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data/CHRG-110/CHRG-110hhrg32548.txt ADDED
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1
+ <html>
2
+ <title> - NORTH KOREA</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+ NORTH KOREA
10
+
11
+ -----------------------------------------------------------------------------
12
+
13
+ BRIEFING AND HEARING
14
+
15
+
16
+ BEFORE THE
17
+
18
+
19
+ COMMITTEE ON FOREIGN AFFAIRS
20
+
21
+
22
+ HOUSE OF REPRESENTATIVES
23
+
24
+
25
+ ONE HUNDRED TENTH CONGRESS
26
+
27
+ FIRST SESSION
28
+
29
+ ------
30
+
31
+ JANUARY 18 AND FEBRUARY 28, 2007
32
+
33
+ ------
34
+
35
+ Serial No. 110-15
36
+
37
+ ------
38
+
39
+
40
+ Printed for the use of the Committee on Foreign Affairs
41
+
42
+
43
+
44
+ Available via the World Wide Web: http://www.foreignaffairs.hollse.gov/
45
+
46
+
47
+ U.S. GOVERNMENT PRINTING OFFICE
48
+ 32-548 WASHINGTON : 2007
49
+ -----------------------------------------------------------------------
50
+
51
+ For sale by the Superintendent of Documents, U.S. Government Printing Office
52
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800
53
+ Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
54
+
55
+
56
+ <TEXT NOT AVAILABLE IN TIFF FORMAT>
57
+ 
58
+ </pre></body></html>
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1
+ <html>
2
+ <title> - ESTABLISHING THE HOUSE DEMOCRACY ASSISTANCE COMMIS- SION FOR THE 110TH CONGRESS; AND CALLING ON THE GOVERNMENT OF THE UK TO IMMEDIATELY ESTABLISH A FULL, INDEPENDENT, AND PUBLIC JUDICIAL INQUIRY INTO THE MURDER OF NORTHERN IRELAND DEFENSE ATTORNEY PATRICK FINUCANE IN ORDER TO MOVE FORWARD ON THE NORTHERN IRELAND PEACE PROCESS</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+ ESTABLISHING THE HOUSE DEMOCRACY ASSISTANCE COMMIS-
10
+ SION FOR THE 110TH CONGRESS; AND CALLING ON THE
11
+ GOVERNMENT OF THE UK TO IMMEDIATELY ESTABLISH A
12
+ FULL, INDEPENDENT, AND PUBLIC JUDICIAL INQUIRY INTO
13
+ THE MURDER OF NORTHERN IRELAND DEFENSE ATTORNEY
14
+ PATRICK FINUCANE IN ORDER TO MOVE FORWARD ON THE
15
+ NORTHERN IRELAND PEACE PROCESS
16
+
17
+ ------------------------------------------------------------------------------
18
+
19
+
20
+ MARKUP
21
+
22
+
23
+
24
+ BEFORE THE
25
+
26
+
27
+ COMMITTEE ON FOREIGN AFFAIRS
28
+
29
+
30
+ HOUSE OF REPRESENTATIVES
31
+
32
+
33
+
34
+ ONE HUNDRED TENTH CONGRESS
35
+
36
+
37
+ FIRST SESSION
38
+ ON
39
+
40
+
41
+
42
+ H. Res. 24 and H. Con. Res. 20
43
+
44
+ ------
45
+
46
+
47
+ JANUARY 23, 2007
48
+
49
+ ------
50
+
51
+
52
+ Serial No. 110-22
53
+
54
+
55
+ ------
56
+
57
+
58
+ Printed for the use of the Committee on Foreign Affairs
59
+
60
+
61
+
62
+
63
+ Available via the World Wide Web: http://www.foreignaffairs.hollse.gov/
64
+
65
+
66
+
67
+ U.S. GOVERNMENT PRINTING OFFICE
68
+ 32-845 WASHINGTON : 2007
69
+ -----------------------------------------------------------------------
70
+ For sale by the Superintendent of Documents, U.S. Government Printing Office
71
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800
72
+ Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
73
+
74
+
75
+ <TEXT FILE NOT AVAILABLE IN TIFF FORMAT>
76
+
77
+ 
78
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg32846.txt ADDED
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1
+ <html>
2
+ <title> - SOUTH SUDAN: THE COMPREHENSIVE PEACE AGREEMENT ON LIFE SUPPORT</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+
10
+ SOUTH SUDAN: THE COMPREHENSIVE PEACE
11
+
12
+ AGREEMENT ON LIFE SUPPORT
13
+
14
+ -----------------------------------------------------------------------------
15
+
16
+
17
+
18
+ HEARING AND BRIEFING
19
+
20
+
21
+ BEFORE THE
22
+
23
+
24
+
25
+ SUBCOMMITTEE ON AFRICA AND GLOBAL HEALTH
26
+
27
+ OF THE
28
+
29
+
30
+ COMMITTEE ON FOREIGN AFFAIRS
31
+
32
+
33
+ HOUSE OF REPRESENTATIVES
34
+
35
+
36
+
37
+ ONE HUNDRED TENTH CONGRESS
38
+
39
+ FIRST SESSION
40
+
41
+
42
+ ------
43
+
44
+ JANUARY 24, 2007
45
+
46
+
47
+ ------
48
+
49
+ Serial No. 110-2
50
+
51
+
52
+ ------
53
+
54
+
55
+ Printed for the use of the Committee on Foreign Affairs
56
+
57
+
58
+
59
+ Available via the World Wide Web: http://www.foreignaffairs.hollse.gov/
60
+
61
+
62
+
63
+ U.S. GOVERNMENT PRINTING OFFICE
64
+ 32-846 WASHINGTON : 2007
65
+ -----------------------------------------------------------------------
66
+ For sale by the Superintendent of Documents, U.S. Goverment Printing Office
67
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800
68
+ Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
69
+
70
+ 
71
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg32919.txt ADDED
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1
+ <html>
2
+ <title> - THE ESCALATING CRISIS IN DARFUR: ARE THERE
3
+ PROSPECTS FOR PEACE?</title>
4
+ <body><pre>
5
+ [House Hearing, 110 Congress]
6
+ [From the U.S. Government Publishing Office]
7
+
8
+
9
+
10
+
11
+ THE FSCALATING CRISIS IN DARRJR: ARE THERE
12
+
13
+ PROSPECTS FOR PEACE?
