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LEGAL ISSUES

The Kerry Pitch

Yes, John Kerry is your soul mate.
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One night in 2000, Sen. John Kerry invited 15 Massachusetts technology entrepreneurs over for dinner. Arriving late, Paul Egerman, a veteran of tech start-ups, wasn't able to find a parking space and pulled into a dubious spot in front of his host's Beacon Hill mansion. The senator greeted him at the door with a parking pass, then asked for a favor in return. "He gave me a piece of bond paper with just his name and asked me to give him an autograph," Egerman recalls. "I felt stupid." But he signed -- and then took a second to process what he'd just learned: John Kerry collects entrepreneurs' autographs.

Those who assume that a liberal senator from Massachusetts would rather collect the autographs of tax collectors might be even more surprised. Like most Democratic senators, Kerry routinely receives poor ratings from the tax-cut-obsessed National Federation of Independent Business. The group, which represents 600,000 small-business owners, wars regularly with congressional Democrats over the minimum wage, the estate tax, and almost everything else. Tapping a trial lawyer as his running mate did nothing to boost Kerry's image at NFIB.

And yet, in two decades in the Senate, Kerry has put together a distinct agenda with respect to entrepreneurship, one informed by his own experiences as a business owner and his roots in one of the nation's most innovative, growth-oriented state economies. "A lot of political folk, especially Democrats, didn't used to get the private sector," says John Moriarty, a former lobbyist and longtime Kerry ally. "But he understands the value of it, of rewarding results based on merit." Still, Kerry has work to do. An informal survey of Inc. 500 CEOs, for example, shows Kerry winning the support of only 16% to Bush's 57%. They may recall that in 2000, Al Gore, despite a long history as an enthusiast of technological innovation, came to be perceived as an opponent of business altogther once he pledged to defend "the people versus the powerful."

The Kerry camp would argue that their man has some of the best Main Street business credentials since Truman. In 1976, Kerry and his friend K. Dun Gifford opened a cookie business in Boston under their mothers' maiden names, Kilvert & Forbes. It was intended to sound, Gifford says, like "a pretty snooty upscale company."

Though Kerry also had a law practice at the time, Gifford says his partner proved to be a hands-on operator, reviewing sales data daily. They started with two types of cookies based on family recipes, selling for $1.25 each because of costly ingredients. Kerry insisted on the Lindt chocolate he remembered from his Swiss boarding-school days and the same butter used in traditional croissants.

Political ambitions cut short Kerry's cookie-mogul dreams; when he ran for office in 1982, he bought out Gifford, then sold the business. "I could've been Mrs. Fields," he joked with reporters in May, but "I thought it was smarter to earn $23,000 as lieutenant governor."

In the Senate, Kerry volunteered to serve on the Committee on Small Business and Entrepreneurship, even though it is widely seen as a backwater. At first, many thought it an effort to move out of the considerable shadow of his state's senior senator, Edward Kennedy. Both Democrats and Republicans have since credited Kerry with helping to expand the committee's range as its ranking Democrat and, for two years, its chairman. He has not spent as much time as Republicans lamenting the burden of taxes and environmental and labor regulations, but he has proposed tax-simplification and regulatory-assistance programs designed to make it easier for small businesses to comply.

Although pro-business activism does not always square with fealty to Democratic interest groups, Kerry has at times managed to balance the two, sponsoring legislation to encourage individual investment: tax breaks on long-term gains from small-business stock, and an expanded capital-gains exclusion for small-cap companies. He has also pushed programs designed to benefit businesses in disadvantaged urban and rural areas, subtly challenging the logic of affirmative action by prioritizing place rather than race.

Kerry has used his Beacon Hill dinners to keep in touch with local health care, software, and venture-capital communities. "He's a man of Massachusetts," says Moriarty. "The tech industry has been economically important for most of his adult life. Enabling everyday high-tech start-ups is small business." These days, the state's economy is defined more by the tech-heavy Route 128 corridor than by Cape Cod docks or Boston banks; growth has come in the form of small companies, frequently founded out of universities and research labs. "He gets that it's an incubator economy," Moriarty says.

As a presidential candidate, Kerry has proposed the types of initiatives that would likely play well at those entrepreneurial dinners, even if they don't excite the NFIB. The centerpiece is a national "small-business opportunity fund," with a focus on loans to micro-enterprises and a promise to increase federal venture capital investments. He now suggests scrapping capital-gains taxes on new long-term investment in small businesses and speeding up depreciation schedules for high-tech equipment and software.

In sum, Kerry's platform emphasizes access-to-capital issues over payroll concerns like taxes and health care costs (although Kerry has proposals dealing with those subjects, too). "There's a clear policy distinction between looking at small business as a large mess of small interests and looking at a segment of fast-growing gazelles, the real engine of the U.S economy," says the Democratic Leadership Council's Rob Atkinson, who has advised Kerry. "That is what Kerry has done differently from the more traditional Democratic approach and actually from the Republican approach."

