By Steve Bills

Sen. John Kerry (D-Massachusetts), the new chairman of the Senate Small Business Committee, is striking a decidedly pro-business stance, saying he will push for an agenda that aids the nation's smaller companies. As the replacement for Kit Bond (R.-Missouri), Kerry plans to push for new lending programs, restored funding for the SBA, the expansion of government-provided consulting services, and more comprehensive health insurance programs. "I've made fighting for small businesses one of my top priorities in the Senate," he said in a statement after Democrats regained control of the chamber in early June for the first time since 1994.

With some small-business owners questioning President George W. Bush's commitment to entrepreneurs, Kerry is trying to convince entrepreneurial advocates that their concerns won't be ignored in Washington. Thanks to recent changes in the political climate in Washington, he may have an opportunity to bring about change. In late May, Vermont Sen. James Jeffords bolted from the GOP, handing the Democrats a one-vote majority in the Senate. Before that, Republicans--who controlled the White House as well as both houses of Congress--had the edge, and they used it in pressing for deregulation and lower taxes. (Indeed, one of the new Congress' first acts in January was to rescind OSHA's ergonomics rule.) Being in the majority, Kerry says, "gives you a little more leeway to set an agenda."

Small-business leaders may be encouraged by Kerry's words, but they're taking a wait-and-see attitude toward his ability to deliver. Some fear their key issues won't garner enough support in the changed environment. "Our priorities are not the priorities of the Democrat Senate," says Karen Kerrigan, president of the Small Business Survival Committee, an advocacy group in Washington, D.C. "There are lots of smaller pieces of legislation we still think we can push through the House and the Senate and get to the President's desk, but we are definitely pulling back on our expectations."

For instance, given the current balance of power, Kerrigan says it's less likely labor rules pertaining to independent contractors will be reformed. Currently, employers have to fill out a 20-point test to determine whether a worker is a contractor or an employee with rights to benefits. The SBSC hoped Republicans would pass legislation that made it easier for companies to classify workers as contractors. Kerrigan also doubts the new Congress will cut capital gains taxes or pass "expensing" rules that let firms write off the full cost of equipment in the first year rather than depreciating it over time. "Those types of offsets are probably going to be diminished," she says.

The first test of the Democrats' strength will probably be the minimum wage. Sen. Ted Kennedy (D-Massachusetts), chairman of the Health, Education, Labor and Pensions Committee, promised that a bill raising hourly wages could reach the Senate floor before July 4. A similar proposal died last fall, when the two parties failed to reach a compromise before the November elections. Business leaders were disturbed that the measure nearly passed considering Republicans controlled both houses.

To win over Republicans this time, Kerry will put together an amendment to the minimum wage bill that includes tax relief for small businesses, says David Wade, one of the Senator's spokesmen. (Kerry also sits on the finance committee.) Another amendment will probably concern raising the tax deduction for health insurance premiums for the self-employed to 100%, up from the current 60%. The Senate passed a similar measure earlier this year, but it didn't survive the final version of the $1.35 trillion tax package. Kerry is not sure how the final bill "will take shape," but he says, "I would push it very hard." Kristie L. Darien, director of government affairs at the National Association for the Self Employed in Washington, D.C., which favors 100% tax deduction for health insurance, says she thinks passage is likely given that "health insurance, in this Congress, is a really high priority."

On other healthcare issues, Kerry favors expanding Medical Savings Accounts for younger workers and the self-employed and looking into legislation that would set up Association Health Plans, which would let small businesses band together to get lower insurance rates. While Kerry supports these initiatives, Wade says, his "perspective is that they shouldn't be a substitute for healthcare reform and broader access."

Kerry wants to restore the Small Business Administration's funding, which President Bush proposed cutting by 26% in his budget. Wade says he thinks he has a better chance to fully fund the SBA now that he's chairman of the Small Business Committee. He also wants to increase the SBA's microlending program for small startups, expand the SBA's women's business centers and provide government assistance for small business in poorer urban and rural areas. "Access to capital is a critical issue," Kerry says.

In the meantime, his immediate concern is helping small companies on the West Coast deal with escalating energy costs. Kerry wants the SBA to provide below-market disaster loans for businesses that can't afford to buy electricity. He plans to hold a hearing on this matter on June 23 in Washington. But Kerry is a realist. With new tax cuts planned, he realizes that it may be hard to find funding in the federal budget for these proposals that will help the nation's smaller companies. "To some extent, we are captives of the tax bill we just passed," he says. "I don't want to get into the position of promising everything and not being able to deliver anything."