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Fiscal Cliff Spin Wars Show Small-Business Split

Small-business owners have taken up arms on both sides of the spin wars between President Barack Obama and House Republicans over the fiscal cliff, spotlighting a growing rift within K Street’s small-business lobby.

Long dominated by GOP-friendly trade associations such as the National Federation of Independent Business, the small-business advocacy community is increasingly making room for upstart liberal groups. These include the American Sustainable Business Council, which boasted that four of its members attended last week’s exclusive White House briefing for 15 small-business leaders.

“For once, we finally have a forum,” said ASBC co-founder and CEO David Levine, who added that his group was founded in part as a counter-weight to the NFIB and the U.S. Chamber of Commerce. Such groups “were not representing the voices of large numbers of businesses,” he said.

The ASBC promotes environmental protection and social equity, among other issues, and purports to represent 150,000 businesses through a network of 50 trade groups. Unlike the NFIB, the chamber, and a host of better-established K Street trade groups, the ASBC supports letting the Bush-era tax cuts expire for those with annual incomes of more than $250,000.

“The members in our network have been pretty clear that what would help them is if consumers had more money in their pockets, and if we had more money to spend on infrastructure and health care,” said Kevin Simowitz, director of the Maine Small Business Coalition — an affiliate of the Main Street Alliance, another small-business group that has worked alongside the ASBC on the fiscal cliff and other issues.

Officials at the NFIB, which pegs its membership at about 350,000, have complained about their exclusion from White House meetings. Some acknowledge that Obama’s cold shoulder comes as no surprise: Not only does the NFIB spend millions backing mostly Republicans on the campaign trail; the group was a lead plaintiff in the Supreme Court case challenging Obama’s health care law.

“As a business person, you want to hear dissenting opinions,” said NFIB member Kevin Maloney, president of Northeast Express Transport, a Windsor Locks, Conn., transportation service with about a dozen employees. “If all you’re hearing is your own opinion fed back to you, you’re never going to hear what you should hear. So for the president to invite only the small-business organizations that support his position is short-sighted and doesn’t serve the country well.”

But the NFIB and its allies may soon get their own hearing, thanks to their GOP friends on Capitol Hill. House Majority Whip Kevin McCarthy, R-Calif., will meet with a group of small-business leaders in his office Wednesday. NFIB officials may also soon bring a small-business contingent to Capitol Hill.

McCarthy released a campaign-style YouTube video last week that coincided with Obama’s visit to a toy factory outside Philadelphia; it’s gotten more than 18,000 views. The video features an engineering company owner in Collegeville, Pa., warning that the Obama tax plan “ignores the way most small businesses work in America.”

The NFIB teamed up with the chamber, the Independent Community Bankers of America and another small-business trade group called the S Corporation Association to release an analysis by Ernst & Young warning that the Obama tax plan would shrink the economy by 1.3 percent and would result in 710,000 fewer jobs. Conservatives argue that raising the taxes of earners of more than $250,000 would harm small businesses that pay taxes at the individual rate rather than the corporate rate.

But more moderate small-business groups, including the American Sustainable Business Council, the Main Street Alliance and the Small Business Majority, released their own survey concluding that the majority of small-business owners actually want to see taxes increase for those making $250,000 and above to facilitate job creation and infrastructure investments.

“If the middle class is disappearing, then the customer base for the businesses we represent disappears,” said Levine, of the ASBC. “These folks are very concerned that there’s no money to reinvest back into their communities, back into the country.”

The split among small businesses, which the Small Business Administration typically defines as companies with 500 employees or fewer, should come as no surprise. The nation’s small businesses, which by the administration’s latest estimate total some 27.9 million, include entrepreneurs such as yoga instructors, electricians, corner bakers, organic farmers and truckers.

They’re represented by a plethora of trade groups, from the National Small Business Association to the U.S. Chamber of Commerce, which maintains that more than 96 percent of its member businesses have 100 or fewer employees.

Fueling the small-business wars is a growing dispute over who really speaks for small business. Obama has said that only 3 percent of taxpayers with small-business income would be affected by his plan to raise taxes on the wealthy.

“You’re always going to find voices on different sides,” said Brad Close, vice president of public policy at NFIB, of the competing messages from the small-business lobby.

Small-business groups across the board do agree on one thing, however: None of them wants the across-the-board spending cuts and automatic tax increases that would be triggered by a fall off the fiscal cliff. As the GOP stalemate with the White House drags on, small-business groups on the right and left could wind up united in their dismay.

An earlier version of this article incorrectly identified the Maine Small Business Coalition’s Washington affiliate. The coalition is affiliated with the Main Street Alliance.

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