Obama reorganization bid faces challenges on Capitol Hill

President Obama's Friday announcement that he is seeking authority to reorganize federal trade and business-related functions could face some fine-tuning or outright resistance in Congress.

Speaking to a group of small business owners at the White House, Obama said he was working to make government's current "maze" more "consumer friendly" and transparent for small businesses. "We live in a 21st century economy, but we've still got a government organized for the 20th century," he said. And though he sees the issue of leaner government as bipartisan, he said he would move on the issues "with or without" the help of Congress.

Under the White House-proposed Consolidation Authority Act, which would provide the president with fast-track priority in Congress, Obama intends to save $3 billion over a decade by whittling down six major departments and agencies that handle business and trade. These include core business and trade components of the Commerce Department, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency. Obama called their disparate functions "redundant and inefficient" and proposed merging them into one department "with one website, one phone number and one mission." Some 1,000 to 2,000 full-time equivalent jobs would be eliminated through attrition, officials said.

The single department, to be led by a new secretary, would be built around four economic pillars, Jeffrey Zients, deputy director of the Office of Management and Budget, said during a conference call with reporters on Friday. They would include trade and investment; small business and economic development; technology and innovation (which would include the U.S. Patent and Trademark Office); and statistics (which would include the Census Bureau). Senate Minority Leader Mitch McConnell, R-Ky., was traveling to Myanmar, but his spokesman Don Stewart expressed skepticism -- pending study and further details from the administration -- about $3 billion in savings at a time when Obama also is asking for a new increase in the debt ceiling of $1.2 trillion.

"Americans want a government that's simpler, streamlined and secure," Stewart said, "so after presiding over one of the largest expansions of government in history, and a year after raising the issue in his last State of the Union, it's interesting to see the president finally acknowledge that Washington is out of control."

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, was more encouraged. "I stand ready to work with President Obama on proposals to reorganize federal agencies," he said. "While I have been disappointed that the White House has not embraced earlier bipartisan congressional efforts seeking collaborative engagement on proposals to reorganize government, I hope this announcement represents the beginning of a sincere and dedicated effort to enact meaningful reforms."

Sen. Tom Carper, D-Del., chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, praised the Obama team for "going big" in the long-anticipated plan. "As the federal government looks for ways to tighten its belt," he said in a statement, "we have to be careful not to make cuts just for the sake of cutting -- there's always a great temptation to be penny-wise and pound foolish in the pursuit of savings -- but I think this policy strikes the right balance of streamlining federal operations without fundamentally crippling agencies' ability to do their jobs effectively."

Sen. Mark Warner, D-Va., an activist on agency performance, called it "a promising start to what I hope will be a sustained effort to look for improved performance and greater efficiency among every agency and department across the federal government." As an example of additional redundancies in government that need addressing, he mentioned that the federal government "operates 82 teacher quality programs within 10 separate agencies -- and 56 separate programs spread across 20 agencies that deal with financial literacy."

The bid to reorganize goes back to a December 2010 study on boosting competitiveness produced by the liberal-leaning Center for American Progress.

On Friday, its chairman, John Podesta, commended Obama for "the thoughtful and far-reaching plan to reshape the federal government to more effectively focus on ensuring U.S. long-term economic competitiveness. Just like any successful business, the federal government itself needs to streamline and organize for global competition."

Podesta said the Obama plan "launches a long-term strategy that ensures American businesses find more investors and customers, that more jobs are created here -- and that workers enjoy a rising standard of living."

Also influencing the Obama administration as well as lawmakers of both parties was a March 2011 Government Accountability Office report documenting duplication of effort within departments and agencies.

Within days of the GAO report, Obama tasked Zients with establishing a Government Reform for Competitiveness and Innovation Initiative. Officials spent the next six months on a comprehensive review of agencies and programs involved in trade and global competitiveness, analyzing their scope and effectiveness, areas of overlap and duplication, unmet needs, and possible cost savings. They consulted with business groups and lawmakers as well.

The original goal of releasing the reorganization by last summer was left unmet as the administration battled with Congress over spending cuts and raising the debt ceiling. Also, Commerce switched secretaries, and John Bryson wasn't sworn in until October.

The first clues of its general direction were visible in a report released in June by the Council of the Inspectors General on Integrity and Efficiency. Zients praised that report as offering a way to help "eliminate duplication and fragmentation and better support the nation's competitiveness in a 21st-century global economy." The professional body of government IGs found "inefficiencies" and "poor coordination" in trade and export functions after reviewing its past examinations of the structure of the Agriculture, Commerce, Homeland Security and State departments, as well as SBA, the Environmental Protection Agency and the Ex-Im Bank.

In Friday's remarks, Obama singled out the proposed move of the National Oceanic and Atmospheric Administration from Commerce to the Interior Department, stating NOAA was situated in Commerce in 1970 only because President Nixon was having a feud with his Interior secretary over prosecution of the Vietnam War.

The new proposal does not sit well with some environmental groups. Frances Beinecke, president of the Natural Resources Defense Council, issued a statement saying, "This is not merely some technical, bureaucratic shift. The move could erode the capabilities and mute the voice of the government's primary agency for protecting our oceans and the ecosystems and economies that depend on them. We understand the president's interest in creating a more nimble, coherent entity for economic policy; but that can be done without sacrificing the scientific and environmental strengths of NOAA, and the independent perspectives it brings to critical issues."

The business community, many of whose members at the White House on Friday applauded the president, might take a wait-and-see approach. "If the streamlining and efficiency undertaken in this proposed combination of agencies will mean that manufacturers will have less intellectual property protection, for example, it would be a devastating mistake," Aric Newhouse, senior vice president for policy and government relations at the National Association of Manufacturers, wrote in a blog. "If, on the other hand, this leaning process will mean doing more with less, it would be a great step forward."

White House officials noted that "with the exception of President Ford, every president from Herbert Hoover to Ronald Reagan had reorganization authority. Presidents had this sort of authority for almost the entire period from 1932 through 1984," they said. "Unlike the authority granted in the past, the president's proposal would initiate new accountability by mandating that any plan must consolidate government -- reducing the number of agencies or saving taxpayer dollars."

Donald Kettl, dean of the School of Public Policy at the University of Maryland, said, "Congress always guards its prerogatives, and every time the president seeks authority on his own it raises questions not only about committee jurisdictions but about what the executive branch has been up to."

In the 1980s, Kettl said, Reagan's vision of smaller government was opposed by Congress more than by the business community. "But today, the central thing is whether government can be made more supportive and transparent to make it easier for business people to do business without tripping over boundaries of separate agencies."