POLITICS - The Bush Economy, Again

"Trade deficit hits record high for fifth straight year" by By Martin Crutsinger, AP

The deficit in the broadest measure of trade hit an all-time high in 2006 and for the first time the United States even ran a deficit on investment income.

The Commerce Department reported that the imbalance in the current account jumped by 8.2 percent to $856.7 billion, representing a record 6.5 percent of the total economy. It marked the fifth straight year the current account deficit set a record.

Investment flows turned negative by $7.3 billion from a surplus of $11.3 billion in 2005. It was the first time investment income has been negative on records going back to 1929. That means foreigners earned more on their U.S. holdings than Americans earned on their overseas investments.

While the U.S. has run deficits in its trade in goods every year since 1976, until last year it had still been able to record a surplus in investments.

Analysts said that figure turned negative because of the large amount of U.S. assets that have been transferred to foreign hands over the past three decades to pay for the imported cars, clothing and electronic goods American consumers love to buy.

“The hope is that the transition to a lower current account deficit goes smoothly, but the danger is that people stop loaning us money before they start buying our goods,” said David Wyss, chief economist at Standard & Poor's in New York.

The current account is the broadest measure of trade because it covers not only trade in goods and services but also investment flows between countries. It also represents the amount of U.S. assets that have been transferred into foreign hands to cover the gap between American exports and imports.

For all of 2006, the United States had a goods deficit of $836 billion, a surplus in services of $70.7 billion and a deficit in investment flows of $7.3 billion. In addition, the government paid out $84.1 billion in a category known as unilateral transfers, which covers foreign aid.

The report also showed that foreign direct investment to buy or expand companies in the United States jumped 67 percent to $183.6 billion last year, the highest level in six years. This increase came in spite of the controversy over efforts by Dubai Ports World to take over operations at several U.S. ports.

Ah, yes, and Bush still gives tax brakes to companies who take their business overseas along with American jobs. More and more of America is owned by foreign interests. If this continues, ordinary Americans will have no investment left in our nation. We all will be just be employees of foreign interests and Big Busine$$.