By Liz Borod

Perry Tuneberg was facing a potential disaster when, two years ago, the IRS decided to test a program to tax dentists on the charges they billed, instead of fees they'd already collected. As president of the Illinois State Dental Society, Tuneberg knew some patients never managed to pay their entire dental bills. As a result, dentists would owe taxes on money they'd never received. "That would have created a terrible (cash flow) mess for dentists all over the country," says Tuneberg, who heads a 20-employee practice in Rockford, Ill.

So Tuneberg decided to alert his congressman--and former Sunday school teacher--Rep. Donald Manzullo (R-Illinois). "He was almost like a pit bull," Tuneberg recalls happily. "He was on this as a small-business issue before we had even mobilized any political action." He believes that Manzullo's involvement eventually caused the IRS to halt the program.

A fifth-term congressman, Manzullo has long been sympathetic to small business. He grew up in a small-business family, and his older brother still runs Manzullo's Famous Italian Restaurant in New Milford, Ill., which their parents opened in 1963. This past January he was elected chairman of the House Small Business Committee, which put him in position to sink his teeth into what he sees as the biggest threats to small business: taxes, regulatory relief and government interference with the market.

In one of his first major initiatives, he held a hearing on May 24 to reform Federal Prison Industries, also known as Unicor, which employs 21,000 inmates in factories inside 68 federal prisons. "Federal Prison Industries (is providing the equivalent of) slave labor in this country and that is competing with people who pay taxes and stay out of trouble," Manzullo says. Even worse, from Manzullo's point of view, the prison system receives preference on federal procurement contracts, from which it reaped $556 million in 2000 from government agencies, shutting out small businesses seeking to compete for the orders.

But will he be effective on the House floor? Despite a passionate local following among folks like Tuneberg, he'll have to battle relative obscurity on the national level. Joe Mancuso, founder of the not-for-profit Center for Entrepreneurial Management and The CEO Clubs, didn't have an opinion on Manzullo. Nor did Rudy Lewis, president of the National Association of Home Based Businesses in Owings Mills, Md., despite Lewis's familiarity with another small-business defender, Sen. Christopher "Kit" Bond (R-Missouri).

Manzullo will also have to find a way to work with a Senate Small Business Committee led by Democratic Sen. John Kerry of Massachusetts. In the past seven months Manzullo has introduced 11 bills. Only one passed in the House, but its fate has yet to be determined by the Senate. It would provide a $728 million budget for the SBA for fiscal 2002--$186 million more than the Bush Administration earmarked.

Observers say so far Manzullo is doing a good job of finding common ground with the opposition, but he needs to stick to his positions if he wants to make real progress. In 2000, the two major small-business advocacy groups, the National Federation of Independent Businesses and the Small Business Survival Committee, both awarded him a perfect score for his voting record.

Indeed, in March he introduced a tax-relief package along with ranking minority committee member Rep. Nydia Velazquez (D-New York) in a partnership he hopes will continue. "I decided I was going to capture all of her energy--and she's got a tremendous amount of it--and tie it to my energy and go after what big government is doing to small businesses," Manzullo says. The bill was referred to House committee.

Mary Leon, the NFIB House lobbyist, says Manzullo has the political connections necessary to make an impact in Washington. But Darrel McKigney, president of the SBSC, predicts Manzullo will encounter a struggle in the Senate. "It will be a bit of a tug-of-war because there's two distinct philosophies," McKigney says. Kerry will be worried about which programs should be receiving government money, he explains, while Manzullo will look to see how government can stay out of small business altogether.

All agree that while Manzullo's got his work cut out for him in the current climate, he still stands a good chance of being remembered as an effective small-business advocate. After all, it's in his blood.