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LEGAL ISSUES

A Missed Opportunity

An Inc. editor offers his comments on what was wrong with the 1995 White House Conference on Small Business.
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Small-business owners just don't get how Washington works. Which may be why they blew their chance to affect public policy at this year's White House Conference on Small Business

Last summer almost 2,000 delegates converged on Washington, D.C., for the White House Conference on Small Business (WHCSB). Their primary goal was to trim the 431 issues raised at earlier state conferences to the 60 they would present to President Clinton in the final report of the conference. When it came time on the last day of the conference for the delegates to cast their final votes for the 200 or so issues remaining, the electronic voting system developed by MCI, one of the conference sponsors, broke down.

Springing into action, Mark Schultz, executive director of the WHCSB staff, called NationsBank, another sponsor, and 120,000 pennies were trucked over to the Washington Hilton. In the meantime, the hotel sent a couple hundred ice buckets to the voting area. For each vote a delegate made, a penny was dropped into the ice bucket representing that issue. When the voting was finished, each bucket's contents were dumped into a coin counter for the final tally.

The staff's quick solution to a potentially grave problem was symbolic of what was right about this year's WHCSB. At every turn Schultz and his staff turned a potential free-for-all of delegates with disparate interests into a relatively flawless four-day conference, all with an even hand. What's more, their work was done in the face of a lot of whining, complaining, and accusations of unfairness leveled by small-business owners and interest groups.

Even two months after the conference, the complaints continued. Representatives of the Veterans Business Council of California testified before the House Committee on Veterans Affairs that "the final insult by the Clinton administration is that the White House completely and willfully refused to place veterans' issues on the agenda of the White House Conference on Small Business in spite of a yearlong campaign by our group and the requests of over 20 leading congressional heavyweights on both sides of the aisle from both houses." They went on to single out Schultz for refusing to put veterans' issues on the agenda.

Well, that's only part of the truth. Elected delegates at the state level submitted a list of issues to the WHCSB. Those were whittled down at each of the regional conferences to come up with the ones that were voted on in Washington. What Schultz had told the veterans and other small-business interest groups was that if they wanted to get issues onto the table, they should get themselves elected as delegates. In fact, the National Association of Women Business Owners, the American Franchisee Association, the National Minority Coalition, and the National Association for the Self-Employed came to the WHCSB with a combined wish list of 44 issues. Of those, all but two made the final cut.

The 1995 conference, unlike its predecessors in 1980 and 1986, was well attended by representatives of the White House. Clinton appeared with Gore for the opening keynote address. The heads of several agencies were present throughout. While the all-business crowd received Clinton surprisingly warmly, its behavior was decidedly rude during many of the sessions. For one thing, there was persistent chattering among the attendees in the general sessions as speakers attempted to address the audience. Perhaps the worst example of discourteousness came when Carol Browner, head of the Environmental Protection Agency, announced that the EPA would reduce or waive penalties for small businesses with minor, first-time violations of most environmental laws. Small companies, she said, would also be given a six-month grace period to come into compliance. Good news, you'd think. But when Browner announced that the goal was to bring people into compliance because, after all, we didn't want to undo 25 years of environmental protection, a delegate shouted from the floor, "Yes, we do!" and went on to heckle the administrator. The image (consistent with behavior during other sessions) probably didn't leave administration representatives feeling all that charitable toward the audience.

The WHCSB was designed to give small business a chance to get the president's ear. But there is absolutely no obligation for the president to adopt any of the conference's recommendations.

According to the rules set up by the conference staff, the final 60 issues were to be passed on to Clinton unranked, so that it would be impossible for him to know which ones received the most votes and which ones squeaked onto the list. Nevertheless, it's interesting to note that restoring the deductibility of travel and entertainment expenses to 100% -- hardly the most pressing issue facing growth companies -- got the second highest vote by a wide margin.

Issue #280, which called for Congress and the president to "take immediate steps to bring the federal budget into balance by eliminating or reducing appropriate programs, commissions, agencies, and departments," made the final list. But the delegates apparently were referring only to those programs, commissions, agencies, and departments that didn't benefit them specifically, since issues #286, calling for the elevation of the Small Business Administration to a cabinet-level position, and #288, calling for the development of a process to monitor the implementation of the WHCSB's suggestions, also made the final list.

And so did some issues that were just plain baffling, given the overarching call for government to become more fiscally responsible and to intrude less in the operations of small-business owners. How do you explain the adoption of issue #141, calling for a presidential commission to study the enforcement and impact of federal antitrust laws designed to ensure the survival and diversity of small businesses unable to compete with large companies that extract unfair competitive pricing from manufacturers and service providers? Or #139, calling for the creation of a small-business relief fund to assist small businesses displaced by the establishment of a big business in their localities, with the big business contributing an annual fee to the relief fund? Apparently, free markets are good only so long as they don't make competition too tough for small business.

Certainly, there were many issues among the final 60 that got beyond petty self-interest and are perennial problems for even the most sophisticated growth companies. The call for a capital-gains tax break for investments in small business as well as the clarification of independent-contractor status (the issue with the most votes) come to mind. But those issues may get lost in the noise of the 58 others.

Before the president and Congress consider heeding the cry of issue #287, which calls for the convening of a WHCSB every four years, they'd be wise to examine just how successful the 1995 conference was in getting beyond matters of narrow self-interest to truly represent what was in the best interest of the country's small businesses as well as the health of the overall U.S. economy. When they examine the 60 top-ranking issues presented at this year's conference, they should apply the same criteria of fiscal responsibility and accountability that the delegates demanded from government. In the final analysis, what small business missed at the WHCSB was the opportunity to exhibit before a receptive audience of government officials just how powerful, articulate, and responsible an economic force it has become.

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Jeffrey L. Seglin is an editor at large at Inc.

Last updated: Nov 1, 1995




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