NY Times

September 27, 8000

Advocates for small business — including those in Congress — had near uniformly mixed reactions to President Obama’s proposal Friday to temporarily elevate the Small Business Administration to a cabinet agency but then fold the S.B.A. into a super trade and commerce department. Uniformly mixed in that most people The Agenda contacted praised the decision to make the S.B.A. part of the cabinet but expressed caution about the consolidation proposal.

The president called for merging the S.B.A. with the Commerce Department and four trade-related agencies into, as the president put it in a speech on Friday, “one department, with one Web site, one phone number, one mission: helping American businesses succeed.” In a conference call with reporters, Jeff Zients, deputy director for management at the Office of Management and Budget, said the prospective new department would comprise four broad “pillars.” Small business and economic development would be one of those pillars, and the S.B.A would be combined with economic development programs at other agencies into one of those mission areas. (The other pillars would be trade, technology and innovation, and statistics.)

As for concerns that the new agency might dilute the S.B.A.’s authority to speak for small business inside the government, Mr. Zients seemed to suggest that all American businesses might have to ally in a global economy. “This integrated department will be about serving America’s businesses — small, medium and large — as they compete in the global marketplace,” he said.

Once the agencies are merged, Mr. Zients added, the S.B.A. would lose its seat at the president’s table. “Once we have consolidation authority, once this specific proposal passes,” he said, “we will have one integrated department that is led by a secretary who will be on top of all of the important assets and services that serve businesses.” The United States trade representative, whose office would be merged into the new department, would retain a separate cabinet position.

Leaders of the small-business committees in Congress said in separate statements that while they supported streamlining government, they would review the president’s plans carefully. “The details will be critical,” said Senator Olympia Snowe of Maine, the top Republican on the Senate Small Business Committee. “Of particular concern will be ensuring that entrepreneurs do not face new hurdles in obtaining assistance in starting, operating or expanding their small businesses — whether accessing capital, pursuing exporting opportunities, or contracting with the federal government.”

Outside Congress, most small-business advocates treaded with similar care. “On the one hand, reorganizing federal agencies to create a ‘one-stop-shop’ for America’s small businesses could streamline processes and make accessing information and assistance much easier,” Todd McCracken, chief executive of the National Small Business Association, said in a statement. “On the other hand, such a reorganization could minimize the emphasis placed on small business by the federal government and lead to an even greater imbalance toward promoting the interests of large businesses over those of small business.”

John Arensmeyer, chief executive of the Small Business Majority, a group initially formed to back the administration’s health care reform, said: “Right now small business has an independent agency that reflects its needs. The obvious concern is that by bringing this into larger agency there’s a risk that some of that voice gets lost. We know that government is held in very low esteem by small business, but the S.B.A. is an exception to that right now.”

There were some stronger views. For example, the American Small Business League, which protests the diversion of federal contracts for small business to large corporations, sided firmly with the other hand. “This is not a move to save money,” said the league’s president, Lloyd Chapman, in a statement. “This is a move to eliminate federal small-business contracting programs.”

But the head of one trade association for S.B.A.-backed lenders was optimistic. “The lending policies and centralized loan operations of S.B.A. are among the more sophisticated in the federal government,” said Chris Crawford, president of the National Association of Development Companies, which represents lenders in the S.B.A.’s 504 loan program. In a reorganization, “they become the model for the collapse of the far-flung bureaucracies into one unit called small-business lending — worldwide. If anything, even in a larger reconstituted Commerce Department, access to credit for small businesses becomes a primary mission goal with much higher visibility.”

But opposition from the small-business constituency and its Congressional representatives, should it materialize, is only one obstacle for the administration to overcome — many interests, and Congressional fiefdoms, are at stake. Just a few hours after the president spoke, Sen. Max Baucus, the Democratic chair of the Finance Committee, and Dave Camp, the Republican chair of the House Ways and Means Committee, jointly rejected any effort to relocate the Office of the U.S. Trade Representative, an agency under their purview: “Making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation.”

And if the consolidation were to fail, those small-business advocates just might get the best of both worlds: an independent S.B.A. but with cabinet-level status.