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Trade Deficit and National Debt

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Katie McGrath

on 28 April 2016

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Transcript of Trade Deficit and National Debt

Trade Deficit and National Debt
Katie McGrath, Mary Longhurst, Elise Houston, and Austin Harris
Trade Deficit
Exports - Imports = Net Exports
When Imports are greater than Exports
Resulting in negative Net Exports = Trade Deficit
US buys foreign products because of low exchange rates in other countries
Trade Deficit and National Debt
Both Trade Deficit and National Debt are a problem
However, changing one could negatively change the other.
Cut Government spending? (forbes.com)
Strong U.S. dollar effect?(econedlink.org)
Relation between Trade Deficit and National Debt
Trade Deficit
- $10 trillion trade balance within the last 20 years (Heffner, 2015)
12 million domestic jobs loss (Heffner, 2015)
China has a $273 billion trade surplus (Lichtblau, 2011)
National Debt
$11 trillion, and climbs about $1 trillion annually
80% of GDP (Raum)
Gravity of the Problems Domestically
Balance our trade with other countries
Fixing currency manipulation
Invest in coordinated manufacturing policies
Possible Solutions to Trade Deficit
Issues Related
National Debt
The financial obligations of a 
national government resulting from deficit spending
Over $19 trillion (US Debt Clock)
Big topic in the United States
National Debt:
Tax Policy
Income tax
Entitlement Programs
Those who can’t continue to do hard labor (construction) type of jobs would be eligible to collect earlier
Possible solutions to US National Debt
Reduce spending in areas such as:
Payments to agricultural producers
Social Security benefits for new beneficiaries
Human space exploration programs
Grants to large sized airports
Increase taxes on:
Emissions for Greenhouse Gases
Implement an exercise tax on cigarettes
Control the rise of medical costs
As the United States builds this trade deficit, the national net capital outflow also becomes negative due to the positive relationship it holds with national net exports. The negative effects to net capital outflow and net exports will show in reductions of national savings and overall gross domestic product(GDP) figures. This means that as our trade deficit grows, so will our national debt!
Allen, R. D. (2013). US Government Spending, the National Debt, and the Role of Accounting Educators. Journal of Accounting Education,31(3), 215–231. Retrieved from http://www.sciencedirect.com/science/article/pii/S074857511300047X
Chafuen, A. (2015 1). The U.S. Economy in 2015: Challenges and Opportunities. Forbes. Retrieved from http://www.forbes.com/sites/alejandrochafuen/2015/01/01/the-u-s-economy-in-2015-challenges-and-opportunities/#2597c2cd33f8
Collins, M. (2015 1–15). America’s Trade Deficit - The Job Killer. Forbes. Retrieved from http://www.forbes.com/sites/mikecollins/2015/01/15/americas-trade-deficit-the-job-killer/#35d1c33e558f
Fighting for a U.S. Federal Budget that Works for All Americans. (2015 12–15). National Priorities Project. Retrieved from https://www.nationalpriorities.org/campaigns/us-federal-debt-what/?gclid=Cj0KEQjwt763BRDZx_Xg3-Pv2cABEiQAoDfeGHuwXyUiVPxW0PGh-6ThW_Mrc6PBIOa_3gtxrKnkR8oaAqom8P8HAQ
Heffner, T. (2015 11–12). Economic Problems Facing the U.S. Economy In Crisis. Retrieved from http://economyincrisis.org/content/major-economic-problems-facing-united-states
Lichtblau, E. (2011, October 6). Senate Nears Approval of Measure to Punish China Over Currency Manipulation - The New York Times. Retrieved from http://www.nytimes.com/2011/10/07/business/senate-nears-approval-of-measure-to-punish-china-over-currency-manipulation.html?_r=0
Raum, T. (n.d.). Rising national debt may be the next economic crisis - ABC News. Retrieved from http://abcnews.go.com/Business/story?id=8000179&page=1
Rines, S. (2015 11–27). 5 Economic Problems That the Next U.S. President Will Face. The National Interest. Retrieved from http://nationalinterest.org/feature/5-economic-problems-the-next-us-president-will-face-14452
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