Obama's Six Agency Merger - Smoke and Mirrors

The President has decided, after spending trillions of dollars, that it was time for an “effective, lean government.” Like most of the promises he made, the intention is suspect. He wants Congress to give him greater power to merge six major economic agencies into one.

The six departments in question are the Commerce Department, the Export-Import Bank, the Office of U.S. Trade Representative, the Overseas Private Investment Corporation, the Small Business Administration, and the U.S. Trade and Development Agency.

To support his move, Obama uses a bizarre example to exemplify government inefficiency. “The Interior Department is in charge of salmon while they’re in fresh water, but the Commerce Department handles them when they’re in saltwater. And I hear it gets even more complicated once they’re smoked.”

For starters, the Interior Department is not in question. The administration says that 1,000 to 1,200 jobs would be cut through attrition and the merger would save $3 billion dollars over ten years.

Considering the out-of-control spending this administration has engaged in the last three years, $300 million a year is a drop in the bucket. It is more about “smoke and mirrors,” a political attempt to help the Obama re-election by portraying him as an advocate for a lean and effective government.

Combining organizations is not about simplifying government but the political appearance of reducing the size of government. The move is tied to Obama’s National Export Initiative (NEI) and the Executive Order of March 2010. The Senate did not fund the NEI in the 2012 Commerce Appropriation. He thinks Congress will fund his NEI if it appears that he is streamlining his outlandish spending.

The National Export Initiative (NEI) is a plan that he unveiled in the 2010 State of the Union address. Obama promised to “double U.S. exports over the next five years and support 2 million American jobs” by creating an export promotion cabinet (to oversee government programs and special financing for farmers seeking overseas market opportunities) and tougher enforcement of international trade laws.

Congress is also resisting reauthorization of the Export-Import Bank. It is my opinion that a bank should remain independent of a six-organization merger. Should a bank be tied to such a powerful combined organization?

Brendan Buck, spokesperson for House Speaker John Boehner, said, “American small businesses are more concerned about this administration’s policies than from which building in Washington they originate.”

The Commerce Department controls domestic and foreign business, trade, economic development, technology, entrepreneurship (job creation), and business development. The Commerce Secretary, with a budget of $7.6 billion and 47,000 employees, also covers divisions such as Census Bureau and the National Institute of Standards and Technology.

The Export-Import Bank, the official U.S. export credit agency founded in 1934, finances the export of U.S. goods and services. The official export credit agency of the United States, the Export-Import Bank has a budget of $89.9 million and 391 employees. Export-Import Bank does not compete with private sector lenders and guarantees loans from U.S. banks to foreign businesses that buy U.S. made products.

The U.S. House of Representatives delayed a long-term reauthorization of the Export-Import Bank and the decision to raise the lending cap to $135 billion from the current $100 billion limit.

“Airlines of America (AFA), the trade union that represents leading U.S. carriers, insist that Congress make fundamental changes to how the bank operates as part of any increase in the lending cap. The group argues that the bank finances loans to foreign carriers at favorable terms unavailable to domestic carriers, putting U.S. airlines at a competitive disadvantage.” Foreign airlines with investor grade credit rating should secure financing from other banks, not the Export-Import Bank. (USA Today)

General Electric’s CEO Jeffrey Immelt and Boeing’s James McNerney wrote to House leaders that failure to increase the lending cap could lead to the loss of thousands of U.S. jobs.  Boeing is arguing that the Export-Import Bank terms help Airbus.

Obama’s administration supports the higher cap. The President cited the Export-Import bank for funding a multibillion-dollar deal for Indonesia Lion Air to buy 230 Boeing jets. A $636 million direct loan from the Export-Import Bank to finance the sale by Siemens Energy of gas and steam turbines to be installed in Saudi Arabia was hailed as a success of “in-sourcing” 825 jobs in North Carolina. I could be mistaken but Siemens is a corporation with high credit rating that can borrow money from the private sector, not from a taxpayer-sponsored bank.

“Reauthorizing the bank and expanding its lending cap is an administration priority, and we will continue to work closely with Congress to get this done,” said Amy Brundage, White House spokeswoman. (USA Today)

Office of U.S. Trade Representative advises Obama on trade issues, develops and coordinates international trade policy and oversees negotiations. Ron Kirk, the U.S. Trade Representative, is Obama’s Cabinet member since 2009. His office has a budget of $51.3 million and a staff of 227 employees.

Interestingly, Ron Kirk, the U.S. Trade Representative is also the Vice Chairman of the Board of Directors of the Overseas Private Investment Corporation (OPIC), a non-voting member of the Export-Import Bank Board of Directors, a member of the National Advisory Council on International Monetary and Financial Policies, and is on the Board of Directors of the Millennium Challenge Corporation. Millennium Challenge Corporation (MCC) is “an innovative and independent U.S. foreign aid agency that is helping lead the fight against global poverty.” Isn’t “global poverty” one of the favorite pet projects of liberals and UN Agenda 21?

It appears that Ron Kirk is a very influential man in three of the six government agencies that Obama wants to collapse into one.

Overseas Private Investment Corporation (OPIC) is presented in the mainstream media as helping U.S. businesses to establish a presence overseas. In actuality, they lead the way to Sustainability and help the implementation of UN Agenda 21. The OPIC Annual Report of 2010 states that “OPIC support projects that:

-          Are environmentally and socially sustainable

-          Are compatible with low- and no-carbon economic development

-          Respect human rights, including the rights of workers and affected communities

-          Avoid or provide mitigation and compensation for any negative impacts

-          Provide timely project information to affected people

-          Are undertaken in countries that are taking steps to adopt and implement laws that extend internationally recognized worker rights”

It appears that OPIC is more concerned with implementation of UN Agenda 21, low- and no-carbon economic development, thus eliminating fossil fuels, and international worker rights.

According to the Overseas Private Investment Corporation (OPIC) environmental and social policy, “OPIC and its partners and stakeholders work together to further the common aim of bringing sustainable prosperity to developing countries around the world,” at the expense of U.S. economy and its citizens. It appears that this corporation, created in 1971, with a budget of $54.9 million and 215 employees is busy leading the way to UN Agenda 21 sustainability and elimination of fossil-fuel based economy.

The U.S.Trade and Development Agency (USTDA) gives grants to open emerging markets for increased exports of U.S. manufactured goods and services. Since our net exports, exports minus imports, is usually a negative number and thus a drag on Gross Domestic Product (GDP), the Trade and Development Agency’s work with its $50 million budget and 50 employees has little positive impact on U.S. net exports. We have imported more than we have exported for years and the trend is not likely to change.

The agency claims that they have identified $3.6 billion of U.S exports directly attributable to USTDA-funded activities. The agency also boasts that for every dollar spent by the agency, USTDA’s export measure grew to over $58. It is not clear how they arrived statistically at such a claim. The agency’s projects focus on clean energy, transportation, telecommunications, and environmental services. This leaves out agriculture and other manufacturing sectors.

The Small Business Administration oversees the U.S. small businesses that “create 90 percent of new jobs and receive 23 percent of all federal contracts congressionally mandated by the Small Business Act.”  Karen Mills, the SBA administrator, would be elevated to Cabinet-level rank, an insignificant and deceptive move. Instead, the SBA’s budget should be increased substantially and federal program significantly for America’s main job creator.

As the evidence clearly suggests, President Obama’s attempt to merge six federal agencies into one is just a smoke screen for other agendas – it is not about streamlining government, saving $300 million a year for ten years, or just a transparent attempt at getting re-elected. More complicated relationships, interests, and outcomes are at stake.