WSJ: How the Tax Cut President Trump Loves Will Deepen Trade Deficits He Hates
In addition to exploding the budget deficit that Republicans pretend to care about, the GOP tax scam will also worsen trade deficits that President Trump claims to hate. Today, a column by Greg Ip in the Wall Street Journal examines how the tax law will lead to wider trade deficits. Key excerpts:
“Among President Donald Trump’s most deeply held economic convictions is that trade deficits are bad, yet his signature economic policy—a major tax cut—likely will deepen the trade deficits he abhors for years to come. ”
“…In the long run wider trade deficits will make Americans poorer. That’s not because foreigners are stealing American jobs, as Mr. Trump often contends. Rather, it’s because Americans will increasingly borrow from foreigners to sustain their standard of living. Paying them back will wipe out a sizable chunk of the tax cut’s benefit. ”
“[CBO] predicts the current-account deficit (which comprises goods and services trade and investment income) will be $124 billion larger five years from now because of the tax cut, which the U.S. will have to finance by borrowing from abroad. ”
“There is a real possibility that Mr. Trump, who entered office promising to save Americans from the predations of foreigners, will leave office with the U.S. more indebted to them than ever.”
“…In the long run wider trade deficits will make Americans poorer. That’s not because foreigners are stealing American jobs, as Mr. Trump often contends. Rather, it’s because Americans will increasingly borrow from foreigners to sustain their standard of living. Paying them back will wipe out a sizable chunk of the tax cut’s benefit. ”
“[CBO] predicts the current-account deficit (which comprises goods and services trade and investment income) will be $124 billion larger five years from now because of the tax cut, which the U.S. will have to finance by borrowing from abroad. ”
“There is a real possibility that Mr. Trump, who entered office promising to save Americans from the predations of foreigners, will leave office with the U.S. more indebted to them than ever.”