Time to overhaul, rationalize the U.S. Commerce Department

President Barack Obama said that the most “salient message” from the election was the voters’ demand that all levels of government and the private sector work together to “help the middle class move forward”. He’s right.

Real unemployment, in all categories, remains above 16 per cent; wages for 90 per cent of workers remain stagnant; there is little business confidence despite cash-rich treasuries; and the trade deficit in manufactured goods is a persistent $300bn each year.

Voters, particularly those in the industrial heartland, and only slightly less so on each coast, have demanded a more balanced economy. They want an economy that restores the vitality of the manufacturing sector. These workers supported the bailout of the auto industry because they believed there was no reasonable alternative. And they feel that the private sector, acting alone, cannot sufficiently advance the economy or protect their interests.

It is no surprise then that during the campaign Mr Obama called frequently for combining the executive branch’s nine distinct department and agency commerce-related efforts into a reconfigured “department of business”. It is not a new department but, rather, under a reconstituted and renamed commerce department, a consolidation of responsibilities and activities.

Given the complexity of the steps that need to be taken to speed up economic recovery, Mr Obama’s proposal is not just practical and expedient, it is also imperative.

The steps to be taken are obvious. First, adopt a manufacturing and industrial policy that integrates the government’s policies related to financing, research and development, and investment tax credits, taxation, trade, subsidies and domestic procurement.

Second, overhaul the corporate tax code to change the provisions that discourage some US companies from expanding domestically. Eliminate the incentives that encourage other companies to ship jobs overseas and lower tax rates in exchange for eliminating certain special tax breaks.

Third, invest significantly in the rebuilding and upgrading of the nation’s infrastructure, ideally through a new, independent national infrastructure bank, with a capitalisation of at least $1tn.

Finally, create a justice department bureau to enforce trade agreements and protect the nation’s intellectual property. The current system places trade agreement negotiation side-by-side with enforcement, often in the same hands, and without prescribed IP protection protocols.

With Mr Obama’s proposed “one-stop-shop” reform of the commerce-side of the executive branch, whose stated goal is to “help American businesses succeed”, there would just be a single, encompassing department of business with focused front-end guidance, resource allocation and follow-up. It would replace the nine disconnected agencies whose efforts are further complicated by the multiplicity of Congressional oversight committees.

Putting it less politely, keeping Congress as far as possible from folks who do the real work of running government is always positive. At least and until the voters of this land decide to combine their voting rights and sufficient brains to kick out the 19th Century ideologues who stand for election with the singular goal of blocking government.

Leo Hindery is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, a bright and experienced economist and investor – and a helluva racing driver.

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15 comments

  1. jonrmack

    None of this is really that simple. Mercantilism is dangerous and unproductive. What exactly are our problems with our infrastructure that require so much overhaul that the private markets can’t handle it? And President Obama’s view of what the election meant are a little skewed, so I don’t know his analysis is the best one to take. He says HIS election to office was a mandate for higher taxes. That’s true. However, either his incompetence or arrogance has blinded him to the fact that the republican majority in the house was elected to make large and necessary spending cuts.

    • keaneo

      You describe a House majority that even with Republican gerrymandering diminished. A majority that refuses to negotiate with the Senate. A majority including a segment that has made this the least productive in history. Useless demagogues.

      And “mercantilism”? Har. You’re a few centuries out of date on economics.

      • jonrmack

        Can you provide evidence of this gerrymandering? I’m not saying you’re wrong, I just haven’t seen any proof. Also, if you look at the plans they’ve put forward over the last two years, they’ve conceded quite a bit with regard to raising revenues. And let’s throw a little bit of the blame on the leader please. Other president’s have worked with incredibly hostile chambers in the past, and have still reached compromise. Like I said, the Republicans have come a long way in compromising if you use the Ryan plan as a standard. It’s a little arrogant and childish of the president to think he can have everything he wants.

            • keaneo

              Now I can unfold the little piece of paper where I wrote down – “dollars to doughnuts he rejects the source – no matter what”. Before I posted the link.

              Mail me a penny postcard when you have something more than “I just haven’t seen any proof”.

              Bye.

              • jonrmack

                I can remember thinking, oh, he’s going to post some bull article. I didn’t even have to write it down. Anyway, your second source is written by people who’ve worked for notoriously and/or openly liberal publications. Gerrymandering does occur. It may have. But you have no proof that it had any significant impact and therefor, no proof it have any relevance.

                • keaneo

                  So, you didn’t really read beyond the source. The truth only comes from sources acceptable to the Republican Party, apparently.

              • jonrmack

                and your little piece of paper is wrong. I don’t reject sources no matter what. But I don’t take sources at face value, EVEN IF they are peer reviewed. I give little credit to information that is not peer reviewed.

    • eideard

      Could you lot move on to the student cafeteria or Mory’s if you have nothing to contribute on the topic. My wife and I sorted the gerrymandering question before breakfast, this morning. Both of the TweedleDeeDum parties do it and the Republicans controlled sufficient state legislatures to get away with it.

      I don’t know any students of politics who didn’t recognize that before the recent election. Golly – corruption varies according to demographics and class. What a discovery.

      • jonrmack

        I did contribute. I asked you to alert your readers as to what is so disastrously wrong with our infrastructure that only big government can solve it?

      • eideard

        Well, lots of folks in American finance and communications find Hindery interesting. Y’all have wandered into a cul-de-sac. Comments closed.