A Trade Deficit Isn’t Failure

http://www.nytimes.com/2017/01/30/opinion/a-trade-deficit-isnt-failure.html

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To the Editor:

Re “How to Get Tough on Trade Deficits” (Op-Ed, Jan. 24):

Jared Bernstein’s prescription for curing our trade deficit misses two important points. First, a trade deficit is not an indicator of failure. Our trade deficit is larger when our economy is growing and smaller when our economy is faltering.

A trade deficit is essentially just the flip side of a capital surplus, which means that foreigners are seeing opportunities to invest in our country and employ Americans. That sounds to me like success.

Second, our trade deficit is partly driven by our federal budget deficit. Why does all that foreign capital seek out the United States? Because our pool of savings is being drained by government borrowing into entitlements, federal salaries and military adventures.

In fact, the budget deficit is our core problem: Our borrowing of the last decade has dampened our capacity for innovation and reduced our ability to invest in infrastructure, education and training. Breaking this vicious circle is the key to real economic success.

MATTHEW ROONEY

Director, Economic Growth

George W. Bush Institute

Dallas