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U.S. is halfway to Obama 5-year export-doubling goal
U.S. manufacturers posted a fourth consecutive month of expansion in March. While the rate was a bit below February’s gain, the overall trend is still up.
Some critics argue that Obama set the bar artificially low by using recessionary 2009 numbers as his starting point.
Alan Tonelson, an official with the U.S. Business and Industry Council, said Obama also “has the wrong goal” by focusing on exports and not the other part of the trade equation: still-huge import levels and resulting trade deficits.
The U.S. imported $540.4 billion more in goods and services last year than it exported, down only slightly from the $559.9 billion trade deficit in 2011.
“We racked up a pretty impressive export performance over the last few years. But the main reason that we may not reach the Obama doubling-export goal is the world economy is slowing down,” said Tonelson, whose organization represents nearly 2,000 mainly family-owned U.S. manufacturing companies.
Obama shrugs off such skepticism, suggesting the recent manufacturing gains speak for themselves.
“What’s happening here is happening all around the country,” the president said during a recent visit to a flourishing engine-part factory in Ashville, N.C. “Just as it’s becoming more and more expensive to do business in places like China, America is getting more competitive.”
Federal legislative “Buy America” restrictions on certain recent government contracts— considered protectionist by many economists — are also being credited with helping to spur some recent U.S. manufacturing gains.
The U.S. now makes about 18 percent of the world’s goods, down from nearly 40 percent right after World War II. Clearly, many manufacturing jobs will never come back.
“The U.S. had manufacturing trade surpluses until around 1980 (but) has run big deficits since then,” said Martin Baily, a Brookings Institution senior fellow and co-author of a new Brookings study of U.S. manufacturing.
The study showed that high trade deficits, especially with China, and high U.S. business tax rates are combining to keep U.S. manufacturing from rebounding more strongly.
Manufacturing “still remains a very important sector and one that I think we need to foster and that needs to flourish,” Baily said. “So we need to expand manufacturing in order to reduce that trade deficit. We can’t just do it on services alone.”
Republicans have long clamored for lower corporate tax rates to stimulate business growth. At a nominal top rate of 35 percent, the U.S. has the highest corporate tax of the world’s industrialized nations.
While few U.S. companies actually pay the full rate due to various deductions and credits, U.S. tax bites dissuade foreign companies from setting up shop here while providing incentives to U.S. multinational companies to keep large sums overseas, Republicans argue.
Obama largely agrees and has proposed lowering the top rate to 25 percent for manufacturers, even lower rates on income from still-undefined “advanced manufacturing” and 28 percent for all other corporations.
By Donald Lambro
Growth spikes are little more than trend-free anomalies
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