"I ran for office pledging to make our government leaner and smarter and more consumer friendly," President Barack Obama reminded a group of small businessmen at a January 2012 White House gathering.
You can see why the audience needed a refresher course. The president's two signature legislative accomplishments, the Affordable Care Act and the Dodd-Frank financial reform, had heaped unprecedented amounts of regulation onto the business sector at a time when full-time jobs were scarcer than they'd been in three decades. So to bolster his economic bona fides, Obama was now advocating greater executive-branch power to make the federal bureaucracy more responsive to business concerns. "Let me be clear," he vowed. "I will only use this authority for reforms that result in more efficiency, better service, and a leaner government."
The target of Obama's tweaking that day was the Department of Commerce, the century-old rectangular behemoth on Constitution Avenue. Currently headed by the wealthy Chicago businesswoman Penny Pritzker, whose family fortune derives from the Hyatt hotel chain, Commerce's mission is to "promote job creation and improved living standards for all Americans by creating an infrastructure that promotes economic growth, technological competitiveness, and sustainable development." Yet even the president recognizes that Commerce, like many other federal agencies at the nexus of the government and the private sector, has often been better at promoting its own bewildering bureaucratic growth.
"Right now, there are six departments and agencies focused primarily on business and trade in the federal government," Obama said. "In this case, six is not better than one. Sometimes more is better; this is not one of those cases, because it produces redundancy and inefficiency. With the authority that I'm requesting today, we could consolidate them all into one department, with one website, one phone number, one mission: helping American businesses succeed. That's a big idea."
It may have been a big idea, but with a Republican-controlled House of Representatives, Obama's expanded consolidation authority was a non-starter. That didn't stop him from floating a proposal, just over a week before Election Day, to create a brand new cabinet-level position-the secretary of business-presumably to tidy up the current byzantine sprawl that includes such non-commercial agencies as the National Oceanic and Atmospheric Administration (NOAA) and the Census Bureau.
After winning re-election handily, the president brought up the business secretary idea a few more times, but it ran up against the same unfriendly legislative math. The lesson is clear: You can campaign against the Department of Commerce, you can complain periodically about its activities and results, but even proposals for cosmetic surgery on the 42,000-employee agency are likely dead on arrival. And eliminating the thing altogether is not on the agenda of anyone near the levers of power.
From T.R. to Hoover to Byzantium
The best thing that you can say about the Department of Commerce is that it's small by Washington standards. The department's budget of $8 billion in fiscal year 2012 was just a thirteenth the size of Labor, which itself is a fraction of the Treasury ($443 billion) and Defense ($655 billion).
But there's small, and then there's small. Facebook, whose 2013 revenue ($7.9 billion) was essentially the same as Commerce's budget, managed to earn that money with a fifth the number of employees. eBay has a slightly smaller workforce than the department, but double the revenue and a much more convincing story to tell about enabling commerce between individual citizens. The Department of Commerce is physically massive, organizationally obscure, and technologically tethered not to the 21st-century Internet but to the early-20th-century Progressive Era.
In 1903, President Theodore Roosevelt inaugurated the Department of Commerce and Labor as part of his reform crusade. Within five months, the bureaucracy grew from one official, the secretary, to an impressive 10,125 employees around the nation. The labor component was hived off into its own department in 1913.
The newly single Department of Commerce was not entirely sure what to do with itself until 1921, when the energetic politician Herbert Hoover became secretary. Prior to Hoover's tenure, the post was seen as something of a joke-the department's vanity history of itself, From Lighthouses to Laserbeams, confesses right there in the title that one of Commerce's most important duties was managing lighthouses.
"Hoover saw the post as grander: an opportunity to show the country what it could do if it had a national engineer," Amity Shlaes reports in The Forgotten Man, her recent history of Franklin Roosevelt. "When the recession hit, he urged President Warren Harding to host a conference with business and labor on creating employment. The idea was that Washington could encourage business, and perhaps the states and labor, to work together to make the economy grow."
Between Hoover's ascension to secretary and his departure in August 1928 to run for president, the department would vacuum up governmental organizations in a bid to increase its influence. In 1925, Commerce snatched the Bureau of Mines and the Patent Office from the Department of the Interior. The following year saw the creation of an Aeronautics Division at Commerce, a precursor to the Federal Aviation Administration. And a short-lived Radio Division was created in 1927.
Hoover did not forget where he came from after moving to the Oval Office. Among his first actions as commander in chief was to lay the cornerstone of the Department of Commerce building (now the Herbert C. Hoover building) using the very trowel George Washington used to lay the cornerstone of the Capitol. The building, which was constructed between 1929 and 1932 and cost $17.5 million to build ("over $2,000,000 more than the Louisiana purchase," From Lighthouses to Laserbeams brags), was then the biggest office building in the world.
It's a good thing they left room to grow: By 1969, Commerce had 25,400 employees; by 1972, after President Richard Nixon set about monkeying with the economy, the number had climbed to 35,000. Today, that figure is more than 7,000 higher.
Such size requires heavy maintenance fees. The department is asking for $14.8 million in FY 2014 to complete phase four of renovations and modernizations to the Hoover building-this after $5 million spent in each of the previous two years. Then there's the $16 million that agency bureaucrats seek to update their financial management software because, in their own words, it is "neither a Financial System Integration Office certified system nor is it Section 508 compliant. Additionally, system limitations require Commerce to undertake a highly manual and inefficient process that involves compiling multiple data sources to provide reports requested by the Congressional Appropriations Committees. The stability and reliability of the system is questionable as the design is almost 25 years old."
As Obama joked when announcing his Commerce reorganization plans, some of the decisions that led to this bureaucratic growth were less than honorable. Why did the weather-measuring NOAA wind up in the department after a Richard Nixon-led restructuring in 1970? "It had something to do with President Nixon being unhappy with his Interior Secretary for criticizing him about the Vietnam War," Obama said, with a chuckle. "And so he decided not to put NOAA in what would have been a more sensible place."
The Crony Capitalism Factory
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