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Accounting Switch Cuts Deficit--on Paper

Associated Press

The Reagan Administration has come up with a paper-work way to reduce the reported U.S. trade deficit by about $3 billion before the election, but officials denied Wednesday that the accounting change was politically motivated.

Commerce Under Secretary Robert Ortner, a leading advocate in the Administration for the revised procedure, said the change made more sense economically and was not an effort to manipulate government statistics for the presidential drive of Vice President George Bush.

While private economists generally supported the new procedure, they questioned the timing of the switch, coming amid a campaign in which Democrat Michael Dukakis has charged that soaring trade deficits are a principal failure of Reagan economic policies.

The new procedures will change how merchandise imports get counted each month. Since 1979, the government has included the costs paid to foreigners to ship and insure their products, now about $1.5 billion monthly, as part of the country’s total import bill.

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Before 1979, the monthly merchandise trade figures did not include shipping and insurance costs for imports.


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