Race to the Top

John Kerry

What do you see as the biggest issues facing small businesses today?
Staggering health-care costs. [They] shot up 47 percent under this administration and prevent small businesses from expanding their work forces. On the Senate small-business committee, I have consistently supported allowing self-employed individuals to deduct 100 percent of their health-care costs, [and] I also worked with Sen. John McCain [to] give small businesses a health-insurance expenses credit.

I also think access to capital is a major issue. There's been a dramatic decline in VC funding...leaving many businesses without a source of equity financing. I led the fight to reauthorize the Small Business Technology Transfer program that provides R&D funding to small businesses, which increased funding for the program by $150 million. I fought against the elimination of all three [government] microloan programs, and pushed for accountability from the SBA and to restore 7(a) funding after Administrator Hector Barreto announced this January that the loans would be stopped indefinitely.

As president, how would you address these issues?
On health care, I will allow small businesses to buy into the same health plan as members of Congress. I've also proposed refundable tax credits for up to 50 percent of the cost of coverage to small businesses and their employees. [And] I will make health care more affordable for employers and employees by having the federal government help with certain high-cost health cases. Since Bush took office, health-insurance premiums for small firms have risen faster than costs for large firms. Bush has offered nothing to address [these] rising costs for small-business owners. My plan is focused on lowering overall costs throughout the health-care sector, while greatly expanding health-insurance coverage.

On accessing capital, I will ensure that small businesses have the federal support they need to grow and thrive. I will help entrepreneurs bridge the gap between their need for capital and traditional financing sources by increasing the federal government's VC investments.

What about the overall regulatory environment for small businesses?
I have several policy advisors who've either been entrepreneurs or [have] been advisors to entrepreneurs. And I've been a small-business owner myself [of a small shop in Boston], so I have a good appreciation of the issues small companies face.

Small businesses are drowning in tax paperwork. I will reduce this burden by simplifying tax filing for small businesses, including allowing the IRS and state agencies to combine, on one form, both state and federal employment tax returns. Even with the tax credits, the process will be streamlined. Small businesses demand it, and we need to deliver.

The Bush Campaign

Entrepreneur spoke with two of President Bush's top small-business advisors, who shared their thoughts about the president's record and his future agenda for small business.

What do you see as the biggest issues facing small businesses today?
Megan Hauck, Deputy Policy Director of Bush/Cheney '04: The rising cost of health care-costs are borne more by small companies. Our solution is not just government help; it's doing things to empower the private sector. We want to give more [health-care] options for more people. There isn't one panacea [for health-care costs]-there isn't going to be one approach that works.

What is the president's view of some of the specific government programs, like the Manufacturing Extension Partnership, that are targeted to help manufacturers?
Gary Blank, Deputy Policy Director of Bush/Cheney '04: The president is much more interested in creating the proper environment for doing business so that government isn't involved in creating jobs.

If the president's view is that creating the environment for business is most important, what has he done in this area?
Blank: The Treasury Department has made it easier for small companies to file income tax returns, reducing their tax burden. And we're still working on a new strategy on the issue of bundling [federal] contracts; we have to work with federal agencies to make it easier for small companies to compete. And legal reform is important. Our general attempt is to try and curb frivolous lawsuits, to deliver medical malpractice reform so that it's clearer to small businesses what they're liable for [in the workplace].

There has been a lot of debate in recent years over the SBA and the importance of its loan programs. How does the president view these programs?
Blank: When we were asked "What is the most pressing issue for small businesses?" my answer wasn't SBA loans. You have to place your priorities where you want. [SBA's] 7(a) [loan program] can't be a replacement for what's going on in the private sector, though the government sometimes has to get involved in providing seed capital for small companies.

Joshua Kurlantzick is a writer in Washington DC.

This article was originally published in the September 2004 print edition of Entrepreneur with the headline: Race to the Top.