New Hampshire technology entrepreneur Judy Orfao comes from a family of Democrats and voted for Bill Clinton--but backed George W. Bush in 2000. She's likely to vote for the President again, since none of the Democrats crisscrossing the state appeals to her. Orfao, who also describes herself as "disillusioned" with the Democrats' policies, says she "looks at Bush as someone who's not going to hurt me."

Orfao's opinion probably should be taken seriously by the nine Democrats seeking to become their party's standard bearer this year. In 1992, Clinton was elected as a pro-business centrist whose positions on issues like free trade and welfare reform mirrored those of the Republicans. But in the run-up to the nation's first presidential primary on January 27, the majority of Democratic candidates have charted a much different course. On a host of economic issues, they are distancing themselves from not only Bush but also Clinton. And not surprisingly, New Hampshire's entrepreneurs are perplexed by what they hear.

On no issue is the shift more obvious than free trade. Ten years after Congress narrowly passed the North American Free Trade Agreement--which Clinton signed into law--the top candidates are coming out as critics of the pact. In a speech at a Loudon, N.H., racetrack, Congressman Dick Gephardt of Missouri told New England's version of the white male swing vote--dubbed "NASCAR dads" by the campaigns--that "we didn't get anything out of" the deal, which dropped trade barriers between the U.S., Canada, and Mexico. And in fact a recent study from the Carnegie Endowment for International Peace asserts that Nafta has had a "neutral" effect on jobs in the U.S.

"Putting a picket fence around our economy and our borders is not a good idea."

-New Hampshire CEO Paul Houle

Of course, Gephardt voted against Nafta in 1993. Some of his rivals--including the two atop the New Hampshire polls at presstime--have only recently converted to the cause. A decade ago, as governor of Vermont, front-runner Howard Dean supported Nafta. Now he says he favors renegotiating the deal to ensure that workers have a right to collective bargaining and that environmental standards are upheld.

Massachusetts Senator John Kerry--who is running second--loves to point out that Dean has flip-flopped. In a debate last fall, he mocked Dean's suggestion that the U.S. should not trade with any nation with lesser labor standards. "That means we would trade with no countries," Kerry said.

But the senator has his own explaining to do. Though he voted for Nafta in 1993, Kerry now talks of "reviewing" trade deals. He also opposes a proposed free trade pact with South America. (For a look at the views of the rest of the field of serious contenders, see the chart on the next page.)

The fact that Democrats are coming out against free trade is certainly understandable. Even George W. Bush has dabbled in protectionism, most notably with his steel tariffs. Polls show the loss of jobs overseas is resonating among average voters. "If you ask people whether they favor or oppose free trade, the majority to two-thirds now say they oppose it," says Celinda Lake, a Democratic pollster. "People just feel that the jobless recovery has made this even more salient. It's not only blue-collar jobs going to China but white-collar jobs going to India. You've got even free traders moving to fair trade now."

But while that may be true of the general public, entrepreneurs still tend to believe that they can benefit from trade pacts, either by cutting what they pay in duties to ship goods overseas or by lowering costs by allowing them to contract out support services abroad. In New Hampshire--a state that shares a border with Canada--Nafta's benefits are particularly visible.

"I'm sensitive to the fact that we're losing jobs but I'm a realist," says Paul Houle, president of New Hampshire's High Technology Council and CEO of a Nashua start-up, Hawkeye Global, that provides wireless tracking technology. "Putting a picket fence around our economy and our borders is not a good idea."

The Democrats' stance on trade might not be such a big deal, except it fits into a larger pattern of indifference among the candidates to views that are popular among entrepreneurs. The candidates are unanimous in favoring a repeal of some or all of the Bush tax cuts. And on the issue of top concern to business owners--health care--their proposals come off to many as either radical or pie in the sky. Of Dean's universal health care plan, Judy Orfao quips, "Is that really going to happen in my lifetime?"

All of this leaves the business owners who would normally vote for a Democrat adrift. David Pastor, whose family has owned Fletcher's Appliance in Nashua for generations, voted for Al Gore and hates Bush's Iraq policy. But Pastor's vote is still up for grabs: He's undecided, trying to choose between Clark, Dean, and Kerry.

Though entrepreneurs are a small segment of the population--and one that is traditionally politically conservative--they constitute something of a bellwether in New Hampshire. Fully 96% of the state's businesses meet the U.S. Small Business Administration's definition of "small" by having fewer than 500 employees. And New Hampshire is a place with a longstanding antitax, antiregulation bent.

Nationally, the implications of the Democrats' shift away from Clinton's policies may be even more serious. The perception that Democrats were antibusiness is often cited as one reason the party lost three elections in a row starting in 1980. Since then, Democrats have burnished their economic credentials in several ways, including cozying up to entrepreneurs. "It's a kind of balance to their attacks on big business," explains University of Virginia professor Larry J. Sabato.

Democratic campaign consultant Peter Hart believes that achieving this balance is the key to victory. "My bet is that this year's candidate is more likely to have something in common with small-town businesses than with Wall Street," he says. By his own standard, then, the party is in trouble. Observes New Hampshire Business Review editor Jeff Feingold: "Whatever messages they are sending to small-business owners are getting lost in the shuffle."

Sidebar: The Surprising Politics of Trade

Democratic candidates are disavowing the policies of Bush--and Clinton.

Dick Gephardt

U.S. Rep. of Missouri
As House minority leader, strongly opposed Nafta in 1993. Has also criticized Clinton and Bush's China trade policy.

Howard Dean

Former Vermont Gov.
Supported Nafta because it was good for Vermont, but says that campaigning in the heartland has opened his eyes.

John Edwards

North Carolina Sen.
Opposed fast-track negotiating authority for Bush. Proposes a 10% tax cut for cos. that maintain U.S. ops.

Wesley Clark

Retired Gen.
Mostly mum on the issue. Says he's pro free trade, but that past deals cost the U.S. jobs.

John Kerry

Massachusetts Sen.
Backed Nafta and fast-track authority, but speaks of "reviewing" pacts. Opposes a South American accord.

Published on: Jan 1, 2004