While the Bush administration is still touting the good news on the budget deficit, the Commerce Department released data showing that the trade deficit hit another all-time high in August. The current account deficit (the broadest measure of the trade deficit) is now projected to be close to $900 billion in 2006 or 6.6 percent of GDP. In the land where big deficits are more important than smaller deficits, this record trade deficit would be getting serious attention. As it stands, it looks like coverage of the record trade deficit will be buried on the business pages. Most of the bad things people like to say about budget deficits are also true of trade deficits. Large deficits are unsustainable; they provide a temporary boost in living standards at the expense of the living standards of future generations. Unfortunately, the much bigger problem of the trade deficit gets considerably less attention than the budget deficit.
--Dean Baker
