Obama’s Trade Agency Consolidation Proposal: Hope and Caution

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Clearly, the impact of President Obama’s proposal to consolidate parts of six trade agencies is tiny in comparison to the government’s $3.5 trillion in spending or its trillion-dollar-plus deficits. But if—and that is a big if, depending upon not-yet-available details—it represents a genuine step toward smaller, less costly, and more effective government, it would be a welcome small change from the direction of the past three years.

The proposal would reportedly combine some of the functions of the Office of the U.S. Trade Representative, the Small Business Administration, the Export-Import Bank, the Overseas Private Investment Corporation, the Trade and Development Agency, and certain trade functions of the Commerce Department into a single government entity. The White House says the move would save $3 billion over 10 years—barely a rounding error in Washington. The White House also says it would trim 1,000 people—again, a blip in the 2.1-million-person federal workforce, but not negligible.

Nevertheless, Congress and the public should keep a sharp eye on the proposal, as government reorganizations have a way of starting out as plans to reduce costs and cut the size of the federal workforce and end up adding to both spending and head count.

Beyond that, it is difficult to know how much this particular consolidation might ease regulatory burdens in international trade. The President talked the talk in his statement:

“We’d have one department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need financing for a warehouse, to the day they’re ready to export and need help breaking into new markets overseas.”

On its face, this sounds positive—streamlining, reducing duplication and complexity, and improving service. As long as implementation of the President’s proposal does not become womb-to-tomb government regulation of trade or entrepreneurship, it may prove a useful step in facilitating competition by U.S. business in markets abroad.

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The President’s request that Congress restore statutory authority for plans to reorganize government agencies—an authority Presidents had for many years but expired in 1984—is good in concept. Such legislation should give to a President broad authority to propose changes, including abolishment of agencies, and should ensure that a presidential proposal receives a timely up-or-down vote in Congress. Above all, the process must provide that the President’s plan takes effect when the Congress approves it by joint resolution, rather than having the plan automatically take effect unless Congress disapproves it by joint resolution.

The latter automatic approach would cede too much authority to the executive branch, as whatever plan the President came up with to change government would take effect automatically as long as the President retained the support of the one-third of one house of Congress necessary to sustain a presidential veto of a joint resolution of disapproval. Significant changes in the organization and functioning of the federal government should have the support of a majority of both houses of Congress.

That President Obama wants to cut the size and cost and increase the efficiency of at least a small piece of the federal government is a cause for hope. Caution is warranted, however, in considering the President’s proposal, as the devil is always in the details.

Source material can be found at this site.

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