President Obama proposed Friday to consolidate six major federal departments and agencies that oversee various aspects of business in the U.S., including the Commerce Department and the Small Business Administration.

The other departments that would be consolidated include the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency. Obama also elevated SBA administrator Karen Mills to a seat on the Cabinet.

The move would be the most significant reorganization in the federal government since the formation of the Department of Homeland Security in the Bush administration. Obama is asking Congress to give him the authority to merge the six entities into a single department tasked with boosting American business and promoting competitiveness.

The administration noted that Presidents have had reorganization authority from 1932 through 1984.
The initial focus of the proposed legislation, dubbed the Consolidation Authority Act, would be to help small businesses compete, export and grow. 

“Small businesses often face a maze of agencies when looking for even the most basic answers to the most basic questions,” said a fact sheet on the White House website. “There is a whole host of websites, toll-free numbers and customer service centers that at times offer them differing advice. The result is a system that is not working for our small businesses. The President is proposing to consolidate those six departments and agencies into one department with one website, one phone number and one mission—helping American businesses succeed. There will be one department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need a warehouse, to the day they are ready to export and need help breaking into new markets overseas. The new department will lead the development and implementation of an integrated, strategic, government-wide trade effort and have a focused capacity to help businesses grow and thrive.”

However, at least one small business advocacy group, the American Small Business League, said the consolidation would have a negative impact on small businesses. The group said it is vehemently opposed to the move because it would “negatively impact millions of small businesses and reduce the power of the only federal agency that helps small businesses.” It noted that ASBL president and founder Lloyd Chapman has been predicting for years that the federal government would try to consolidate the SBA within other departments, and has campaigned against the move.

"Of course I predicted he would do this years ago," said Chapman. "Combining the SBA with the Department of Commerce is a typical Washington move to close an agency. They're not trying to save money; they're trying to close the agency because large corporations want 100 percent of federal contracting dollars. If they can essentially close the SBA by combining it with the Commerce Department, zeroing out the budget and slowly eliminating the staff, they can essentially wind down small business programs, including the requirement that 23 percent of all federal contracts be awarded to small businesses. That money will be diverted to large corporations."

Another lobbying group, the Financial Services Roundtable, however, praised the elevation of the SBA administrator to a Cabinet-level post.

“The Financial Services Roundtable is supportive of the elevation of the SBA Administrator to Cabinet-level status by the President," said Financial Services Roundtable president and CEO Steve Bartlett in a statement. "This move recognizes the importance of small businesses across the country, and their contribution to growing the American economy. We look forward to working with the SBA and their agency partners to continue providing benefits, education, and lending opportunities to small business.”

Congress may not agree to the reorganization. The Democratic and Republican chairmen of the congressional committees overseeing trade policy and taxes, Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Dave Camp, R-Mich., issued a joint statement raising some objections to consolidation of the Trade Representative's office.

“Everyone agrees we must do more to ensure that our government runs efficiently and makes the best use of taxpayer dollars," said Baucus and Camp. "While we welcome the ability to reduce duplication and streamline government services, we are concerned about the impact that the President’s proposal could have on the ability of the United States to aggressively open new markets to American-made goods and services and create U.S. jobs. Creating jobs must remain our number one priority, and a smart, aggressive trade policy that promotes our world-class agricultural and manufactured goods and services is critical to accomplishing that goal. The Office of the U.S. Trade Representative is nimble, lean and effective – and time and again it delivers on its mission and creates jobs here at home. Taking USTR, one of the most efficient agencies that is a model of how government can and should work, and making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation. We certainly need to look for ways to reduce government and cut taxes, but not at the expense of programs that are helping businesses, ranchers and farmers create jobs and expand our economy.”

Rep. Sander Levin, D-Mich., the ranking Democratic member of the House Ways and Means Committee, also weighed in. “I welcome the opportunity to work with the President on the shared goal of ensuring our government agencies operate as efficiently and effectively as possible," he said in a statement. "Congress should consider the President’s request regarding executive authority to reorganize the government. As we do so, we must ensure a meaningful role for Congress on all reorganization proposals at every juncture. Regarding the example cited by the President, it is important to recall that Congress established the Office of the U.S. Trade Representative, within the Executive Office of the President, because our trade objectives were not adequately negotiated, implemented or emphasized when trade negotiators and enforcers were part of a broader agency.”

“The enactment of trade agreements has been a hard slog with the President," said Sen. Chuck Grassley, R-Iowa, the ranking Republican member of the Senate Judiciary Committee. "Any reorganization that disrupts trade negotiations and expanded markets for U.S. businesses and farmers would cause me serious concern.  Consolidation that doesn’t hurt export opportunities might make sense. Congress will need to look at this proposal carefully.  It’s not surprising that the President is focusing on this area for consolidation. Trade is already a lower priority than it should be for this White House.”