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Economic Outlook: Fighting over scraps

By ANTHONY HALL, United Press International   |   Feb. 7, 2013 at 9:54 AM
Once you name the problem, you are half way home and the problem is getting the U.S. economy going without using any stimulus dollars to do it.

Washington refuses to acknowledge, let alone embrace this simple, but intriguing problem. Instead, everyone talks out of the sides of their mouths, expressing great concern over the size of the U.S. deficit and the accumulation of debt, but never finding the nerve to do something about it.

Before anyone points fingers, let it be known there are big spenders on both sides of the aisle. U.S. military actions in Iraq and Afghanistan are not the same thing as extensions of unemployment benefits, but spending is spending as far as the debt is concerned. At last glance, borrowing to fight a war costs the same as borrowing to pave a road.

President Obama is right in nagging at Republicans who won't vote yes on raising the debt ceiling with the line that they don't want to pay for the projects and programs they have created. At the same time, the president is tops in his class at kicking a spending cuts decision down the road.

To boost the economy without spending requires increasing efficiencies and the largest drain on efficiency is the U.S. trade deficit that comes to around $40 billion per month, give or take a few billion.

On the world stage, the United States is simply not competitive and that is partly the price we pay for clean air, clean water, relatively smog-free cities and other environmental benefits. Although far from perfect, environmental regulations are a clear deterrent to businesses that can relocate to countries where environmental regulations are not as expensive.

Similarly, the United States gives away a competitive edge through labor costs, which means our standard of living is working against us.

With the enormous diversity available to the United States in terms of production, it is a constant shock to figure out that the country runs a trade deficit month to month with Ireland.

China makes sense. A deficit with the Organization of Petroleum Exporting Countries makes sense. But U.S. businesses fall behind with a country known for exporting beer, knitting and pharmaceuticals. How does that happen?

On a separate tangent, here's a quick mental test that can illustrate part of the problem. In the past four years try to guess roughly how many headlines and articles were written regarding Republicans and the Democrats fighting over money.

Just conjure that up. Over the year, tens of thousands, perhaps millions of articles, television news stores and radio news bits dedicated to fighting over money across the aisle in Washington.

There is so much squabbling over every dime in the U.S. budget, most of it head-butting over ideology -- that there is not even the remotest hope for a jobs program -- and nine out 10 politicians would say that creating jobs is the country's biggest problem.

The overall image, to put it one way, is of politicians in Washington fighting tooth and nail over scraps while month after month the United States is losing ground in the global economy.

Let's just say, tentatively, the real problem is China's currency manipulations and subsidized industries that squander opportunities and steal U.S. jobs.

Now guess how many articles are written about that every year. Some, yes. But if the United States was a corporation, the chief executive office would say, "We lost money last year. What should we do about it?" and then the divisions would start fighting over the ever-shrinking funds available for office parties. In the meantime, the Treasury Department each year passes over the chance of declaring China a currency manipulator and the country's trade deficit -- the measure that says the United States is not at the top of the game -- continues to run at a net negative.

In international markets the Nikkei 225 index in Japan fell 0.93 percent while the Shanghai composite index in China lost 0.66 percent. The Hang Seng index in Hong Kong gave up 0.34 percent while the Sensex in India dropped 0.3 percent.

The S&P/ASX 200 in Australia added 0.3 percent.

In midday trading in Europe, the FTSE 100 index in Britain lost 0.28 percent while the DAX 30 in Germany gained 0.85 percent. The CAC 40 in France added 0.2 percent while the Stoxx Europe 600 added 0.51 percent.

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