ok i call this hearing of the house small business committee to order this process favor a congress approved lamarck legislation to revive our struggling economy in passing the american recovery and reinvestment act congress laid the groundwork for long term sustainable growth that the old contains several small business provisions and i'm pleased to say many of them are already working for just as importantly small business credit markets are coming back to life long volumes in the secondary market jump from under one hundred million dollars in december to three hundred sixty million dollars last month so things are year plan this is a good time to stop and check our bearings today we're going to evolve await the progress made thus far witnesses and committee members will discuss the recovery act small business in doing so all we can hopefully pain point where we have made headway and identify areas in which there are still strides to be made regardless of the economic climate talks policies the critical tool for growth also creating new avenues of for growth some of the most important role regions in the recovery act are those that invest in new industries small firms are already leading the green revolution increases in clean energy tax credits are helping that process along and generating tremendous opportunity for small firms in a recent survey by the air conditioning contractors for america seventy five percent of respondents that that they have seen improve sales because the efficiency sector is dominated by intrapreneur wars good meals for green businesses is good news for small business that clearly we have come a long way since february the recovery act in terms of successful provisions to make sense to go and see their increases or extensions at the same time there are a number of suggested measures that whole very real potential on are worth a second look the moving forward it is important to remember one thing these are exceptional times they cannot be met with apprehension they cannot be addressed inaction we need to confront them head on with in the weight of solutions that is why it's so important that our policies invest in small firms they are the ones offering fresh solutions they're the ones leading the way back to prosperity i would like to thank the witnesses bands for their testimony and i'm glad that they were able to make the trip to washington to be with also this morning this afternoon and look forward to hearing from them so with that i yield to the ranking member mr graves for his opening thank you madam chair and thank you for calling this hearing on the  stimulus was signed into law on feb seventeenth two thousand and nine with pledges of job creation and help for small businesses although the overall package is hefty price tag was eight hundred billion dollars only a fraction less than one percent of it was devoted to helping small businesses recover unfortunately the promised jobs have not been created an economic recovery has not materialized instead the jew national unemployment rate was nine point five percent the worst in twenty six years we were told that it could rise to ten percent in the coming months we must do better america's small businesses need our help to create and turn the economy around unfortunately the stimulus provisions are simply operating on the edges the economy although the stimulus tax provisions can be helpful the broader long term answer to small businesses economic recovery is income tax reductions in addition small companies need predictability in the tax code for more than a single year budget plan for investment small businesses need to keep more of what would help them invest in their companies so they can expand hire workers and get our economy moving again and a new taxes to pay for health care reform such as a tax on those comes over two hundred eighty thousand dollars will devastate the many small business owners who thank you for the opportunity to provide testimony on behalf of small business service contractors and make up the heating ventilation air conditioning and for duration industry my name is stand johnson during our president stands heating air conditioning heating cooling an indoor air quality company located in austin texas metropolitan area my company has been serving residential and commercial customers for over fifty five years we have grown from beginnings and now employs more than forty workers come before us chairman of the board of a c c as you've heard every day more than four thousand a c c a member companies across the nation help homeowners small business owners and building managers realize the comfort and cost benefits of h p a c r eighty one percent of a member companies have less than fifty employees and fifty percent have less than twenty employees my comments this afternoon summarize my written submission and focus on some of the expanded energy tax incentives passed as part of the stimulus bill and their impact on the residential and small business commercial clients there's hope that my testimony will help inform future policy decisions that further assists mall businesses and least trying economic times a c c a believes that tax credits are the best way to encourage homeowners and building owners to reach and obtain higher efficiency h p a see our tax credits help soften the blow of the new equipment investment cost and shorten the payback period i contested at three fourths but not all of our member companies have seen positive proof the tax credits  stimulus package are working the stimulus bill includes several important changes and modifications to existing tax credits for homeowners found under section twenty five c and twenty five day of the internal revenue code under the l section twenty five c tax credits homeowners could only claim up to three hundred dollars for installing qualified h b ac or hot water quitman in two thousand and nine the stimulus bill boost the value of the twenty five c tax credits to thirty percent of the in tal install cost up to fifteen hundred dollars cap and extended the credit through two thousand and ten under the old section twenty five d of the tax code a homeowner who installed a