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The best way to do something big about the U.S. economy and jobs is to reduce the excessively huge flow of imports by about 25% or $700 billion annually to eliminate our trade deficits.. A first step can be to question the TPP Trans Pacific Partnership free trade deal that’s been loaded up with lobbyist submissions  favoring  global business while hurting domestic industry.

On an ongoing national basis, there could be a tax credit for U.S. companies that replace imports by producing more here or buying  from U.S. suppliers. The $700 billion of recurring new business withoutadvance  government funding would be great for U.S. industry and labor and for America. We’ve got to stop the “de-industrialization” of our country now.                                      

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Kenneth Davis is a former U.S. assistant secretary of commerce/international, IBM vice president and chief financial officer, and investment banker.

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The following was delivered to the Take Back the American Dream conference panel, Making It In America: Reviving and Strengthening U.S. Manufacturing

You have undoubtedly heard the numbers, almost all of them bad.

We have a trade deficit of more than $550 billion dollars a year. This is actually an improvement from before the financial collapse, but only because people’s buying power remains down.

On this chart that first line down is $100 billion. Each line down is another $100 billion. Each year. This is real money that bleeds out of our economy.

If we were engaged in actual “trade” the money would be coming back as fast as it is leaving – that is what the word “trade” means. And that would be a win-win for all trade partners. But it has not worked out that way. Imports stay ahead of exports.

Our manufacturing sector has been bleeding out of our country along with the money. (more…)

Another month and another terrible trade deficit report. Why is it that DC elites who profess to care so much about deficits say so little about our worst deficit? The trade deficit drains money from our economy, lowers our wages and forces us into an ever-lower standard of living.

Trade Deficit Rises 14%

BusinessWeek: Trade Gap in U.S. Widens More Than Forecast,

The trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions propelled imports to a record.

The gap grew 14 percent to $51.8 billion, the Commerce Department reported in Washington today. The median estimate of economists surveyed by Bloomberg News called for an increase to $50 billion. A 5.2 percent jump in imports, the biggest in more than a year, swamped the 2.9 percent gain in exports, which also reached a record.

… Imports from China climbed 12 percent in March after plunging the prior month as the Lunar New Year holidays extended into early February. The March trade gap with China widened to $31.5 billion from $28.1 billion, today’s report showed.

A trade deficit of $51.8 billion in one month (half of that with China alone) is an annual rate of $621.6 billion, which is 4% of our currently $15,461.8 billion GDP. So we’re currently bleeding out at a rate of 4%. Not good at all, and we’ve been bleeding out like this for decades.

This is called a trade deficit, but really it isn’t. Continually selling to us and and not buying from us is not “trade.” This continual bleeding of money our of our economy is the reason we are losing our jobs, factories and entire industries. This is the result of a different kind of deficit — a democracy deficit. We, the People have not been able to stop this, even when all polls show that the people want this to stop. Because there are powerful interests getting rich(er) off of it. (more…)

A trio of governors and a duo of lieutenant governors last week dined on pink slime burgers and pronounced them mouth-wateringly-delicious-and-nutritious as TV cameras rolled on their barbeque in a Nebraska factory that manufactures the stuff.

Shoppers have reacted somewhat differently to pink slime secreted into their hamburger, so much so that three national supermarket chains stopped using it, and an Iowa grocer now offers both slimed and unslimed burger.

The politicians insisted that identifying slimed beef is not necessary, or even wise, because the fabricated-sans-fat- smashed-meat-scraps-seasoned-with-ammonia mixture is more nutritious. It’s so great that announcing its presence on the burger label is unnecessary, the politicians insisted.

The governors and lieutenant governors chose to champion not consumers but slime producers. The reason is obvious. Iowa Gov. Terry Branstad, who organized the slime plant tour and barbeque, got $150,000 in campaign contributions in 2010 from the factory’s founders. Rather than rally to the public, too many politicians prostitute themselves to corporations. Thus, American workers have a government that incongruously rewards corporations that ship jobs overseas. Somewhere the government of the people, by the people, for the people got lost.

