Sen. Richard Burr, a former businessman in North Carolina, says he wants the federal government to put the Small Business Administration inside a new agency that combines the departments of Commerce and Labor.
Burr says the move would eliminate duplicative programs that cost the government "staggering amounts of money every year."
One critic of Burr's pending legislation, the American Small Business League, has been asserting that the proposal would close the Small Business Association, leaving many businesses without federal help to secure loans and get federal contracts.
The bill itself doesn't call for elimination of the SBA, which was established under President Dwight Eisenhower in 1953. It would create a new Department of Commerce and the Workforce with a Cabinet-level secretary and five under-secretaries, including one in charge of small business who would oversee the SBA.
American Small Business League president Lloyd Chapman said that even if the bill doesn't spell out an end of SBA, it would essentially close it. He said the legislation, which was introduced in December, was "essentially a resurrection" of a plan by former President Ronald Reagan in 1985 to close the SBA to save money.
"The Department of Commerce has always been there for large businesses," he said.
The SBA provides loans, loan guarantees and other assistance to small businesses. By law it works with other agencies to give 23 percent of federal contracts to small businesses. Fraud issues at the agency include companies that misrepresent their eligibility for SBA services.
Combining the agencies won't stop the fraud, Chapman said. "It will make it worse. It will be harder for small businesses to get more contracting, counseling and loan programs."
Burr spokesman Robert Reid said Chapman was wrong.
"It's not closing the Small Business Association. If anything, it's elevating their interests in the executive branch," because an under-secretary would be in charge, he said. "We think it's better for small businesses."
In an earlier statement, Burr said that the new combined department would keep the independent functions of Labor and Commerce and would not make policy changes. A summary of the bill specifies that the existing authority of the SBA also would be kept. Meanwhile, it would combine programs in the two departments that have similar missions and would combine support and administrative offices.
For example, the Labor Department's job training programs would be combined with Commerce's economic development work.
The bill also would eliminate or reduce funding for seven programs, including an international labor comparisons analysis and two programs under the Workforce Investment Act - a Career Pathways Innovation Fund, which provided job-training grants to community colleges, and the Enhanced Transitional Jobs Demonstration program, which aimed to help find jobs for men who were released from prison or owed child support.
Programs to be cut could be added or subtracted if the bill advanced through Congress.
The new Department of Commerce and the Workforce also would have under-secretaries for economic analysis and the Census, international trade, labor, and patents and trademarks.
Burr declined to be interviewed. The future of his proposal is unclear. But of the more than 5,500 bills introduced by the 113th Congress, only 57 became law by mid-December.
Two other Republican senators, James Inhofe of Oklahoma and Dan Coats of Indiana, signed on as cosponsors.
Burr's legislation was sent to the Senate Homeland Security and Governmental Affairs Committee, where it could be debated and passed on for a full Senate vote or left to die of neglect. A committee staffer said Sen. Thomas Carper, D-Del., the chairman, hadn't decided what to do with it yet.
Burr worked in sales for 17 years for Carswell Distributing, a national wholesale commercial products company based in his hometown of Winston-Salem. He started the job after he graduated from Wake Forest University and continued there until he was elected to the U.S. House of Representatives in 1994.
Gregg Thompson, the North Carolina director of the National Federation of Independent Business, said his staff hadn't had time over the holidays to look at Burr's legislation, but said: "Sen. Burr has a 100 percent voting record every year from the NFIB and is probably one of the best friends of small business."
President Barack Obama, during his last campaign, also proposed some streamlining that would have combined the SBA with the Commerce Department.
The administration hasn't named a new SBA administrator since the previous one, Karen Mills, announced her resignation nearly 11 months ago. A White House spokeswoman would say only that the acting administrator, Jeanne Hulit, who has been in charge after Mills left in August, has been doing a good job.
Some of the recommendations in Burr's bill also are drawn from suggestions from the Government Accountability Office, the investigative arm of Congress, and the Obama-appointed deficit-cutting Bowles-Simpson Commission.
The commission recommended putting SBA in the Commerce Department. Its leaders were former University of North Carolina system president and former SBA chief and Clinton chief of staff Erskine Bowles and Alan Simpson, a former Republican senator from Wyoming.
Burr's plan also would transfer the National Oceanic and Atmospheric Administration from the Commerce Department to the Department of the Interior.
By Renee Schoof
McClatchy Washington Bureau