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Small Business

Washington Wish List

It's time for big plans in Washington. With President-elect George W. Bush focused on assembling his new Administration,

lobbyists for special-interest groups are laying some groundwork of their own. While all are jockeying to put their issues

at the top of lawmakers' to-do lists, advocates know there won't be any easy victories this year.

That's because the Senate is split 50-50, and the Republicans hold just a nine-seat majority in the House. "If you don't

have bipartisan support, you don't even get out of the starting gate," says Dan Danner, senior vice-president for public

policy for the National Federation of Independent Business. "It just raises that initial hurdle higher and higher."

Indeed, while small-business lobbying groups such as NFIB had hoped for a bigger GOP win, they're now renewing ties -- and

attempting to forge new ones -- with centrist Democrats sympathetic to entrepreneurs' needs. And they're counting on Bush,

who has already picked several CEOs for his Cabinet, to set a more business-friendly tone at federal agencies. The one risk

for small biz: being overshadowed by big biz, whose interests are not always the same. Yet with power so closely divided

between the two parties, and Bush hardly able to claim a mandate, few in Washington are expecting massive reform or

sweeping regulatory changes anytime soon.

That said, small-biz advocates are, as always, optimistic. What follows is a list of the issues they'll be pushing, and the

likelihood of their agenda being embraced. Not surprisingly, the items -- taxes, regulations, and health care -- have a

direct impact an entrepreneur's bottom line.

THE ESTATE TAX. Small-business groups deride the so-called death tax as a drag on family businesses,

forcing owners to spend thousands on estate planning. President Clinton vetoed a bill last year that would have repealed

the tax, but lobbyists took heart in the fact that it passed the House and Senate. Now, with Bush on record favoring

repeal, small-biz groups see another chance to finish off the tax once and for all. It's unclear, though, whether Bush will

back a stand-alone bill or roll it into a larger tax package.

Democrats are likely to revive a compromise plan supported by Al Gore that would double the current per-person exemption,

exempting roughly three-quarters of small businesses from the tax. Even if the compromise gets passed, look for small biz

to declare victory. "Some sort of death-tax relief is a slam dunk," boasts Ray Keating, chief economist for the

60,000-member Small Business Survival Committee. "It's just a matter of what's going to happen."

AN ACROSS-THE-BOARD TAX CUT. Bush may still have to sell congressional Republicans -- not to mention

Democrats -- on his 10-year, $1.6 trillion tax-cut package, but small-business groups have heard enough. No surprise, they

strongly favor a rate cut. The money saved, they argue, would be reinvested in businesses, creating new jobs, and giving a

boost to the flagging economy. "With any tax bill," says Danner of the NFIB, "there's some degree of competition for pieces

of the pie."

OTHER ODDS AND ENDS. On a less-sweeping scale, the small-business lobby would like to tweak the tax code

in several ways. Among the changes advocates will continue to push: higher deductions for business meals, a higher limit

for writing off business equipment as a direct expense, and a loosening of the rules through which small businesses may use

the cash-based system of accounting.

The business-meal deduction is particularly important to home-based entrepreneurs, says Ginny Beauchamp, vice-president for

the National Association of the Self-Employed. "They don't have big marketing budgets," she adds, "so they often tell

people about their products over a cup of coffee or sandwich." While none of the items are likely to win broad support as

stand-alone bills, lobbyists hope they'll be rolled into a larger tax bill. The flip side, of course, is that other groups,

including major corporations, will be looking for perks, too.

ASSOCIATION HEALTH PLANS. Small-biz groups see health-insurance purchasing pools as a way to achieve the

lower premium costs available to large companies. At the moment, some states allow them, while others don't. But a federal

law is needed to allow the pools to cross state lines, the key to real purchasing power.

While the House backed association health plans as part of its patients' bill of rights last year, the Senate did not.

Opposition is likely to come from large insurers. But the biggest stumbling block may simply be a lack of interest.

Lawmakers are expected to make a priority of other issues, such as expanding Medicare to cover prescription drugs. And

worries over the economy may trump health-care concerns altogether.

TAX-FREE MEDICAL-SAVINGS ACCOUNTS. Championed by the Small Business Survival Committee, MSAs are touted as

a free-market remedy to rising health-care costs. The accounts allow either employees or employers to set aside pretax

dollars to pay for health-care expenses in connection with catastrophic medical insurance. Lobbyists are pushing for the

program to be simplified and given permanent status. It's now set to expire in two years. As with association health plans,

there's a risk that MSAs could be used as bargaining chips against health-care reforms that small-biz groups oppose, such

as expanding the rights of employees to sue their HMOs and employers.

REGULATORY RELIEF. It's a perennial gripe of small-business owners: too much regulation. And in recent

months, the Clinton Administration has given them even more to complain about. NFIB and other groups would like to see Bush

wipe away new regulations that require employers to take steps to reduce workplace injuries and give federal agencies

greater authority to withhold contracts from companies that have violated environmental regulations and other laws.

But the new President will have little authority to do so. About the best small biz can hope for is that Bush will stop

other regulations still in the works. Yet, as Giovanni Coratolo, director of small-business policy for the U.S. Chamber of

Commerce, points out, it isn't easy putting the brakes on bureaucracy.

Of course, the small-biz lobby will be playing defense, too. Aside from pushing their own agenda, lobbyists are likely to

find themselves battling measures backed by their traditional foes: labor unions and trial lawyers. They're also likely to

be sidelined, at times, during debate over issues off their radar, such as education reform. And on still other issues,

such as product-liability reform, lobbyists candidly acknowledge they see little chance of advancing their cause this year.

But it never hurts to wish. By Julie Fields in New York

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