14
+
15
+ -----------------------------------------------------------------------------
16
+
17
+ HEARING
18
+
19
+
20
+
21
+ BEFORE THE
22
+
23
+
24
+ COMMITTEE ON FOREIGN AFFAIRS
25
+
26
+
27
+ HOUSE OF REPRESENTATIVES
28
+
29
+
30
+
31
+ ONE HUNDRED TENTH CONGRESS
32
+
33
+
34
+ FIRST SESSION
35
+
36
+
37
+
38
+ ------
39
+
40
+
41
+ FEBRUARY 8, 2007
42
+
43
+
44
+ ------
45
+
46
+
47
+ Serial No. 110-6
48
+
49
+
50
+ ------
51
+
52
+
53
+ Printed for the use of the Committee on Foreign Affairs
54
+
55
+
56
+
57
+ Available via the World Wide Web: http://www.foreignaffairs.hollse.gov/
58
+
59
+
60
+
61
+
62
+ U.S. GOVERNMENT PRINTING OFFICE
63
+ 33-109 WASHINGTON : 2007
64
+ -----------------------------------------------------------------------
65
+ For sale by the Superintendent of Documents, U.S. GovernlD.3nt Printing Office
66
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800
67
+ Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
68
+
69
+
70
+
71
+ <TEXT NOT AVAILABLE IN TIFF FORMAT>
72
+
73
+ 
74
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg33318.txt ADDED
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1
+ <html>
2
+ <title> - THE FUTURE OF THE UNITED NATIONS UNDER BAN KI-MOON</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+
10
+
11
+ THE FUTURE OF THE UNITED NATIONS UNDER
12
+ BAN KI-MOON
13
+ ______________________________________________________________________
14
+
15
+
16
+
17
+
18
+
19
+ HEARING
20
+
21
+ BEFORE THE
22
+
23
+ COMMITTEE ON FOREIGN AFFAIRS
24
+
25
+ HOUSE OF REPRESENTATIVES
26
+
27
+ ONE HUNDRED TENTH CONGRESS
28
+
29
+ FIRST SESSION
30
+ _______
31
+
32
+ FEBRUARY 13, 2007
33
+ _______
34
+
35
+ Serial No. 110-7
36
+ _______
37
+
38
+ Printed for the use of the Committee on Foreign Affairs
39
+
40
+
41
+
42
+ <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
43
+
44
+ Available via the World Wide Web: http://www.foreignaffairs.house.gov/
45
+ _____
46
+
47
+ U.S. GOVERNMENT PRINTING OFFICE
48
+ 33-318PDF WASHINGTON : 2007
49
+ ___________________________________________________________________________
50
+ For sale by the Superintendent of Documents, U.S. Government Printing Office,
51
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area
52
+ (202) 512-1800, Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC
53
+ 20402-0001
54
+
55
+ <TEXT NOT AVAILABLE>
56
+ 
57
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg33319.txt ADDED
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1
+ <html>
2
+ <title> - AFGHANISTAN ON THE BRINK: WHERE DO WE GO FROM HERE?</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+
10
+
11
+ AFGHANISTAN ON THE BRINK:
12
+ WHERE DO WE GO FROM HERE?
13
+ ______________________________________________________________________
14
+
15
+
16
+
17
+
18
+
19
+ HEARING
20
+
21
+ BEFORE THE
22
+
23
+ COMMITTEE ON FOREIGN AFFAIRS
24
+
25
+ HOUSE OF REPRESENTATIVES
26
+
27
+ ONE HUNDRED TENTH CONGRESS
28
+
29
+ FIRST SESSION
30
+ _______
31
+
32
+ FEBRUARY 15, 2007
33
+ _______
34
+
35
+ Serial No. 110-13
36
+ _______
37
+
38
+ Printed for the use of the Committee on Foreign Affairs
39
+
40
+
41
+
42
+ <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
43
+
44
+ Available via the World Wide Web: http://www.foreignaffairs.house.gov/
45
+ _____
46
+
47
+ U.S. GOVERNMENT PRINTING OFFICE
48
+ 33-319PDF WASHINGTON : 2007
49
+ ___________________________________________________________________________
50
+ For sale by the Superintendent of Documents, U.S. Government Printing Office,
51
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area
52
+ (202) 512-1800, Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC
53
+ 20402-0001
54
+
55
+ <TEXT NOT AVAILABLE>
56
+ 
57
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg33320.txt ADDED
@@ -0,0 +1,81 @@
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
+ <html>
2
+ <title> - AMENDING THE IRAN SANCTIONS ACT OF 1996; NATO FREEDOM CONSOLIDATION ACT OF 2007; AMENDING THE FOREIGN AFFAIRS REFORM AND RESTRUCTURING ACT OF 1998; EX- PRESSING THE SENSE OF THE HOUSE THAT BANGLADESH IMMEDIATELY DROP ALL PENDING CHARGES AGAINST SALAH UDDIN SHOAIB CHOUDHURY; HONORING THE LIFE OF THE LATE DR. JOHN GARANG DE MABIOR AND REAFFIRMING THE CONTINUED COMMITMENT TO PEACE IN THE REPUBLIC OF SUDAN; CALLING FOR THE IMMEDIATE RELEASE OF ISRAELI SOLDIERS HELD CAPTIVE BY HAMAS AND HEZBOLLAH, AND FOR OTHER PURPOSES; AND SUPPORTING THE GOALS OF INTERNATIONAL WOMEN'S DAY</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+ AMENDING THE IRAN SANCTIONS ACT OF 1996; NATO FREEDOM
10
+ CONSOLIDATION ACT OF 2007; AMENDING THE FOREIGN
11
+ AFFAIRS REFORM AND RESTRUCTURING ACT OF 1998; EX-
12
+ PRESSING THE SENSE OF THE HOUSE THAT BANGLADESH
13
+ IMMEDIATELY DROP ALL PENDING CHARGES AGAINST SALAH
14
+ UDDIN SHOAIB CHOUDHURY; HONORING THE LIFE OF THE
15
+ LATE DR. JOHN GARANG DE MABIOR AND REAFFIRMING
