Two deficits — trade and budget — have dominated American politics. Two recent reports show that both have grown dramatically. On this week’s episode, why the trade deficit probably matters less than people think and the budget deficit matters much more than politicians will admit.
The Commerce Department reported on Tuesday that the goods trade deficit struck an all-time high of $891.3 billion in 2018. This in spite of President Trump’s trade wars intended to narrow it. While Mr. Trump has fixated on the trade deficit, it is actually largely driven by factors other than the high tariff rates and “terrible” trade deals he laments.
Meanwhile, the Treasury Department reported that the federal budget deficit has exploded so far this fiscal year, which began in October. The gap in government spending and revenues grew by 77% in the first four months of the 2019 fiscal year compared to $310 billion compared to $176 billion in the same period last year.