The Office of Management and Budget -- over strong objections of some senior White House aides -- will recommend to President Carter a major reorganization of federal programs for economic and community development.
In a memo that Carter is scheduled to receive today, OMB Director James T. McIntyre is urging the president to ask Congress to create a new Department of Development Assistance that would tie together most of the government's programs for economic development, community facilities and housing.
The new department would add agencies and functions to a vastly expanded Department of Housing and Urban Development.
It would include the Economic Development Administration from the Commerce Department, the Agriculture Department's community and economic development programs now in the Farmers Home Administration, similar programs now in the Community Services Administration, loan programs for local development corporations from the Small Business Administration and all functions of the proposed National Development Bank.
Top White House political aides reportedly met late yesterday to draft a memo, which the president also is scheduled to receive today, outlining their view that the OMB proposal has little chance of winning congressional approval.
The two sides may meet with Carter today to resolve the issue, one administration official said.
The Public Works and Agriculture committees of the House and Senate are known to object strenuously to the measure, which would take away large chunks of their jurisdiction.
"We'll fight it to the teeth," said a House Public Works and Transportation Committee source. "Will reorganization make the Economic Development Administration work better? I don't think so."
EDA administers grants for public works such as water and sewer lines and loans for private developments like industrial parks. It is a major part of the Commerce Department, and some sources say that without it, the department would be gutted.
However, the proposed new Cabinet agency has support in some quarters of Congress.
Rep. Jack Brooks (D-Tex.), chairman of the House Government Operations Committee, said yesterday, "The concept seems to have some merit. It would consolidate the distribution of federal funds for development and make it easier for small cities to know what's available and for large cities to cut down their hauling costs."
Brooks was referring to the heavy expenses cities often incur in applying for federal grants. Boston, according to an OMB memo, spends $1 million a year to maintain a full-time federal programs staff.
The influential Texas congressman stressed that he had not seen final details of the DDA proposal and could not comment on the specific recommendations.
After several White House political advisers warned McIntyre of congressional opposition last week, the OMB director began considering a scaleddown plan that would have separated federal programs aimed at government entities from those that aid private business. Under that plan, the former would have gone to a new HUD and the later to an expanded Commerce Department.
However, the plan also encountered opposition from interest groups and members of Congress.
Explaining why McIntyre decided to go ahead with the DDA recommendation, one source said, "The conventional wisdom this time last year was that we'd never get civil service reform passed, and we did. We don't believe that just because something is controversial, it can't move. The only way to streamline all these fragmented programs is to have a full reorganization."
OMB's memo said economic development aid is now splintered among 12 programs in five agencies; community facilities aid is scattered among four agencies and funds to plan development are in nine programs in three agencies and eight regional commissions.
McIntrye's proposal to Carter is said to include other reorganization options -- including one for doing nothing -- but contains arguments against all of them.