Homeland Security's Winners and Losers


By Richard S. Dunham It's the biggest reshuffling of the federal bureaucracy since 1947, when the Defense Dept. was created from the old War and the Navy Depts. and the Central Intelligence Agency and National Security Council were born. The massive new Cabinet office -- dubbed the Homeland Security Dept. -- will have about 170,000 employees and a budget of $37.5 billion.

If, as President Bush insisted on June 7, no significant change in staffing occurs, it means that a number of federal agencies and department heads will be losing a lot of clout to the powerful new kid in the Cabinet. Here's a quick rundown of some of the big winners and losers in the homeland security shakeup:

WINNERS

The FBI and CIA. They may hate each other, but they hate the thought of losing their current status even more. The feuding fiefdoms somehow managed to avoid reporting to the new Cabinet Secretary. Instead, they'll be asked to pass along terrorism reports to the intelligence analysts at the new department. But what if the old spooks and gumshoes don't fully cooperate? A senior Administration official says the Homeland Security Secretary would have to appeal to a "higher authority." Is that the President or the ghost of J. Edgar Hoover?

Tom Ridge. The former Pennsylvania governor, now President Bush's homeland security adviser, is the odds-on favorite to be the first Homeland Security Secretary. That's a big promotion. For eight months, he has had little real power and no budget authority. With Cabinet status come both power and accountability. That's good. If Ridge founders in the future, he'll have no more excuses.

White House Chief of Staff Andy Card. The top staffer in the West Wing pulled off a modern-day miracle: shuffling 170,000 federal staffers around without word leaking out. That's an amazing accomplishment. Card ruffled some high-level feathers by keeping Cabinet officials and top White House staffers in the dark until the last possible moment. But secrecy was essential. An ill-timed leak by a disgruntled Administration official could have been devastating to the reorganization plans. Credit (or blame) also goes to Office of Management & Budget Director Mitch Daniels for running the numbers sub rosa.

Business. Corporate America will be a big-time beneficiary of a centralized Homeland Security Dept. It means streamlined communications for emergency planning and disaster response. It means one-stop shopping for federal assistance following natural disasters or terrorist attacks. The business community has built a close working relationship with Ridge. That should pay off in the new Cabinet order.

Senator Joe Lieberman. The Connecticut Democrat, a possible 2004 Presidential candidate, has been the leading congressional proponent of a Cabinet-level security agency. For his efforts, he has been called a meddler by some Republican partisans. Lieberman's vindication: President Bush invited him to the White House on June 7 for a strategy session on how to win quick Hill backing for the new department. Among the other bipartisan champions: Democratic Representative Jane Harman (D-Calif.), Republican Senator Arlen Specter (R-Pa.), and GOP Representative Mac Thornberry (R-Tex.).

Info-Tech Advocates. A top priority of the department will be to modernize government computers so that agencies will be able to communicate efficiently and securely with each other. As Budget Director Daniels has discovered, many federal departments can't communicate with each other electronically because their computer systems are incompatible.

"You can't even send e-mail within the State Dept.," Senate Foreign Relations Committee Chairman Joseph Biden (D-Del.) said June 6 at The McGraw-Hill Companies' Homeland Security Summit in Washington. (BusinessWeek Online is owned by The McGraw-Hill Companies.) "To get classified information over the Net [from] one State Dept. facility to another isn't possible, practically speaking." And there has been little support on Capitol Hill to pay for computer upgrades. "The liberals said no," notes Biden, "and the conservatives said we need to save the money for tax cuts."

In the interest of national security, the new Cabinet Secretary will upgrade federal info-tech standards in a hurry. After all, what's the good of putting all of the government's security-related agencies under a single roof if they can't talk to each other?

LOSERS

Transportation Secretary Norm Mineta. The only Democrat in the Bush Cabinet will lose about 20% of his budget and two of his most important responsibilities when the new Transportation Security Agency and the Coast Guard are transferred to the new department. A good soldier, as always, Mineta says he's 100% behind the reorganization. But it'll make one of the Administration's most visible officials into one of its more obscure ones. Mineta joked about it the day after the President's prime-time speech. "So, anything in the news?" he asked a Washington audience.

Attorney General John Ashcroft. The nation's top cop gets to keep the FBI in his orbit, but he's set to lose the Immigration & Naturalization Service, the Office of Domestic Preparedness, and the National Infrastracture Protection Center. Only the Transportation Dept. loses more staff and budget authority.

Hill Barons. Eighty-eight congressional committees and subcommittees now have jurisdiction over homeland security issues. That number is sure to dwindle if the President's proposal becomes law. Watch for longtime lawmakers to battle each other to maintain the power of the purse -- and those high-publicity oversight hearings.

Treasury Dept. President Bush argues that the department responsible for Administration fiscal policy doesn't need to oversee security matters, too. That may be so. But the Secret Service and the Customs Service, two agencies slated to be transferred to the new department, perform many functions that fall outside the security portfolio. Among them: collecting duties on imports and investigating currency counterfeiters. Those job descriptions don't quite match the new Homeland Security mission.

FEMA. The Federal Emergency Management Agency will lose its independence and its autonomy under the Bush plan. FEMA is considered a model of efficiency --and one of the least political of government institutions. Americans can only hope that the new unit of the Homeland Security Dept. maintains the high standards of the old agency. Dunham is a White House correspondent for BusinessWeek's Washington bureau. Follow his views every Monday in Washington Watch, only on BusinessWeek Online


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