South By North Strategies, Ltd.

In a recent column in The Nation, Thomas Geoghegan argues that the trade deficit helps explain why the stimulus “ran out of steam.”

When we have a big trade deficit, the feds can’t run up a debt just to re-employ Americans. As long as we’ve so much trade debt, we have to figure that a distressing amount of any stimulus will go ultimately to re-employ the workers in China, Brazil, Japan and even Europe, who fill the gap between the “demand” we pump up and what we actually “supply.” When we have a big trade deficit, it means that the more we prime the pump, the more we drain out this distressing amount of our national wealth.
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And why else did the stimulus run out of steam?
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It was probably not big enough, but an even bigger one might have run out of steam. The bigger the trade debt, the less punch there is in running up a deficit. You can’t just blame the GOP for cutting the stimulus down.