From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Violates Constitutional Law
Dr. Alec Feinberg Author of the Book
The Truth of the Modern RecessionAnd Founder of the website:
www.CitizensForEqualTrade.orgEmail – [email protected]
Trade Deficit Tax Losses
April 26, 2010
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
This Presentation Has Narration YOU MUST DOWNLOAD TO HEAR•Please use the Voice Prompts available on select slides for narration,.
April 10, 2023 Page 2
Click on Sound Icon
NOTE: YOU MUST DOWNLOAD THIS FROM SLIDESHARE.NET TO HEAR THE SOUND
When you open this file select read only
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Instruction to Hear Narration
• IF YOU ARE VIEWING THIS FROM SLIDESHARE.NET, YOU MUST
DOWNLOAD THE SLIDE PRESENTATION TO HERE THE
NARRATION
• WE RECOMMEND YOU FIRST SAVE IT TO YOUR DIRECTORY
• THEN OPEN, AND SELECT READ ONLY
• CLICK THE SOUND PROMPS TO HEAR.
.
April 10, 2023 Page 3
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Overview of Discussion
• Background of Dr. Alec Feinberg• Brief Introduction• Free Trade - The Good, The Bad, & The Ugly• The Trade Deficit and What It Means• Root Causes of the Trade Deficit •Trade Deficit Tax Losses• Simple Correlation Assessment – National Debt & Free Trade Deficit • Quantifying How Much Tax Loss is Due to the Trade Deficit• Is Forced Subsidizing of the U.S. Trade Deficit Through Tax Losses Unethical & Illegal• The Solution of Equal Trade
April 10, 2023 page 4
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.ComApril 10, 2023 Page 5
ST Microwave
•Dr. Alec Feinberg is • Author of The Truth of the Modern Recession
• Founder of the Website Citizens For Equal Trade• Inventor of Reliability Economics
• The book & contact information may be found on either website
– www.modernrecession.com– www.CitizensForEqualTrade.org–Book is listed on Amazon with excellent reviews ($19.95)
–Not-for-Author-Profit Book
Author Background Information
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Book Not for Profit Educational Activities
April 10, 2023 Page 6
•Learn the Truth of the Modern Recession, become empowered, and support the Not-For-Profit following activities at the same time:
• Sending copies of this book to Congress People (my cost is about $8 per book)
• Organizing Citizens for Equal Trade My cost to run the website is about $10/month
Petition for equal tradePlease sign at CitizensForEqualTrade.orgAll Author Profits support these educational activities
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Article Information on this topic
• A Recent Article on this topic and others is on my book Website:– www.modernrecession.com–www.CitizensForEqualTrade.org
–Also a link to this slide presentation on both sites
• Free Trade ‘Deficit’ Violates Constitutional Law and the U.S. Free Trade Agreement (Find it at the bottom of this site with sample chapters)
April 10, 2023 Page 7
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Economy – U.S. Issues are All Inter-Related
April 10, 2023 page 8 /
Top Economy Issues Approximately Last 10 YearsNational Debt Doubled ($12.5 Trillion)Manufacturing Jobs losses - Up 33%
Free Trade Deficit – (2000 China enter US free trade)
Tripled ($7.5 Trillion since 1971)$5.1 Trillion since China’s Entry
Separation of Wealth Increases 1% per Year(Increase 28%, 1980-2007)
Unemployment DoubledBusiness Failure Rate Increased
Housing Failure Rate Increased
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.ComApril 10, 2023 Page 9
FREE TRADE The Good, The Bad,
& The Ugly
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Free Trade Philosophy
• Comparative Advantage–In a Free marketplace, each country will specialize in its
comparative advantage (i.e. natural resources, skilled work, agriculture-friendly weather, etc.). Result should be all parties will increase their income.
