Mexico. Note how the USA imports much more than it exports. As before, I used data from 2008. I am not cheating: 2009 was the year of the Great Recession and the data for all countries was skewed by it. Since 2008, China has surpassed Germany as the world's biggest exporter, but the quality of Germany's products is second to none.


Finally, look at the following chart showing federal budgets starting in 1930. The chart shows budget deficits and surpluses as percentages of GDP. Note how the last Republican president to have a budget surplus, not to mention having them on a semi-regular basis, was Eisenhower (Nixon inherited his 1969 surplus and immediately squandered it away). If a budget deficit is anathema to Republicans, as Boehner and McConnell often claim, why is that Reagan, Bush I, and Bush II always had one?


The above data is from, respectively:

• http://www.census.gov/foreign-trade/balance
• https://www.cia.gov/library/publications/the-world-factbook/
• http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/hist01z2.xls.