While Kerry may never become Mrs. Fields -- although his personal record as a businessman compares favorably with George W. Bush's -- his ultimate success as an entrepreneur might be in redefining the Democratic Party around a cutting-edge pro-business agenda. "Why would a guy go start a cookie company?" asks Moriarty. "He gets the sheer fun of building and creating something that becomes viable. He's got the soul of an entrepreneur."

Sidebar: Where the Vote Needs to Be Rocked

The Bush-Kerry race may dominate the news, but small-business lobbies are also focusing on a number of key state and local races. Here's a glance at the contests and the candidates.

South Dakota

Tom Daschle (D-inc.) vs. John Thune (R)
Senate Minority Leader Daschle has a real race on his hands against Thune, who held a top job at the Small Business Administration under Ronald Reagan, and then served in the House. There doesn't seem to be a tax that Thune wouldn't support cutting. He also would allow the self-employed to deduct 100% of their health care.

Alaska

Tony Knowles (D) vs. Lisa Murkowski (R-inc.)
As a business owner herself -- she owns a pasta wholesaler -- Murkowski is a strong voice for entrepreneurs. But she's tainted by nepotism: Her father appointed her to his old Senate seat in 2002 when he vacated it to become the state's governor. Though Alaska is heavily Republican, former governor Knowles is himself an entrepreneur (he owned four restaurants) and Alaskans like that he's a maverick who breaks with his party on issues such as drilling in the Arctic Natural Wildlife Refuge.

Washington

Patty Murray (D-inc.) vs. George Nethercutt (R)
Bush and the business lobby have thrown their weight behind U.S. Rep. Nethercutt in an effort to snag this seat from Murray, the quintessential "soccer mom" Democrat. Nethercutt's voting record, which gets a perfect ranking from the United States Chamber of Commerce (USCC), has included support for most tax-cut proposals. He's also outspoken on esoteric issues such as reducing federal paperwork for business owners and curtailing ergonomic rules. Still, Nethercutt, a free-trade advocate who hails from the conservative eastern side of the state, will likely have a hard time winning votes in Seattle, where the memory of the violent 1999 World Trade Organization protests lingers. He was an adviser to that notorious conference.

North Carolina

Erskine Bowles (D) vs. Richard Burr (R)
The race for John Edwards's seat is a win-win for entrepreneurs. Bowles, who ran the SBA under Clinton and then served as White House chief of staff, advocates a tax credit for businesses offering health insurance; pooled access for affordable health care premiums; and a doubling of the SBA's budget, to $1.5 billion. However, the NFIB and the USCC back U.S. Rep. Burr, in part because of Bowles's support for Hillary Clinton's failed health care plan.

Missouri

Claire McCaskill (D) vs. Matt Blunt (R)
Business groups love Blunt, the Missouri secretary of state who has pledged to cut taxes, increase penalties for fraudulent workers' compensation claims, and even offer tax breaks for new hires and for job training. He faces State Auditor McCaskill, who ousted unpopular Gov. Bob Holden in the August Democratic primary.

Washington

Christine Gregoire (D) vs. Dino Rossi (R)
Former state senator Rossi promises to cut red tape, raise tax incentives for small businesses, and make health insurance affordable. And he has fiscal know-how: In the state senate, he was well respected as a budget whiz, implementing the state's lauded results-based budgeting approach. State Attorney General Gregoire, who negotiated the $206 billion Big Tobacco settlement in 1998, is close to outgoing Democratic Gov. Gary Locke and supports his no-new-taxes budget. Still, some of the blame for the state's so-so economy is laid at his door and may taint her, too.

Utah, District 2

Jim Matheson (D-inc.) vs. John Swallow (R)
This is a rematch from the 2002 campaign, which Matheson won by just 1,641 votes. Swallow, who co-founded a high-tech lighting start-up, voted for tax cuts and won NFIB accolades during a stint in the state legislature in the '90s. However, Matheson has won the USCC's endorsement for his moderate pro-business stance; considered a valuable Democratic ally, he's voted to eliminate the estate tax and advocates tax cuts for small businesses.

Arizona, District 1

Paul Babbitt (D) vs. Rick Renzi (R)
Renzi was the chief sponsor of a veterans' entrepreneurship bill and has also fought for tax breaks. A serial entrepreneur, he previously started a real estate firm and an insurance company. Unions, environmentalists, and MoveOn.org, meanwhile, support Babbitt, the presumptive Democratic nominee (and brother of former Interior Secretary Bruce Babbitt).

Texas, District 32

Martin Frost (D-inc.) vs. Pete Sessions (R-inc.)
Thirteen-term Democrat Frost helped redraw district lines in the 1990s, removing Texas Republicans from House power. Back in charge, the GOP repaid the favor by setting up this incumbent vs. incumbent race. Sessions, a former chair of a local chamber of commerce, has pushed for tax cuts and for better health care access for entrepreneurs; he has a 100% USCC rating, versus Frost's 39%. Though he's a storied survivor, this just might be Frost's last stand. -- Stephanie Clifford




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