National Clothesline

As Democrats prepare to take control of Congress next month, the question arises: How will the change in leadership affect drycleaners and other small businesses?

Over the past six years, Democratic legislative initiatives were stymied while Republicans focused on tax cuts and reform of tort, regulatory and bankruptcy systems. Now the Democrats will have a chance to put forth measures more to their liking. According to John Arensmeyer, writing in the Small Business Review on-line newsletter, action in several key areas could come in the 110th Congress.

Minimum wage is a top priority of incoming Speaker of the House Nancy Pelosi and the first increase in the federal minimum wage in 10 years is likely to pass.

On health care, Republican efforts to enact an association health insurance plan that would have allowed small business owners to pool their buying power failed in the face of bipartisan opposition. That legislation would have superseded state insurance laws, resulting in lower levels of mandated coverage and enabling associations to avoid covering unhealthy groups, opponents have said.

Now an alternative Democratic bill, sponsored by Senators Richard Durbin of Illinois and Blanche Lincoln of Arkansas, may emerge. This plan would try to reduce premiums by allowing businesses with 100 employees or fewer to buy en masse. A choice of coverage would be provided by private insurers, while the same agency that oversees health insurance for federal employees would manage the program. The bill has widespread support among Democratic senators, Arensmeyer said.

In the House of Representatives, Maine Democrat Tom Allen has gained national political attention for small business health care legislation that is similar to the Senate bill but focuses on businesses with 50 or fewer employees.

Noting that a large proportion of the nation’s uninsured and underinsured individuals are working in small businesses, Allen has said that “expanding health care coverage for small business owners and their employees should be a top priority for Congress.”

Access to capital and small business-specific regulatory reform were part of the Democrats’ 2006 Innovation Agenda and are likely to make the legislative priority list in the next Congress. The Small Business Administration (SBA) budget has been cut almost 50 percent over the past six years. Attempts by Democrats, sometimes joined by Republican lawmakers, have met only with modest success.

In the 110th Congress the ranking Democrats of the House and Senate Small Business Committees, Nydia Velasquez of New York and John Kerry of Massachusetts, respectively, are expected to become the new committee chairs and push to restore funding for the SBA’s flagship 7(a) loan program and initiatives such as the Manufacturing Extension Partnership (MEP), the Alternative Technology Program (ATP) and the Small Business Innovation Research Program (SBIR).

“I look forward to proactively developing policies that will provide this nation’s 24 million small businesses with the resources they need to succeed in today’s challenging marketplace, from lowering the cost of capital to reducing regulatory burdens for entrepreneurs,” Velazquez said in a statement.

On taxes, a full repeal of the estate tax is probably dead, but Democrats were working last year on a compromise bill that would have raised the exclusion to $3.5 million ($7 million per couple) by 2011.

According to the Center on Budget and Policy Priorities, that would reduce the pool of taxable estates in which a small business or farm is the main asset to 50 annually.

Increased deductibility of small business expenses is a bipartisan issue that could succeed, but it may be impeded by pressures to trim the budget deficit.

Democrats are also likely to revisit the Alternative Minimum Tax (AMT), which hits many small business owners.

Energy issues also loom large. The new Congress might offer fuel cost relief in the form of tax credits, incentives for companies developing alternative energy and conservation measures.