CHARGES

DETAILED DESCRIPTION OF CHARGES

1. A Limitless Trade Deficit increases the national debt from significant tax losses and therefore ends up stealing money from U.S. Citizens who must help pay off this increase

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A   The basic arguments for Charge 1 are that current U.S. trade deficit policy causes national debt primarily through multiple sources of U.S. tax revenue losses and forces excessive spending of government-funded unemployment programs. Evidence provided is from economic statistical studies (on how the trade deficit affects the national debt) and also includes our explanations. The qualitative evidence explains the tax losses in detail. However, quite simply, the U.S. government cannot collect taxes on foreign employees who replace U.S. workers.  These replaced U.S. workers also end up in government-sponsored unemployment programs. This causes lost tax revenue which, combined with government unemployment program expenditures, creates increases to the national debt. U.S. citizens must pay for this increase. This is a form of stealing money from citizens to support trade deficit products.

     The basic arguments for Charge 2 are similar to Charge 1. Since current U.S. trade deficit policy causes national debt (verified by statistical studies) through multiple sources of U.S. tax revenue losses on imports, such imports are then effectively subsidized. Companies produce products not only with cheaper foreign untaxed labor, but have lobbied for tax loopholes, which enable excessive profits at the expense of U.S. citizens. U.S. citizens must pay for these lost revenues, which add to the national debt. Every tax loophole that benefits corporations is a cost to U.S. citizens. In addition to the losses in tax revenues are losses due to government unemployment programs. We devote much of an entire chapter in our book on multinational tax loopholes for both foreign and domestic corporations. We note that each tax loophole that has been created over the last 20 years (since NAFTA and China entered into the U.S. marketplace) though the initiative of lobbyists and special interest corporate groups, has ended up penalizing U.S. citizens though increases to the national debt. Paying less corporate tax means someone has to pay for the lost revenues. This then amounts to stealing money from U.S. citizens who have to now support the new tax breaks given to these multinational corporations.

3) A Trade Deficit Policy without Limits Causes the Illegal use of Public Funds for the Purpose of Subsidizing the Transition of Domestic Business to Foreign Countries

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     Trade deficit policy forces U.S. citizens to pay for the transition of U.S. businesses to foreign countries as they must support the unemployed who have lost their jobs in this transition. U.S. citizens would find it appalling if they realized they were in fact subsidizing such unethical activities through tax losses. However these activities are more than unethical; they create illegal use of public tax funds. This includes, but is not limited to, an increase in the national debt due to job outsourcing related to product off shoring, factory offshoring, tax loopholes in offshoring the business, and losses in U.S manufacturing. These tax losses mean that U.S. citizens are now being forced to pay a tax to partially support such business transitions.

     If trade were balanced, it would severely reduce organized trade deficit crimes. For example, adopting the 2006 Warren Buffett proposal of import certificates[1] would mean that any importer would have to purchase the certificate to sell their product in the U.S. This, of course, is only one scenario of possible methods to balance trade. However, under this scenario two things occur: 1) the importer would need another level of legal paper work to bring in their product, and 2) this is an added cost to a trade product, which, if it were a counterfeit product, would make it harder to enter into the U.S. The serious organized crime of currency manipulation would be stopped as well. China’s goal in currency manipulation is to create a Chinese trade surplus, which would not be allowed with a balanced trade policy. 

 5) A Trade Deficit Policy without Limits Results in the Violation of Article IV, Section IV of the U.S. Constitution

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     At the end of 2010, the trade deficit was $8 trillion, which means that foreigners own that much more of us than we do of them. Their financial possession of U.S. assets is roughly split equally in their ownership of U.S. debt and their controlling interest in U.S. companies. As of January 2011 the estimates are:

·         21% of all revenue-bearing U.S. businesses

·         31% of our national debt

As stated in our constitution, “No Tax or Duty shall be laid on articles exported from any State.” Such tax violations would stop with a U.S. balanced trade policy or be reduced if the yearly trade deficit were at least limited.

     The argument is then - U.S. tax payers are actually paying a “reverse tariff” tax on moving imported trade deficit goods from state to state through tax losses due to the trade deficit. In other words, U.S. citizens are paying an interstate tax since the import trade deficit goods have tax consequences that increase our National debt.

        The agreement between our trading partners requires elimination of tariffs and quotas on most (if not all) goods and services traded between them.  Our argument is similar to Charge 6. U.S. taxpayers are actually paying a “reverse tariff” on imported trade deficit goods through trade deficit tax losses. Since the trade deficit is partially funded by U.S. taxpayers, then this is a self-imposed tax on trade surplus of imports and is a reverse tariff debt that U.S. citizens are paying on deficit imports. Therefore, a trade deficit violates free trade policy itself! 

     Most U.S. economists are free trade advocates. What makes this baffling is that hardly any of these economists can be supportive of the U.S. trade deficit and its related failure modes which cannot be separated from one another. We believe that most U.S. economists have not studied trade deficit tax losses and are unaware of its violation of constitutional law. As well apparently traditional economics seems to weighs the good with the bad. This site supports "reliability economics" which tries to be proactive and not tolerate dominant failure modes, this is a key difference compared to current economics.

     “The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil... Right now, the rest of the world owns $3 trillion more of us than we own of them.” Warren Buffet proposed a form of equal trade using a vehicle called import certificates. This brought about a Balance of Trade Restoration Act of 2006 which was did not pass.  

We have a full tutorial, a book and articles (1 &4). The mathematics is not difficult if you would like to review it.  The book, The Truth of the Modern Recession,  is written for the layperson and your purchase helps support these activities for $19.95.  Get excellent in-depth information on trade deficit issues as well. Free books are sent to senators,  individual educators, and radio talk show hosts. The is a not for author profit book.
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