After he got little reaction from Republicans to his boast about cutting taxes for 95 percent of working families, President Obama went off-script during his State of the Union Address. "I thought I'd get some applause on that one,'' he joked. Instead, a bipartisan burst of clapping did break out when Obama announced a National Export Initiative, with a goal of doubling exports over the next five years.
It's no wonder exports created a rare moment of unity during the speech. As prime export markets, "Emerging economies are going to lead the world out of these economic doldrums," Fred Hochberg, the chairman and president of the Export-Import Bank of the United States, said last week in Minneapolis. In 2008 the bank authorized $14.4 billion in financing to support an estimated $19.6 billion in U.S. exports. According to the bank, 86 percent of the transactions involved small businesses.
Hochberg, who along with Sen. Amy Klobuchar met with several exporters in Minnesota, discussed the export initiative with the Star Tribune's Editorial Board. "Every time there has been a crisis in the past, it has generally been the American consumer that's really driven the world economy," he said. But, as everyone with maxed-out credit cards now knows, "It's just not sustainable."
Exports, on the other hand, can lead to a sustainable economic recovery and create jobs. And Klobuchar, unlike many of her Washington colleagues who talk more than act, deserves credit for working with businesses on export issues. The Minnesota Democrat clearly sees the potential -- in fact, the need -- for export growth.
In keeping with national trends, the trade trajectory had been moving in the right direction in Minnesota before the financial crisis, with annual exports growing from $10.5 billion in 2003 to $17.3 billion in 2008, according to data supplied by the Minnesota Department of Employment and Economic Development. Minnesota exports fell 19 percent in the first and second quarters of 2009 and slipped 17 percent in the third quarter. While that's better than the U.S. overall, which suffered hits ranging from 21 percent to 26 percent, the export downturn helps explain why unemployment has remained so stubbornly high.
Minnesota's diverse economy is relatively well-positioned for export growth in the long-term. Hochberg identified five basic areas of opportunity: medical equipment; power generation; aviation; agriculture and farm equipment; and construction. Minnesota has a hand in all these sectors, with particular strength in medical equipment and agriculture.
Neither the Obama administration nor the Export-Import Bank are in the business of betting on industry sectors. Industrial policy is "un-American," said Hochberg, even though "none of the rest of the world operates this way, which puts us in a very difficult position when we're trying to build manufacturing."
So if our government can't pick winners and losers, what can it do? First, focus on the basics. We'll rarely be the low-cost provider anymore. So it's more essential than ever to have a highly educated workforce. Busted budgets will make that more difficult, but it's crucial to continue investing in education.
And it's time to revisit proposed trade partnerships with Colombia, as well as other countries. Obama's presidential predecessor, George W. Bush, was right in negotiating to open more markets to freer trade. Doubling exports in five years will be harder to achieve if these deals remain stalled in Congress.
Showing a bipartisan approach so badly needed in Congress, Klobuchar and Sen. George LeMieux (R.-Fla.), will soon sponsor a bill to return staffing to previous levels at the U.S. and Foreign Commercial Service, which works through embassies overseas to help American exporters. The bill would also expand the Rural Export Initiative, which is a pilot project begun in 2006 that works to encourage exports from rural businesses. Congress should act quickly once the bill is proposed.
These are the kinds of business-friendly efforts that are needed to increase exports and get more people working again.
If these strategies are successful, next year's State of the Union Address won't need any presidential prompting to get Congress to applaud the progress.