Budget Deficits vs. Exports

The Heritage Foundation ^ | August 15, 2012 | Bryan Riley

[1rudeboy]

The federal government recently announced that it is expected to run a budget deficit of more than $1 trillion for the fourth straight year. One often-overlooked result of these large budget deficits is their negative impact on U.S. exporters.

Sales of U.S. Treasury securities to foreigners are not counted as exports. But if they were, Treasury securities would be one of the country’s biggest exports.

The government sold $216.5 billion in treasury bonds to foreigners in the first five months of 2012. That’s four times more than the amount exported by U.S. agricultural producers and three-and-a-half times more than the amount exported by carmakers.

Sales of Treasury securities abroad have an impact on exporters, because when people in other countries buy U.S. government Treasury bonds, they have less money left to spend on U.S. private-sector goods and services.

That’s why if politicians are serious about boosting U.S. exports, their top priority should be to restrain excessive federal spending. This would reduce the budget deficit, resulting in fewer Treasury bond “exports” and more opportunities for U.S. private-sector producers to sell their goods and services abroad.

 

[wolfman23601]

So Heretige is now mercantilist?

I wonder if they’d be willing to balance the budget by cutting subsidies and corporate welfare?

[1rudeboy]

No, and yes. I take it you are not familiar with Heritage?

[11th Commandment]

This article is right on. However, deficits also cause companies to move oversees. As government gobbles-up available credit, capital is limited in the US driving up borrowing costs. Thus, companies move operations oversees for lower cost advantage.

[sickoflibs]

RE : Sales of Treasury securities abroad have an impact on exporters, because when people in other countries buy U.S. government Treasury bonds, they have less money left to spend on U.S. private-sector goods and services.
That’s why if politicians are serious about boosting U.S. exports, their top priority should be to restrain excessive federal spending. This would reduce the budget deficit, resulting in fewer Treasury bond “exports” and more opportunities for U.S. private-sector producers to sell their goods and services abroad.”

Well at least we are exporting something, with this money we borrow we can create gubmt jobs at about $500K per job. How can this go wrong?

[wolfman23601]

Overseas where? Granted, the US is not in good shape, but nobody else in Western Civilization is either... and borrowing costs have never been lower. I agree with the need to eliminate the debt/deficit, but the sole focus on the trade balance has never worked and more often than not results in war. It is called Mercantile Capitalism and is essentially cronyism to the Nth degree. Small business and consumer wealth does not thrive in this system. Ask the Germans. The large manufacturing corporations do well there with their subsidies and their govenment’s focus on trade balance, but it is nearly impossible to start a small business and the common person has about enough money to live in a shoebox and eke out a living on bare essentials.

[Toddsterpatriot]

That’s why if politicians are serious about boosting U.S. exports, their top priority should be to restrain excessive federal spending.

Totally agree about the spending, but.........even if the government never added another dollar of debt, there is still $11.1 trillion in outstanding Treasury debt.

Plenty for them furriners to buy instead of our exports.

[Cringing Negativism Network]

, but the sole focus on the trade balance has never worked and more often than not results in war.

-

The problem of course is, the same can be said of not focusing on trade balance.

Either way.

[bert]

——Sales of Treasury securities abroad have an impact on exporters, because when people in other countries buy U.S. government Treasury bonds, they have less money left to spend on U.S. private-sector goods and services.——

That is balderdash. It presumes the ones fleeing to a safer haven for their capital are the same as those purchasing exported goods. They re not.

People buying cigarettes and companies buying airplanes are not spending their money on bonds. People buying lubrication equipment and cotton testing equipment are not spending all their money on bonds. People buying high pressure safety valves and boilers are not spending their money on bonds. People buying water heaters are not spending money on bonds. People buying air compressors are not spending all their on bonds.

The article is ludicrous.

[11th Commandment]

and borrowing costs have never been lower.

But availability to capital is a high cost. To further explain my point, companies will outsource to oversees due to limitation on capital.

[Moltke]

Ask the Germans. The large manufacturing corporations do well there with their subsidies and their govenment’s focus on trade balance, but it is nearly impossible to start a small business

The GDP contribution by small and medium businesses in Germany is appr. 70%. They are and for ages have been the backbone of the German economy.