A sweeping reorganization of federal programs that would have created a new Department of Development Assistance has been rejected by senior White House officials.
Top White House aides Hamilton Jordan, Stuart E. Eizenstat, Frank B. Moore, Jack H. Watson Jr., Robert Lipshutz and Anne Wexler reportedly agreed yesterday that the bold plan had no chance on Capitol Hill.
"It won't work. It won't pass Congress.And there's no support for it," said one source.
The Office of Management and Budget had worked on the plan for nearly two years.
Instead, OMB Director James T. McIntyre was considering last night a scaled-down plan that would take programs from other agencies and add them to both the Commerce and Housing and Urban Development departments. It is designed to streamline the government's lending and grant-making authority to businesses and to state and local governments, an administration official said.
The plan has not yet gone to President Carter for a decision.
One urban lobbyist said the effect of the decisions would be "no real reorganization at all," but an administration aide said the new option "would be a significant change from present operations."
Carter came to office on a pledge to reorganize the federal bureaucracy and eliminate waste and duplication. To date, his efforts have resulted in the creation of a new Energy Department, a proposal for a new Education Department, the reorganization of the civil service system and several minor program changes.
Besides economic development, OMB's reorganization staff has studied proposals to expand the Interior Department into a new Department of Natural Resources.
Once the development and resources decisions are made, OMB will be finished with major reorganization efforts, a spokesman said yesterday.
Sources said the senior White House officials seemed "open" to the idea of a Natural Resources Department, but they stressed that no decision has been made on that subject.
The proposal for a new development department would have consolidated nearly all of the government's economic and community development programs into a vastly expanded HUD.
The less sweeping option would separate federal programs aimed at aiding government entities from those that aid private business.
A new HUD, which would be called the Department of Housing and Community Development, would manage various grants and some loans to state and local governments. These would include some programs, such as public works grants and planning and technical assistance, now in the Commerce Department's Economic Development Administration.
They also would include the community development functions now in the Agriculture Department's Farmers Home Administration.
A new Commerce Department, called the Department of Trade and Business Development, would retain those EDA loan and grant programs for business and industry and would acquire the Small Business Administration, the Export-Import Bank and the Overseas Private Investment Corp.
McIntyre has not decided what he will recommend on a proposal to create a National Development Bank that would provide loan guarantees and some grants to stimulate business activity in distressed rural and urban areas.
The senior White House officials were said to feel it should not be proposed as a separate entity. Instead, according to one option, its loan guarantee functions would be placed in an enhanced EDA, which is up for congressional reauthorization this year. The bank's grant functions would be assumed by the beefed up EDA and also by an enhanced Urban Development Action Grant program in HUD.
That option, one source stressed, is a White House proposal and not one from OMB. McIntyre prefers to put the bank in the Commerce Department and authorize it to provide loan guarantees up to $11 billion and grants up to $550 million to businesses locating in distressed areas, the source said.
As proposed last year the bank would have been a separate entity administered by the heads of HUD, Commerce and the Treasury. But the proposal, a conerstone of Carter's urban program, never got out of a congressional subcommittee.