Downsizing Government: Eliminate the Commerce Department By Senator Spencer Abraham As- the Co-Chair of the Dole Task Force on Eliminating Government Agencies and the Senate sponsor of the Department of Commerce Dismantling Act, I am extremely pleased to have the opportunity this morning to discuss our efforts to eliminate the Commerce De- partment. I also want to take this opportunity to thank The Heritage Foundation for putting forward detailed proposals for eliminating se v eral Cabinet departments; many of your sug- gestions have found their way into the four Cabinet elimination bills that the task force has developed. In my mind, no issue better symbolizes the dramatic changes that have occurred since the November election s than the ongoing efforts to eliminate departments of the federal gov- ernment. just a year ago, members walking the halls of Congress were discussing the merits of making the Environmental Protection Agency a Cabinet-level department. Today, Mor- ton Kon d racke is predicting on "The McLaughlin Group" that, contrary to prevailing opinion, the Department of Commerce will not be eliminated this year. I don't agree with his prediction, but I like his choice of topics. Our task force was set up to examine ways t o dismantle four Cabinet departments: Com- merce, Energy, Housing and Urban Development, and Education. These four departments alone employ more than 74,000 bureaucrats and have combined budgets of $70 billion- 133 times more than the entire federal gover n ment spent at the turn of the century. We must target these departments if we are truly to restrain the growth of government, reduce the tax burden on American businesses and workers, and balance the budget. The goal of our task force is not simply to "ze r o out" these Cabinet departments, but rather to examine rational approaches to consolidate, privatize, and/or devolve back to the states their functions. In our efforts, we adopted the following four principles as our guide: 0 Those programs deemed unnece s sary or wasteful are terminated; 0 Those programs duplicative of other departments or agencies are consolidated; 0 Those programs that serve a valid purpose are transferred to more appropriate agencies; and 0 Those programs which can be better performed o u tside the government will be privatized. By applying these guiding principles, our Cabinet proposals both reduce the federal spending on, and increase the effectiveness of the truly vital functions of, each department. Now let me turn to our efforts to di s mantle the Commerce Department-the only depart- ment slated for elimination in the congressional budget resolution. As former Commerce Secretary Mosbacher notes, the department is "nothing more than a hall closet where you throw in everything that you don 't know what to do'with.." In my judgment, no other de-

Senator Abraham, a Republican, represents Michigan in the United States Senate. He addressed a meeting of The Heritage Foundation's Washington Policy Roundtable on July 26,1995. ISSN 0272-1155 Q 1995 by The Heritage Foundation.

partment better symbolizes the waste and duplication prevalent in the federal government than Commerce. First, many of the department's functions are either duplicated or outperformed by other government agencies and private industry. Its own Inspector General notes that the depart- ment has evolved into a "loose collection of more than 100 programs," while the GAO states that Commerce "faces the most complex web of divided authorities," sharing its "mis- sions with at least 7 1 federal departments, agencies, and offices." Second, its bureaucracy is bloated, its infrastructure is in disrepair, and more than 60 per- cent of its resources are dedicated to noncommercial activities. For example, almost 60 percent of the department' s $3.6 billion budget is consumed by the National Oceanic and Atmospheric Administration (NOAA)-the nation's weather and ocean mapping service. Third, many of its programs are simply a waste of taxpayer dollars. A prime example is the notorious Economic De v elopment Administration. At some point in its history, 40 percent of the EDA's loans were in default, while economic assistance grants were being distributed to such economically troubled areas as Key Biscayne, Florida. Even when it is effective, the EDA d uplicates the efforts of numerous other programs in other departments. Today's Department of Commerce cannot be "reinvented." Its problems can be solved only if it is dismantled. Using the four guiding principles I mentioned earlier, our Com- merce legisl a tion would do the following: First, we would eliminate unnecessary, duplicative, and wasteful programs such as the EDA, the Minority Business Development Agency, the U.S. Travel and Tourism Ad- ministration, the Technology Administration, and the National Telecommunications and Information Administration. Second, we would transfer the various functions of NOAA-which comprises the lion's share of the department's budget-to more appropriate agencies and departments, or to private institutions. For example, s e afood inspection would be transferred to the Department of Agriculture, which already carries out most food inspection pro- grams. Marine and estuarine sanctuary management would be transferred to the Interior Department, which already manages some fisher i es. Third, we would transfer many of the Commerce Department's trade programs to agen- cies where their functions may be better performed. Nineteen distinct federal agencies are charged with promoting U.S. exports, but only 8 percent of total federal spen d ing on trade promotion is directed by Commerce. Secretary Ron Brown may ar- gue that Commerce leads federal efforts at export promotion, but almost three-quarters of the export promotion funds go to the Department of Agriculture, not Commerce. Unfortunate l y, the very traits that make Commerce a likely target for elimination-its hodgepodge of unrelated agencies-also make navigating its elimination through the legis- lative process extremely difficult. Commerce offers something for everyone, andbur efforts h a ve stepped on a lot of toe -s. In the end, however, I believe we will. prevail for-the simple reason that, while one can justify many of the programs under the Commerce umbrella, there is no justification for the umbrella itself. It's an accident of polit i cal evolution, not the product of sound policy. For that reason, dismantling the department presents us with the unique opportunity to rationalize many of the functions currently under its jurisdiction, including those functions related to trade. Let me s ay at the outset that I am a big proponent of free and expanded

