Bill Richardson To Head Department of Commerce: What Does It Mean?

So it appears that yet another old primary opponent of Barack Obama's will be joining his cabinet: Bill Richardson, governor of New Mexico, will most likely be announced tomorrow as the administration's commerce secretary.

Small businesspeople and entrepreneurs should take note, as the Department of Commerce affects them in a few ways that most people are probably not even be aware of:

• The Patent and Trademark Office is part of Commerce. The PTO issues patents for inventors and entrepreneurs, and handles other intellectual property issues. Small businesses are one of the most important sources of patent activity in the country.  A recent SBA study found that firms with under 500 employees obtain more patents than larger firms, and that these small firms make up 40 percent of all firms with 15 or more patents. The implication is that most of the new innovation going on in today's economy is driven by small firms.
• The Minority Business Development Agency is also part of Commerce, and it provides free consulting services to minority business owners, as well as access to financing.
• The International Trade Administration is another agency within Commerce. It provides most of the services related to promoting U.S. exports, and runs a hotline for business owners to provide information on how to take themsevles global. But Commerce doesn't always promote trade, according to some claims that its export restrictions and "anti-dumping" rules are outright protectionism.
• The Economic Development Administration tries to shore up economically-distressed communities through grants and other efforts. For example, the Trade Adjustment Assistance for Firms Program provides project grants to increase the competitiveness of domestic manufacturing firms losing ground to imports.

But what about Richardson? How much does the pick matter? Is he going to change Commerce's policies toward entrepreneurs?

Well, any changes are likely to be minor. Like many other large federal bureaucracies, things don't change much at Commerce regardless of who the president is and who he appoints. Justin Fox over at Time says that he can't recall a commerce secretary who has ever had a significant impact on economic policy.

With those caveats in mind, we can still clearly say that Richardson will have an impact on the direction of the department. Based on his record, expect an emphasis on public-private partnerships. The centerpiece of his gubernatorial tenure has been Governor Richardson's Infrastructure Partnership (GRIP), a $1.6 billion financing program to overhaul much of New Mexico's transportation infrastructure. Richardson worked with businesses in issuing bonds to pay for the program, and he came under scrutiny from the FBI due to political connections with CDR Financial Products, a firm that helped arrange these financing deals. With Richardson as governor, New Mexico also bought an equity stake in Eclipse Aviation, an Albuquerque aircraft manufacturer that recently filed for Chapter 11 bankruptcy.

For those concerned about Commerce as a source of protectionism, Richardson said in June, "I'm a free-trade Democrat. I'm also an endangered species in the Democratic Party." He also, unlike Obama and Clinton, maintained his support for NAFTA when running for president. On the other hand, he did campaign on promises to only support free trade agreements if they contain "fair trade" provisions regarding labor standards. But when he's actually had to walk the walk--when he was in Congress from 1993 to 1997 --Richardson generally voted very much in favor of free trade agreements without "fair trade" revisions.  Public Citizen said he made "fair trade" votes only ten percent of the time.

But ultimately Richardson's role in promoting trade policy at Commerce is going to be determined by what Obama decides to do. Current Secretary of Commerce Carlos Gutierrez is still speaking in support of President Bush's free trade agreements and argues that they are needed to help domestic small businesses and entrepreneurs. That role of advocacy for the president's policies is where Richardson will have the most impact.