Conservative Principles Now

President Obama’s Secretary of Commerce, Gary Locke, rolled out the administration’s new “National Export Initiative (NEI)” today at the National Press Club.  The way Secretary Locke described it, the NEI sounds like a great vehicle to create jobs—government jobs.

Secretary Locke began by saying that the “NEI represents the first time the United States will have a government-wide export-promotion strategy with focused attention from the president and his Cabinet,” ignoring the prior administration’s success in negotiating free trade agreements with more than a dozen countries between 2001 and 2009.  NEI’s main features are:

- more “robust” efforts to help small- and medium-sized enterprises, through the Foreign Commercial Service (FCS) “Gold Key” program (Sec. Locke made it sound like something brand new—actually “Gold Key” has been around for more than 20 years).

-President Obama’s “Export Cabinet” wants to hire more U.S. Government (USG) bureaucrats “to advocate for U.S. business” and channel more taxpayer dollars into “export promotion activities” at the U.S. Departments of Commerce and Agriculture.

-“improved access to credit” through increasing U.S. Export-Import Bank lending to small- and medium-size businesses from $4 billion to $6 billion through FY 2011 budget increases.  This sounds like an export subsidy and puts the government into the position of picking winners and losers among companies applying for loans (may the best lobbyist win!).

-Locke says the administration favors “trade agreements that are balanced, ambitious and improve market access for U.S. workers, firms, farmers and ranchers” but pledged “continuing the rigorous enforcement of international trade laws to help remove barriers that prevent U.S. companies from getting free and fair access to foreign markets.”  In practical terms, Locke’s emphasis on the fig leaf of enforcement means the administration will continue to have no real intention of pushing the three stalled FTAs with Panama, Colombia, South Korea (although Sec. Locke said that USTR Amb. Ron Kirk is working “to fix the problems” with those FTAs).

Bottom Line take-aways:  The NEI relies on too much government interference and too many USG bureaucrats shilling for politically well-connected companies.  It was telling that the only FCS success story Sec. Locke cited involved the sale of a General Electric “combined cycle power plant” in Kuwait (in April 2009 after Obama took office, of course).  GE’s Chairman, Jeffrey Immelt, is a well-known Obama supporter and GE owns pro-Obama MSNBC.  Another little sign—a pro-NEI press release from the United Parcel Service (UPS) was distributed at the luncheon.  Non-unionized FedEx has alleged in full-page advertisements in the Washington Post and elsewhere in recent months that the Obama Administration has tilted USG policy in favor of UPS and their 35,000 Teamster Union drivers.

The real answer is not an “Export Cabinet,” but lowering taxes and reducing regulations so that U.S. companies can be truly competitive.  Instead of increasing the FCS budget, why not abolish it and use the savings to reduce the deficit!  Truly competitive U.S. companies can hire their own private sector consultants who will be far more effective than Foreign Commercial Service bureaucrats.

If President Obama really wanted to expand market access for all U.S. exporters, he would push Congress to approve the free trade agreements with South Korea, Colombia, and Panama.  What he and Secretary Locke actually want is for the government to decide which exporters get taxpayer money, just like the government decides who gets bailed out at home, who gets what health care, which producers get a break from cap and trade, and on and on.

Here in Washington, people are discussing two things: Jim Zorn’s job security as the Washington Redskins’ head coach and health care, in that order. But there’s a $3.6 trillion gas tax on the table that already passed the House and is making its way through the Senate, and cap and trade has Americans all over the country concerned. The $3.6 trillion gas tax figure, which includes gasoline and diesel gas, comes from a new report from Senators Kay Bailey Hutchison (R-TX) and Kit Bond (R-MO) on the effects of climate change legislation. And the energy tax has rippling economic effects, as Senators Hutchison and Bond explain in their Washington Times op-ed:

Americans will be double-hit by the gas tax when it raises the costs of goods and services such as groceries and utilities they must continue to purchase. Energy costs are among businesses’ top operational expenses already. While companies face a variety of energy expenses, ranging from heating and cooling their work space to powering equipment and lighting, operating their vehicles is the most costly. Every company, from the small-town local florist to a package delivery service with nationwide operations, will be hard hit. In order for these businesses to withstand the heavier tax burden and to remain profitable, they will be forced to pass these energy cost increases along to consumers through higher prices.”

Some industries are more energy-intensive than others, and  farmers and ranchers are hit particularly hard. Heritage Senior Policy Analyst Ben Lieberman writes, “In addition to higher diesel fuel and electricity costs, prices for natural gas-derived fertilizers and other chemicals will also rise. Everything else affecting agriculture, from the cost of constructing farm buildings to the price of tractors and other farm equipment, will also go up.”

According to the Hutchison-Bond report, U.S. farmers and ranchers will incur higher fuel costs of $550 million in 2020. That figure will jump to $1.65 billion by 2050. According to The Heritage Foundation’s cap and trade analysis, farm profits are expected to decline by 28 percent in 2012 and will be an average 57 percent lower from 2012-2035. Congress is attempting to buy the farm vote by touting them as the beneficiaries of a carbon offset program because farmers can use cleaner technology, reduce nitrous oxide emissions, or simply not grow crops. However, the revenue gained from offset revenue will pale in comparison to lost income from cap and trade.

Economic gains and environmental improvements aren’t mutually exclusive goals; in fact, they often go hand-in-hand. Hutchison and Bond say, “We can improve the environment and economy through American ingenuity and technological advancement, not with taxes and mandates that increase costs and burden American families and businesses.”

Instead, cap and trade significantly reduces the amount of resources the private sector can invest in newer, cleaner technology.

The full report is available here.