–Theory refers only to aggregate wealth and says nothing about the distribution of wealth
–End up with big winners and losers–Does not speak to Trade deficits–Large separation of wealth
April 10, 2023 Page 10
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Free Trade: The Good, The Bad, & The Ugly
The Good:
• 1) Low-priced goods, 2) reduced inflation, 3) low-priced services, 4) new job
opportunities in foreign-owned businesses, 5) new global opportunities in
manufacturing, 6) imports/exports of agricultural and commodity, 7) export
opportunities, 8) reduced likelihood of war with our trading partners due to
foreign investors, and 9) manufacturing outsourcing raises the level of 3rd
world countries.
The Bad
• U.S. unemployment crisis due to job outsourcing primarily in the
manufacturing area, lack of protectionism, U.S. corporation failures have
occurred due to foreign competition that has had many advantages over
U.S. businesses. Some foreign governments are accused of subsidizing
products - cheaper labor. Example - Detroit automakers had failures and
needed bail outs.
April 10, 2023 Page 11
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Free Trade:The Ugly & The Really Ugly
• The Ugly: Global Cheating Crisis:
– Currency Manipulation
– Product subsidy to gain competitive advantage
– Product counterfeiting
– Unfair non tariff trade barriers by our trading partners
– Lack of intellectual property rights protection
• The Really Ugly: Losing America
– 3.6 Million Jobs lost to China, Mexico and Canada
– Job Losses = Tax Revenue Losses -> Increase in U.S. national debt
– Foreigners own U.S. businesses & U.S. Treasuries
– We are beholden to Foreign governments making regulations impossible
– l
April 10, 2023 Page 12
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Example - Accusation China Currency Manipulation•January 2009—Treasury Secretary designate Timothy Geithner said —backed by the conclusions of a broad range of economists was that China is manipulating its currency
•The Schumer-Graham bill had proposed a 27.5% tariff on all imports from China until the Yuan reached a fair value. Stopped by lobbyist influences Sept. 2006.
April 10, 2023 Page 13
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Example: Accusation on Japan
• In 2008 the U.S. had a $55.8 billion trade deficit in auto and auto parts with Japan that represented about 8% of our total trade deficit. U.S. exports of autos and auto parts to Japan were almost 27% lower in 2008 than in 2000
• Japan’s artificially weak currency provides a significant per-vehicle cost advantage that amounts to an outright annual subsidy of between $3,000 for small car to $12,000 for a luxury sedan or SUV for every vehicle exported to the United States.
• Japan also continues to block imports of U.S. auto parts using a combination of non-tariff barriers
April 10, 2023 Page 14
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
THE TRADE DEFICIT AND WHAT
IT MEANS
April 10, 2023 Page 15
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
What Does a Trade Deficit Mean?& How Large is it??• When a U.S. deficit occurs it means imports are greater than exports
• U.S. Total Trade Deficit started 1971, has accumulated to $7.5 trillion ($6.5 trillion last 20 years). Below we compare it to the National Debt (cumulative total).
April 10, 2023 Page 16
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Free Trade & Trade Deficit
•To be in favor of Free Trade means you must be Supportive of the:
– U.S. Free Trade Deficit
–Why do most economists support free trade yet do not support the free trade deficit?
