The government is spending hundreds of billions of taxpayer dollars attempting to stimulate the economy, but it’s clear these spending programs are not achieving the results we need. Instead, the economy continues to shed jobs. Unemployment figures released last week show U.S. unemployment reaching a 26-year high of 9.8 percent.
Instead of putting Americans back to work, Congress is simply putting heavier burdens on taxpayers, while driving the country deeper into debt. In short, the current approach is not working. There is another approach to stimulating the economy – a proven method to increase prosperity, grow our economy and create jobs: expansion of free trade.
Free trade is a proven stimulus. According to a Peterson Institute study, the average American household is about $9,000 per year richer as a result of the country’s integration with the world economy since World War II. Furthermore, if the world’s remaining barriers to trade and investment were to fall, global trade would add another $500 billion to domestic wealth creation each year. That’s $500 billion in economic stimulus per year without adding to our national deficit.
American consumers only account for about five percent of the world’s population. We must make international markets more available to our exporters to help them grow.
In 2008, export growth exceeded GDP growth. Without this strong growth in exports, there would have been no positive economic growth. Over the past few years, this growth helped offset some of the declines in the housing market.
In my own district, there are countless businesses, small and large, that benefit from free trade. One is Bloomington-based Donaldson Incorporated, a leading manufacturer of air filtration systems and other industrial products. Prior to the recession, Donaldson was seeing record profit increases, driven in large part by its increased sales to customers in Europe, in Asia, and our neighbors here in North America.
Those buyers were in places we’ve already worked to open to free trade. Donaldson used these earnings to grow their business and hire new employees here at home. Of course, like nearly every other business, they’ve faced serious challenges as the economy has struggled.
Along with targeted tax relief and similar incentives, increasing trade opportunities would help companies like Donaldson and thousands of others weather the current economic downturn and provide opportunities for new growth.
Unfortunately, there are consumers and markets across the globe that still cannot be accessed by American sellers because of high tariffs, quotas and other barriers to international trade. It’s time to knock down those barriers.
We can start by supporting pending trade agreements with South Korea, Columbia and Panama currently before Congress. Doing so would open up markets for American products, stimulate the economy and also strengthen both democracy and free market principles in each of these nations. Opening the South Korean market alone would give U.S. businesses access to a market the size of our third largest trading partner, Mexico.
However, we can go beyond free trade agreements alone. I am encouraged by the recent initiative announced by U.S. Trade Representative Ron Kirk aimed at helping small and medium –sized businesses in the U.S. increase their exports. In our global economy, it is not just large corporations who benefit from increased trade. Providing the entrepreneurs and small businesses responsible for about 70% of our nation’s job growth with access new markets is simply the smart thing to do.
I have long advocated for increased trade and strong global relationships between the U.S. and nations abroad. I’ve visited India, China and several nations in Africa and the Middle East. In every country, free trade is essential for their own growth and prosperity, as well as the growth and vitality of the United States.
It’s time for Congress to reevaluate the actions they’ve taken in recent months with regard to jobs and the economy. As we do that, we must seek to expand and encourage free trade wherever possible –as it is one important tool in growing jobs and increasing prosperity, both at home and abroad.
The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.