While walking around Greenlake and observing the turtles sunning themselves on a log, I had a revelation. I may have been wrong all these years about how to solve our trade deficit. The Tea Party might have the solution.
The trade deficit is the single most important problem facing America, as we buy goods and services from overseas on credit. The countries holding our money then buy American companies, move the jobs offshore, and sell more products to Americans. The Tea Party has come up with a brilliant solution to this problem. Why waste hard earned tax dollars on government programs to support trade? Instead, cut off the ability to buy.
There are two courses of action open to Washington, D.C., policy makers. First, invest in making our country more competitive. Place our resources in education, research and infrastructure, and establish an aggressive role for government in assisting our companies abroad. This means copying the methods of other countries in using government as a sales force for trade and investment attraction. This government activism is of particular help to small and mid-size businesses. Generally, the bigger companies have the ability to take care of themselves. Still, even Boeing faces government-owned competitors and customers and Microsoft needs help with intellectual property protection.
The problem with examining what other countries do — assisting product development (such as Airbus), creating tax incentives to attract investment, providing government assistance in sales — is that those governments have made jobs and economic success a high priority. Such government activism removes the ability of individuals to make their own spending decisions.
The Tea Party has devised a second course of action. This approach recognizes that Americans want it both ways, ideally with no consequences. Or if there is a downside, it should not affect them.
Who buys products based on price? Who goes to Wal-Mart and other retailers that have good deals? It is middle- and lower-income Americans. Rich people don’t have to be price conscious. They can buy an American-made product that may be of equal or better quality and pay more. The key to the Tea Party’s solution is to get more money in the hands of rich people and to decrease the ability of the middle and lower classes to buy cheaper overseas products. This approach is against government activism.
The solution proposes tax cuts for the rich, less government subsidy to the poor, and, therefore, fewer resources among the spenders. This is called consumer squeezing. It supports the overarching policy of diminishing the role of government in your life and handing the policy choices to the people and to business leaders. The problem has been that the average American and business leader wants to get the best value for the dollar and this leads to buying products or services that are made by others. In fact, members of the Tea Party, with careful examination, might find in their philosophy that the overseas competitors are not playing fairly. The governments of these competitors often have a strong role in the economy and the competitor might even be a government-owned or government-controlled company.
No policy choice is perfect, so the best bet in this case is either refuse to learn or else ignore what others do, especially if it conflicts with your philosophy. This is the case when your goal is to solve the trade deficit by removing the ability of Americans to buy foreign products. Rather than stimulate sales, restrict demand. This will work.
In terms of the Tea Party's thinking, another beauty of this approach might be considered what it would do to immigration. How many people move to Greece looking for work?
So, how to proceed? We cut domestic programs. We have already starved the U.S. Foreign and Commercial Service. We can reap tax savings by eliminating this function. We can eliminate other tax dollars that go to export promotion such as the ExIm Bank and U.S. Trade and Development Agency. There are many other areas that can be eliminated by the gang of 12 as we work to raise unemployment and lower the spending ability of the middle and lower classes.
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