Business finance lehman small

The emasculation of Bill Clinton's health care plan, the most ambitious social program proposed by a president in decades, began with people like Sharon Beard, the owner of a fence company in Springfield, Ill. She was one of more than 600,000 foot soldiers in the war fought and won by the National Federation of Independent Business against the Clintons. She championed free enterprise in dozens of entreaties to Congress, countless appearances on television, even a protest rally when Clinton's health reform bus tour came to town. And that helped kill the principal financing mechanism of health care reform--a proposed "employer mandate" requiring most employers to pay their workers' health insurance.

The debate over a much less ambitious reform plan will resume when Congress returns to work next week, but the NFIB's role in the demise of Clinton's sweeping overhaul plan marks a major shift in Washington's--and the nation's--political culture. No longer do a handful of lobbyists for corporate titans from the Business Roundtable, the National Association of Manufacturers and the U.S. Chamber of Commerce call the shots for conservatives on big economic issues. The era of grass-roots-oriented, small-business lobbying has emerged from the rubble of health care reform.

Unlike most of the timid corporate players in Washington, the NFIB gambled by challenging Bill and Hillary Clinton at the height of their popularity at the start of the health care debate and prevailed by applying unrelenting pressure to the lawmakers who held the fate of reform in their hands. In doing so, the NFIB turned a Washington certainty upside down: The received wisdom was that the small-business lobby's glory days had gone after Republicans were turned out of the White House. The reality is that the NFIB's power has reached its zenith with a Democrat there.

The NFIB's victory is all the more remarkable because it flew in the face of strong public opinion. Significant majorities of Americans still tell pollsters they support the financial scheme Clinton proposed, which mandates that most employers pay a large share of their workers' health insurance. NFIB leaders knew they could not solicit public sympathy by basing their appeals on small businesses' bottom lines. Instead, they used an NFIB study to argue that Clinton's plan to make most firms pay as much as 80 percent of their workers' insurance costs would kill up to 1.5 million jobs. The group faxed the study to all 535 members of Congress, knowing it would carry particular weight in the small-business-heavy South and West.

The overall NFIB strategy was plotted by 11 lobbyists in Washington led by John Motley, a former NFIB membership salesman who despite having no experience working for a legislator has a virtually photographic knowledge of congressional districts and a keen sense of which way a member will vote. "If John had been dropped down from another planet and there was just one tiny speck on earth where he was supposed to be," says NFIB lobbyist Mark Isakowitz, "he's landed on it."

The basic strategy was this: no compromise on employer mandates (72 percent of NFIB members said they would rather have no reform at all); willingness to compromise on secondary issues, like how the government might structure insurance purchasing cooperatives for small firms at the end of the legislative process, and support for insurance reforms including subsidies for poor persons and a provision that workers be allowed to carry their health insurance if they switched jobs. To pay for increased coverage, they proposed tax penalties for high-priced benefit plans.

Politically, NFIB members picked their battlefields. Since conservative Republicans were already on their side and liberal Democrats were firmly in the other camp, the NFIB's strategy was to ignore several committees where moderate lawmakers did not hold the balance of power and concentrate on panels like the House Energy and Commerce Committee and Senate Finance Committee, where conservative Democrats and moderate Republicans were the essential swing votes. The makeup of these panels was most geographically and politically representative of the country, and the NFIB believed that defeats there would send signals that the rest of Congress should follow suit. The plan worked. The only surprise to NFIB leaders was that the dominoes fell as slowly as they did.

Swingers. Throughout the struggle, the NFIB targeted its attention on a group of potentially "gettable" Democrats and Republicans whose positions change from issue to issue and week to week. That meant the NFIB pressure was applied to the likes of Energy and Commerce member Richard H. Lehman, a Democrat from Fresno, Calif., who won election in 1992 with just 1,000 votes. "That's as close as you get," says Motley. "And there are lots of farms there and small businesses." In other words, Lehman was acutely vulnerable to small-business pressure.

The NFIB's seminal victory came before this year's congressional Easter recess. The target was John Dingell's Energy and Commerce Committee. Six Democrats were undecided on the employer mandate, and the powerful chairman was trading away all manner of goodies to get the bill out of committee. The NFIB singled out Jim Slattery, a Democrat running for governor of Kansas--a state heavy with small businesses.

Just one day after Dingell leaked a plan containing mandates, small businesses blitzed not just Slattery's district but the whole state, with phone calls, faxes and handwritten letters. It joined forces with Hallmark Cards Inc., which employs 5,000 Kansans and licenses hundreds of card shops throughout the country, and Pizza Hut, based in Wichita. Typical of the letters was one from Ronald Williams, owner of Anywhere Travel of Salina: "If this health plan is mandated by the federal government, you will have 12 new people on the unemployment rolls in Salina because I will be forced to shut my businesses down." Slattery ended up siding with small businesses in opposing a mandate and backing a plan that would finance health reform by taxing generous benefit plans--an idea the NFIB had long advocated and that was violently opposed by organized labor, whose members now enjoy such plans tax free. The Energy and Commerce panel ended up being unable to draft its own health care bill because there was not a majority for any of the options floated during its deliberations.

Other House panels struggled equally as hard, but the NFIB decided to concentrate its fire by mid-July on the 65 Democrats who remained uncommitted on the mandate. Using the resources of an informal antimandate coalition, the NFIB whipped its members into a panic, sending out 500,000 "action alerts" carrying warnings like this one: "Because a new plan would stick YOU with the bill for a new health care system, you need to contact Rep. X RIGHT AWAY!"

Inside the beltway, NFIB lobbyists arranged meetings with the members on the fence. "This is what we work for all year long," says Motley, "so that when you get to the endgame, you have access. Our goal when it gets to the floor is to have 10 to 15 gettable. Then the whole world drops down on them." Clearly, the strategy worked. House Democratic leaders were unable to bring to a vote any kind of health care plan with an employer mandate because nose counters said it would be defeated. All efforts are now aimed at devising much less ambitious legislation.

Lobbying in the Senate was dicier because the Finance Committee did its main work in late June and early July behind closed doors. Rumors arose that panel members were privately considering a "triggered mandate" on companies, which would take effect only if voluntary measures to achieve universal health insurance failed. The NFIB didn't wait to find out how seriously the idea was being pushed. NFIB canvassers launched a massive assault on five Finance Committee Democrats, including Max Baucus of Montana, whose state has only 50 businesses with more than 100 employees. During the July recess, the NFIB packed three health care seminars in Montana with 800 small businessmen. The message was "no mandates, no triggers, no taxes." In the end, Baucus supported the mandate, but proposed an exemption for small firms that employ fewer than 50 workers. More important, the equivocations on Clinton's bill helped guarantee that the panel could not muster a majority to report out any reform plan.