April 10, 2023 Page 17
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Trade Deficit Implications
•Trade Deficit -> Foreigners own U.S. deficit dollars
• Money comes back in foreign investments
• Foreigners with excess U.S. dollars buy U.S. debt (treasuries) and businesses
• Effectively U.S. net worth is being transferred abroad
•We are more and more beholden to foreigners– This effects foreign political policies and our position
April 10, 2023 Page 18
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
How Much in 2009 Do Foreigners Own of U.S.?• Current Estimate is $9.7 trillion (3 trillion in treasuries, 6.7 trillion in businesses)
• Total trade deficit is 7.5 Trillion since 1971.• Foreigner ownership is ~77% due to trade deficit• National Debt – about $3 Trillion of $12.1 Trillion about 25%
• U.S. Businesses Aug, 2008 - share of foreign-owned U.S. companies as a percentage of the whole has also jumped to 13.9 % (about $6.7 trillion)
• Business net worth in U.S. is about $50 trillion, household net worth is $54 trillion
April 10, 2023 Page 19
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Warren Buffet on Free Trade Deficit
• “The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil... Right now, the rest of the world owns $3 trillion more of us than we own of them” (Ref. Wikipedia)
April 10, 2023 Page 20
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Investigating 40 Years of Free Trade Deficits Effects
•Trade Def Equals $7.5 Trillion since 1971 ( $5.5 trillion dollars in just the last 10 years)
•No country can long sustain a trade deficit, Economics 101
April 10, 2023 page 21 /
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
US Trade Deficit
April 10, 2023 Page 22
Year
U.S.Service Trade
Surplus
U.S.Goods DeficitBillions
$
U.S.Overall Deficit
Billions $2000 79.6 -459.20 -379.602001 69.7 -436.70 -367.002002 67.4 -491.70 -424.302003 60.2 -559.50 -499.302004 65.8 -681.20 -615.402005 83.3 -796.90 -713.602006 93.3 -850.60 -757.302007 128.1 -836.00 -707.902008 162.9 -832.10 -669.20
Total 810 -5944 -5134
Country/Area
Deficit in Percent
China 39%NAFTA 21%OPEC Nations 22%Others 18%TOTAL 100%
2008
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Trade Deficit In Billions of Dollars
April 10, 2023 Page 23
NAFTAYear China Japan Mexico Canada Others Total2009 $226.8 $45 $48 $20.2 $38.6 $378.62008 268 74 65 78.3 210.6 695.92007 258 84 75 68 216.4 701.42006 234 90 65 72 299.4 760.42005 202 83 50 78 302.3 715.32004 162 74 45 67 261.9 609.92003 124 66 40 52 213 4952002 103 70 37 48 163 4212001 83 69 30 53 130.5 365.52000 84 82 24 52 137.8 379.8
China, Japan, NAFTA, Others
www.census.gov/foreign-trade/balance/
In Billions of Dollars
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.ComApril 10, 2023 Page 24
Trade Deficit In PercentChina, Japan, NAFTA, Others
Year China Japan Mexico Canada Others2009 59.9% 11.9% 12.7% 5.3% 10.2%2008 38.5% 10.6% 9.3% 11.3% 30.3%2007 36.8% 12.0% 10.7% 9.7% 30.9%2006 30.8% 11.8% 8.5% 9.5% 39.4%2005 28.2% 11.6% 7.0% 10.9% 42.3%2004 26.6% 12.1% 7.4% 11.0% 42.9%2003 25.1% 13.3% 8.1% 10.5% 43.0%2002 24.5% 16.6% 8.8% 11.4% 38.7%2001 22.7% 18.9% 8.2% 14.5% 35.7%2000 22.1% 21.6% 6.3% 13.7% 36.3%
www.census.gov/foreign-trade/balance/
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
China’s Trade Surplus Leads to GDP Growth
April 10, 2023 Page 25
Year
ChinaPopulation(Billions)
ChinaPop
GrowthSince 2000
GDPper CapitaChina in
U.S. dollars
ChinaGDP
Growth
in %
Billions
GDPChina
2000 1.26183 0.00% $3,800 7% 48002001 1.27311 0.90% $3600 8% 45002002 1.28430 1.78% $4600 8% 60002003 1.28698 2.00% $4400 8% 57002004 1.29885 2.94% $5000 9.1% 64492005 1.30631 3.53% $5600 9.1% 72622006 1.31397 4.13% $6800 10.2% 88832007 1.32185 4.76% $7700 10.7% 101702008 1.33004 5.41% $5300 11.4% 7800
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
U.S. Trade Deficit Leads to GDP Contraction
April 10, 2023 Page 26
Year
U.S. Pop
(Billions)
U.S. Pop
GrowthSince 2000
U.S. GDPPer Capita in dollars
U.S. GDP
in Billions
U.S. GDPGrowth in
%2000 0.2756 0.0% $33900 9255 4.1%2001 0.2781 0.9% $36200 9963 5%2002 0.2806 1.8% $36300 10082 0.3%2003 0.2903 5.4% $37600 10400 2.45%2004 0.2930 6.3% $37800 10990 3.1%2005 0.2957 7.3% $40100 11750 4.4%2006 0.2984 8.3% $41600 12310 3.2%2007 0.3011 9.3% $44000 13130 3.2%2008 0.3038 10.3% $46,000 13860 2.2%
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
China and NAFTA U.S. Job Losses
•Cheaper Labor Causes Job Losses in U.S.
