The Daily Signal Victor Davis Hanson: Chuck Schumer, Nancy Pelosi and Warren Buffet Were Right, Trade Deficits Matter
Apr 23, 2025
Victor Davis Hanson, a renowned military historian and political commentator, dives into the pressing issue of trade deficits and their dire implications for the U.S. economy. He highlights a stark contrast between the past surplus era and today’s alarming debt levels. Hanson argues that while previous economic growth softened the blow, current budget and trade deficits are a ticking time bomb. He calls for urgent measures to address these financial challenges, warning that our room for maneuver is shrinking.
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Trade Deficits Now Critical
- Trade deficits have long been tolerated due to strong GDP growth and rising incomes.
- Now, with soaring budget deficits and national debt, trade deficits have become a critical problem.
Warnings on Trade Deficit Limits
- In 2000, Democrats Pelosi and Schumer warned of the unsustainability of trade deficits over 3% GDP.
- Experts including Warren Buffett and Jason Furman echoed concerns over high trade deficits increasing foreign leverage.
Rising Deficits and Debt
- The US budget surplus of $236 billion 25 years ago has flipped to a $1.8 to $2 trillion annual deficit.
- National debt rose from $5.6 trillion (32-33% GDP) to $37 trillion (125% GDP), worsening trade deficit risks.