The time has come to address the $726 billion trade deficit.

The Wall St. Journal reported in its weekend edition that House Republicans are searching for a legislative agenda as it met in private caucus on the Eastern Shore of Maryland in a three-day retreat.

While a number of prospective issues were discussed in the Journal article, one that wasn’t mentioned was what to do about the $726 billion trade deficit recorded for 2005. The deficit ballooned by $108 billion over the preceding year. Meanwhile, Russia, Germany, Japan and China all reported trade surpluses. Isn’t anyone in Washington concerned that we are losing our manufacturing base in this country? Where are the leaders of either party addressing the disadvantage our domestic manufacturers face in competing with trading partners who have a 17% or more built-in edge over U.S. domestic companies because of our flawed corporate tax system which has the perverse incentive of encouraging U.S. companies to ship jobs overseas. Isn’t it time our policymakers started listening to Texas businessman David Hartman who has offered a sound proposal to rebuild our manufacturing base by replacing our current corporate income tax with a border-adjusted tax?

This is an opportunity for Republicans to regain the philosophical high ground by offering a serious plan that addresses the twin problems of our unsustainable trade deficit and the loss of our U.S. manufacturing jobs.

Democrats seem to think that all they have to do to gain ground in the November 2006 elections is run against George Bush without offering any serious alternatives to his domestic or foreign policies. In the short run, that may work for them. In the long run, however, ideas ultimately prevail. The conservative ideals propounded by Barry Goldwater and Ronald Reagan propelled the Republican Party into majority status in the 1980s and 1990s. Now, the Republicans are running out of steam as they have lost their way in this post-Cold War, post-Reagan period.

The issues today are different from those which confronted our nation from the early ‘60s to the end of the Cold War. Whichever Party understands that and offers Americans a sensible approach to the serious problems we face on the economic and foreign policy fronts will emerge as the next major force in American politics. Right now, the jury is out. Republicans had better start addressing these serious issues like trade deficits soon or they will find themselves in the minority again.

To see Hartman’s proposal for rebuilding our manufacturing base and addressing our unsustainable trade deficits, link here.

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