[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 17864-17865]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  FISCAL POLICY AND THE TRADE DEFICIT

  Mr. DORGAN. Mr. President, I will come to the floor and comment 
generously about this fiscal policy issue of $792 billion of tax cuts 
over the next 10 years. We don't have surpluses yet. We have economists 
who tell us we will have surpluses and when these surpluses will exist 
over the coming 10 years. We have an appetite for trying to figure out 
what we want to do with all these surpluses that have not yet 
materialized.
  Economists at the start of this decade in the early 1990s predicted 
almost universally that we would have a decade of slow, anemic economic 
growth and continued trouble. Going back 8 years, we had a $290 billion 
fiscal policy deficit. The Dow Jones industrial average had not yet 
reached 3,000, or it had barely reached 3,000. We had sluggish growth. 
In 1999, the budget deficit is largely gone. The Dow is somewhere close 
to 11,000. We have robust economic growth and economists predicting 
wonderful economic news as far as the eye can see. These are 
economists--who can't remember their telephone numbers or their home 
addresses--predicting what will happen, 3, 5, and 10 years in the 
future.
  The result is people seize on these surpluses and say: Let's give 
three-quarters of $1 trillion in tax cuts, nearly one-third of which 
will go to the top 1 percent of the income earners in this country. I 
will have a lot more to say about that in the debate which will ensue 
during this week. My colleague, Senator Durbin, just read Kevin 
Phillips' comments that were on NPR yesterday morning. I think they 
were right on point. I hope we can spend some time discussing those as 
well.
  I want to talk about another deficit, one that both parties have been 
largely ignoring. It is called the trade deficit.
  I have here a Washington Post article that appeared last Wednesday, 
July 21, ``U.S. Trade Deficit Hit Record High in May.'' This was 
written by Paul Blustein. Paul is the Washington Post reporter who 
writes their trade stories. Any time you see a trade story, it will be 
by Paul Blustein. He will talk to the same three or four people. They 
will comment in each article, and month after month the trade deficit 
worsens.
  We have a very serious problem. We tackled the budget deficit, and 
wrestled it to the ground. Now, we largely don't have a fiscal policy 
budget deficit. It is gone. That was tough, hard work. But the trade 
deficit is growing and at an alarming rate.
  It is interesting that this story in the Washington Post actually 
says that we have a trade deficit that is a record deficit, ``thanks to 
America's unflagging appetite for foreign goods.'' The Post, in this 
story, finds all of this both ``heartening'' and ``worrisome'' for the 
U.S. economy.
  Heartening because so many Americans are feeling so prosperous that 
they are buying an ever-rising amount of imports.
  I am more struck by the ``worrisome'' aspects of this trade deficit. 
One of those was highlighted by the Post article, with the Japanese 
deciding that their central bank should intervene with respect to the 
value of the yen against the dollar--to manipulate the value of the yen 
in order to influence continued exports to the United States.
  What is happening to the trade deficit? This chart shows record trade 
deficits month after month. It means we are buying more from abroad 
than we are selling abroad. It means we are running a current accounts 
deficit that will some day be repaid by a lower standard of living in 
the United States.
  There is a lot of disagreement among economists but none about that. 
A trade deficit must at some point be repaid in the future by a lower 
standard of living in the country that experiences the trade deficit.
  Here is a chart that shows the growing U.S. trade gap, exports and 
imports. You will see what is happening to the U.S. exports on this 
softening bottom line. And you will see what is happening to the level 
of U.S. imports and the massive red ink that represents indebtedness 
that burdens this country. Should we worry about this indebtedness? The 
answer is, yes, of course. Should we do something about it? Absolutely, 
and sooner rather than later. There is now in law a commission called 
the Trade Deficit Review Commission. This is a piece of legislation 
that I authored and was cosponsored by Senators Byrd, Stevens, and 
others. This Commission has been impaneled and is now beginning its 
work. But we have a responsibility as a country to respond to this 
trade deficit and to do so aggressively.
  Another chart shows the deficit with respect to specific countries. 
Japan: We have had a trade deficit with Japan forever, it seems. This 
trade deficit is robust and growing, and continues to grow to record 
levels.
  It used to be that economists would say that we have trade deficits 
because we have been running budget deficits. When you run budget 
deficits, you are going to run trade deficits. The budget deficits are 
gone. Why is the trade deficit worsening? Yes, with Japan, with Canada, 
and it is worsening with Mexico.
  We used to have a trade surplus with Mexico. We were able to turn 
that into a deficit very quickly because we negotiated a trade 
agreement with Mexico that was incompetent. We have incompetent 
negotiations by bad negotiators that resulted in bad trade agreements 
and higher deficits with respect to Mexico. We turned a surplus into a 
deficit.
  China: What is happening with China is a very substantial runup of 
the trade deficit in just a matter of about 8 to 10 years.
  What do we do about all this? I am concerned, obviously, about not 
only the general trade deficit, which weakens our manufacturing sector, 
but also with respect to the economic stars in our country, the family 
farmers. Agricultural trade balances have worsened. Our agricultural 
trade balance with Europe declined sharply between 1990 and 1998. In 
Asia and Europe, our agricultural trade balance has changed in a manner 
that is detrimental to family farming.
  Going back to the issue I mentioned on the previous chart of our 
individual bilateral trade relations with China, Mexico, Canada, and 
Japan, you will see that we are continuing to run trade deficits that 
are alarmingly high. Yet no one wants to talk about it, and certainly 
no one wants to do anything about it. The minute someone says let's 
take some action, someone else will say: You are proposing a trade war. 
What on earth can you be thinking about?
  This country had better think about itself for a few minutes. It 
ought to turn inward and ask: What does this red ink mean to the U.S. 
and its future?
  Even Mr. Greenspan, who is prone to understatement, indicated that 
this cannot be sustained for any lengthy period of time. This country 
must worry about its bilateral trade relationships with the countries I 
just described. It also must worry about its general trade strategy, 
which results in huge trade deficits and in the kind of trade 
relationships, which I think will make this country's citizens 
increasingly angry and anxious.
  Incidentally, these trade deficits are much higher than the 
Washington Post reports. The trade deficit in the Post represents the 
combination of goods and services. If you look at trade deficits in 
goods, it is much higher than

