Office of Management and Budget Director David A. Stockman and Commerce Secretary Malcolm Baldrige are involved in a behind-the-scenes battle over an attempt to eliminate three Commerce offices that promote the export of American-made goods, particularly aircraft and nuclear power plants.
"These services are not like an Erector set that one can fool around with on the living room floor and quickly build up again," Baldrige told Stockman on Nov. 17 in an angry memo, a copy of which was obtained by The Washington Post. "After 30 years of international business experience, I understand what the consequences of such actions would be and there is no way I can go along with the recommendations."
In a Nov. 12 memo the OMB director said he wanted Baldrige to eliminate the Commerce Department's Office of Export Development, the Bureau of Industrial Economics and the Foreign Commercial Service. The three employ 1,190 people, including 600 in the Foreign Commercial Service who perform economic intelligence in U.S. embassies for American business.
"The Foreign Commercial Service is consistently a very useful source of information and assistance to the American business community," a Washington representative of a major U.S. corporation said. "If Brazil was making plans to build a subway in Rio de Janeiro, the Commercial Service would inform the American subway industry of such plans."
The memo to Stockman makes clear that the commerce secretary was angry from the outset.
"You sent your memorandum over on Thursday, giving us the weekend to reply to extremely far-reaching recommendations," Baldrige starts out, "and leaving us with the impression that they were perfunctory at best.
"When the president asked me to take this job," Baldrige goes on, "we agreed that the department had to be strengthened in the areas of trade and economic affairs. Our conversations then and since have not implied either the status quo or weakening in these areas."
Of the other branches Stockman wanted to eliminate, the Bureau of Industrial Economics analyzes export trends and the Office of Export Development helps to promote the export of American-built technological goods like aircraft and nuclear power plants. Along with farm products, foreign purchases of aircraft and nuclear power plants are two of the nation's biggest export money-makers, accounting for 42 percent of the loans granted by the U.S. Export-Import Bank.
Baldrige told Stockman he could not subscribe to the elimination of any of these three offices. Besides, Baldrige said, the Commerce Department had already absorbed what he said were the deepest budget cuts of any department in the federal government.
"We have already agreed to cuts that will take the Commerce Department 48 percent below the Carter 1982 budget," Baldrige said. "Our revised 1984 budget is 38 percent lower than the 1981 level even after rescissions and deferrals were applied. This is more than any other Cabinet department has done. With regard to the remainder of your recommendations, I protest in the strongest terms most of the cuts below our revised request. These recommended levels are unacceptable."
Besides anger, Baldrige expressed surprise at Stockman's new budget recommendations. His memo to Stockman concluded: "I am forced to believe that the recommendations to eliminate the Foreign Commercial Service, Export Development and the Bureau of Industrial Economics come as a result of some macroeconomic theories that neither the administration nor I can subscribe to.