Interview With John Kerry, Chairman of Senate Committee on Small Business and Entrepreneurship

He's the guy who put the "entrepreneurship" in the Senate Committee on Small Business and Entrepreneurship. As committee chairman in 2001, Sen. John Kerry, D-Mass., had the name extended to reflect its broader sense of mission. Now, with the Democratic takeover of Congress, he returns to the helm, pledging to strengthen capital programs and other opportunities for small-business owners, while fighting to give them a fair shot at federal contracts — largely by preventing Coca-Cola, Microsoft, Wal-Mart and other large corporations from scooping them up.

Kerry, a former entrepreneur himself, surprised colleagues 22 years ago for seeking a post on the low-profile committee, yet was pilloried as anti-business during his 2004 presidential bid campaign, over his support of a minimum-wage increase and curbing tax incentives for corporations. Kerry recently spoke to Inc.com staff reporter Angus Loten about raising the federal minimum wage, taming employer health-care costs, and other key issues the committee expects to take up in the year ahead.

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Inc.com: What's your impression of the minimum-wage bill that was recently sent back to the House with more than $8 billion in tax breaks for small-business owners?

Kerry: Obviously, if they were free-standing, some of our colleagues would embrace the larger portion of the tax pieces. But I think there was a feeling that it should've been a clean bill. I can't predict the outcome. We'll have to see what happens in committee. That's where it will be resolved. Some of the small-business measures in the bill we've advocated in the committee and we're supportive of them.

Inc.com: Opponents have said President Bush's proposed tax cuts for employees who buy their own health insurance are a threat to the employer-based system of coverage. Are they?

Kerry: They are. But what's happening in the health-care industry today is there's a rush to push away from defined benefits to defined contributions. So, the fact is, it's already threatened to some degree. There are decreasing numbers of people within the private sector who are carrying employer-based coverage. It's just the nature of the cost increases and pressures. The problem with the president's plan is that it really only affects a very small number of people who have enough money to be able to have the tax benefits make a difference. As a macro approach to the problem, it doesn't do enough. It doesn't really get at it. We have 27 million Americans who are working for small businesses who do not have health insurance. I think you have to have a much larger approach that helps bring down the cost of health care itself and reduces the cost of premiums.

I've always supported a plan to give a 50 percent tax credit for premiums to all small businesses, which would make the premiums much more affordable. I've also suggested an insurance pool with a cap on the costs for all businesses. You would reduce the premiums on every single health-insurance plan in America by about $1,500, which would have a profound impact. If you couple that with the tax benefit, it really starts to become affordable.

Inc.com: Where do employer cost-pooling initiatives like Health Saving Accounts fit in?

Kerry: I'm trying to find a way to thread that needle. It would be good to be able to do it. The first problem is, what's the extent of the pool, what's the makeup of the pool. The second issue is what are the standards for pools that might reach across state lines where you might have a difference in the quality of mandates currently required.

Those are the two biggest hurdles to that, and we're trying to figure out how you can create a pool that broadens participation without affecting the quality of care.

Inc.com: What's the state of Small Business Administration? There were reports in January that its disaster-loan program was running out of money.

Kerry: The SBA has been cannibalized. Morale is low. It's had a 37 percent budget cut. It's the most cut agency in the federal government right now. What we need to do is push legislation to provide short-term relief to the businesses that need it, while giving the SBA the tools it needs to deliver.

Inc.com: Seven months ago, Steven Preston became the agency's new administrator. How's he doing so far?

Kerry: I think he's honest and sincere about what he wants to achieve, but I don't know if he'll be permitted to. Part of that will play out in the budget fight next week, and we'll see what happens. I think he's moved continually to try to address some of the reform and accountability concerns, but has a long way to go.

We can give him a little time to grab the reins and implement the things he's said he'll implement. We'll have him up at the appropriate time and take a look at those issues.

Inc.com: Small-business federal contractors will soon have to recertify their size every five years to prevent large corporations from netting those contracts. Is five years too broad?

Kerry: We need to review it and figure out an appropriate timeframe. I want to hear from participants and I want to hear from lenders. We'll get a sense of that and we'll move on it very quickly. We'll have a hearing and evaluate it in the coming months.

Inc.com: What else can the government do to foster entrepreneurship?

Kerry: The most important thing is start-up facilitation. That can be in the form of capital programs, networking, mentoring, and other opportunities. Another way is through micro-lending. It's a shame to see that program under so much stress with this administration.

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