The proposal comes at a politically opportune moment for the president, who has faced sustained Republican criticism that his administration has failed to tame a bloated federal bureaucracy.
With an eye squarely on his reelection campaign, Obama announced that he would initially focus on merging sprawling entities that deal with small businesses in a bid to save $3 billion by eliminating more than 1,000 jobs over the next decade.
Almost a year ago, Obama promised in his State of the Union address to create a leaner, more efficient federal bureaucracy. Since then, Republicans — both on Capitol Hill and in the presidential campaign — have charged that the administration’s health-care, environmental and financial reforms have added layers of red tape and costs at the worse possible time.
For a president who has spent months pushing his $447 billion jobs bills, the proposal sought to establish that he is also committed to reducing spending over the long term. His announcement came a day after he notified Congress of his intent to raise the national debt ceiling by $1.2 trillion to cover increased U.S. spending commitments.
Obama noted before an audience of small-business owners at the White House that the federal bureaucracy includes five different entities involved in housing and more than a dozen that regulate food safety.
“No business or nonprofit leader would allow this kind of duplication or unnecessary complexity in their operations,” Obama said. “So why is it okay in our government? It’s not. It has to change.”
Obama is scheduled to deliver this year’s State of the Union address on Jan. 24, and Republican critics, while embracing the spirit of paring the government’s size, questioned whether Obama was scrambling to make good on his pledge with his reelection effort looming.
“A year after raising the issue
. . .
it’s interesting to see the president finally acknowledge that Washington is out of control,” said Don Stewart, spokesman for Senate Minority Leader Mitch McConnell (R-Ky.).
Other lawmakers expressed concern that the reorganization could harm U.S. trade policy, noting that the Office of the U.S. Trade Representative, which is among the agencies the president would consolidate, was established to serve a distinct role.
In a joint statement, Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) questioned whether the legislation would hamper the government’s ability “to aggressively open new markets to American-made goods and services and create U.S. jobs.”
Yet the White House was banking on muted opposition from GOP lawmakers, because the consolidation proposal goes right to the Republicans’ core ideological belief that the government is too large.
Under the plan, Obama is seeking broad consolidation authority, which had been granted to the White House by Congress during the Great Depression but was taken away from President Ronald Reagan after a sunset provision in the law kicked in, in 1984.
Once Congress grants him authority, officials said, Obama would establish a new department charged with overseeing trade and investment, business and economic development, technology and innovation, and economic statistics.
The new department would combine the trade and commerce functions of the Commerce Department, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corp. and the Trade and Development Agency.
The Census Bureau, the Bureau of Economic Analysis and the Bureau of Labor Statistics would also be included to focus on government statistical data. But the National Oceanic and Atmospheric Administration — now the largest part of Commerce’s budget — would be moved to the Interior Department.
The new department would be led by a Cabinet secretary; the U.S. trade representative would remain a member of the Cabinet, officials said.
Congress would be able to vote on each specific proposed merger. Jeffrey D. Zients, the Obama administration’s chief performance officer, stressed that any proposal would have to reduce the size of government and save money.
“The government we have is not the government that we need,” Obama said. “We live in a 21st-century economy, but we’ve still got a government organized for the 20th century. ”
In a signal that the proposal may hold some attraction for Republicans, Rep. Darrell Issa, who is chairman of the House Oversight and Government Reform Committee and one of Obama’s biggest GOP critics, said Friday that he stands “ready to work with President Obama” on the reorganization.
“I hope this announcement represents the beginning of a sincere and dedicated effort to enact meaningful reforms,” said Issa (Calif.).
While symbolically important — especially because similar reform efforts by previous administrations have often failed — the specific consolidations being proposed would barely dent the number of workers and the amount of spending in the country’s 2.1 million-employee federal bureaucracy.
Still, despite GOP criticisms of the government’s size, White House budget data show that the number of federal employees last year was fewer than in 1985, under Reagan, despite a U.S. population that is about 30 percent larger now.
In his 2011 State of the Union address, Obama vowed to tackle federal inefficiency, famously joking: “The Interior Department is in charge of salmon while they’re in fresh water, but the Commerce Department handles them when they’re in salt water. And I hear it gets even more complicated once they’re smoked.”
Aides said the quip came from White House Chief of Staff William M. Daley, who served as commerce secretary during the Clinton administration and had urged Obama to tackle concerns with the sprawling federal bureaucracy.
Despite the prominent discussion of the issue and Obama’s vow to release specific plans within six months, administration officials spent most of last year playing down the goal of a major reorganization.
They said they were sidetracked by the need to draft contingency planning for a possible government shutdown and the acrimonious debate in the summer over raising the federal debt ceiling. At the same time, Obama commissioned a study of which entities should be targeted and received the results in June.
Though White House officials estimated that 1,000 to 2,000 jobs could be eliminated in the first wave of reorganizations, they said most of the cuts would come through natural attrition as employees retire or seek outside employment.
Elaine Powell-Belnavis, president of the Council of Small Business Administration locals, said she could not rubber-stamp the president’s plan without knowing what the “slimmer” workforce the White House promises will mean for her union members.
“Nothing goes away tomorrow,” Small Business Administration director Karen G. Mills told her employees in a Friday conference call.
Staff writers Lisa Rein and Paul Kane contributed to this report.