qualified geo farmall heat pump three twenty sixteen could claim a two thousand dollars tax credit geothermal systems my fifty percent of a c c a member company saw a small increase in twenty five percent saw a significant increase in the sales of qualified high efficiency h p a c equipment one a c c a member commented that without the fifteen hundred dollar tax credit we would have had massive temporary and some permanent layoffs instead we have been able to keep steady work during a traditionally slow time another member recently commented that the credits provided a big boost to their sales leading to a twenty percent increase in replacements over the last year indeed the higher tax the higher value tax credits are helping the homeowners elect to replace the quitman instead of repair as long as they can get credit a boost to the geothermal system tax credit has been a real home run interest and sales of geothermal equipment has seen a tremendous spike my own company has seen a geothermal business go from zero percent of our business in june of two thousand and eight to over thirty percent of our business in june of two thousand and nine but the gains as a result of the tax code changes in the stimulus bill have not been without unintended consequences a seemingly small increase in the minimum s e e r and d e r energy efficiency qualifying standards that was made light in the legislative process has created a lot of confusion for manufacturers distributers contractors and homeowners as a result consumer choices for some homes have become limited making it difficult for homeowners to take advantage of the tax credits in some situations there is no doubt the tax credits and stimulus bill have made half ition c h b a basic whitman more affordable for homeowners however the stimulus lacked a companion incentive for commercial and small business building owners the committee's report last equipment is only fifteen to twenty years commercial building owners have little or no incentive to upgrade to newer more efficient energy efficient equipment industry replaces a larger percentage of zero systems in residential applications compared to  much or allowing bonus depreciation of fifty percent of the install cost in the year the equipment was placed into service still another option would be to extend the residential tax credits qualified small businesses many small businesses from professional office is located in condo townhouse projects to small shopping centers utilize the same equipment found in residential homes but because this equipment is installed in commercial property it cannot qualify for a tax credit with that i and a broker from dallas texas i'm here today on behalf of more than one point one million members of the national association who deeply appreciates congress efforts to help small  prosper during the current economic crisis it is our belief that the two thousand mile the stimulus legislation has provided helpful relief to america's small business owners including realtors by helping the stabilize the housing market in stimulate the economy i want to focus my remark today on three solutions in particular and provide some comments as you have requested on what more can be done first realtors appreciate actions taken by congress to provide tax incentives that what stimulate housing investment especially among new homebuyers early in two thousand and eight in a i advocated for a tax credit for purchases of a principal residence initially congress created a seventy five hundred dollars refundable credit for first time buyers which was anything that from april two thousand and eight through june thirtieth two thousand and nine because buyers were required to repay the amount to credit was more like an interest free loan and a few consumers took advantage of it two thousand and nine stimulus increased the amount of the credit to eight thousand dollars eliminated the repayment requirement and extended it from june thirtieth two thousand and nine to december first two thousand and nine with these improvements it appears that the two thousand mind tax credit is being used realtors continue to receive many calls seeking information on the credit and our website has received a steady volume of hits and according to market data during the first quarter of two thousand and nine first time home accounted for more than half of the purchases and one hundred thirty four of the one hundred fifty two metropolitan markets that we track that's a significant increase from the average thirty to forty percent of home buyers and they are a research department is working to compile additional information about first time buyers and will be pleased to share those profiles with you as we gather that information today we ask that congress take additional steps to ensure that the tax credit continues to support him because housing and economic recovery one we ask that you eliminate the repayment requirement for two thousand purchasers credits december first expiration date through next year three we asked that congress make the credit available to all purchasers and at least consider increasing the amount of the credit the second provision i want to touch on briefly is the action taken by congress in two thousand and seven to provide relief from the markets cancellation tax this provision has proven invaluable to many sellers and has made the time consuming burden of completing a short sale quite simpler congress recently extended this tax relief through two thousand and twelve we greatly appreciate those efforts madam chairman ever  making this relief permanent part of the tax code finally the stimulus bill also provided the waivers for some small business administration programs raises a guarantee on another and created a new loan program again we applaud those efforts and conclusion real estate is small business at its best by an acting provisions that stabilize america's role of state market you are helping small businesses and america's communities thrive and prosper once again we thank you for your efforts today america's rail tristan ready to work with you on the additional measures that i've to other solutions that will help the