16
+ THE CONTINUED COMMITMENT TO PEACE IN THE REPUBLIC
17
+ OF SUDAN; CALLING FOR THE IMMEDIATE RELEASE OF
18
+ ISRAELI SOLDIERS HELD CAPTIVE BY HAMAS AND
19
+ HEZBOLLAH, AND FOR OTHER PURPOSES; AND SUPPORTING
20
+ THE GOALS OF INTERNATIONAL WOMEN'S DAY
21
+ ---------------------------------------------------------------------------
22
+
23
+ MARKUP
24
+
25
+
26
+
27
+ BEFORE THE
28
+
29
+ COMMITTEE ON FOREIGN AFFAIRS
30
+
31
+
32
+ HOUSE OF REPRESENTATIVES
33
+
34
+
35
+ ONE HUNDRED TENTH CONGRESS
36
+
37
+
38
+ FIRST SESSION
39
+
40
+
41
+ ON
42
+
43
+
44
+
45
+ H.R. 957, H.R. 987, H.R. 1003, H. Res. 64,
46
+ H. Res. 98, H. Res. 107 and H. Res. 149
47
+
48
+ ------
49
+
50
+
51
+ FEBRUARY 15, 2007
52
+
53
+
54
+ ------
55
+
56
+
57
+ Serial No. 110-18
58
+
59
+
60
+ ------
61
+
62
+
63
+ Printed for the use of the Committee on Foreign Affairs
64
+
65
+
66
+
67
+ Available via the World Wide Web: http://www.foreignaffairs.hollse.gov/
68
+
69
+
70
+
71
+ U.S. GOVERNMENT PRINTING OFFICE
72
+ 33-320 WASHINGTON : 2007
73
+ -----------------------------------------------------------------------
74
+ For sale by the Superintendent of Documents, U.S. GovernlD.3nt Printing Office
75
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800
76
+ Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
77
+
78
+
79
+ <TEXT NOT AVAILABLE IN TIFF FORMAT>
80
+ 
81
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg33330.txt ADDED
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+ <html>
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+ <title> - FULL COMMITTEE ORGANIZATION MEETING</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+ FULL COMMITTEE
10
+ ORGANIZATION MEETING
11
+
12
+ =======================================================================
13
+
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+ COMMITTEE ON SMALL BUSINESS
15
+ UNITED STATES HOUSE OF REPRESENTATIVES
16
+
17
+ ONE HUNDRED TENTH CONGRESS
18
+
19
+ FIRST SESSION
20
+
21
+ __________
22
+
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+ JANUARY 31, 2007
24
+
25
+ __________
26
+
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+ Serial Number 110-1
28
+
29
+ __________
30
+
31
+ Printed for the use of the Committee on Small Business
32
+
33
+
34
+ Available via the World Wide Web: http://www.access.gpo.gov/congress/
35
+ house
36
+
37
+ U.S. GOVERNMENT PRINTING OFFICE
38
+
39
+ 33-330 PDF WASHINGTON DC: 2007
40
+ ---------------------------------------------------------------------
41
+ For sale by the Superintendent of Documents, U.S. Government Printing
42
+ Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800
43
+ DC area (202)512-1800 Fax: (202) 512-2250 Mail Stop SSOP,
44
+ Washington, DC 20402-0001
45
+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+ HOUSE COMMITTEE ON SMALL BUSINESS
69
+
70
+ NYDIA M. VELAZQUEZ, New York, Chairwoman
71
+
72
+
73
+ JUANITA MILLENDER-McDONALD, STEVE CHABOT, Ohio, Ranking Member
74
+ California ROSCOE BARTLETT, Maryland
75
+ WILLIAM JEFFERSON, Louisiana SAM GRAVES, Missouri
76
+ HEATH SHULER, North Carolina TODD AKIN, Missouri
77
+ CHARLIE GONZALEZ, Texas BILL SHUSTER, Pennsylvania
78
+ RICK LARSEN, Washington MARILYN MUSGRAVE, Colorado
79
+ RAUL GRIJALVA, Arizona STEVE KING, Iowa
80
+ MICHAEL MICHAUD, Maine JEFF FORTENBERRY, Nebraska
81
+ MELISSA BEAN, Illinois LYNN WESTMORELAND, Georgia
82
+ HENRY CUELLAR, Texas LOUIE GOHMERT, Texas
83
+ DAN LIPINSKI, Illinois DEAN HELLER, Nevada
84
+ GWEN MOORE, Wisconsin DAVID DAVIS, Tennessee
85
+ JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
86
+ BRUCE BRALEY, Iowa VERN BUCHANAN, Florida
87
+ YVETTE CLARKE, New York JIM JORDAN, Ohio
88
+ BRAD ELLSWORTH, Indiana
89
+ HANK JOHNSON, Georgia
90
+ JOE SESTAK, Pennsylvania
91
+
92
+ Michael Day, Majority Staff Director
93
+
94
+ Adam Minehardt, Deputy Staff Director
95
+
96
+ Tim Slattery, Chief Counsel
97
+
98
+ Kevin Fitzpatrick, Minority Staff Director
99
+
100
+ ______
101
+
102
+ STANDING SUBCOMMITTEES
103
+
104
+ Subcommittee on Finance and Tax
105
+
106
+ MELISSA BEAN, Illinois, Chairwoman
107
+
108
+
109
+ RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking
110
+ MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
111
+ BRAD ELLSWORTH, Indiana STEVE KING, Iowa
112
+ HANK JOHNSON, Georgia VERN BUCHANAN, Florida
113
+ JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
114
+
115
+ ______
116
+
117
+ Subcommittee on Contracting and Technology
118
+
119
+ BRUCE BRALEY, IOWA, Chairman
120
+
121
+
122
+ WILLIAM JEFFERSON, Louisiana DAVID DAVIS, Tennessee, Ranking
123
+ HENRY CUELLAR, Texas ROSCOE BARTLETT, Maryland
124
+ GWEN MOORE, Wisconsin SAM GRAVES, Missouri
125
+ YVETTE CLARKE, New York TODD AKIN, Missouri
126
+ JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
127
+
128
+ .........................................................
