Fracking the U.S. trade deficit

http://www.csmonitor.com/Environment/Energy-Voices/2013/1008/Fracking-the-US-trade-deficit-video

Over the past decade, the natural gas production of the United States has increased greatly, and according to the author of this article, this new energy boom is starting to trim back the United States' trade deficit. Trade deficit is a measure of the difference between the value of a country's total imports and exports. A nation accumulates a trade deficit when the value of its total imports outweighs the value of its total exports, and America just happens to have the highest trade deficit in the world. But over the past few years, a new trend has been emerging as the U.S. has been slowly chipping away its trade deficit as energy costs have decreased, and dependence on foreign oil has dropped.

According to this article, this year the United States is expected to surpass Russia and Saudi Arabia as "the world's largest producer of oil and gas," and by 2020, the United States is expected to become the world's largest oil producer. Energy is turning out to be a big export for the United States, as more and more liquified natural gas is being shipped to other countries, which is a good first step in erasing our trade deficit. The article states that from 2011 to 2012, the U.S. trade deficit decreased by 13.5% from $559.9 billion to $540.4 billion, largely as a result of energy exports. Over the past few years, politicians have been speaking out frequently to address their concern over American companies outsourcing jobs to China, and thus stripping away America's once great industrial power. But if the United States can become the world leader in energy markets, perhaps that will be enough to offset the consequences of America's loss of manufacturing dominance.

The expansion of U.S. energy production will most certainly lead to more jobs, as energy companies hire new workers to meet increasing energy demands. But the biggest impact of increasing energy production will be the return of manufacturing plants and jobs to America, as companies become increasingly attracted to our lower energy costs. This long awaited return of manufacturing companies will greatly help offset our trade deficit when these firms begin shipping their products around the globe, adding to the United States' exports. Energy production is the future of American prosperity and, if current trends continue, will help shrink our trade deficit as well.

Obama Renews Calls on Congress to End Shutdown, Raise Debt Limit - The Washington Post

http://www.washingtonpost.com/politics/john-boehner-presses-demands-for-talks-with-obama-on-shutdown-debt-ceiling/2013/10/08/fbbe50da-3028-11e3-9ccc-2252bdb14df5_story.html

President Obama held a press conference today in which he urged the Republican-controlled House of Representatives to end the government shutdown and, more importantly, vote to raise the debt ceiling. Furthermore, Obama is demanding that there be no debate on the issue of raising the debt ceiling, and is refusing to negotiate with the Republicans over this. If the government debt hits the current debt ceiling of $16.999 trillion, a limit its expected to reach by October 17, then we will default on our debt, lowering our nation's good credit.

In this case, I find myself agreeing with President Obama. Republicans have lost the right to negotiate and make demands regarding the debt ceiling after their behavior essentially caused the government shutdown last Tuesday. Why should Democrats now listen to the Republicans' demands after their hopeless mission to defund Obamacare left 800,000 Americans out of work? House Speaker John Boehner has warned that the government must learn to live within its means and stop borrowing so much money before Republicans will vote to raise the debt ceiling again. But Obama also reminded Republicans that if we hit the debt ceiling and default on our debt, then the Federal Government will have to pay more interest on the national debt, which is just as bad increasing spending. 

While I agree that the government absolutely does need to cut spending to lower the deficit, with the government shut down and the economy in the balance, now is not the time to negotiate over budget cuts or Obamacare. I was not impressed with the way Republicans handled the shutdown and I will not approve of those tactics being used over the debt ceiling. There is simply too much at stake. The economy would be deeply hurt by a default on our debt, and having that happen on the heels of a government shutdown would be even worse. Republicans should choose their battles carefully, and find different ways to cut the deficit in the future.

Government Shutdown Unlikely to Damage Economy, But Debt Limit Could be Catastrophe - The Washington Post

http://www.washingtonpost.com/business/economy/government-shutdown-wont-kill-economy-but-debt-ceiling-could-be-catastrophe/2013/10/07/06196142-2f6f-11e3-bbed-a8a60c601153_story.html

Ok, so my predictions about the government shutdown not happening were a little bit too optimistic. As you now probably know, the Federal Government did indeed shut last tuesday after Republicans refused to back down on defunding Obamacare, and Democrats refused to accept their demands. In the course of a week, 800,000 government workers were furloughed by the Federal Government as a direct result of the government shutdown, but essential services of the government will still be carried out. Now, with hundreds of thousands of government employees out of work (at least for the time being), and renewed uncertainty in the Federal Government, the economy is sure to take a hit in the coming weeks.

The government shutdown has already had a broad impact. National parks and museums still remain closed, which is hurting tourism, and will ultimately lead to a loss of revenue from potential foreign visitors to those sites. But more importantly, as I mentioned in my previous blog, investors are now losing confidence in the economy as a whole, and are beginning to sell stocks. This could have a global effect if world markets lose confidence in the United States' economy as well.

While the effects of the government shutdown have been very negative, if congress cannot agree to raise the debt ceiling by the upcoming deadline, the resulting impact on the economy will be far worse in comparison, as the Federal Government will not be allowed to borrow any more money to pay its bills. According to the article, the investment bank Goldman Sachs reports that if congress does not vote to raise the debt ceiling, our nation's GDP will be lowered by 4.2% over the course of a year. This is simply unacceptable. If Republicans and Democrats refuse to come to a compromise on raising the debt ceiling, then the economy could be damaged greatly because of their failure to do their jobs. While Republicans may argue that the national debt is too high and implementation of Obamacare will increase the deficit too much to allow the debt ceiling to be raised, failure to raise the debt ceiling will probably have far worse effects on the economy than a $16.7 trillion dollar deficit.