real estate industry laydown the nation into a new era of economic strength and thank you again for inviting me to share our views and i'll be happy to answer any questions from the members thank them  to thank all the members of the committee and certainly appreciate the efforts you have already put out on behalf of small business in particular manufacturing a m t is over four hundred companies are involved in making all of the equipment is essential used in manufacturing all of the products within the united states and around the world we make the equipment that everybody else uses to make the products that you see every day all around you we have about three hundred ten thousand skilled employees involved in our industry engineers mechanics electricians tool makers and the managers and owners of the businesses and a lot of our businesses are small businesses they're ten million or last century sixty percent of our members would qualify as a  small small business and eighty three percent of the manufacturing industry as a whole will represent small businesses and so while we're a small industry by numbers we're actually quite enormously important from the standpoint of what it is that we provide we are the fundamental backbone for any progress that would be made in alternative energy programs health care initiative the defense industry strength so it's a tremendously important industry while at the same time we are seeing the devastation of this recession on our industry like all the other industries are and maybe even a little bit more so because of being capital intensive essentially where the first once into the recession and unfortunate we're going to be the last ones out and so we certainly appreciate the attention of this committee to the important needs of our members some of that could be evidenced by the fact that sixty percent of our members and recent data last year sixty percent sales declined for our average members from two thousand and eight to two thousand and nine and in addition to that we did for president obama's automotive task force a recent review of our members and thirty percent of our members are saying within six months they'll be out of business if something doesn't change with the credit industry and or the current economic situation so obviously it's critically important our focus at a m t is in the next six months if we can help our members survive the next six months some of these discussions may be somewhat irrelevant and the number one issue we are faced with is the credit issue while these things tie together now the credit she was a major point the provisions and things that the committee has done in the reinvestment act have been great the ninety percent loan guarantee the waiving of the fees has been phenomenal but unfortunately you still can't get the credit the fact that there's a guarantee doesn't really help and that has been a problem the bonus depreciation in the enhanced section one hundred nine expensing great things as well we really appreciate that unfortunately of companies are making profit it's very difficult for them to use those so that's not accelerating the cause and need of our members right now the net operating loss carry back that's fantastic and can be used but we certainly need to have that brought forward in two thousand and nine two thousand and ten because for same for our industry at the beginning of two thousand and eight we are actually making some money so we can take advantage of them to really get in two thousand and two thousand and ten we really do have problems energy related tax and says you provided some of our members are taking advantage of those but there is some ambiguity in some of the definitions and rules there to figure out which ventures actually qualify so not a large number of people actually taken advantage of that obviously was concerned as represent graves pointed out the big ending that only two hundred billion of the seven hundred eighty seven billion are actually being provided funds and being committed and with a lack of credit again that still is a number one issue for us so some suggestions that might be immediate help that we certainly could use from a small business standpoint i say that as a recent small business person i just took over this position as an association would be to try to get a maybe a temporary reprieve on the federal business taxes like fica which represent a shock and ny from this committee have talked about which would be very important easing some the risk requirements on banks who are making credits to small business in the manufacturing area possibly a temporary stay in certain covenant violations that lenders would be actually providing to small businesses maybe take a look at loosening the rope don't let it go it might seem counterintuitive to actually increase what are the guidelines for summer that might be in violation but i think it's critically important to look at maybe secondary items like backlog employment records other things that would measure the performance to pay back that loan besides just casual which right now everybody would probably be in violation of longer term some things such as tax credits for exploiting products in two thousand and nine would help trade balance issues and get people exporting their products as i talked about extending the bonus depreciation and enhanced expensing through two thousand and ten and beyond would be very helpful the net loss operating loss carried back if we can get two thousand and nine two thousand and ten included and possibly look at some companies with revenues over the fifteen million so some of our customers could also be included in that because they're the ones buying the equipment and some of the legislation that's already been put out there impact and build us a to good programs that are already out there that those could be included would be fantastic so the most important thing with all those all those would be for not if we start imposing any other new programs to put taxes on to businesses so i implore the committee to do the best they can to avoid any burden on taxpayers going forward and with that i'd like to submit if i could