Export Opportunism

President Barack Obama finished his first State of the Union address last week with the same vigor and rousing rhetoric that helped win him the presidency 15 months ago. But politics were on bright display and there seemed to be little 2010 doubt that, despite Obama's calls for congressmen to set politics and ambition aside to do what their electorate sent them to Washington to do, political impasse would be the name of the game in a year of midterm elections.

The speech has been President Obama's most useful tool in tackling a political crisis. When it came to selling the health care bill or troop surge in Afghanistan, the slumping president has looked to his rhetorical skills to remind everyone how inspiring he is and why a large majority of Americans liked him in the first place.

In practical policy, however, Obama has numerous challenges he ambitiously set forth in his speech last week, the most peculiar of which is his goal to double exports from the United States in five years. It is a seemingly innocuous pledge in a sea of promises that define state of the union addresses, however, it is much more puzzling considering that doubling exports is a keystone of his strategy to repair the American economy.

The United States has run a trade deficit every year since 1975, and contentious squabbles over the reasons why have dominated American international economic policy debates ever since. In the 1980s, it was Japan who bore the brunt of American criticism for weakening the yen and boosting exports at the expense of Michigan auto workers and other Rust Belt industrial firms. In the 1990s, the post-NAFTA "sucking sound" from Mexico was the scapegoat for another swath of American manufacturing job cuts and a drop in the number of things we consume that are produce at home.

The 2010 rhetoric signals that the United States will either enhance protectionist measures against foreign imports, or, more interestingly, take on the Chinese and pressure the world's fastest growing economy to halt its alleged currency devaluation, allowing the dollar to depreciate, boosting exports and reducing the trade deficit.

Either strategy would go contrary to the international economic policies that are in the country's best interest in the short term. The former would only jeopardize any hard-earned progress on recent trade negotiations, and the latter would further alienate the single most important country to America's economic future, in terms not only of trade but of finding a willing lender to finance America's massive debt-driven recovery. Or, it could just be a matter of semantics: the U.S. might well double exports in five years' time, but it might also double its imports, only worsening its untenable current account deficit.

Each of these potential reasons signals very little economic policy creativity; though it will be no small achievement if the United States can actually double its exports in five years.