129
+
130
+ (ii)
131
+
132
+
133
+
134
+
135
+ Subcommittee on Regulations, Health Care and Trade
136
+
137
+ CHARLES GONZALEZ, Texas, Chairman
138
+
139
+
140
+ WILLIAM JEFFERSON, Louisiana LYNN WESTMORELAND, Georgia,
141
+ RICK LARSEN, Washington Ranking
142
+ DAN LIPINSKI, Illinois BILL SHUSTER, Pennsylvania
143
+ MELISSA BEAN, Illinois STEVE KING, Iowa
144
+ GWEN MOORE, Wisconsin MARILYN MUSGRAVE, Colorado
145
+ JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
146
+ JOE SESTAK, Pennsylvania VERN BUCHANAN, Florida
147
+ JIM JORDAN, Ohio
148
+
149
+ ______
150
+
151
+ Subcommittee on Urban and Rural Entrepreneurship
152
+
153
+ HEATH SHULER, North Carolina, Chairman
154
+
155
+
156
+ RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska,
157
+ MICHAEL MICHAUD, Maine Ranking
158
+ GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
159
+ YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado
160
+ BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada
161
+ HANK JOHNSON, Georgia DAVID DAVIS, Tennessee
162
+
163
+ ______
164
+
165
+ Subcommittee on Investigations and Oversight
166
+
167
+ JASON ALTMIRE, PENNSYLVANIA, Chairman
168
+
169
+
170
+ JUANITA MILLENDER-McDONALD, LOUIE GOHMERT, Texas, Ranking
171
+ California LYNN WESTMORELAND, Georgia
172
+ CHARLIE GONZALEZ, Texas
173
+ RAUL GRIJALVA, Arizona
174
+
175
+ (iii)
176
+
177
+
178
+
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+
180
+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
208
+ C O N T E N T S
209
+
210
+ ----------
211
+
212
+ STATEMENTS BY COMMITTEE MEMBERS
213
+
214
+ Page
215
+
216
+ Velazquez, Hon. Nydia M.......................................... 1
217
+ Chabot, Hon. Steve............................................... 2
218
+
219
+ COMMITTEE BUSINESS
220
+
221
+ Passage of Committee Rules and Oversight Plan.................... 3
222
+
223
+ APPENDIX
224
+
225
+
226
+ Prepared Statements:
227
+ Velazquez, Hon. Nydia M.......................................... 5
228
+ Chabot, Hon. Steve............................................... 8
229
+
230
+ (v)
231
+
232
+
233
+
234
+ FULL COMMITTEE ORGANIZATIONAL MEETING
235
+
236
+ ----------
237
+
238
+
239
+ WEDNESDAY, JANUARY 31, 2007
240
+
241
+ U.S. House of Representatives,
242
+ Committee on Small Business,
243
+ Washington, DC.
244
+ The Committee met, pursuant to call, at 12:00 p.m., in Room
245
+ 2360 Rayburn House Office Building, Hon. Nydia M. Velazquez
246
+ [Chairwoman of the Committee] presiding.
247
+ Present: Representatives Velazquez, Jefferson, Shuler,
248
+ Gonzalez, Michaud, Cuellar, Lipinski, Moore, Altmire, Braley,
249
+ Ellsworth, Chabot, Bartlett, Akin, Fortenberry, Gohmert, Davis,
250
+ Buchanan, and Jordan.
251
+ Staff Present: Tim Slattery, Majority Counsel; and Zuraya
252
+ Tapia, Clerk.
253
+
254
+ OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ
255
+
256
+ Chairwoman Velazquez. I call this Small Business Committee
257
+ organizational meeting together.
258
+ I want to first welcome all returning and new Members. I
259
+ look forward to working with each of you this Congress. There
260
+ is no question that we all have the same goal, to best advocate
261
+ on behalf of our nation's 26 million small businesses. For this
262
+ Committee to truly meet the needs of small firms, we must work
263
+ together in a way that is fair and best addresses their
264
+ concerns.
