SOTU Challenge: Meeting Million New Manufacturing Jobs and Doubling Exports Commitments

Dave Johnson

Before the election President Obama set a goal of doubling exports and creating one million new manufacturing jobs by the end of 2016. What has to happen for these goals to be met?

In The State of the Union Stakes Bob Borosage points out the stakes and challenges that Obama must face,

At question is the basic American dream: the assumption that a decent life can be earned by hard work.

Consider where we are. For over three decades, the rich have gotten far richer, while working families have struggled to stay afloat. The reality is that the rising American electorate – the young, minorities, single women, union workers – are sinking together.

For decades giant American corporations have been enriching themselves at the expense of the rest of us by moving jobs, factories and industries out of the country to low-wage countries where workers have little or no say. They have pocketed the difference in cost of labor, environmental protections, worker safety protections and other costs imposed in a democracy. They have used the threat to export even more jobs to force workers here to shut up and do what they are told and take what they can get.

The result has been terrible for America’s middle class, and beyond tgerrible for those below that. Borosage again,

More than 20 million people are in need of full-time work. Corporate profits are at record highs; CEO salaries are soaring. But wages are at record lows in relation to the economy, and falling.

More than a fifth of our children live in poverty, the second worst of all advanced economies. College is being priced out of reach for more and more people, even as student debt exceeds credit card debt. Our broken health care system threatens to bankrupt a country, yet life expectancy for America’s 50-year-olds is the worst in the industrial world. We’re spending more on our military than at the height of the Cold War, while we can’t find the money even to rebuild our bridges.

In 2010, the richest 1 percent pocketed fully 93 percent of the nation’s income growth. A typical male worker earned less in 2011 than he would have in 1968.

President Obama has been working to bring back jobs and restore America’s ability to make a living. He said, “We can help big factories and small businesses double their exports, and if we choose this path, we can create a million new manufacturing jobs in the next four years.”

Blocked By Obstruction

Unfortunately many of his initiatives have been blocked by Republican obstruction. The American Jobs Act and The Bring Jobs Home Act, efforts to rebuild America’s infrastructure and stop the tax breaks that actually incentivize offshoring were both filibustered. May other efforts were also blocking by House and Senate Republicans. But the President has been able to move some things forward using the power of the Executive.

In October CAF’s Isaiah Poole pointed out that Conservative Obstruction Cost Us 2 Million Jobs So Far This Year, writing,

Since the beginning of the year I have been keeping a “jobs deficit” chart tracking our progress—or more accurately, our lack of progress—toward closing the unemployment chasm left by the 2008 financial crash. The target is 5 percent unemployment by the end of 2014, an aggressive but not unrealistic target if we had the political will to make the decisions needed to drive unemployment down quickly.

What Can Be Done?

Here is a look at some things the President can do to move further toward the goals of doubling exports and creating 1 million manufacturing jobs:

1) Declare China to be a currency manipulator, because China manipulates its currency to give itself a trade advantage.

Actually, other things that can be done are so far back, let’s focus on currency manipulation before continuing.

In last week’s post, Fix The Trade Deficit, Fix The Economy I cited a new report from the Economic Policy Institute (EPI), “Reducing U.S. trade deficit will generate a manufacturing-based recovery for the United States and Ohio,” showing that our trade deficit, the major component of which results from China’s currency manipulation, has cost us between 2.2 million and 4.7 million U.S. jobs, between 1 percent and 2.1 percent of the unemployment rate and a gross domestic product increase of between 1.4 percent and 3.1 percent.

These are real numbers that were carefully calculated. This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. And there are real solutions available to fix the problem.

According to the EPI report, currency manipulation by China and as many as 20 countries is responsible for between $190 billion and $400 billion of our trade deficit, in a single year. That’s about half to two-thirds of the problem right there. So that’s half to two-thirds of the 4.7 million jobs taken by our trade deficit, well over the 1 million goal.

