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Courting the Small-Business Owner By ELIZABETH OLSON Even so, small-business owners rarely make headlines as a political target group even though they are as many as 25 million strong and a major generator of jobs. But they sure have gotten the attention of the rival candidates for the White House. The Republican presidential campaign has zeroed in on small-business owners, with Mr. Bush thumping for tax relief, lower health care costs and litigation reform when he appears at small manufacturing plants or in similar settings. The first lady has campaigned in Michigan and Minnesota and other swing states, making an appeal to women business owners. While Republicans traditionally are known as the party of big business, the Bush administration has made small business a priority, starting four years ago when Mr. Bush, a former Texas governor, borrowed a page from the winning 1992 Clinton campaign that courted small-business owners. "If you are going to talk about business," said Todd McCracken, president of the National Small Business Association, a trade group, "it's more appealing to talk about small business, the backbone of the country, than big corporations." Owners of small businesses typically have voted overwhelmingly for the Republican candidate, viewing Republicans as more likely to give them tax breaks and less likely to impose burdensome new regulations - exactly the formula that Mr. Bush is proposing, according to a campaign spokesman, Reed Dickens, who said the president "is for removing obstacles to growth." This year, small-business owners are still likely to favor Mr. Bush by a big margin over Mr. Kerry - even though Mr. Kerry is a former small businessman who opened a muffin and cookie shop in Boston in 1979 and once served as chairman and ranking minority member of the Senate Small Business and Entrepreneurship Committee. But the Democratic challenger is hoping to make some inroads on three issues: health care costs, access to capital and tax relief. Another trend also works in his favor: the increasing number of women entrepreneurs, who seem more disposed to Mr. Kerry than to Mr. Bush. The National Association of Women Business Owners released a survey Sept. 22 showing that 55.9 percent of its members queried in August supported Mr. Kerry versus 40.1 percent for Mr. Bush, and cited health care insurance as their single most pressing concern. Mr. Kerry has begun to hammer on the high costs of health insurance, which resonates with many small-business owners who face the challenge of coping with premiums that have been rising recently between 15 percent and 25 percent yearly, forcing some to trim or even drop employee coverage. A recent scorecard issued by House Democrats found that higher costs for health insurance, pensions and energy were pounding small businesses. The issue is a crucial one on both sides of the political fence, according to a survey last July by the National Small Business Association, which found that of 14,000 members who responded, more than one-third said that health care was an important issue affecting their vote. Only taxes, the wars on terrorism and in Iraq and the overall economy were ranked as more urgent concerns. In the survey, 64 percent of respondents supported Mr. Bush, compared with 32 percent for Mr. Kerry. Mr. Kerry, who has assembled a network of small-business owners to support him in two dozen battleground states and who often appears with small-business owners at campaign events, is proposing allowing small businesses to participate in Congress's health plan to save about 15 percent on health care costs. He also supports refundable tax credits for up to 50 percent of the cost of premiums paid by small business owners for their employees. These measures, his campaign said, would make health care two-thirds cheaper for small businesses than it is today. Mr. Bush is backing association health plans, or A.H.P.'s, which would allow small-business owners to pool their resources to bargain for cheaper health care, much as bigger companies with larger numbers of employees do now. This has won the support of Earl Wayne Trotter III, who is known as Skip, vice president for operations of Trotter Machine Inc., a family-owned business in Rockford, Ill., which employs 66 people making hydraulic valve spools used in forklifts, backhoes and other construction equipment. "Our health care costs have gone up an average of 22 percent for each employee for the past three years," said Mr. Trotter, 37, who says he plans to vote for Mr. Bush. "There's no reason why five shops the size of Trotter Machine can't pool together to find more economic health funding." Bills setting up A.H.P.'s have been approved in the House of Representatives, where the idea has been backed by Democrats as well, but legislation has stalled in the Senate because of stiff opposition from big insurance companies. Jason Furman, who advises Mr. Kerry on economic issues, said the senator opposes A.H.P.'s because "a Congressional Budget Office study showed that four out of five plans would see their costs go up under Bush's proposal." Along with ameliorating health care costs, Mr. Dickens, the Bush-Cheney campaign spokesman, listed cutting taxes, reducing government regulation and red tape and decreasing junk lawsuits as ways the administration has helped, or plans to help, small-business owners. Mr. Kerry says he wants lawsuits to be screened to weed out frivolous litigation. Tax relief is another significant divide between the candidates. Mr. Bush would extend previous tax cuts, which he claims have given small-business owners about $75 billion in relief and has reduced rates for more than 90 percent of small businesses that pay taxes at the individual income rate. Democrats challenge the administration's figures, citing Treasury Department data that indicate only 180,000 small-business owners qualify for the bracket that can take advantage of the lower tax rates. The Kerry campaign said the numbers were even smaller, an important point because Mr. Kerry wants to roll back tax cuts for the $200,000-and-over earners - a proposal that the Republican campaign claims would hurt 900,000 small businesses. "The tax relief issues are huge," said Desma Reid-Coleman, chief executive of Quality Professional Services in Detroit, an umbrella for her six companies including the Detroit airport luggage cart concession. "You have to make a living. But the tax rollbacks hit only the highest bracket businesses, and don't help the smaller companies." Representative Nydia Velázquez of New York, the ranking Democrat on the House Small Business Committee, argues that's because more than "half of small businesses received less than $500 under the president's tax cut." Mr. Kerry argues that the Bush administration has "consistently shortchanged funding for loan programs" to help small businesses get off the ground, and has not shored up venture capital funding to keep them going. He wants to provide a tax credit for any net new jobs created by a small business with up to 99 employees, eliminate capital gains taxes for investments in small-business start-ups and lower the corporate tax rate by 5 percent, which Mr. Furman said "would benefit tens of millions of such businesses." Democrats complain that the Bush administration has cut budgets for government programs that aid small businesses, including calling for an end to the federal microloan program that provided $12.5 million last year in start-up loans for businesses owned by women, and has not given women entrepreneurs a big enough slice of the federal procurement pie. Mr. Furman said a Kerry administration would set a goal of getting 30 percent of such contracts for small businesses, compared with the current 14 percent level. Still, business owners like Bobra Bush, owner of the Telcare Corporation of Boca Raton, Fla., which conducts customer satisfaction surveys, are undecided about which way they will vote come November. "Health care costs are insane every year,
but the tax rollbacks are where Bush is appealing," she said.
"Yet, he's also cut back the Small Business Administration,
and that's hurt us. You have to think about the bottom line, but
you have a social conscience too. It's a tough choice."
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