If a third-party populist were to run in 2004 on Ross Perot’s signature issues of unfair trade and mammoth deficits, George W. Bush would suffer the fate of his father. He would be a one-term president, fortunate to get 40 percent of the vote. For the combined budget and trade deficits George W. has run up dwarf anything his father produced.

Even before the cost of war is factored in, the fiscal deficit for 2004 is $521 billion. But the trade deficit, five times as large as any his father ran, is a graver matter. The second American Century may be aborted.

In 2003, our merchandise trade deficit came in at $550 billion, 5 percent of our gross domestic product. With China, our trade deficit hit $124 billion. U.S. imports now account for 100 percent of China’s growth.To the Alfred E. Newman Economic Club that meets at the Wall Street Journal editorial offices, such trade deficits don’t matter. But President Bush and Karl Rove had best pay heed.

For factory closures, lost jobs, and the outsourcing of back-office work to India and Asia are the hottest issues in the Democratic primaries and a huge liability for a president who has presided over the disappearance of one in every six manufacturing jobs in the USA.

The trade deficit is also behind the dollar’s loss of 15 percent of its value against major world currencies last year. Only huge purchases of Treasury bonds by the Bank of Japan and the willingness of Beijing to pile up a hoard of dollar reserves prevents a run.

Why are China and Japan subsidizing our consumption? For the same reason a drug dealer hands out samples of crack cocaine to school kids. To get them hooked.

By keeping the value of their currencies low, Japan and China not only keep their factories humming, as ours shut down, they are effecting the steady transfer of the factors of production from America to Asia. They are making this once self-sufficient Republic a future dependency of Asia, as we ship them our industrial base, our technology, factories, plants, and skilled jobs.

In classical liberal economics, free trade is win-win. But that is not true of power politics, where, as one nation rises, another recedes. As China knows and we have forgotten, trade is foremost among the means nations use to advance in industrial and military power at the expense of rivals. Great powers that run chronic trade deficits, with declining currencies, are invariably fading powers.

As it rushed to the rescue of Gregory Mankiw, the Bush adviser who celebrated outsourcing as good for America, the WSJ tutored us:

If country X does or makes something with relatively low cost compared to country Y, then country X should make it. Country Y is thus released to earn higher returns on something else.

Fine as theory. But if country X is the Germany of Kaiser Bill and Admiral von Tirpitz and country Y is the Britain of Lord Salisbury, one indulges such drivel at the risk of national survival.

China is becoming the factory floor of the world. And as her leaders force her people to sacrifice for the future, America, where the consumer is king, indulges herself in the present. In the free-trade catechism, what’s good for me now is good for America. Yet not only does this contradict common sense, history reveals it to be the folly of every declining great power from Holland to Spain to Britain.

From the Britain of the Acts of Navigation to the America of Lincoln and Theodore Roosevelt, to Bismarck’s Germany and China today, big nations that treat trade as a matter of paramount importance are the rising powers that come to dominate the world.

The Chinese are the ants of summer, gathering for the winter. Americans are grasshoppers consuming themselves into dissipation.

Last October, Warren Buffett revealed that he was speculating in foreign currencies, betting against the dollar: “[O]ur country,” he wrote, “has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than we produce—that’s the trade deficit—we have, day to day, been both selling pieces of the farm and increasing the mortgage on what we still own.”

Bush is indeed the fortunate son. Not only has he no Perot in the race, he is running against a senator who voted for NAFTA, the WTO, and permanent MFN for China, and is equally oblivious to the truths Warren Buffett has recognized.We’ve said it before. America needs a new party, an America First Party that will stand against amnesty for illegal aliens, walk out of the WTO, and abandon these imperial wars that are bleeding and bankrupting our country financially and morally.