Small business leaders clash over proposal to consolidate SBA with Labor, Commerce


Sen. Richard Burr of North Carolina (on the right) has introduced legislation that would consolidate the SBA with other federal departments. (J. Scott Applewhite/AP)

It seems a harmless enough word, “consolidation.” However, it has some small business leaders up in arms, as Republican lawmakers have quietly resurrected an effort to lump the Small Business Administration and two other agencies into a single federal department.

Sen. Richard Burr (R-N.C.) recently introduced a bill that would tuck the SBA inside a consolidated agency including the Labor and Commerce departments. Called the Department of Commerce and the Workforce, the newly proposed agency would oversee most business-related regulations and resources for the federal government, and according to a summary on the bill, would maintain the core functions of the SBA.

The proposal is similar to one pitched two years ago by the White House, and Burr says it would save “staggering amounts of money every year” by eliminating duplicative programs.

“Combining offices with similar functions within these two agencies is a common-sense approach that reduces wasteful spending and would streamline our approach to comprehensive economic policy,” Burr said in a statement, referring solely to the roles of the departments of Commerce and Labor.

Sen. James Inhofe (R-Okla.), one of the bill’s cosponsors, noted that those two agencies were once a single department, later arguing that reuniting them would “save the taxpayers money, tame our growing government and increase the efficiency of its essential services.”

However, some say the bill is merely the latest in a series of attempts to shutter the SBA. Lloyd Chapman, head of the American Small Business League, a lobbying organization, has warned that merging the department with others would “close the only tiny agency in government to assist the 28 million small businesses that are responsible for over 90 percent of net new jobs in America.”

In a recent e-mail to On Small Business, Chapman suggested that the consolidation would dismantle important small-business programs, and he has likened the current proposal to a plan set forth three decades ago by President Ronald Reagan to save money by closing down the department.

Others say the outcome would not be nearly as detrimental to small businesses. Karen Kerrigan, president of the Small Business and Entrepreneurship Council, another advocacy group, argued that consolidation would have either no effect at all or slightly positive one for those fighting for firms on Main Street.

“If the legislation actually leads to reduced spending and better policies to help entrepreneurs, than it will be a positive,” she wrote in an e-mail, later adding that “the core functions of the SBA can be performed within another agency.”

The bottom line, she said, “is that a commitment to small business does not rest with whether they have an agency with their name on it.”

Though pushing any legislation through a bitterly divided Congress may prove difficult in the coming year, Republicans already have some support on this issue from the opposite side of the aisle .

In 2012, President Obama asked lawmakers to grant him the authority to shrink the federal government. He pledged to use the power to merge several agencies with similar responsibilities, including the Commerce Department, the Small Business Administration, the Office of the United States Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency.

Obama’s vision, he said at the time, was to have “one department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need financing for a warehouse, to the day they’re ready to export and need help breaking into new markets overseas.”

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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