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President Barack Obama listens to Senator Judd Gregg (R-N.H.) after introducing him as Commerce Secretary nominee on Feb. 3 in the White House. Saul Loeb/AFP/Getty Images
Among all of President Barack Obama's picks for cabinet posts, Republican Senator Judd Gregg as Commerce Secretary certainly is one of the more baffling.
A fiscal conservative, Gregg had once called for eliminating the Commerce Dept. and voted against measures to sharply boost federal funding for science and technology, a cause popular with Democrats. What's more, it's not immediately clear what Obama gets in return for appointing the third Republican to his cabinet, joining Transportation Secretary Ray LaHood and Defense Secretary Robert Gates. When news first broke that Obama was nominating Gregg, many pundits assumed it was just a Machiavellian ploy to rid the Senate of another Republican. But New Hampshire Governor John Lynch, a Democrat, has vowed to appoint a Republican to fill Gregg's Senate seat, one of Gregg's conditions for taking the Commerce job.
Appointing Gregg could bring some tactical benefits, however, as Obama seeks to convince the business community and moderates that his administration will be about more than big government and massive spending. A look at Gregg's 16-year voting record in the Senate, during which he rose to chairman of the Budget Committee, shows that he is strong on bread-and-butter issues dear to corporations.
Gregg voted for every major free-trade agreement, for example. He also has consistently supported measures to reduce business taxes while opposing legislation that would add to business costs or hurt profits: He voted against bills that would require companies to slash carbon emissions, hike taxes on oil and gas producers, or allow the federal government to negotiate lower drug prices with pharmaceutical manufacturers on behalf of Medicare beneficiaries. And while Gregg voted against the 2007 America Competes Act, which had gained wide bipartisan support, it was on the grounds that the dramatic increases in federal spending on science and technology research were excessive.
Several business lobbying groups swiftly gave Gregg ringing endorsements. The National Association of Manufacturers noted that Gregg had voted in line with NAM's position on every issue during the 110th Congress. As NAM sees it, among the top hurdles preventing a revival of U.S. manufacturing are some of the highest business taxes and regulatory costs in the world.
"These have to be addressed, because they are big forces preventing manufacturers from investing in the U.S.," says Frank Varga, NAM's vice-president for international economic affairs. The Information Technology Industry Council, or ITIC, also was enthusiastic, noting that Gregg supports a permanent tax credit for research and development. Gregg voted in line with the tech council 82% of the time during his career.
Those who believe the federal government should play a much bigger financial role in promoting new technology companies or small business are likely to be disappointed in the pick. Obama's original choice to run Commerce, New Mexico Governor Bill Richardson, a former energy secretary, would likely have brought a more interventionist view of government to Washington.
Since Richardson's election in 2002, New Mexico has invested billions of taxpayer funds in everything from Hollywood films and solar power startups to a light aircraft maker and a "space port" for commercial space travel. Some of these moves backfired, but on balance the strategy created lots of jobs and put New Mexico's economy on a firmer footing. Richardson withdrew from consideration because of a federal investigation of political contributions to his administration in New Mexico. He has denied any wrongdoing.
In contrast, Gregg is a "small government conservative," says Ralph Hellmann, a Republican who is the ITIC's chief Washington lobbyist. "He is very dubious of federal programs that supplant state and local efforts."
The value of putting Gregg in the cabinet, Hellmann contends, is that he will help build trust between the Obama Administration and business. "They know if they are to get the economy out of the ditch, they will need different voices at the cabinet table," Hellmann says. "He will not be shy about letting Obama or [Chief of Staff] Rahm Emmanuel know his views."
But will Gregg stand in the way if Obama wants Commerce to greatly expand its programs to help U.S. industry? Hellmann doesn't think so. He notes that Gregg helped negotiate the Senate version of the controversial October bailout for the banking system, played a lead role along with Democratic Senator Edward Kennedy on the No Child Left Behind Act, and voted for investment tax credits for renewable energy technologies. "He is loyal, and he knows he needs to reflect the President's views," he says.
As for whether Gregg's appointment also was a brilliant political maneuver by the Administration, that will depend on how popular the Democrats remain two years from now. New Hampshire Governor Lynch could appoint a Republican to his vacant Senate seat who promises not to run in 2010, when Gregg's current term expires. And with Gregg out of the picture, the Democrats have a much better chance of grabbing his seat.
Engardio is an international senior writer for BusinessWeek .