2

trade. During my campaign for the U.S. Senate, I endorsed the North American Free Trade Agreement, a politically difficult position to take coming from an industrial state like Michi- gan . In fact, I was the only candidate from either party to do so. Expanded trade does increase American jobs and living standards. Clearly, establishing contacts and building trade relationships is important. But just how effective is the current structure o f our federal trade programs? Opposition to dismantling Commerce comes from two sources-bureaucrats in the department who stand to lose their power and prestige, and certain portions of the business community who are concerned about our proposed reforms o f the department's trade functions. Their principal concern is that Commerce is essential to promoting American exports abroad. In fact, in testimony be- fore a House committee the other day, Secretary Brown claimed that the Commerce Department is a "job c reator" that builds the economy by increasing exports.

You might have heard the claim that trade advocacy and counseling efforts by the Com- merce Department "returned $10.41 to the federal Treasury for every dollar invested in export promotion." According to the Department of Commerce, this number and others like it are based upon undefined estimates. As the Heritage Foundation's Joe Cobb pointed out in testimony Monday before the House Commerce Committee, "estimate" means 96 made up." Other economists ag r ee. Robert Shapiro of the Progressive Policy Institute and former economic advisor to Bill Clinton argues that there is "no economics" to the notion that export promotion creates jobs. Shapiro states, "All you can do with them is increase jobs for compani es with the clout to get the subsidy. But that's at the expense of industries that don't have the clout. You're just shifting things around."

None of this is to say that the federal government has no role in promoting international trade. My legislation begins the important process of consolidating our trade functions by transferring them to more appropriate agencies, thereby increasing their e f ficiency and ef- fectiveness. As former Commerce official Wayne Berman points out, "You shouldn't negotiate open markets in one department and then try to exploit those open markets in an- other department. It ought to be a focused, well coordinated effor t."

The Commerce Department Dismantling Act embraces this view by transferring over 70 percent of the International Trade Administration, including the Import Administration and the Foreign Commercial Service offices, to the USTR, creating one office where our trade agreements are negotiated and enforced. In addition, the legislation creates a series of In- dustry Advisory Boards composed of representatives from the private sector to provide advice to policyrnakers and to ensure that industry has a "voice" in any administration.

Another trade-related agency my bill affects is the Bureau of Export Administration. As it is currently situated, the Export Administration is criticized for two failings. According to the defense community, it does a poor job of an alyzing risks and protecting U.S. security in- terests. Meanwhile, businesses criticize the Administration for being unresponsive to many requests by industry, often sitting on applications for extended periods of time instead of notifying the exporter of possible problems.

Given these criticisms, I see legislation to dismantle the Department of Commerce as an opportunity to make the Export Administration more responsive through two basic reforms: First, setting a time limit for granting export licenses an d second, formalizing, either legisla- tively or through report language, the inter-agency process by whichlicensing concerns are raised. These two reforms would make the BXA a much more effective partner with busi- nesses while protecting our national se curity.

3

In conclusion, let me say that the 104th Congress has a historic opportunity to stop the growth of government and move us toward the limited central government envisioned by our Founding Fathers. Given this opportun.ity, it would be a tragedy if one of the flagship ef- forts of the new leadership, the effort to eliminate the Department of Commerce, is defeated. It will be impossible, in my judgment, to successfully address the massive growth of government and balance the budget if we cannot ev e n address dismantling this depart- ment and redesignating its core functions to other agencies. If we lack the will to do this, it will be virtually impossible to implement the reductions in social service programs that will be necessary to achieve balanc e . My point is this : If we cannot dismantle the Department of Commerce simply because 8 percent of total federal spending on trade promotion must be spent by the department, then where can we cut spending? In my judgment, if we don't dismantle one of the l east de- fensible Cabinet departments, then we won't make the tough decisions to limit spending for other sympathy-engendering spending programs. In closing, I believe the goals of the Dole Task Force on Eliminating Government Agen- cies and those of Amer i can industry are the same-limited government, efficient regulation, low taxes. In that sense, the elimination of the Department of Commerce is more than just a symbol for eliminating government waste; it's a key step in downsizing gov- ernment for the ben efit of all Americans. I hope that we can work together to make the elimination of this department a reality.

.0. .0. .0.

}}