DEFICIT SCHMEFICIT

The UN is butting in again, this time to criticize the USA for having two big deficits that they claim are hurting the world's economy: the annual federal budget deficit and the trade deficit. (Click HERE for the NYTIMES article on this.)

Well this is ALL BUNK!

First of all, the budget deficit is NOT large by ANY historical measure. In WW2 it was 50% of GDP, and as recently as 1990's it was more than 5% of GDP. Now, it is less than 5% - and shrinking. Further proof that it is NOT too big is the fact that interest rates have remained low; if the federal government was putting too big a strain on the world money supply - "crowding out" other potential borrowers - then rates would go higher. They have not; they have remained as low as they have ever been!

Second of all our trade deficit is not a bad thing AT ALL: if we stopped buying things from people overseas, then foreign economies would tank - REALLY GO INTO A DEEP RECESSION, INCREASING THEIR UNEMPLOYMENT AND THEIR BUDGET DEFICITS (AS THE UNEMPLOYED PUT BIGGER AND BIGGER DEMANDS ON THEIR SOCIALIST/WELFARE SYSTEMS AND BECAUSE THEY'D GET REDUCED REVENUES!).

And Americans would have to pay more for things than they pay now. (I think that's the part that the anti-Americans at the UN REALLY LIKE!)

If we bought less from China, for example, then all the economic tigers of Asia would suffer: the South Korea, Taiwan, Thailand, Singapore and China economies - all of'em - would collapse!

IOW: the UN plan is a recipe for WORLDWIDE ECONOMIC COLLAPSE - a one-way ticket to serfdom.

The reason much of the Third World is poor is because of the EU's, China's and Japan's protective trade barriers.

If the UN wants to improve the living standards of people in the Third World then they need to make the EU AND CHINA AND JAPAN CONSUME MORE; NOT MAKE THE USA CONSUME LESS!

Even arch-liberal/NYTIMES columnist Kristoff has admitted that free trade has been the best route to end world poverty, (hat tip Radley Balko).

So. the UN should just shut up, already! And get out of the way!

HERE ARE SOME MORE FACTS (from COMMON SENSE AND WONDER):

The UN is now complaining that the US has too high a budget deficit and if it doesn't cut the budget there could be a shock to the world economy. I am all for balanced budgets, especially through reducing in government spending (instead of increased taxation, which can actually reduce tax receipts if it causes an economic slowdown). However, I think the UN comments are a bit over the top (and are pretty funny considering they just called us "stingy", but I guess they think it is okay if we throw money at UN approved projects).

If you look at this historical data from the OECD, both the US and Europe have had deficits much larger, as a percentage of GDP, than what we have today. Here are some key points:

- In 2004, the budget deficit as a % of GDP was 4.4%. The OECD average was 3.5%. While most countries had deficits lower than the US, some, like Japan (with a deficit equivalent to 6.5% of GDP) had far high levels.

- If you look back to 1993, the OECD average was a deficit equivalent to 5% of GDP, with the UK at 7.9%, Canada at 8.7%, France at 6%, Greece at 13.4% (!!!!), Italy at 10.3%. The US deficit was 4.9%.

In other words, our current deficit is not the end of the world.

Yes in absolute terms it is big, but as a percentage of GDP, it is not out of the ordinary. In fact, both the US and EU were running higher deficits just 10 years ago. And the world didn't end, in fact, it got much better (I'm not arguing the virtues of deficits, I'm just saying that despite predictions of catastrophe, things turned out alright). I also think its funny how you still hear people complain about the Reagan budget deficit and how he spent enormous amounts of money. But you never hear anyone complain about European deficits and how they were spending like there was no tomorrow. Well, according to the OECD, in 1987, the US deficit was 4.3% of GDP, while deficits were 4.5% of GDP in Europe. And they didn't even have the excuse of a massive military buildup! - (Max Jacobs CS&W).

So....... if ya REALLY wanna help the Third World: CONSUME MORE! Every thing you don't buy is another hungry person goin' without a meal somewhere in the Third World.