Mike Shedlock

Hoping to seize the deficit reduction initiative from Republicans (it does not take much because Republicans have no proposals on the plate) President Obama is out to prove he is a genuine deficit fighter. With much fanfare Obama launched his idea to streamline government. The proposal requires Congressional approval.

Laughably, out of an enormous annual budget of $3.7 trillion, the president's proposal, assuming it worked (and that is not a safe assumption), would save a mere $300 million a year. To top it off the president wants to create a new cabinet-level position out of the process.

Is this the best anyone can do?

Republicans are against the idea. If it was a Republican president asking to do the same thing, it's safe to point out that Democrats would be against the idea.

The New York Times reports Obama Bid to Cut the Government Tests Congress

Mr. Obama called on lawmakers to grant him broad new powers to propose mergers of agencies, which Congress would then have to approve or reject in an up-or-down vote. If granted the authority, he said, he would begin pruning by folding the Small Business Administration and five other trade and business agencies into a single agency that would replace the Commerce Department.

The White House estimated that the consolidation would save $3 billion over 10 years and result in reductions of 1,000 to 2,000 jobs. The savings is a mere rounding error in the $3.7 trillion annual budget, but the numbers may be less important than the message that Mr. Obama wants to cut wasteful spending.

It is not clear whether Congress, where much of Mr. Obama’s legislative agenda has languished, will go along with this initiative. Republicans were immediately skeptical, suggesting that the White House was more interested in honing its re-election message than in reducing the size of government.

Even Democratic leaders expressed misgivings about folding the Office of the United States Trade Representative, a stand-alone agency with just 227 employees, into a large bureaucracy, saying it could harm American trade policy.

“Making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation,” said Senator Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, in a statement with Representative Dave Camp, the Republican chairman of the House Ways and Means Committee.

The White House has been working on this plan since the president announced his streamlining goals last January. He recycled a colorful example of duplication from his State of the Union address: the Interior Department has jurisdiction over salmon in freshwater, while Commerce handles them in saltwater.

Under the terms of the reorganization, five agencies — the Small Business Administration, the United States Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency, plus the business and trade functions of the Commerce Department — would be consolidated into a single agency focused on helping the private sector.

Mr. Obama said he would elevate the director of the Small Business Administration, now Karen Mills, to his cabinet. The United States trade representative would retain cabinet rank, the White House said.
Streamlining Perspective 

The president's proposal does not eliminate anything. Instead it merges small bureaucracies into even bigger bureaucracies much like banks evolved into what should be known as "too big to succeed". Moreover, Obama's proposal creates a new cabinet-level position in the process.

I am confident the president's plan will cost money in spite of what the president says. My rationale is simple: you don't add cabinet-level positions without adding costs. And those costs are sure to escalate over time no matter how well-intentioned initially.

I have a better idea, and it comes straight from the lead-in image to the New York Time's article.



Please take a look at that chart.

I count 17 green dots, 7 red dots, and 32 blue dots in a bureaucratic tangle of interconnected responsibilities. President Obama wants to untangle some of those lines making them more efficient.

Pay specific attention to the caption.

A Business Looking for Government Resources Starts Here

I have a simple question: Why should any business be seeking government (taxpayer) resources?

Instead of merging bloated bureaucracies into even bigger bloated bureaucracies, I propose elimination of 17 green bureaucracies, 7 red bureaucracies, and 32 blue bureaucracies.

Whereas Obama's plan will do next-to-nothing, my plan would save billions of dollars a year. Don't look for Democrats or Republicans (other than Ron Paul) to support it, because both parties pay lip service to actually reducing government.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.