request to have my written testimony institute in washington d c welcome thank you chairman woman blast us ranking member graves and other distinguished members of the committee thank you for having me to speak on the important topic of the two thousand and stimulus impact on small business and entrepreneurial activity the american recovery and reinvestment act it contained a number of provisions aimed at boosting the economic output of small businesses to through tax incentives loan guarantees or some other government initiatives these provisions included an increase in bonus expensing and bonus depreciation of qualified investing expenses depreciation expense and provisions are important proper tax policy tools for stimulating economic activity this is why these provisions have been included in previous taxes stimulus bills specifically these tools encourage companies to increase investment output and expand activity in the short run basically what the federal government is saying that we're having a fire sale on capital if you act now you'll be able to expand quickly more efficiently unfortunately the effectiveness of these proposals may be limited since these provisions have expiration date small businesses may have difficulty expanding the businesses  for the calendar year and take advantage of these and current events adjusted small businesses have not been able to respond to the latest and most proposals for example a recent survey of small business owners indicated to have the same level of capital expenditure and growth in their business plans today as they did prior to the expansion of the bonus appreciation even worse the number of small business owners planning an expansion over the next year is declining and we see these numbers showing up in the anomic indicator has nonresidential fixed investment has been declining of the last three quarters as many americans are painfully aware unemployment has climbed steadily reaching nine point five percent in june this year despite projections from the ministrations economic team that the unemployment rate would not pass a few of the benefits touted by some estimates proposals have to date while bonus depreciation expenses were appropriate policy moves earlier this year small business requires congress to take bold action now small businesses are some the strongest pillars of employment in the economy research shows the job creation from small businesses and startup companies have help limit previous recessions in fact over fifty percent of fortune five hundred companies were either founded in a recession or bear market economy while this may seem counterintuitive this is an example of the economic cycle at work a new companies are rising that employ more and more people help in ending a recession pro growth tax policies can be small businesses and entrepreneur successful small businesses expand and hire new employees job losses from larger more established firms good economic policies rewarding the successful companies instead of penalize in their success through higher taxes it is never too late to enact good economic policies this congress can establish a foundation for strong economic growth strong good tax policy first congress to make permanent the small business tax relief that was inactive in two thousand  two thousand and three and the bonus depreciation bills are not good earlier this year entrepreneur saw a decline in the marginal tax rates thanks to jack to an actor in two thousand wanted two thousand and three small businesses benefited from lower capital cost has capital gains and dividends taxes reduced lower capital cost means that more small business can be created has the risk for business startups a klein unfortunately couple gains a marginal tax rates are scheduled to quickly increase these higher taxes already being calculated many businesses as they plan for future investment  expansion these higher tax rates will offset the smaller provisions in the stimulus bill and hender future investment small businesses are also very very labor intensive unfortunately right now currently wages are flat or declining quarter and work hours have been shrinking with the minimum wage expanded to be increased over ten percent companies will have limited capability to pass on these wage increases to their employers historically a minimum wage increase of this magnitude results in point losses for small business of one percent so i'd like to urge congress in the committee to think about  companies of the number of people affected by this tax increase about twenty percent of them will have a half of their income from small business type associations and then a tax increase of this magnitude and job losses and slow economic growth and chief economist for the independent community bankers on merica mr merrill more than twenty five years of government relations experience in the public and private sector i c b a rapist since five thousand community banks of all sizes and charter types throughout the united states welcome thank you madam chair ranking member graves and members of the committee very pleased to be here to represent our five thousand community banks nationwide much monday morning quarterbacking has been taking place with the economic stimulus package that was passed back in february without a doubt the severe economic recession did require a sizable fiscal stimulus and i was pleased that in the seven hundred eighty seven billion dollars package many good positive tax relief measures were included while the bulk of the recovery  it did focus on spending initiatives beneficial tax relief and reform items are having a very positive effect specifically tax items we see helping the economy include the eight thousand dollars first time home tax credit the extension of the alternative minimum tax that prevented twenty six million people from being forced into paying additional a m t taxes and there were some beneficial tax relief for the mid municipal bonds additionally the net operating loss provisions the immediate two hundred fifty thousand dollars small business expensing and of course the major s b a loan program enhanced mints are all helping many small businesses