After Addressing Currency Manipulation

After addressing currency manipulation, there are several initiatives, in no particular order:

  • National manufacturing strategy that targets key industries. A national strategy goes beyond tax incentives and other piecemeal efforts, it involves a comprehensive examination to determine the key industries and then putting in place all of the components of an ecosystem to support the industry. This means
    • the transportation, energy and internet infrastructure,
    • the entire supply chain,
    • the education and training of employees at all levels,
    • R&D facilities and researchers for innovation and design,
    • availability of materials,
    • the investment structure to finance building factories and obtaining inventory,
    • trade and tax policies to help these companies locate and export,
    • etc.

    In other words, use the resources of our government to encourage and develop the entire ecosystem and “chain of experience” located in an area, often around a “cluster” of businesses, required for an industry to develop and thrive. Other countries do this, and we do not.

  • Strong enforcement of trade agreements. Many countries successfully engage in mercantilist practices, and our country has a very lax record of enforcing violations. China in particular engages in a whole range of subsidies, trade barriers and other violations that can be fought with trade complaints, sanctions and tariffs. Under President Bush there was no trade enforcement at all. Under Obama there has been a beginning with steel, tire and other trade complaints.
  • Push Buy America policies in national, stale and local procurement. Our tax dollars should be spent here during a jobs emergency.
  • Revive the American Jobs Act and The Bring Jobs Home Act to fight offshoring incentives, and rebuild our infrastructure to create jobs and create the fertile ground in which American businesses can thrive.

Tracking Jobs And Exports

The Alliance for American Manufacturing (AAM) has launched a “1 Million New Manufacturing Jobs” Tracker that they are calling the #AAMeter. The #AAMeter measures from the beginning of 2012.

According to today’s #AAMeter January’s employment nubers showed 4,000 manufacturing jobs were created, so we are 996,000 jobs from meeting the 1 million jobs goal. That means 21,191 manufacturing jobs must be created every month to meet the goal.

Tracking The Exports

The initiative to double exports is on track. But there are a couple of caveats:

1) It does us little good if imports also increase. If imports remain above exports we still have a trade deficit draining wealth out of our economy. While there is good news on exports, there is terrible news on the trade deficit — we just learned that 2012 had the highest trade deficit ever.

2) The economic value also depends on what exports you are talking about. Financial scams products? Raw materials? Petroleum and natural gas products? Movies?

here are some numbers:

NY Times a year ago: Obama Vow on Exports Is on Track, With Help,

Exports are running at about $180 billion a month, according to Commerce Department data, up from $140 billion a month two years ago. They are currently growing at an annual pace of about 16 percent — a percentage-point higher than necessary to double exports to $3.1 trillion by 2015.

The Wilson Center, July 2012, Obama’s Goal to Double Exports: A Midterm Analysis,

October, 2012, U.S. goal of doubling exports by 2015 now likely, survey of high-tech firms says,

Today’s report on the U.S. trade performance for May 2012 shows that the Obama Administration is roughly on track to achieve the President’s lofty goal of doubling U.S. exports over the five year period ending in 2014.

A survey of U.S. high-tech manufacturers said it is likely the United States will meet a goal set by President Obama two years ago to double export values by 2015. This finding from UPS Inc.’s annual “Change in the (Supply) Chain” survey conducted by IDC Manufacturing Insights is a far cry from a similar survey conducted in 2010 when less than half of that survey’s respondents said the objective was achievable.

According to BusinessWEEK in October 2012, “Through August, exports in 2012 were up 43 percent from the comparable period in 2009.”

See also:

Fix The Trade Deficit, Fix The Economy.

For 2012 Lets Restore Our Industrial Commons

The National Manufacturing Strategy Debate

Today’s Big Idea To Get America Working: Revive American Manufacturing

Reviving and Strengthening U.S. Manufacturing

Revive Manufacturing with Green Jobs

Quick Things To Bring Manufacturing Jobs Home

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