Obama Makes SBA Chief a Cabinet Member

Posted by: John Tozzi on January 13, 2012

The government’s top official charged with advocating for small business is now a member of the White House cabinet, President Obama announced today.

Along with the move, Obama asked Congress for authority to shuffle the executive branch’s org chart, consolidating six agencies (including the Small Business Administration) that deal with trade and commerce.

SBA Administrator Karen Mills will join the cabinet, meeting with the president alongside the secretaries of Treasury, Labor, Defense, and other executive departments. The move requires no approval from Congress, according to SBA spokeswoman Hayley Meadvin.

Obama also asked Congress to give him the power to merge the following agencies:

  • The core business and trade functions of the Commerce Department
  • U.S. Trade Representative
  • Export-Import Bank
  • Overseas Private Investment Corp
  • Trade and Development Agency
  • Small Business Administration

The new agency would encompass four areas: trade and investment; small business and economic development; technology and innovation (including the Patent and Trademark Office); and statistics (bringing together the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics).

“By doing this we will serve businesses, especially small businesses, much better,” said Jeff Zients, deputy director at the Office of Management and Budget who also holds the title of federal chief performance officer. “This consolidated department will have one website, one telephone number, and one mission … to make it much easier for small businesses and help American businesses succeed,” he told reporters on a conference call today.

The move is more symbolic than substantial, says Bob Litan, who worked in the Office of Management and Budget during the Clinton Administration and is now vice-president for Research and Policy at the Kauffman Foundation. “Government mergers are no better than corporate mergers,” he says. Promises that consolidation will make the organization more efficient rarely materialize in the private sector and probably won’t in this case either, Litan says. He says Congress is unlikely to give Obama the authority to make the changes anyway. “The major reason [for the announcement] is for them to have the symbolic effort to show that they’re trying to save taxpayer money and streamline the government.”

It’s not clear what the new department would be called, or who would lead it. The Secretary of Commerce, John Bryson, is already a cabinet member, as is the U.S. Trade Representative, Ron Kirk.

The move to streamline bureaucracy follows a report last year from the non-partisan Government Accountability Office that detailing how different arms of the government duplicate efforts. For example, there are 80 programs across four agencies that deal with economic development.

The consolidation will save $3 billion over 10 years and eliminate 1,000 to 2,000 jobs through attrition, Zients said.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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