Deficits don’t matter? What a stupid statement. They can matter, especially the way we’ve been running them the last several decades. You can’t keep running $1.2 trillion merchandise trade deficits indefinitely and not have it matter, unless the aim is to grow everyone else’s economy while you just assume ever-increasing levels of debt.
So depending on several factors, including what it is you’re importing and who’s selling it to you, deficits can matter. If it’s cheap Chinese steel or aluminum dumped into your economy because there is too much capacity at home and China uses state power to support it, that’s a problem. The metals and mining industry is an example of a critical industry that the United States needs for its own national security and well-being. We don’t need to be dependent on China for the steel and aluminum we use to build our ships, aircraft, tanks, trucks, cars, buildings, and other products.
Also, if the United States is going to continue to prosper and innovate, it needs investment. If we just consume and don’t invest in the productive capacity of our economy, living standards of Americans over time will deteriorate. It’s also a question of who we want owning our country and economy, because every dollar sent overseas is a potential claim on our existing assets and productive capacity. I mean, maybe it doesn’t matter to you who owns the land, buildings, factories, and companies of this country, but it does to me. Do we want, for example, communist China possibly exerting its ownership of U.S. Treasury debt as a political weapon? I don’t. You don’t think that’s a problem?