265
+ I have always believed that there shouldn't be a Democratic
266
+ or a Republican way when it comes to small businesses. Good
267
+ ideas come from both sides and we need to be open and encourage
268
+ that. With that option of today's rules package and oversight
269
+ plan, I believe we are demonstrating to the small business
270
+ community that we are committed to working together and
271
+ advocating on their behalf. Small businesses deserve our
272
+ partnership and I look forward to working with Ranking Member
273
+ Mr. Chabot and the other Members of the Committee to accomplish
274
+ this goal.
275
+ We have a very diverse Committee, both ideologically and
276
+ geographically. I believe that is our strength and we'll make
277
+ sure that this Committee's final product benefits entrepreneurs
278
+ in all sectors. That being said, I look forward to the
279
+ discussions, as well as the debates, that I know will transpire
280
+ over the next two years. I am sure they will be both lively and
281
+ informative and I welcome that.
282
+ Again, I welcome each of you here and I look forward to
283
+ working with all of you.
284
+ I would like to take this time to introduce the freshmen on
285
+ the Committee: Congressman Heath Shuler from North Carolina,
286
+ Representative Jason Altmire from Pennsylvania; Bruce Braley
287
+ from Iowa; Yvette Clarke, New York; Brad Ellsworth, Indiana;
288
+ Mr. Hank Johnson, Georgia; Joe Sestak from Pennsylvania.
289
+ At this point, I would like to yield to the Ranking Member,
290
+ Mr. Chabot, for any opening statement he may have.
291
+
292
+ STATEMENT OF MR. CHABOT
293
+
294
+ Mr. Chabot. Thank you, Madam Chair. I thank you for
295
+ yielding and I'll be brief. We have a vote, as we all know, so
296
+ I'll try to keep this as brief as I possibly can.
297
+ I want to first of all congratulate you on being the chair
298
+ of the Small Business Committee. I know that you've been a
299
+ hardworking Member on this Committee for a long time now and I
300
+ know that you'll do a good job.
301
+ I also want to commend both you and your staff for working
302
+ so well in the transition period. With our staff, I think
303
+ you've bent over backwards to be fair with us and we appreciate
304
+ that. And while we will certainly have partisan differences
305
+ over the course of the next two years, there are many issues
306
+ that I think we can agree on and after all, 99 percent of the
307
+ businesses in this country by definition are small businesses
308
+ and 60 to 80 percent of the jobs that are created are created
309
+ by small businesses. So I think we should work together as you
310
+ indicated to improve the environment for millions of Americans
311
+ who own or work in small businesses.
312
+ And I would also like to introduce the freshmen Members
313
+ that we have on our side, so I'll begin with--is Dean Heller
314
+ here yet? No. He was Secretary of State of Nevada. He's been a
315
+ commercial banker and stockbroker, and he will be the Ranking
316
+ Member of the Finance and Tax Subcommittee. Next I'd like to
317
+ introduce Dave Davis from Tennessee here. He had a very
318
+ successful career as the owner of two healthcare and medical
319
+ equipment businesses and David will be the Ranking Member of
320
+ the Contracting and Technology Subcommittee. Mary Fallin, who I
321
+ believe is not here, was a real estate broker and she was
322
+ Oklahoma's Lieutenant Governor and she served there in a
323
+ cabinet-level position as the State's small business advocate.
324
+ Vern Buchanan, who is here, Vern is of Florida. Turned a small,
325
+ quick printing franchise into an immensely successful
326
+ enterprise and later became one of the nation's most successful
327
+ automobile dealers and we welcome him here.
328
+ And finally, my friend and fellow Ohioan, Jim Jordan, who
329
+ in addition to building a very successful record in the Ohio
330
+ General Assembly is widely known for his prowess as an all
331
+ American wrestling champion. So we welcome Jim here. I want to
332
+ welcome all of them to our nation's capital and our returning
333
+ Members, Roscoe Bartlett, Sam Graves, Todd Akin, Bill Shuster,
334
+ Marilyn Musgrave, Steve King, and Louis Gohmert who will be the
335
+ Ranking Member of the Investigations and Oversight Committee;
336
+ Lynn Westmoreland, who will be the Ranking Member of the
337
+ Regulations, Healthcare and Trade Subcommittee; and finally,
338
+ Jeff Fortenberry, who will be the Ranking Member of the Rural
339
+ and Urban Entrepreneur Subcommittee Member.
340
+ And with that, I'll yield back.
341
+
342
+ ADOPTION OF COMMITTEE RULES
343
+
344
+ Chairwoman Velazquez. Thank you, Ranking Member. And now
345
+ the first order of business is to adopt the Committee rules. As
346
+ you mentioned, Ranking Member, this was done in conjunction
347
+ both with the Democratic side and the Republican side, working
348
+ together. Changes were well made. Those changes are positive.
349
+ They're fair. It opens the process for more participation and
350
+ the only way that we could be effective in providing solutions
351
+ to the many issues impacting small businesses is by providing a
352
+ process that is open, is fair. The minority will have one third
353
+ of everything when it comes to having witnesses, including the
354
+ budget and total control of the budget. You will be the one
355
+ making the decision as to how, where the budget will be spent.
356
+ With that, I will yield to the Ranking Member, if you have
357
+ any comments regarding the Rules Plan. Every person, every
358
+ Member has a copy, has been provided to you, both the rules
359
+ package as well as the oversight plan.
360
+ Mr. Chabot. Thank you, Madam Chair, and I'll be brief. I
361
+ want to reiterate my appreciation for both your and your
362
+ staff's working with our side on the rules. I agree with you
363
+ that there is protection of minority rights in the rules and
364
+ more opportunities for minority input and we appreciate that.
