Who truly speaks for small businesses?

By John Stoehr

May 22, 2012

http://blogs.reuters.com/great-debate/2012/05/22/who-truly-speaks-for-sm...

Everyone knows that small businesses hate President Obama’s historic healthcare reform law, right? At least that’s what the nation’s leading small-business advocacy group would have you believe.

Joining 26 states, the National Federation of Independent Business challenged the law all the way to the U.S. Supreme Court in March. It claimed the “individual mandate” is unconstitutional and would bankrupt small businesses with unnecessary costs.

Yet while the NFIB claims its multimillion-dollar lawsuit is on behalf of job creators and small businesses everywhere, it’s unclear whether small businesses genuinely support the NFIB position. A close look at its record suggests that the NFIB uses the politically valuable mantle of small business to pursue an agenda that may take its cues from elsewhere.

For one thing, many of its 340,000 members, most of whom employ 20 or fewer workers, have already benefited from the law. According to a March report in the Wall Street Journal, members have seen costs go down thanks to tax credits that were built into the law. Small firms in industries like advertising have also been able to compete with large national companies for talented employees. As one member told the WSJ: “[The NFIB is] doing a very big disservice to their members” by opposing the healthcare law.

For another, the NFIB has a record of lobbying for issues that benefit big businesses, not necessarily small ones. Consider a widespread state tax loophole that lets big-box retailers like Wal-Mart and Home Depot transfer income to out-of-state subsidiaries. This loophole often allows the chain retailers to pay no state income tax, while small businesses do. Yet the NFIB has fought against closing such loopholes.

Moreover, small businesses generally favor some kind of regulation, because such standards often make them more competitive with big companies. The NFIB is opposed to regulation on principle, but it also claims, as many Republicans do, that the threat of regulation on entrepreneurs and job creators – they have a habit of calling it “regulatory uncertainty” – has kept businesses from hiring and thus from stimulating the economy. But observers across the political spectrum say this is a canard. Regulation isn’t preventing businesses from hiring. Poor sales are.

Perhaps it is no surprise that the NFIB fights for issues that the Republican Party as well as big corporations also fight for: deregulation, lower taxes and tort reform. According to the Center for Responsive Politics, the NFIB’s political action committee has raised over $20 million since 1998. In 2010, nearly 94 percent of contributions went to Republicans. This year it’s 98 percent. It spent $9.5 million lobbying against the healthcare reform bill in 2010. And last year, the NFIB received $3.7 million from Crossroads GPS, according to Bloomberg. Crossroads GPS is a non-profit with close ties to Karl Rove, the political adviser of George W. Bush.

Given the partisan affiliations and positions, it’s unsurprising that other groups who claim to speak for small business, such as Family Values at Work, cast a gimlet-eye at the NFIB. So do small-business owners and small-business advocacy groups. Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, called the NFIB a “small-business pretender” and “lapdog” of the U.S. Chamber of Commerce. In April, J. Kelly Conklin, a New Jersey cabinetmaker, wrote in the Hill: “Whether we’re talking about health care or taxes (or both at the same time), NFIB always seems to side with the big fellas – big insurance, big banking, big business – not little guys like me. Why? I don’t know.”

Perhaps few do.

What’s more certain is that calling yourself a small-business group while serving the interests of big business has political advantages.

A Gallup poll showed most Americans trust small business to create jobs, more than they do large corporations or the U.S. Congress. That kind of public opinion explains why the major parties can’t agree on anything unless it has something to do with small business.

And it explains why the NFIB, in speaking for small business, hopes to be seen as speaking for the American people – even though, if the Supreme Court overturns the healthcare law, it’s the American people and their trusted small business who may suffer most.

PHOTO: Buttons reading “Repeal Obamacare” are displayed at the American Conservative Union’s annual Conservative Political Action Conference (CPAC) in Washington, February 9, 2012. REUTERS/Jonathan Ernst