Diary

Obama’s Commerce Combine

Last week Pres. Obama asked Congress to combine six federal agencies into a single cabinet level agency to oversee Commerce. His nominal reason is to bolster the economy by making it easier to do business in the US and making the Federal Government better able to promote business. Given Obama’s outright hate for business and free markets, a skeptic might wonder why. The answer is that Obama is using the time honored playbook of defending bureaucratic failure – when government fails, put a new coat of paint on the old jalopy.

Pres. Carter inherited and oversaw an energy policy failure in the 1970’s. The US’s gasoline supply was disrupted by OPEC and also government mandates as to the delivery of product across state lines. Some states had plenty of gas, while others rationed it. Carter demanded that people ‘drive 55’ to save fuel and wear sweaters inside. It was a colossal failure, largely at the hands of bureaucrats who thought regulation was the answer. Carter’s response in 1977 was to create the Department of Energy, an umbrella of existing agencies. By lumping the failed Federal Energy Administration with the more successful Atomic Energy Commission, Carter saved his bureaucrats from embarrassment. Fast forward to 2009, and the DOE remained alive and well, doling out billions in grants and loan guarantees to Obama supporters.

In the early months of Pres. Bush’s presidency, Saudi terrorists attacked the Pentagon and the World Trade Center, killing 2,977 innocents. Despite pouring nearly $30 bln each year into the NSA, the intelligence community failed to notice 20 young Arabs who had radical ties, some of whom had trained to fly but not land a plane, and all of whom had bought plane tickets for the same day. 9/11 was a colossal failure of the Federal Government’s obligation to keep citizens safe from foreign attack. Bush’s response was to create the Department of Homeland Security by combining such notable failures as the INS, the ATF, and of course the airport security that allowed 19 young foreign Arab men armed with box cutters onto the airplanes. Fast forward ten years, and TSA employees are being tested for radiation exposure from the same machines they force children to walk through.

Recessions come and go, but 2008 was particularly bad. Government policy had inflated the access to cheap capital for a decade, and the housing bubble burst, bringing down every industry dependent on debt. While it was always ridiculous to presume that the DOC and FTC could somehow guide the US economy toward making the right decisions, the ‘great recession’ proved that these agencies were at best worthless. As with his big government predecessors, Obama is seeking damage control by combining several worthless agencies into one agency too big to eliminate.

Neither Carter nor Bush’s uber-agency strategy saved money, cut government payrolls, or made government more effective. Why would Obama assume otherwise for his adventure? Perhaps he doesn’t care about performance so much as the appearance of action. Agencies like the DOC and the SBA do more harm than good to the US, so the right move would be to eliminate them, but Obama is on the side of government, not commerce. He just wants to rearrange the deck chairs, add a layer of management, and credulously claim that bigger is better when it comes to government bureaucracies.

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