[[Page 17865]]

this. That relates to the question of what is happening to the American 
manufacturers.
  Let me talk about farmers specifically for a moment. Our family 
farmers around the country are suffering through a very serious crisis. 
The bulk of that is because prices have collapsed on the grain market, 
even though the stock market is reaching record highs. The grain market 
has collapsed, and farmers are told their food has no value.
  Another serious part is that, even though we produce more than we 
need and we need to find a foreign home for our grain, we discover that 
grain floods across our borders and livestock floods across our border, 
especially from Canada and other parts of the world, undercutting our 
farmers' interests. Why? Because we had incompetent negotiators 
negotiating incompetent trade agreements. They have resulted in 
increasing trade deficits in this country.
  The story behind the headlines is the injury that is caused to family 
farmers, to the manufacturing sector, to that part of America's economy 
that has produced the strength of this country today. That strength 
will not long exist if we don't do something about the trade deficit. 
Those who talk about tax cuts for 10 years, anticipating future 
economic growth and future economic surpluses, will not see those 
develop and will not experience that growth unless we do something 
about this exploding trade deficit. You cannot sustain long-term 
economic growth when you run a $21.3 billion deficit in one month. It 
wasn't more than a couple decades ago that we ran a trade deficit of a 
couple billion dollars in a quarter of the year. Wilbur Mills, who used 
to be chairman of the Ways and Means Committee, called special meetings 
to talk about emergency tariffs to be put on goods to reduce the 
debilitating trade deficits. Now they are $21 billion a month and 
growing in a very significant way.
  We need the Administration and the Congress to understand that the 
underlying trade negotiations and trade agreements we have had with a 
number of countries, including NAFTA and GATT, have undercut this 
country's interests. They do not work. They sell out the interests of 
family farmers in this country. They injure our manufacturing sector. I 
am not suggesting putting up walls and retreating. I want our producers 
to be required to respond to competition. But our producers cannot and 
should not be expected to respond to competition when our producers 
have one hand tied behind their backs by unfair trade agreements.
  Finally, I want to talk for a moment about what happened last 
December with the U.S. Trade Ambassador announcing a deal with respect 
to the Canadian trade issue. They have all kinds of agreements that, as 
I said, weren't worth much. We just allowed them to put a bunch of 
points down on a piece of paper. I reviewed that deal, and nothing much 
has happened. In fact, our trade situation with Canada grows worse. Our 
agricultural economy grows worse. Prices have continued to collapse. 
Family farmers continue to be injured and, at the same time, we have 
durum and spring wheat, cattle and hogs flooding across the border, 
most unfairly traded and most in violation of the basic tenets of 
reciprocal trade. Yet, nothing happens. Nobody lifts a finger to say 
let us stand up on behalf of your interests and take the actions you 
would expect the Federal Government to take to insist on fair trade.

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