survive and preserve capital during this recession however a difficult credit market and a depressed economy continues to weigh very heavily on our nation's small businesses i see be able eaves additional targeted tax actions are warranted to boost our long term economic growth i c b a recommends and supports a broad five year net operating loss carry back and extended homebuyer tax credit robust s b a lending programs and subchapter s tax reforms out a minimum during these difficult economic times the tax burden on struggling small business owners should not be increased additionally for the stimulus measures to be successful the on julie burdensome and overly aggressive bank exams that are taking place must be addressed community banks need the flexibility and the capital to support their small business customers back on main street america one of the largest underlying problems preventing our economic recovery is still the housing sector millions of small businesses are suffering the fallout from the dramatic decline in the housing sector because forty five percent of small business loans are backed by some type of real estate collateral financial institutions in general have already written down over six hundred billion in real estate assets and that continues bank regulators are aggressively aggressively forcing even further write downs forcing banks to raise even more capital or cut back on their lending this vicious cycle in the housing sector must be stopped the current homebuyer tax credit is helping but we recommend it being boosted past november and extend it to all homebuyers not just first time home buyers the recovery act did include some positive subchapter s reforms but more can be done there as well more than four million small businesses are structured as s corporations including one third of all banks given today's tight capital markets attracting capital and funds is critical yet the limits that are placed on sub s corporations prevent them from raising capital in order to reach in order increase the ability for small businesses to raise private capital we should increase the number of allowable sub s shareholders allow ira investments in sub s corporations and permit sebas corporations to issue preferred stock given the financial meltdown was caused by asset concentration in the largest financial conglomerates our tax policies must preserve a diversified financial system with capital of vailable for community banks a supported and an expanded and a well provision in the economic stimulus package but more needs to be done there too and other witnesses eveready suggested something we support is expanding that net operating loss carry back which would preserve capital for businesses during this difficult recession today more than half of all small business income earned in the united states is earned by pass through entities such as sub s corporations that pay the individual income tax therefore congress must be extremely mindful of how increasing the income tax rates will impact small businesses in conclusion the t items passed in the recovery act are helping i see be a pledge to work with the small business committee to ensure our nation's small businesses have the capital they need to invest grow and provide jobs thank you thank you mr murphy mr johnson if i may i would like to address my first question to you there has been much discussion in the national media about the number of jobs lost since we passed the economic recovery act and you explaining your testimony that nearly seventy five percent of those surveyed by your organization benefit from the tax credit for b a c equipment and i i i just would live for you to comment as to where would your industry be today if that credit had not been enacted into law madam chairwoman there is no doubt that there has been a constriction in our industry in a number of jobs there is also no doubt that it would be worse if the tax credits had not been out there to encourage homeowners to seriously consider the alternative of taking advantage of the program the tax credit program and moving ahead with needed equipment replacement creating a win win situation it created jobs and it saved energy at the same time helped owners cut their utility bills so it was a win all the way around the block yes we absolutely created jobs and within my own company as an example we had about a ten percent layoff of two that either be extended or expanded the provisions that are in there should be continued the fifteen hundred dollar tax credit  again if you look at the total picture of where we're trying to go with this country the things that the c r industry offers are not only job creation but they're also the greenhouse gas issues that we look at everything else so we're it's wins on multiple multiple levels so extending the tax credits for residential applications would be a tremendous benefit what really needs to be looked at is doing something with commercial businesses small commercial small businesses commercial buildings we actually do more work on older equipment in commercial applications we do in residential  situation if you can carry the provision forward to two thousand and nine hopeful in two thousand and ten because i don't think we're going to come out of this fast enough in our industry as i mentioned with us being first and last out it would be very beneficial for us you're telling us that congress should customers well the existing tax codes for commercial customers allows a depreciation schedule on equipment of thirty nine years a quick one only last fifteen to twenty years on top of that you've got to consider that a lot of small business or and lease situations or leasing a property to run their business out of the leases are uniformly written where the tenants responsible so he's got a shark maybe a five to five year  lease if he has to replace air conditioning equipment he's got a thirty nine year window to write it down and then there is no incentive to do anything but to patch together and open inefficient equipment and so we find ourselves going out areas of the congress about increasing i mentioned it here because we cannot encourage it in too