Obama proposes reorganizing trade agencies, giving SBA Cabinet status

This story has been updated.

President Obama on Friday announced he is seeking authority from Congress to reorganize federal trade and business-related functions in the Commerce Department and other organizations, as well as elevate the Small Business Administration to Cabinet status.

Speaking to a group of small business owners at the White House, Obama said, "today, I'm outlining changes we could make if Congress gives the green light to allow us to modernize and streamline. These changes would help small business owners like all of you."

Obama said six agencies focus on business and trade. "In this case, six isn't better than one," he said. "With the authority I am requesting today, we could consolidate them all into one department with one website, one phone number and one mission -- helping American businesses succeed."

The White House said the plan, the result of nearly a year of consultation with agencies and private sector leaders, would save up to $3 billion over 10 years. Between 1,000 and 2,000 jobs could be eliminated in the merger, but the reductions would take place through attrition.

Obama said that Congress in 1984 had removed the executive branch's authority for reorganization -- "a generation ago," in a time when there was no Internet, he noted. He expressed hope that this Congress would see this effort to bring government into the 21st century as a bipartisan effort.

Rep. Sam Graves, R-Mo., chairman of the House Small Business Committee, said, "I welcome any effort by the president to exercise fiscal responsibility, especially after an unprecedented expansion of government over the last few years. Decreasing the size of government and reducing bureaucracy is something that I support in principle, however, it is important that any effort to make significant changes to federal commerce and trade programs must be done carefully, and in a way that protects America's small businesses."

Obama had announced in his 2011 State of the Union address that he would seek to reorganize federal functions, and the White House later said the process would begin with trade and commerce organizations.

The reorganization effort has been led by Jeffrey Zients, the administration's chief performance officer and deputy director of management at the Office of Management and Budget. He is in charge of the Accountable Government Initiative, which includes a host of federal management and transparency reforms.

In early June 2011, Zients said proposals for reorganizing trade-related functions would be presented to President Obama by the end of the month. Since then, however, the White House has made no formal announcement of its plans.

Reorganization efforts have a very checkered history in government, often because it is difficult to interest members of Congress in how federal organizations are structured. It's been decades since a president and Congress have agreed on a formal reorganization effort.

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