Just as in the case of pink slime, the interests of flesh-and-blood people and corporations frequently conflict. In those instances, a government of the people, by the people, for the people should take their side. But a government run by politicians constantly hounding corporate campaign contributions often fails to favor flesh-and-blood people.

Professor, researcher, writer and mathematician Ralph Gomory discussed this problem last week at the Second Annual Conference on the Renaissance of American Manufacturing, held in Washington, D.C. Many speakers before him recommended recharging manufacturing with fixes like tax breaks, improved technical education and cheaper energy. These, Gomory argued, are no more than tinkering around the edges.

Real solutions exist, he said. There is, for example, billionaire Warren Buffett’s proposal to eliminate the nation’s massive trade deficit and promote domestic manufacturing with certificates that would limit imports to the level of exports.

“Why are these not even seriously discussed?” Gomory asked, then answered:

“That is because the we is not clear. Who is the we of the United States?”

What should be we the people operates as if it were we the corporations. Gomory said: (more…)

Last week, President Obama declared: “America has its groove back! The recovery is moving ahead!” Oh, really? Will he support balanced trade legislation to cut the huge flow of imports that cause our costly trade deficits and job losses? And will he withdraw his premature backing of another NAFTA-like “free trade” deal, the Trans Pacific Partnership (“TPP”)? If he will, he can reassure the nation that he’ll solve our trade problems and recover millions of lost jobs. He should listen again to his friend, Warren Buffett, “The Oracle of Omaha,” this time on the extreme danger of our ever-growing trade deficits.

Ever since late 2003, Mr. Buffett has warned of severe trouble coming, first in a Fortune Magazine lead article headed “Our trade deficits are selling America out from under us. We’ve got to stop it now, and here’s how to do it!” He presented a strong case for returning to a national policy of earning as much as we spend in world trade. If we don’t, he said, we’ll be forced into ruinous debt and borrowing – exactly what happened when his advice was ignored in Washington

American businessman and investor Warren Buffett was quoted in the Associated Press, Jan.20, 2006: “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.”

And then in 2008, he produced a YouTube video to tell the story of “Thriftville” vs. “Squanderville” as in his landmark Fortune article. Here’s a link to the video. (more…)

With so many strange social issues drawing heavy media coverage in the Republican Presidential debates, it’s hard to tell what’s really important to Americans today. Even dedicated Tea Party voters are asking, “Why are we hearing so much about abortion and gay marriage when we’re much more concerned about the economy and job creation?” 

Actually, there’s ample news coverage of one key issue that’s concerning both liberal and conservative voters. That’s the emergence of Super PACs backed by multi-billionaires as the dominant force in choosing the Republican nominee. As Robert Reich put it so well:

“We may not think they’re seeking the nomination for themselves, but they surely want to decide who’s picked and who will be responsive to their wishes as President.”

Widespread concern is rising, with petitions already circulating for overturning the Supreme Court’s Citizens United decision that made the Super PACs possible. That concern should be easy to mobilize among individual voters because most believe in an open election process and the elimination of corruption in Washington in both parties.  It’s not mainly a “liberal vs. conservative” issue. (more…)

Here’s a random point of discussion for the day… Take a look at the photo in this blog post. It’s a manhole cover on 9th Street in New York City, near 1st Avenue.

[Coincidentally, it is located right near the New York office of the Alliance for American Manufacturing (AAM).]

Here’s the question: Why wasn’t this manhole cover made in the U.S.? Why was New York City taxpayer money used to buy a foreign manhole cover instead of an American-made one?

Let’s hypothesize that the City of New York chose to purchase from India due to lower cost. Ie: The manhole covers imported from India were X percent cheaper for Y quantity.

QUESTION: Is there anything wrong with NYC going with the lower-cost option?

