S. deficit in ATPs in 2004. In 2004, the U.S. borrowed $665 billion annually from foreign lenders to finance its enormous trade deficit, an amount equivalent to $5,500 per American household (Bivens, 2004). This borrowing entails serious consequences for the U.S. economy that have thus far been subdued by low interest rates. However, if the deficit follows current trends, Bivens projects that the external debt of the U.S. will rise from 24% of total GDP at the end of 2003 to 64% by 2014 and the cost of servicing just the additional debt incurred from 2004 to 2014 will rise to 1.7% of GDP by 2014 or $250 billion in 2004 dollars. These numbers translate into a painful reduction in the...

Debt and the dollar the United States damages future living standards by borrowing itself into a deceptively deep hole. Retrieved July 11, 2005 from Web site: http://www.epinet.org/content.cfm/Issuebrief203
Odessey, B. (2005, February 10). U.S. trade deficit drops in December but hits record for 2004. Retrieved July 11, 2005 from Web site: http://hongkong.usconsulate.gov/usinfo/statis/ft/2004/12.htm

Soaring high-tech and other imports from China, sharply higher oil prices drive trade deficit to new record (2005, February 10). Economic Policy…