Obama plans government re-organization

There was a sleeper issue in last night's State of the Union. As expected, President Obama spoke of the need to confront our competitiveness challenges through greater investment in innovation (aka R&D), education and infrastructure. But the sleeper proposal was this: government reorganization. And not just reorganization in general, but reorganization tied to increasing American competitiveness. Here is what the President said:

We live and do business in the Information Age, but the last major reorganization of the government happened in the age of black-and-white TV. There are 12 different agencies that deal with exports. There are at least five different agencies that deal with housing policy. Then there's my favorite example: The Interior Department is in charge of salmon while they're in fresh water, but the Commerce Department handles them when they're in saltwater. (Laughter.) I hear it gets even more complicated once they're smoked. (Laughter and applause.) [Biggest laugh line of the night.]

Now, we've made great strides over the last two years in using technology and getting rid of waste. Veterans can now download their electronic medical records with a click of the mouse. We're selling acres of federal office space that hasn't been used in years, and we'll cut through red tape to get rid of more. But we need to think bigger. In the coming months, my administration will develop a proposal to merge, consolidate, and reorganize the federal government in a way that best serves the goal of a more competitive America. I will submit that proposal to Congress for a vote -- and we will push to get it passed. (Applause.) [Emphasis added.]

Government reorganization for competitiveness can mean only one thing: redoing the Commerce Department. Granted, there are other changes as well. For example, the Center for American Progress has recommended a number of internal coordinating mechanisms, including a Quadrennial Competitiveness Assessment (see earlier posting). But the big idea is turning Commerce into a Department of Industry and Trade.

As a scarred veteran of the last attempt to reorganize Commerce during the 1980's, I can attest that such a action will not be easy. There are many permutation to the new structure -- although some are better than others. There is no way to completely pull all the competitiveness related programs into one Department (e.g. should worker training programs be in Labor or Education). And there is a lot of vested interests in keeping the familiar structures in place.

Then there will be push from the GOP to not re-organize departments, but eliminate them.

So, I look forward the President's proposal. And to the debate that will follow. That debate will be set deeply in the context of the debate over spending and investment -- as reorganization is a way of answering the critic of "wasteful duplication."

With the budget and re-organization issues linked at the hip, this sleeper issue could well turn out to be the big issue of the year.