•Between NAFTA and China spanning 1993 and 2008 the total job outsourcing loss is at least 3.63 million
• www.epi.org/economic_snapshots/entry/webfeatures_snapshots_archive_11052003/
• http://online.wsj.com/article/BT-CO-20100323-713114.html?mod=WSJ_latestheadlines
April 10, 2023 Page 27
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
U.S. Foreign Owned Business Equates to Job Losses?• Aug, 2008 - share of foreign-owned U.S. companies as a percentage
of the whole has also jumped to 13.9 percent. Back in 1971, foreign
companies owned 1.3 percent of all corporate U.S. assets.
• Foreign-owned companies in the United States have a work force of
more than 5.3 million, or some 3.5 percent of all workers
http://www.nytimes.com/2009/10/18/business/18excerpt.html
• U.S. trade deficit causes job losses
– Foreigner own 13.9% of U.S. companies yet only employ 3.5% of
work force!
– Extrapolating this, if foreigner owned 100% of all U.S. companies
they would employ 25% U.S. workers.
April 10, 2023 Page 28
http://www.reuters.com/article/idUSN2744743020080827
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
ROOT CAUSES OF TRADE DEFICIT
April 10, 2023 Page 29
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Root Causes of Free Trade DeficitLabor Costs
April 10, 2023 Page 30
• Main Root Cause:
Cheaper labor
Lack of government oversight
High- versus low-wage economies
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Law of Financial Free Trade Equilibrium Between U.S. high & low wage economies
• If two economies have free cash flow, such as China and the U.S., the currencies will flow towards financial equilibrium (from richer country to poorer). The imbalanced monetary pressure causing excess trade deficit is due mainly to three key reasons: cost of wages, each country’s GDP, and the value of the country’s currency.
• Free trade can never be equal trade until all U.S. dollars reach equilibrium with the rest of the world – this would make the U.S. a 3rd world country but owned and operated eventually by outside investors.
April 10, 2023 Page 31
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Root Causes of Free Trade DeficitSecondary Root Causes• Economic Greed (Cheating the U.S. and its tax payers)
• Violations of WTO free trade policy–Foreign Currency Manipulation–Product subsidy to gain competitive advantage–Product counterfeiting–Unfair non tariff trade barriers by our trading partners–Lack of intellectual property rights protection
–Foreign currency manipulation: A country keeps its currency artificially low so its goods and services are cheaper increasing exports.
April 10, 2023 Page 32
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.ComApril 10, 2023 page 33 /
TRADE DEFICIT TAX(TDT)
LOSSES!!
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Trade Deficit Tax (TDT) Consequences
• Not well understood, quantified, and ignored by economists is federal Trade Deficit Tax (TDT) losses for various reasons:–Lost tax wages on non US Products: Products made by non
U.S. citizens do not pay federal tax compared to products that would
have created tax revenues if made in the U.S.–U.S. products replaced with foreign imports, less taxed
wages collected: As U.S. made goods are replaced with foreign
imports, so too are U.S. jobs and lost taxed wages.–Outsourcing Job Losses: Unemployment benefits and health
care government payouts associated with these job losses.