365
+ And I had the opportunity to provide a copy of the rules and go
366
+ over the rule changes with my members at our organizational
367
+ meeting on Monday. And to my knowledge, everyone is pleased
368
+ with those and I would urge my colleagues to support the rules
369
+ and I yield back.
370
+ Chairwoman Velazquez. Are there any Members that wish to be
371
+ recognized on the Rules Plan?
372
+ [No response.]
373
+ Chairwoman Velazquez. If no other Members wish to be
374
+ recognized, I will yield to Mr. Gonzalez for a motion.
375
+ Mr. Gonzalez. I so move that we adopt the Rules Plan for
376
+ the Small Business Committee.
377
+ Chairwoman Velazquez. Does anyone second the motion?
378
+ Mr. Gohmert. Second.
379
+ Chairwoman Velazquez. The question is on the adoption of
380
+ the Rules Plan. All those in favor, say aye? All those opposed
381
+ say no.
382
+ [Ayes.]
383
+ Chairwoman Velazquez. In the opinion of the chair, the ayes
384
+ have it. The Rules Plan for the Small Business Committee in the
385
+ U.S. House of Representatives for the 110th Congress are hereby
386
+ adopted.
387
+
388
+ ADOPTION OF THE COMMITTEE OVERSIGHT PLAN
389
+
390
+ Chairwoman Velazquez. Today, the second order of business
391
+ is the Committee Oversight Plan and this plan is the roadmap
392
+ for the Small Business Committee. It details what we're going
393
+ to do and how we're going to do it. Most importantly, it lets
394
+ the small business community know that we're going to address
395
+ their concerns.
396
+ I want to thank the Ranking Member, Mr. Chabot, for his
397
+ input in constructing this plan and for helping improve it in
398
+ key areas such as the state tax and tort reform. This document
399
+ represents priorities from both sides of the aisle, something I
400
+ think is very important to best serve the small business sector
401
+ and our nation and I am very happy to say that this Committee
402
+ now will have broader and greater flexibility in the sense that
403
+ now the jurisdiction of the Committee has been expanded,
404
+ meaning that the legislation that we can show the
405
+ Parliamentarian has a significant impact on the large number of
406
+ businesses. We can ask for referral and this way, we can assure
407
+ the small business sector that their voices will be heard
408
+ throughout the legislative process.
409
+ It is my goal that we set out to work together to address
410
+ the most pressing concern for small businesses. As we all know,
411
+ this includes healthcare regulations and ensuring a strong and
412
+ vibrant SBA at their disposal.
413
+ It is clear that small businesses face many obstacles. It
414
+ is incumbent upon us to provide small businesses with relief
415
+ and the tools they need to be successful and I strongly believe
416
+ that the oversight plan will achieve this.
417
+ At this point, I will yield to the Ranking Member.
418
+ Mr. Chabot. Thank you, Madam Chair. I know we have a vote,
419
+ so I'll be very brief. We agree and thank the minority for
420
+ working with us on this oversight plan. We've had an
421
+ opportunity to look at the differences that this will make to
422
+ small businesses. It covers taxes and regulations, paperwork,
423
+ healthcare, legal reform, Small Business Administration
424
+ contracting and many other areas.
425
+ So I would urge my colleagues to support the plan and thank
426
+ you for your cooperation.
427
+ Chairwoman Velazquez. Are there any Members that wish to be
428
+ recognized?
429
+ [No response.]
430
+ Chairwoman Velazquez. If no other members wish to be
431
+ recognized, I will yield to Mr. Gonzalez for a motion.
432
+ Mr. Gonzalez. I would move that we adopt the Small Business
433
+ Oversight Plan.
434
+ Chairwoman Velazquez. Does anyone second the motion?
435
+ Mr. Cuellar. Second.
436
+ Mr. Gonzalez. The question is on the adoption of the
437
+ Oversight Plan. All those in favor say aye. All those opposed
438
+ say no.
439
+ [Ayes.]
440
+ Chairwoman Velazquez. In the opinion of the chair the ayes
441
+ have it. The Oversight Plan for the Small Business Committee
442
+ for the 110th Congress are hereby adopted. Thank you. With
443
+ that, we adjourn the meeting.
444
+ [Whereupon, at 12:40 p.m., the meeting was concluded.]
