Senator Ted Kennedy is not known to be especially popular among the rank and file of the National Federation of Independent Business. Yet the organization, which has roughly 500,000 members, recently enlisted one of Kennedy's former aides to lobby more extensively on its behalf, and is scheduling a meeting with Kennedy to discuss upcoming legislation.

The NFIB's newfound interest in working with such liberal stalwarts is a sign of the times in Washington, as the capital's army of trade groups, business associations, and industry lobbyists scramble to make nice with the Democrats who now run Congress. Historically, trade groups have switched loyalties when the control of Congress has flipped. This time, however, the transition may be particularly bumpy. Given the unprecedented degree to which many associations had cozied up to the Republicans in recent years, some have reason to fear a major loss of clout in the policymaking process.

Few groups have more work to do than the NFIB, which has donated lavishly to Republican campaigns in the past and in return saw repeated action on its signature issue of tax cuts. Even in 2006, as Republican political fortunes faltered, the NFIB's political action committee donated $837,000 to congressional candidates, with nearly 90 percent of that money going to Republicans. In terms of simple ROI, that money probably could have been put to better use: Twenty-three of the 28 Republican incumbents who were voted out on Election Day had received money from the NFIB.

"The NFIB has long been pretty rabidly Republican," says Burdett Loomis, a professor at the University of Kansas who has written extensively on the lobbying industry. In the Pelosi era, the group "may well be learning the importance of having folks on both sides of the aisle," Loomis observes.

Leading the NFIB through this transition is Todd Stottlemyer, a software entrepreneur from northern Virginia with no obvious partisan baggage, who took over the group last year. One of the first things Stottlemyer did after the midterm election was to increase by a third, to $20,000, the NFIB's monthly payments to Ogilvy Government Relations, a top lobbying firm it has retained since 2005. The higher fee reflects the extra work the firm will do to help the NFIB navigate the new political realities. "My view is that small business--I know it sounds clichéd--should not be a partisan issue," says Stottlemyer, who ran Apogen Technologies before its sale in 2005. Of course, this ignores the fact that the NFIB and others took exactly the opposite approach over the past 10 years.

Health Care and Taxes

Just as trade associations are eager to reach out to Democrats in Congress, many Democrats are eager to reach out to the business community. Some potential allies are newly elected moderates, while others are longtime lawmakers who hope to burnish their credentials early in this Congress.

Health care is one area to watch. Stottlemyer says he isn't giving up on legislation that would allow employers to join group health plans, which would be exempt from certain basic insurance regulations. The NFIB's preferred bill has some Democratic support but lacked enough votes to pass the Senate even under GOP control. To push something over the hump now would require making significant headway with Democrats.

There is a chance, however, for a compromise. John Gay, the top lobbyist at the National Restaurant Association, admits that, in the past, his members balked at Democratic alternatives like the Small Employers Health Benefits Program, which was introduced by Senators Richard Durbin of Illinois and Blanche Lincoln of Arkansas in the last Congress. Like the legislation that was favored by Republicans, this bill would create association health plans, but it would not exempt them from insurance regulations and it mandates government oversight of the program. Despite their previous dislike for these proposals, some business groups are now warming to them. "At the time, looking over them, they didn't seem as good as those offered by Republicans," explains Gay. "But now there are new chairmen, new majority leaders, and if those proposals get revived--well, you have to retool your expectations."

Like health care, taxes are a subject that trade groups are watching carefully. In the last Congress, there was a serious effort to abolish the estate tax. Today, Congress is considering bolstering the Internal Revenue Service's budget for business audits and levying new payroll taxes on S corps. Stephanie Silverman, the president of the 100,000-member S Corporation Association, says the group's members are nervous about the payroll tax idea. The group is currently scheduling meetings with members of the House Ways and Means Committee to discuss the plan. "We're trying to make them aware of how many S corporations there are in their states," Silverman adds.

"We'll Support Anybody"

While the new order in Washington has put many trade associations on the defensive, some see an opportunity to play offense. Case in point: The National Association of Professional Employer Organizations, whose member companies handle payroll and benefits administration for small employers. For years, PEOs have tried and failed to persuade Congress to create a legal framework for their industry under the IRS code. They want government action because one of their biggest challenges is convincing customers that there is little risk to outsourcing key HR functions.

After the election, Milan Yager, the executive vice president of the PEO trade group, moved quickly to lobby Democrats on the PEOs' proposal. He framed the issue as a step forward for the industry, as well as a step forward for workers whose employment rights ought to be secured by law. That pitch would ring true for a Democratic audience, he figured. In January, Yager's efforts paid off. The Senate voted to add the PEO proposal to a list of small-business tax breaks and other amendments it attached to the bill that would raise the minimum wage to $7.25 an hour. At presstime, Yager was lobbying the House to sign off on the same provision.

The NFIB, with its lobbyists' help, also hopes to find ways to frame its views that will appeal to Democrats. Stottlemyer has already met with Lincoln and hopes to meet soon with Durbin, Kennedy, and others. On Capitol Hill, Stottlemyer has received high marks for making these overtures. Still, forming a political friendship is a two-way street. Come 2008, will the NFIB's board and rank and file allow its financial largesse to be divided more evenly than it was in 2006? Stottlemyer is tactful. "We'll support anybody," he promises, "who supports small business."

Kate Ackley writes about lobbying for the Capitol Hill newspaper Roll Call. She can be reached at