April 10, 2023 Page 34
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Foreign Owned Companies Pay Far Less Tax• Foreign corporations with operations in the U.S. tend to pay less in taxes than their
domestic counterparts and are more likely to pay no income taxes at all, according to a
federal report released this week.
• The U.S. Government Accountability Office report said 72% of foreign companies in the
U.S. reported no federal tax liability for at least one year between 1998 and 2005 versus
55 percent of U.S.-based corporations.
• The GAO report also found foreign companies had lower tax liabilities than U.S. firms - 1.4
percent versus 1.7 percent of sales receipts and assets.
http://www.bizjournals.com/nashville/stories/2008/08/11/daily37.html
www.ctj.org/hid_ent/part-2/part2-3.htm, “Tax breaks for multinational corporations)
April 10, 2023 Page 35
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Trade Deficit Tax (TDT) Consequences(Continued)• Reasons for TDT Losses:
– Foreign owned U.S. companies export services
– Employ many of their own
– Foreigner own 13.9% of U.S. companies yet only employ 3.5% of work force! (See prior slide)
April 10, 2023 page 36 /
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
SIMPLE CORRELATION ASSESSMENT
NATIONAL DEBT & FREE TRADE DEFICIT
April 10, 2023 Page 37
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Trade Deficit
National Debt
1990 - 2009
April 10, 2023 Page 38
Year
AnnualTrade Deficit in
Trillions $Cumulative
Trade Deficit in Trillions $
National Debt inTrillions
$
CumulativeNational Debt in
Trillions $1990 0.081 1.01+ 0.33 3.211991 0.031 1.04 0.39 3.61992 0.039 1.08 0.4 41993 0.070 1.15 0.35 4.351994 0.098 1.25 0.29 4.641995 0.096 1.35 0.28 4.921996 0.104 M1 1.45 0.26 5.181997 0.108 M1 1.56 0.19 5.371998 0.166 M1 1.73 0.11 5.481999 0.265 M1 1.99 0.12 5.62000 0.380 2.37 0.03** 5.632001 0.366 M1 2.74 0.14 5.772002 0.422 M1 3.16 0.43 6.22003 0.495 M1 3.65 0.56 6.762004 0.610 M1 4.26 0.59 7.352005 0.715 M1 4.98 0.56 7.912006 0.760 M1 5.74 0.54 8.452007 0.701 M1 6.44 0.5 8.952008 0.696 7.14 1.04 9.99
2009 0.37 Est. 7.51 Est* 2.1 Est. 12.1 Est.
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
National Debt and Free Trade Deficit Per Year
April 10, 2023 Page 39
Graph shows interesting correlation –
(See section on trade deficit)
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Correlation Analysis From Data:Model for well behaved years - 1996 and 2007
April 10, 2023 Page 40
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Regression Results
•Correlations Found in Data: 84% to 89% (square root of R-Sq)
•X-Y relationship. Y=0.679X -.0726). –Y intercept(.0726) small indicated no deficit no tax losses. (small compared to values in Column 2 from 1996-2007)
•Y(National Debt) ~ 0.68 X(Trade Def.)–implies 68% of some trade deficit X-quantity is linked to lost tax revenue and effectively adds to the national debt
April 10, 2023 page 41 /
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Quantifying How Much Tax Loss is
Due to the Trade Deficit
April 10, 2023 Page 42
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Math Model Assumption
•Assumption: Mathematical relationship is valid for any time period. That is, we have been able to identify an underlying relationship using select years; the relationship should still be reasonably valid for other time periods.
April 10, 2023 Page 43
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
First Estimate from Graph Results
• Foreigners reinvest trade deficit dollars in businesses and treasuries. Foreign investment would not be there if it was not for the trade deficit Use treasuries of $3 trillion as an example for the X-quantity in Graph
• Multiply by 0.68 giving $2 trillion of effective trade deficit that is added to the national debt (=68 cents of every trade def dollar)
• 95% Confidence bounds in Figure between $0.8 and $2.8 trillion(the $0.8 trillion = 11¢ of every trade def. dollar adds to national debt).