445
+
446
+ [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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+
448
+ <all>
449
+ 
450
+ </pre></body></html>
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1
+ <html>
2
+ <title> - OVERVIEW OF U.S. POLICY TOWARD LATIN AMERICA</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+
10
+
11
+ OVERVIEW OF U.S. POLICY TOWARD LATIN
12
+ AMERICA
13
+ ______________________________________________________________________
14
+
15
+
16
+
17
+
18
+
19
+ HEARING
20
+
21
+ BEFORE THE
22
+
23
+ SUBCOMMITTEE ON
24
+ THE WESTERN HEMISPHERE
25
+
26
+ OF THE
27
+
28
+ COMMITTEE ON FOREIGN AFFAIRS
29
+ HOUSE OF REPRESENTATIVES
30
+
31
+ ONE HUNDRED TENTH CONGRESS
32
+
33
+ FIRST SESSION
34
+ _______
35
+
36
+ MARCH 1, 2007
37
+ _______
38
+
39
+ Serial No. 110-29
40
+ _______
41
+
42
+ Printed for the use of the Committee on Foreign Affairs
43
+
44
+
45
+
46
+ <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
47
+
48
+ Available via the World Wide Web: http://www.foreignaffairs.house.gov/
49
+ _____
50
+
51
+ U.S. GOVERNMENT PRINTING OFFICE
52
+ 33-620PDF WASHINGTON : 2007
53
+ ___________________________________________________________________________
54
+ For sale by the Superintendent of Documents, U.S. Government Printing Office,
55
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area
56
+ (202) 512-1800, Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC
57
+ 20402-0001
58
+
59
+ <TEXT NOT AVAILABLE>
60
+ 
61
+ </pre></body></html>
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1
+ <html>
2
+ <title> - NORTH KOREAN HUMAN RIGHTS: AN UPDATE</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+
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+
11
+ NORTH KOREAN HUMAN RIGHTS: AN UPDATE
12
+ ______________________________________________________________________
13
+
14
+
15
+
16
+
17
+
18
+ HEARING
19
+
20
+ BEFORE THE
21
+
22
+ SUBCOMMITTEE ON ASIA, THE PACIFIC, AND
23
+ THE GLOBAL ENVIRONMENT
24
+
25
+ OF THE
26
+
27
+ COMMITTEE ON FOREIGN AFFAIRS
28
+ HOUSE OF REPRESENTATIVES
29
+
30
+ ONE HUNDRED TENTH CONGRESS
31
+
32
+ FIRST SESSION
33
+ _______
34
+
35
+ MARCH 1, 2007
36
+ _______
37
+
38
+ Serial No. 110-35
39
+ _______
40
+
41
+ Printed for the use of the Committee on Foreign Affairs
42
+
43
+
44
+
45
+ <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
46
+
47
+ Available via the World Wide Web: http://www.foreignaffairs.house.gov/
48
+ _____
49
+
50
+ U.S. GOVERNMENT PRINTING OFFICE
51
+ 33-621PDF WASHINGTON : 2007
52
+ ___________________________________________________________________________
53
+ For sale by the Superintendent of Documents, U.S. Government Printing Office,
54
+ Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area
55
+ (202) 512-1800, Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC
56
+ 20402-0001
57
+
58
+ <TEXT NOT AVAILABLE>
59
+ 
60
+ </pre></body></html>
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1
+ <html>
2
+ <title> - FULL COMMITTEE MARKUP OF DISASTER RELIEF AND IMPROVED ACCESS TO CAPITAL LEGISLATION H.R. 1361, H.R. 1332 AND H.R. 1468</title>
3
+ <body><pre>
4
+ [House Hearing, 110 Congress]
5
+ [From the U.S. Government Publishing Office]
6
+
7
+
8
+
9
+ FULL COMMITTEE MARKUP OF DISASTER RELIEF
10
+ AND IMPROVED ACCESS TO
11
+ CAPITAL LEGISLATION
12
+ H.R. 1361, H.R. 1332 AND H.R. 1468
13
+
14
+ =======================================================================
15
+
16
+ COMMITTEE ON SMALL BUSINESS
17
+ UNITED STATES HOUSE OF REPRESENTATIVES
18
+
19
+ ONE HUNDRED TENTH CONGRESS
20
+
21
+ FIRST SESSION
22
+
23
+ __________
24
+
25
+ MARCH 15, 2007
26
+
27
+ __________
28
+
29
+ Serial Number 110-8
30
+
31
+ __________
32
+
33
+ Printed for the use of the Committee on Small Business
34
+
35
+
36
+ Available via the World Wide Web: http://www.access.gpo.gov/congress/
37
+ house
38
+
39
+ U.S. GOVERNMENT PRINTING OFFICE
40
+
41
+ 33-805 PDF WASHINGTON DC: 2007
42
+ ---------------------------------------------------------------------
43
+ For sale by the Superintendent of Documents, U.S. Government Printing
44
+ Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800
45
+ DC area (202)512-1800 Fax: (202) 512-2250 Mail Stop SSOP,
46
+ Washington, DC 20402-0001
47
+
48
+
49
+
50
+
51
+
52
+
53
+
54
+
55
+
56
+
57
+
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+
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+
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+
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+
62
+
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+
64
+
65
+
66
+
67
+
68
+
69
+
70
+
71
+
72
+ HOUSE COMMITTEE ON SMALL BUSINESS
73
+
74
+ NYDIA M. VELAZQUEZ, New York, Chairwoman
75
+
76
+
77
+ JUANITA MILLENDER-McDONALD, STEVE CHABOT, Ohio, Ranking Member
78
+ California ROSCOE BARTLETT, Maryland
79
+ WILLIAM JEFFERSON, Louisiana SAM GRAVES, Missouri
80
+ HEATH SHULER, North Carolina TODD AKIN, Missouri
81
+ CHARLIE GONZALEZ, Texas BILL SHUSTER, Pennsylvania
82
+ RICK LARSEN, Washington MARILYN MUSGRAVE, Colorado
83
+ RAUL GRIJALVA, Arizona STEVE KING, Iowa
84
+ MICHAEL MICHAUD, Maine JEFF FORTENBERRY, Nebraska
85
+ MELISSA BEAN, Illinois LYNN WESTMORELAND, Georgia
86
+ HENRY CUELLAR, Texas LOUIE GOHMERT, Texas
87
+ DAN LIPINSKI, Illinois DEAN HELLER, Nevada
88
+ GWEN MOORE, Wisconsin DAVID DAVIS, Tennessee
89
+ JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
90
+ BRUCE BRALEY, Iowa VERN BUCHANAN, Florida
91
+ YVETTE CLARKE, New York JIM JORDAN, Ohio
92
+ BRAD ELLSWORTH, Indiana
93
+ HANK JOHNSON, Georgia
94
+ JOE SESTAK, Pennsylvania
95
+
96
+ Michael Day, Majority Staff Director
97
+
98
+ Adam Minehardt, Deputy Staff Director
99
+
100
+ Tim Slattery, Chief Counsel
101
+
102
+ Kevin Fitzpatrick, Minority Staff Director
103
+
104
+ ______
105
+
106
+ STANDING SUBCOMMITTEES
107
+
108
+ Subcommittee on Finance and Tax
109
+
110
+ MELISSA BEAN, Illinois, Chairwoman
111
+
112
+
113
+ RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking
114
+ MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
115
+ BRAD ELLSWORTH, Indiana STEVE KING, Iowa
116
+ HANK JOHNSON, Georgia VERN BUCHANAN, Florida
117
+ JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
118
+
119
+ ______
120
+
121
+ Subcommittee on Contracting and Technology
122
+
123
+ BRUCE BRALEY, IOWA, Chairman
124
+
125
+
126
+ WILLIAM JEFFERSON, Louisiana DAVID DAVIS, Tennessee, Ranking
127
+ HENRY CUELLAR, Texas ROSCOE BARTLETT, Maryland
128
+ GWEN MOORE, Wisconsin SAM GRAVES, Missouri
129
+ YVETTE CLARKE, New York TODD AKIN, Missouri
130
+ JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
131
+
132
+ .........................................................
