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Editorial See other Editorial Articles Title: New Deal for U.S. Manufacturers In July, our trade deficit hit yet another all-time record, $68 billion, an annual rate of $816 billion. Imports surged to $188 billion for the month, as our dependency on foreigners for the vital necessities of our national life ever deepens. China's trade surplus with us was $19.6 billion for July alone, moving toward an all-time record of $235 billion for 2006 -- the largest trade deficit one country has ever run with another. Our deficit with Mexico is running at an annual rate of $60 billion. With Canada, it is $70 billion. So much for NAFTA. With the European Union, it is running at $160 billion. America as the most self-sufficient republic in history is history. For decades, U.S. factories have been closing. Three million manufacturing jobs have disappeared since Bush arrived. Ford and GM are fighting for their lives. Bushites boast of all the new jobs created, but Business Week tells the inconvenient truth: "Since 2001, 1.7 million new jobs have been created in the health care sector. ... Meanwhile, the number of private sector jobs outside of health care is no higher than it was five years ago." "Perhaps most surprising," writes BW, "information technology, the great electronic promise of the 1990s, has turned into one of the biggest job-growth disappointments of all time. ... (B)usinesses at the core of the information economy -- software, semiconductors, telecom and the whole gamut of Web companies -- have lost more than 1.1 million jobs in the past five years. Those business employ fewer Americans than they did in 1998, when the Internet economy kicked into high gear." Where did the high-tech go? China. Beijing's No. 1 export to the United States in 2005, $50 billion worth, was computers and electronics. If Americans are the most efficient workers on earth and work longer hours than almost any other advanced nation, why are we getting our clocks cleaned? Answer: While American workers are world-class, our elites are mentally challenged. So rhapsodic are they about the Global Economy they have forgotten their own country. Europeans, Japanese, Canadians and Chinese sell us so much more than they buy from us, because they have rigged the rules of world trade. While the United States has a corporate income tax, our trade rivals use a value-added tax. At each level of production, a tax is imposed on the value added to the product. Under the rules of global trade, nations may rebate VAT levies on exports, and impose the equivalent of a VAT on imports. Assume a VAT that adds up to 15 percent of the cost of a new car in Japan. If Toyota ships 1 million cars to the United States valued at $20,000 each, $20 billion worth of Toyotas, they can claim a rebate of the VAT of $3,000 on each car, or $3 billion -- a powerful incentive to export. But each U.S. car arriving at the Yokohama docks will have 15 percent added to its sticker price to make up for Japan's VAT. This amounts to a foreign subsidy on exports to the United States and a foreign tax on imports from America. Uncle Sam gets hit coming and going. It is as though, after firing a round of 66 in the Masters, Tiger Woods has five strokes added to his score for a 71, and five strokes are subtracted from the scores of his rivals. Even Tiger would bring home few trophies with those kind of ground rules. The total tax disadvantage to U.S. producers -- of VAT rebates and VAT equivalents imposed on U.S. products -- is estimated at $294 billion. Exported U.S services face the same double whammy. A VAT equivalent is imposed on them, while the exported services of foreign providers get the VAT rebate. Disadvantage to U.S. services: $85 billion annually. Why do our politicians not level the playing field for U.S. companies? First, ignorance of how world trade works. Second, ideology. These robotic free-traders recoil from any suggestion that they aid U.S. producers against unfair foreign tactics as interfering with Adam Smith's "invisible hand," which they equate with the hand of the Almighty. Third, they are hauling water for transnational companies that want to move production overseas and shed their U.S. workers. How could we level the playing field? Simple. Impose an "equalizing fee" on imports equal to the rebates. Take the billions raised, and cut taxes on U.S. companies, especially in production. Create a level playing field for U.S. goods and services in foreign markets, and increase the competitiveness of U.S. companies in our own home market by reducing their tax load. U.S. trade deficits would shrivel overnight. And jobs and factories lately sent abroad would start coming home. Isn't it time we put America first -- even ahead of China?
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#1. To: RickyJ (#0)
very excellent article. but doesn't Human Events support Bush and the politicians who made these rules that put our people at such dis-advantage?
No kidding. I write about international trade a lot, and it's incredible how naive or stupid our political trade representatives are. They humiliate and bully valuable partners, like Japan, over relatively small points, like beef, while turning over massive trade benefits on electronics, automobiles, etc. We supposedly have reciprocal agreements with a stack of countries that never play by the rules. Beef sent to Japan has a 38.5 percent tariff slapped on it. So our fairly standard beef costs just as much as far superior Wagyu (Kobe) beef on supermarket shelves. If you had the choice, which would you buy? Meanwhile, their beef has a tariff of about 12 percent. I think part of the problem is that in the past, we negotiated deals that were just screw-jobs for our "partners." We'd find the guys to buy off, then get a deal that was plain robbery and we wiped out entire industries in many, many countries by dumping our excess products on their markets. I would hate to be a corn or rice farmer in some of these countries; there's just no way they can compete with our far more efficient agribusiness. The quality may not be as good, but it's good enough at the prices we can charge. Somehow, though, we get all these favorable deals like CAFTA, and we keep falling further behind. I think that's because the REALLY big economies, like China, Russia, the EU, Japan, Brazil and Korea, have watched us screw smaller countries, and they're not going to allow that to happen to them. We haven't signed a significant trade agreement since the Clinton years, and WTO is going nowhere. In a very major way, this is payback.
There is another side to this that can not be escaped. In his budget report to Congress in 1993, Clinton revealed that the accumulative tax rate in 2005 would exceed 85%. That means that anything that comes from America, not just assembled, but from the ground here right through manufacturing, costs of taxes equals 85% of the cost. Pretty hard to show a profit and pay expenses on 15%. That, more than anything else, explains what has happened to America.
The Talmudic Khazar-Jew dream; Christians killing Muslims and Muslims killing Christians. What could be better than that? Well, Whites killing non-Whites and non-Whites killing Whites, of course.
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