• The $0.8 trillion of $12.3 trillion national debt implies about 6.6% of the national debt is due to the trade deficit
April 10, 2023 Page 44
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Estimate of How Much of Every Trade Def. $ is added to the National Debt
• Using the $0.8 Trillion amount as an example (95% Lower bound)
then
This is also between 10.7 and 26.7 cents of every trade deficit dollar
adds to the national debt. With the U.S. population of about 300
million, this equates to between $2667 to $6667 added to each
citizen’s national debt credit card! We see that free trade is not really
free!
April 10, 2023 Page 45
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Hand Waving – 2nd Estimate for Sanity Check• Rough 2nd Estimate we obtained as follows:
• NAFTA and China spanning 1993 and 2008 the total job outsourcing
loss is at least 3.63 million (see earlier slides)
• Harvard economist Martin Feldstein in 1971 estimated a tax loss of
$10.61 per hour on even a $15 per hour job.
http://www.econlib.org/library/Enc/Unemployment.html
• Using this underestimated value and providing and overestimate of
displaced workers for 1 year of salary, the outsourcing cost to tax
payers (2000 hr. work year) is ~ $77 billion.
• Using a recent EPI estimate of about $700 week including Cobra
subsidies, the taxpayer cost is $131 billion.
http://www.epi.org/publications/entry/jobs_crisis_fact_sheet/
April 10, 2023 Page 46
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Cascade Factor
• GDP consumer spending loss from this outsourcing creating less
product demand and effecting other layoffs is hard to factor. The EPI
estimate is 8.4 million recent jobs lost. The cascade effect may be a
factor of 10 with housing and bail-out issues. This is ~$1 trillion in tax
losses from the trade deficit effect.
• Therefore our final estimate is $1 trillion is most likely reasonable
– Current national debt is 12.5 trillion
– Free trade deficit is estimated here as about 8% of the national debt
• Reader Caution: This is a crude estimate. It is most likely the best
estimate one will find since economist have ignored the TDT quantity.
April 10, 2023 Page 47
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
IS FORCED SUBSIDIZING OF
THE U.S. FREE TRADE DEFICIT
THROUGH TAX LOSSES
UNETHICAL & ILLEGAL?
April 10, 2023 Page 48
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Question
•If US citizens suffer free trade deficit tax losses, and are forced to pay off this as part of a national debt increase, then
– Is the free trade policy/deficit illegal??
– Is it unethical??
April 10, 2023 Page 49
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Is it Unethical if U.S. Citizens are subsidizing the Deficit?
• Ethical greed issues (see prior slides): Currency manipulation by U.S. trading partners, 2) Excessive Job outsourcing, 3) Product subsidies by foreign governments, 4) Unfair non tariff trade barriers by our trading partners, 5) Lack of intellectual property rights protection, and 6) Product counterfeiting.
• In effect, U.S. citizens are forced to enable job outsourcing, currency manipulation, and these on-going greed issues through forced tax subsidies
• Is this Unethical – What say you??
.
