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More important than Social Security

By Lou Dobbs
CNN


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President Bush outlines his domestic and international agendas in the first State of the Union address of his second term.
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(CNN) -- President Bush dedicated a major part of his State of the Union address to what he has been calling one of the biggest problems facing our nation: Social Security.

While there are many issues requiring immediate congressional action, reforming Social Security is not chief among them.

Our leaders in Washington have more pressing issues to solve first. Surely we have more urgent crises, like illegal immigration, border and port security, health care, and perhaps most important, our nation's exploding budget and trade deficits.

The Bush administration, and specifically Treasury Secretary John Snow, has restated its commitment to reducing our growing twin deficits.

The record trade deficit, however, continues to widen at a faster rate than ever before.

New projections show no sign of any real effort to reduce the budget deficit, and the dollar is still trading near its recent lows, despite our renewed commitment to a strong dollar policy.

If this is the Bush administration's idea of commitment, I'd hate to see what neglect looks like. Can we stand any more such commitment from our leaders?

As the United States records its 29th consecutive year of trade deficits, we must acknowledge our current policy of free trade at all costs is not working and begin a real dialogue on balanced trade like our principal trading partners pursue.

Our nation's trade deficit is certainly not improving. In fact, it's worsening almost every month: The deficit in November surpassed $60 billion for the first time ever, putting last year's trade gap on pace to top $600 billion.

That would be 25 percent higher than 2003's deficit, and nearly 50 percent higher than the deficit in 2002.

The ballooning trade deficit is also dragging down economic growth. Rising imports and falling exports in the latest quarter combined to shave more than 1.7 percentage points off the gross domestic product, according to the Bureau of Economic Analysis.

The trade deficit hindered economic growth in 13 of the 16 quarters in the president's first term in office, and in four of those quarters, the deficit cut more than a full point off growth.

This administration is not alone, though: The trade gap has dragged down annual GDP growth in every year but one since 1992.

Our swelling trade deficit with China alone reached a record high of $148 billion through the first 11 months of 2004, already a 30 percent increase over 2003's record gap with another month to be reported.

And while this has mostly led to lower prices for consumers, increased and unbalanced trade with China has resulted in the loss of 1.5 million American factory jobs over the past 15 years, according to the Economic Policy Institute. The job losses have accelerated as the trade deficit with China has grown.

"The American consumer is also the American worker," Republican Sen. Lindsey Graham of South Carolina told me, "and if we don't do something to protect our manufacturing base here at home, it is going to be hard to buy any retail goods."

We've lost more than 2.5 million manufacturing jobs since the beginning of 2001, and not surprisingly, our annual trade deficit has risen by nearly 70 percent over that time. At this rate, we can expect our trade gap to grow to $1 trillion within just the next few years.

This trend will only increase as we continue to outsource American jobs and import low-priced goods from countries with which we willingly enter into free trade agreements.

The so-called crisis in Social Security is the top priority of the president's domestic agenda, but that problem may be decades away from inflicting any pain on Americans.

Our nation's trade deficit, however, represents nearly 6 percent of our nation's GDP, and historically that will lead to tough choices: Either we must make a change in policy now or there will be a difficult adjustment on the part of markets, which can lead to an economic future none of us want to experience.

Talk about a crisis we need to solve immediately.


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