President Barack Obama recently promised that his Administration will be “going to bat” for U.S. exporters. A look at his specific recommendations suggests that the country would be better off if he stuck to golf.
For example, President Obama promised improved access to credit to exporters through the Export-Import Bank (Ex-Im Bank), which provides taxpayer-subsidized loans to U.S. exporters. Think of the Ex-Im Bank as Fannie Mae for exporters, with taxpayers holding the bag for bad loans.
Critics argue that Ex-Im Bank subsidies violate international trade rules prohibiting “The provision by governments of export credit guarantee or insurance programmes.” These are the very rules that Americans rely on to keep foreign governments from using unfair trade barriers to block U.S. exports.
None of the export promotion programs proposed by President Obama address the biggest barrier to U.S. exports: record-setting federal spending. Last year’s $1.4 trillion federal budget deficit was financed in part by diverting $469 billion in foreign spending away from U.S. exports and into the purchase of U.S. Treasury bonds and other government securities.
If the government really wants to boost exports, a little spending restraint would be far more effective than the increased number of trade junkets to foreign countries promised by President Obama.