Well, actually, let’s find out WHY the Indian version was cheaper. Why might India be able to underbid its U.S. counterparts? (more…)

As year-end 2011 nears, the massive flow of imports into the United States. continues unabated.  In the decade ended 12/31/2010, we lost 55,000 manufacturing facilities through closings or sale to foreign owners. The pace has continued this year at about 1,000 a month, and with it the loss of many thousand jobs.

The best long-term solution is for the United States to adopt  a strong policy of balanced trade with the rest of the world, especially including China, which sends by far the most imports here. Very simply, balanced trade would limit our annual total imports to no more than our total exports. The idea was first proposed by Warren Buffet  in Fortune Magazine in 2003. He said “Our trade deficits are selling America out from under us! Balanced trade is by far the best way to stop it !” Leaders in Washington yawned, and nothing was done while we wasted trillions of dollars on trade deficits and lost millions of good jobs.

This week, we made a bold proposal to top Presidential Economic Adviser Gene Sperling to start cutting the flow of imports to the U.S. as of January 1, 2012. A voluntary program would encourage major U.S. importers like Wal-Mart and Home Depot to cut their imports by 10% in 2012 while necessary permanent legislation is readied for our next president to adopt for 2013 and beyond.

This is a rare one-time opportunity for both government and business to learn how to best shift from importing to domestic production. It’s really a new variation on “Buy American,” and it will give voters a chance to express their support for the candidate who speaks out most strongly in favor of balanced trade and the implementation that’s already begun. It can save a whole year by acting now instead of waiting until after the November elections to get started!

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Kenneth N, Davis, Jr. also is a former U.S. Assistant Secretary of Commerce/International and former IBM vice president and chief financial officer.

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To submit a blog to Free Speech Zone, e-mail it to bstack@usw.org. Keep it to 250 words or fewer. You MUST include your full name, hometown, and state. You may attach a photograph of yourself. Please include a phone number. This WILL NOT be published. Posting any given blog is within the discretion of the USW.  No blog using foul language (this is a family site), false information (we don’t want to get sued), or unnecessary personal attacks (again, we don’t want to get sued) will be used. Wait a reasonable period of time, then blog again! This is a Free Speech Zone.

There’s a bold way to create jobs that’s being ignored by Washington!

What’s the plan? Pass a federal law to return to our pre-1970 status of maintaining a positive overall annual balance of  trade with other trading nations.

How would that work? We’d permit total imports each year to match our own ongoing exports. Import certificates  would be issued and traded by the U.S. government to implement the new arrangement. It’s not a protectionist tariff or added cost to U.S. consumers!

Give us the figures. Right now we import $2.3 trillion a year, and we export $1.5 trillion. $300 billion of the $800 billion deficit is from petroleum imports. The remaining $500 billion goods and services deficit would return to the U.S. for production and 5 plus million new jobs! The Obama jobs creation efforts have fallen far short, and there don’t seem to be any big ideas except ones needing heavy deficit spending.

Why hasn’t this balanced trade plan been adopted? Twice, first in late, 2009 and again this year, Obama held jobs summits. He said he’d consider all credible ideas, but both times his “free trade” advisors blocked all balanced trade proposals.

Result: There’s been no action on already-available legislation- “The Balanced Trade Restoration Act.” It wasn’t adopted by former President George W. Bush. It should be updated and passed. It would create millions of new jobs.

It’s time for bold action now!

Kenneth N. Davis Jr.
President, Economic Strategy Associates, Inc.
Stamford, Ct.
Former U.S. Assistant Secretary of Commerce
Former IBM Corp. vice president and chief financial officer
Former investment banker

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To submit a blog to Free Speech Zone, e-mail it to bstack@usw.org. Keep it to 250 words or fewer. You MUST include your full name, hometown, and state. You may attach a photograph of yourself. Please include a phone number. This WILL NOT be published. Posting any given blog is within the discretion of the USW.  No blog using foul language (this is a family site), false information (we don’t want to get sued), or unnecessary personal attacks (again, we don’t want to get sued) will be used. Wait a reasonable period of time, then blog again! This is a Free Speech Zone.