April 10, 2023 Page 50
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Is it Illegal in Violation of Constitutional laws?• Does it violate constitutional law? We have identified one possible constitutional
law that speaks to tax on interstate commerce. This constitutional law states (Article
1, Section 9, Clause 5): “No Tax or Duty shall be laid on articles exported from any
State.” The argument is then, U.S. tax payers are actually paying a forced tax on
moving imported trade deficit goods from state to state through tax losses due to the
trade deficit (that we discussed in this chapter). In other words, U.S. citizens are
paying an interstate tax since the import trade deficit goods have tax consequences
that increase our National debt. Therefore, it is a violation of constitutional law that
tax payers are subsidizing the free trade deficit on imported deficit goods that are
moved from state to state across America. From our graph in Figure 9.3, tax losses
diminish to zero if trade deficit approaches zero. Therefore, only equal trade will not
violate this law. www.house.gov/house/Constitution/Constitution.html
April 10, 2023 Page 51
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Is it Illegal for U.S. Citizens to pay tax on the Deficit Consequences?• Does it violate free trade agreement? The agreement between our trading partners requires elimination of tariffs and quotas on most (if not all) goods and services traded between them. Our argument is similar to that above, U.S. tax payers are actually paying a tax on imported trade deficit goods through tax losses due to the trade deficit (that we discussed in this chapter). Since the trade deficit is partially funded by U.S. tax payers, then this is a self-imposed tax on trade surplus of imports and is a tariff that U.S. citizens are paying our own government on deficit imports. Therefore, a trade deficit violates free trade policy itself!
April 10, 2023 Page 52
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Is it Stealing ?
• Is it stealing for U.S. citizens to be paying for corporate Americas products through TDT losses??
• What Say You?
Example:
You are paying a tax on every free trade ‘deficit’ item sold at Walmart!
April 10, 2023 Page 53
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
THE SOLUTION OF EQUAL TRADE
April 10, 2023 Page 54
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Equal Trade Has No TDT Losses
• Results of our graphical analysis indicate that if the trade deficit were near zero, the contribution to the national debt would be near zero.
• This implies that Equal Trade would create TDT losses, or thus not violate constitutional law.
April 10, 2023 Page 55
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Balanced Trade Restoration Act of 2006 Corrective Action
• Warren Buffett’s plan: Create a market for import certificates that would
represent the right to import a certain dollar amount of goods into the United
States from other countries. These certificates would be issued to US
exporters in an amount equal to the dollar amount of the goods they export,
and can be sold to importers, who must purchase them in order to legally
import goods.
• Results: This Plan does essentially create a tariff
• Alternate Plans are needed
• U.S. Government has failed to act on proposed legislation
Balanced Trade Restoration Act of 2006 (Bill has vanished??)
April 10, 2023 Page 56
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Congress Neglect of 2006 Bill and the free trade deficit•2006 Bill faded•Nothing was ever issued on the Bill•Failure by Congress to provide information or act on one of the biggest threats to the U.S. economy is an indication of – Poor Economic decisions possibly ideologically based
– Influence of big business– Shows a lack of understanding of issues since free trade is supported by most economists
April 10, 2023 Page 57
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
What Would Equal Trade do for U.S.
• Create Millions of Jobs
• Help us pay off the National Debt
• Reduce unemployment to minimum levels
• Reduce separation of wealth
• Stop housing failure Rate
• Stop business failure rate
• Stop foreigners from buying up America
• Stop foreigners from buying up our National debt
• Stop U.S. from being Beholden to unfriendly countries like
China
• Assure America’s Future
• Stop illegal taxation
April 10, 2023 Page 58
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.ComApril 10, 2023 Page 59
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
What You Can Do
• Go to the Website:
– www.CitizensForEqualTrade.org
– Sign the petition for equal trade on the website
– Support this movement and learn : The Truth of the Modern
Recession, with your purchase
– Book at Amazon.com $19.95
April 10, 2023 Page 60
From the Book: The Truth of the Modern RecessionIn Conjunction with CitizensForEqualTrade.Com
Addressed Solutions in the Not-for-Profit The Truth of the Modern Recession, Root Causes and Reliable Solutions
• Reliability Economics - A Bipartisan Solution through Root Cause Analysis:
Using Reliability Economics - Solutions Addressed in book:1. Taxation Plan to Reduce Separation of Wealth2. A Seven Year Plan to Eliminate the National Debt3. Job Creation and Retention Investing4. Free Trade Deficit Mitigation Plan5. Middle East Long Term Solution6. Check and Balance for Lobbyist Problems 7. Many Solutions Without Bailout
April 10, 2023 Page 61
Please see book reviews and information at Amazon.com