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EDITORIAL
No Bang for Our Cheap Buck


Published: December 15, 2004




The Bush administration's de facto weak-dollar policy - its preferred
"cure" for the American trade deficit - is not working. Yesterday's trade
deficit report shows that imports outpaced exports by a record $55.5 billion
in October. The huge imbalance was worse than the gloomiest expectations.

So far, the administration has been hoping that the weaker dollar will raise
the price of imports, leading American consumers to buy less from abroad,
and will at the same time make our exports cheaper so foreigners will buy
more American goods. That's supposed to shrink the trade deficit and, with
it, America's need to attract nearly $2 billion each day from abroad to
balance its books.

But the dollar has been declining since February 2002 - it's down by 55
percent against the euro and 22 percent against the yen - and the trade
deficit has stubbornly refused to shrink along with it. The falling dollar
has done nothing to diminish America's appetite for foreign goods - such
imports continue to rise at a faster rate than exports. According to
yesterday's report, imports were some 50 percent greater than exports in
October. Much of October's import growth was caused by high oil prices,
which have since subsided. But that's no reason to shrug off the disturbing
evidence of the weak dollar's failure to fix the trade gap. The United
States is now on track for a trade deficit of more than $60 billion next
June.