many places one of the requirements to be honest corp is that it cannot have options excellent observation and question madam chair at a time when small businesses and even small community banks their small businesses as well are trying to raise capital the last thing we should do is have these restrictions on private sector individuals that want to invest in small businesses and by restricting shareholder investment and  one hand you have the federal government issuing tarp money government taxpayer money to small businesses yet on the other hand restricting private investment and small businesses so your point  is a good one that we should take off all the restrictions that are preventing small businesses from getting shareholder investment thank you i have a question on the second round i will come back to all the witnesses some predictability in the tax code which allows them obviously to purchase new equipment keep their head above water hire more workers have a case maybe there is undoubtedly a nervousness in the small business community about where are we going next and it's the whole program but certainly there is fear about  committing to spending money for anything because we don't know where we're going and we don't know what we're going to be doing a year from now so that certainly would be a step in the right direction to help us get started  i would echo mrs johnson comments and the world of the entrepreneur of which primarily in close most real estate entre practitioners predictability is extremely important and as a thousand and three tax cuts you could see marginal tax rates on small business income exceeding fifty percent the tax that you're talking about includes dividends capital gains the individual income tax and as we pointed out in our in our testimony that half of small business income would be subject to an increase in the individual income tax rates would go up so it be  very important to preserve their rates that are on small businesses now and not have that that tax rates are going to go up and and scare off investment it small business  unequivocal yes and it's i think if you could look it into perspective as somebody who used to run a subject or us company i think the important word that you brought up was the predictability i personally would make decisions of having to invest in my company depending on what's going on my personal money and knowing what was going on from a tax standpoint and what i would have available for money to actually put back into my company was critical not understanding what might happen certainly left me at odds with whether or not i needed to keep money on the sidelines not knowing what would happen next or what i can put into my company to be more productive so no question are important factors that go in economic growth and the cost investment so for looking one of the biggest impacts of possible expiration these talks that's going to have are going to be hinder investment credit with everything going on and as a representative for the bankers they call me people go to their banks they're usually the place they've been doing business with forever good ratings never defaulted on a loan you know the whole story can you go through and i know you mentioned some of that in your testimony some of the reasons just to maybe seize on why these people feel they're not able to get credit now of the at the banks they have been going to for years so i can go back and have better idea what tell me when they call me is that a fair question to you that's a excellent question and that is something that is a severe problem out there in the economy right now is small business access to credit the bottom line is that banks don't make any money they don't make any profits if they're not lending community banks want to plan all banks want to lend help those small businesses the credit environment out there they're the risk what the regulators are doing to community banks is preventing the community banks from lending as well as they could to small business owners they want them to increase capital they're forcing write downs on on properties that shouldn't be written  down the regulatory environment is making it near impossible for banks even banks that have capital to do lending banks are scared to do lending now also the tax environment if you don't know what the tax environment is going to be like a year from now it's difficult to lend so anything that could be done by congress to have more sensible regulation that the community banks didn't cause this financial crisis this was caused by exotic products being crafted by wall street and the risk taken there on wall street but it is having as you point out a tremendous impact on main street and their ability for them to get credit another point i'll just say briefly is that the secondary market for small business loans and other type of credit is still frozen more policies need to be addressed that freeing up the secondary market where loans that are made by financial institutions can be sold into the three three tax cuts it seems like now for clunkers you name it there is a tax credit for just about everything in every industry can you tell me you know it seems like if we simplify the tax code overall in this country that wouldn't it wouldn't be easier would we need all the credits and different tax cuts for specific can you tell me what the foundation or even your personal view on on what our tax code should look like in a perfect world we might do all of this and the tax code wouldn't have to be two feet thick you make an excellent point congressman i mean what we see is whenever we enact certain types of tax credits tax subsidies we create distortions in the tax code which provides distortions in the economic behavior people instead of investing in i don't they might choose to invest in item be simply because that is being subsidized through tax payers i think we want to look back at a time period and said what was good tax policy we cleaned up the tax code i think we can look back to one thousand nine hundred eighty six where former chairman dan rostenkowski senator bradley president reagan enacted why i think a lot of people