Obama elevates Small Business Administration head to Cabinet, seeks authority to merge agencies

Jan. 13, 2012: President Obama delivers remarks on government reform in the East Room of the White House in Washington. (AP)

WASHINGTON – President Obama announced Friday that he is elevating the head of the Small Business Administration to a Cabinet-level position, as he urged Congress to also grant him permission to consolidate that and other federal agencies in an attempt to make government more efficient.

The decision to bring SBA Administrator Karen Mills into the president's Cabinet does not need congressional approval. However, Obama's much broader proposal to merge overlapping agencies does -- the president appealed to Congress Friday to help make that happen.

"This is the same sort of authority that every business owner has to make sure that his or her company keeps pace with the times," Obama said. "Let me be clear, I will only use this authority for reforms that result in more efficiency, better service and leaner government."

Under the proposal, six major trade and commerce agencies with overlapping programs would be merged. The Commerce Department would be among those that would cease to exist.

The proposal dates back to the president's 2011 State of the Union address, in which the president complained of government overlap and red tape that clogs the federal government, promising to tackle the problem. He injected a bit of humor into his speech to illustrate the point: "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," he said to laughter. "I hear it gets even more complicated once they're smoked."

By late that year, however, officials shied away from forecasting when the president would fulfill his promise.

The White House announced early Friday morning that Obama would seek authority from Congress, not granted since the days of Ronald Reagan, to reorganize and consolidate portions of the federal government. His first proposal would be to reduce redundancy in the area of trade and commerce.

Should Congress grant the president this streamlining authority, each proposal he made would then receive an up-or-down vote from Congress within 90 days.

However, the president's track record with Congress isn't exactly favorable, following public disputes over issues like the nation's debt ceiling and extending payroll tax cuts. In an increasingly fierce election season, the president's move could be aimed at putting Congress on the defense.

The administration has for months highlighted a "We Can't Wait" campaign, intended to showcase issues that the White House says Congress isn't acting on. The president, therefore, has been unilaterally taking action; igniting controversy over whether he is overstepping his constitutional authority.

Now, the president will lean on the very Congress that he's been lambasting for its inaction.

The administration admits 1,000 to 2,000 jobs would be lost in the consolidation process, should it be approved, but officials say the plan would fall in line with the natural course of employee departure. The White House also says the plan could save the government $3 billion over 10 years.

From Congress, a spokesman for Sen. Mitch McConnell, the top Republican in the Senate, pledged Obama's plan would get a careful review.

The spokesman, Don Stewart, also said: "After presiding over one of the largest expansions of government in history, and a year after raising the issue in his last State of the Union, it's interesting to see the president finally acknowledge that Washington is out of control."

Brendan Buck, spokesman for House Speaker John Boehner, said Republicans "look forward to hearing more" about the plan.

"Given the president's record of growing government, we're interested to learn whether this proposal represents actual relief for American businesses or just the appearance of it. American small businesses are more concerned about this administration's policies than from which building in Washington they originate," he said. "We hope the president isn't simply proposing new packaging for the same burdensome approach. However, eliminating duplicative programs and making the federal government more simple, streamlined, and business-friendly is always an idea worth exploring."

Fox News' Kelly Chernenkoff and The Associated Press contributed to this report.