by Nathan H

Created on: December 18, 2006   Last Updated: February 07, 2008

The Commerce Department reported recently that the current account trade deficit increased 3.9 percent to a record $225.6 billion in the July-September quarter. That represented 6.8 percent of the country's total economy, up from 6.6 percent of the gross domestic product in the spring quarter.

The current account deficit is expected to hit a new record for the full year, far surpassing last year's $791.5 billion imbalance even though the shortfall for the fourth quarter is likely to show an improvement, reflecting the drop in oil prices after hitting records this summer.

Critics have singled out the biggest culprit as China, the country which is posting the biggest trade surpluses with the United States. A high-level delegation of seven members of Bush's Cabinet, led by Treasury Secretary Henry Paulson, held two days of talks in Beijing last week to launch a new strategic economic dialogue with China aimed at resolving long-festering trade problems between the two countries.

The increase in the shortfall last quarter was led by an $8.1 billion rise in the deficit in goods, which was driven higher by surging global oil prices. America's surplus in services, which includes such things as airline tickets, banking services and consultants' fees, rose by $810 million to $18.3 billion.
http://news.yahoo.com/s/ap/20061218/ap_on_bi _go_ec_fi/economy

It is rumored that the Roman emperor Nero played the fiddle while his capital city of Rome burned. Could history be repeating itself? The Bush administration, following the lead of the Clinton presidency, has recklessly pursued free trade policies. The leading culprit continues to be China. My December 1st blog dealt with the threats posed to the United States by the Chinese military and economy.

The Chinese have most favored nation trading status with the United States and China continues to dump cheap imports. Over the last 40 years the United States has continued to lose manufacturing jobs, and Wal-Mart is now the number one buyer of Chinese goods.
http://www.politicalcafe.org/posts_2006-12-01. php?id=134

The Bush administration has engaged the Chinese government in trade negotiations, but the Chinese enjoy a much more powerful bargaining position than the United States. Why should the Chinese change their practices when the United States loses billions of dollars in trading to the Chinese each year?

Next year, the Congress and President Bush must take bold action or the economic problems will only grow worse:

Take away China's

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