think that we're the best public policy initiatives enact in this town where they sit there and they said the tax code is simply too confusing there are too many deductions there are too many credits people are taking these write off for things they don't want to buy simply so they can pay less taxes we get rid of some of these taxes some of these credits  taxes that is going to decimate i'd like for you to address that question if you would one of the things that is always disturbing to me when i read the paper about some of the ways to pay for some of these programs which you know we we all agree we need to programs everybody wants to have good health care everybody wants to have the clean environment everybody wants to take care of and their g independents all of us absolutely but the problem is you can't do all those things on the backs of small business and you need to be careful about trying to do all those things before the end of the year as if there's some magic thing that happens at the end of the year right now small businesses are in the worst situation they've been in probably eighty years and to anything additional on top of that right now would be devastating having some manner i mean when we did the information for the to automotive task force and looking at who was going to be around who wasn't going to be around it became clear pretty quickly that the six month window was imperative and trying to find something from a standpoint of a program that could come forward now and help was you know life and the thought of having something additional on top of all the problems already trying to seize me sort through essentially puts these businesses in a situation where if they're going to put their last gasp of putting their home up if it wasn't already up if it wasn't borrowing the kids college fund to try to get through just to make it to the other side of this if they thought on top of doing that to make it through this that they were then going to have these additional taxes on top i think a lot more going to throw the towel in because it's really it's a self defeating prophecy really can't get there so it i can tell you from my personal experience as a business owner i've only been running the association for two months my whole life i've been a business owner it would be devastating appreciate your position because you've been on both sides of the table which gives you a very unique perspective and i appreciate that mr mirsky very quickly well the things is concerning to me you and your organization or you in your organization have you discussed with the comptroller any of these groups to come up with some sort of a mindset on how to address these problems how to work with the banks because there's a huge disconnect right now between what's going on the field and what's going on in d c and it needs to be resolved everyone get out of this mess absolutely congressman that's a tremendous concern throughout the community banking industry of the pressure that the regulators have swung the pendulum way too far in the other direction and are stifling their banks ability to do lending even banks that are well capitalized well regulated industry where the regulator can shut you down and bankers that are in fear of these regulators are pulling in their lending and that is a severe problem it's causing a downward spiral in the ability for for small businesses to get the credit that they need so yes something needs to be done there we've been working very well with the regulatory agencies to make sure that regulation is is fair but i hear that there are so many regulations than the regulatory burden on community banks some small banks and that they had too many regulations but on the other hand what caused the crisis  that we are and it was the lack of oversight or too many regulations well there was a a discrepancy in the application of regulation where you had  highly regulated well overseen community banks where the regulators are in the bank every year examining everything that they do and then you had a lot of gray area non bank lenders you had a lot of wall street exotic products that were outside of the regulatory oversight so with the financial regulation reform that's being presented now we're trying to make sure that the on regulated sector of the financial industry is brought in under that same burden and regulatory oversight that is given to community financial institutions so it was the discrepancy in the application of regulation many many  financial entities were completely on regulator or beyond the scope of what the f b i see and o c c does for you you raise an excellent point the regulation has to be fair across the board so you don't have these gaps and possibly two years or longer before the united states returns to strong economic growth capable of creating a substantial number of jobs and many of the tax provisions being discussed they are temporary for example to increase to section one seventy nine expensing ins after tax year two thousand and nine the expansion of net operating loss carry back is good for only tax years away no nine in tax breaks for consumers such as the first time homebuyer credit or also limited just this year in your opinion will your business or other businesses have sufficient funds to expand and grow your business should the economy begin to recover next year and are these tax changes providing you with enough of a boost not just for survive this year but plan for the future you know part of the problem congressman is that our businesses are so enter related to other businesses that it's a bigger problem than just our problem for example the air conditioning industry is very tied to the housing industry the housing industry's doing badly guess what we're going to be doing poorly also and we're seeing that that's happening to us right now so as we look at how long it takes the other segments of our industries in this country to recover we're going to have to see how long it's going to take us to recover and we're going to be some place behind them getting back up to speed do i think that we have enough we are playing it very close to the vest and trying to be as conservative