2006-10-12

Budget Deficit Reduces but Trade Deficit Increases

The US trade deficit widened by more than expected during August, raising concerns about the state of the world's largest economy.

The deficit was $69.9bn (£37.7bn) in August, up from July's $68bn level, the US Commerce Department said.

The deficit is on course to set a new record, totalling $784.2bn at the end of August, 9.4% higher than a year ago.

So while Paul argues that tax cuts are helping reduce the budget deficit, those funds are being used to fuel the destruction of the US export base.

1 comment:

Paul Hue said...

Yes, I agree that with more money in their pockets thanks to the cut in tax rates, Americans are trading that money for goods and services, including those provided by non-US companies. But the FACT remains: cutting US tax rates in results in American citizens and the Federal government both having more money to spend.

The Feds spent their tax cut dividend on drawing downn their debt. Citizens spent their dividend on many things. Now that you admit tax cutting increases federal revenue, I'm happy to discuss the net impact of national trade deficits.