as we can in our daily operating methods what we're doing how we're doing what we're reporting is would you have any comments i would i would just mention i'm not an economist i'm sure i'm nowhere near as smart as my fellow panelists are on the economic matters but what i do know for sure is that we as an industry manufacturing industry are not going to be coming out of this in two thousand and nine that's a fact at six months ago when we first started getting into this we might have thought that by two thousand and ten it would be a good year and things would be going well again for our industry and  with the data information and clear evidence of companies that are disappearing or in deep trouble and what we see on the horizon we doubt that to be the case in two thousand and ten so to answer your question programs obviously need to be somewhat elastic to what's currently going on in the economy but it would be safe to say that for two thousand and nine and two thousand and ten they will clearly need those break opportunities and if they have losses in those years then your programs that actually allow you to take advantage of the losses need to be harvest utilized as you get past two thousand and ten thanks to the panel you'll back  manager thank you thank you madam chair i want to ask you a question since this is fresh what we're looking at right now in terms of the health care issue this kind of leads back in to taxes but a percent that's being proposed for small businesses to cover health care costs if they don't provide health care for their employees i mean i come out of a small business my husband still running a business and we were talking about this payroll eight percent on your payroll and actually for what we pay for health care for employees right now that actually would be a pretty good deal for us so i guess i just want your opinion you know mr woods i have a lot of small manufacturers in my district in pennsylvania and and mr johnson you know i come great ones there including our past chairman yes while that may seem like one facet of the overall bill which i didn't get a chance to read all thousand and eighteen pages there are certainly elements that may be beneficial and i'm sure there could be three hundred of the thousand that are great programs the eight percent by itself would certainly seem to be a nice viable number compared to other costs i think the concern gets to be just any additive cost any additive tax at this point in the unknowns of all of the other potential costs that go along with it so that by itself seemingly may be good if you weren't doing some other program are ready as a percentage of payroll i think the bigger issue gets to be all of the other potential cost to get associated with that as you on ravel implementation of the program right now what would you say it percentage wise that you're cessation of providing health care do you have any idea what that is i can tell you what the number is i can tell you that the whole time that i was in business in rochester new york u through a from your neighborhood almost all the companies in rochester that were in the two and on manufacturing energy almost everybody i knew was in it but i couldn't give you an actual statistic for our association i'd be happy to get back to you with that i appreciate that if you could i'm trying to get some sense on this mr johnson thank you for the question let me tell you that in february we had a national meeting in fort worth texas and we had a town hall meeting at that national convention that focused on health care and we voted in the room there were five hundred or so people probably in that room and we voted about sixty or seventy percent of our membership were in support of what president obama had on the table at that time rate on that a little bit about what specifics you're talking about well i wished i could and and like most would i hadn't read the entire package but the dollar amount that's attached to it and the hits that we're going to take part are not proper correct we provide insurance company we provide insurance for our employees we pay a great deal of the cost ourselves and we want to continue that program but i think within our industry we recognized there was some need for reform nationally and there are new things need to be done but the dollar amount that's being put on the packages is going to hurt small business tremendously and the support that we showed in february is not there today small business structure we have more than three hundred thousand realtors who have no access to health care at all when we couple that with the average age being around between fifty to fifty two is a high risk  that do you have any of the questions ok i would like to but i do have a question for mr johnson based on the fair question dahlkemper before and that is what percentage of your capability to enable that and they do so by having a nonprofit housing entity at the state level that is a passed similar to one of the taxing into when you file your taxes you can get a bridge loan at closing the other states the national association of realtors has tried to provide information to them so that for those who don't have that they can kind of create a similar programs and  state but it's an excellent program great demand throughout the nation to money ties a tax credit that closing as opposed to waiting the fall but it's not available in all states right now the credit is  eight thousand dollars is there any number that you have that will hold the housing market madam chair any increase of eight thousand dollars will be helpful the numbers that i've seen thrown out there as almost doubling an increase to fifteen thousand dollars we think it would be helpful if the tax credit could be extended b understanding of that is the type of organization that we have prohibited from having such i don't understand the complex is a complex of these of the insurance industry but there are groups  with them our concerns regarding those provisions that are having a positive impact on small businesses with that i just want to take this opportunity to really thank all of you for coming before our committee today