133
+
134
+ (ii)
135
+
136
+
137
+
138
+
139
+ Subcommittee on Regulations, Health Care and Trade
140
+
141
+ CHARLES GONZALEZ, Texas, Chairman
142
+
143
+
144
+ WILLIAM JEFFERSON, Louisiana LYNN WESTMORELAND, Georgia,
145
+ RICK LARSEN, Washington Ranking
146
+ DAN LIPINSKI, Illinois BILL SHUSTER, Pennsylvania
147
+ MELISSA BEAN, Illinois STEVE KING, Iowa
148
+ GWEN MOORE, Wisconsin MARILYN MUSGRAVE, Colorado
149
+ JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
150
+ JOE SESTAK, Pennsylvania VERN BUCHANAN, Florida
151
+ JIM JORDAN, Ohio
152
+
153
+ ______
154
+
155
+ Subcommittee on Urban and Rural Entrepreneurship
156
+
157
+ HEATH SHULER, North Carolina, Chairman
158
+
159
+
160
+ RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska,
161
+ MICHAEL MICHAUD, Maine Ranking
162
+ GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
163
+ YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado
164
+ BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada
165
+ HANK JOHNSON, Georgia DAVID DAVIS, Tennessee
166
+
167
+ ______
168
+
169
+ Subcommittee on Investigations and Oversight
170
+
171
+ JASON ALTMIRE, PENNSYLVANIA, Chairman
172
+
173
+
174
+ JUANITA MILLENDER-McDONALD, LOUIE GOHMERT, Texas, Ranking
175
+ California LYNN WESTMORELAND, Georgia
176
+ CHARLIE GONZALEZ, Texas
177
+ RAUL GRIJALVA, Arizona
178
+
179
+ (iii)
180
+
181
+
182
+
183
+
184
+
185
+
186
+
187
+
188
+
189
+
190
+
191
+
192
+
193
+
194
+
195
+
196
+
197
+
198
+
199
+
200
+
201
+
202
+
203
+
204
+
205
+
206
+ C O N T E N T S
207
+
208
+ ----------
209
+
210
+ OPENING STATEMENTS
211
+
212
+ Page
213
+
214
+ Velazquez, Hon. Nydia M.........................................1,3,5,8
215
+ Chabot, Hon. Steve.............................................2,4,5,10
216
+ Jefferson, Hon. William.......................................... 4
217
+ Gonzalez, Hon. Charlie........................................... 6
218
+ Bean, Hon. Melissa............................................... 6
219
+ Fallin, Hon. Mary................................................ 8
220
+
221
+ APPENDIX
222
+
223
+
224
+ Prepared Statements:
225
+ Velazquez, Hon. Nydia M.......................................... 30
226
+ Chabot, Hon. Steve............................................... 32
227
+ Graves, Hon. Sam................................................. 34
228
+
229
+ (v)
230
+
231
+
232
+
233
+
234
+ FULL COMITTEE MARKUP ON
235
+
236
+
237
+
238
+ DISASTER RELIEF AND IMPROVED ACCESS
239
+
240
+
241
+
242
+ TO CAPITAL LEGISLATION
243
+
244
+
245
+
246
+ H.R. 1361, H.R. 1332 AND H.R. 1468
247
+
248
+ ----------
249
+
250
+
251
+ THURSDAY, MARCH 15, 2007
252
+
253
+ U.S. House of Representatives,
254
+ Committee on Small Business,
255
+ Washington, DC.
256
+ The Committee met, pursuant to call, at 10:00 a.m., in Room
257
+ 2360 Rayburn House Office Building, Hon. Nydia Velazquez
258
+ [Chairwoman of the Committee] presiding.
259
+ Present: Representatives Velazquez, Millender-McDonald,
260
+ Jefferson, Shuler, Gonzalez, Larsen, Grijalva, Michaud, Bean,
261
+ Cuellar, Lipinski, Moore, Altmire, Braley, Clarke, Ellsworth,
262
+ Johnson, Sestak, Chabot, Bartlett, Graves, Akin, Musgrave,
263
+ Fortenberry, Heller, Davis, Fallin, Buchanan and Jordan.
264
+
265
+ OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ
266
+
267
+ Chairwoman Velazquez. I call this meeting to order. Today's
268
+ order of business is the markup of legislation addressing three
269
+ very different but important roles that the Small Business
270
+ Administration plays: access to capital, disaster assistance,
271
+ and contracting.
272
+ This Committee has held a number of hearings on these
273
+ topics, heard from small business owners as well as small
274
+ business advocates. And these three bills address many of the
275
+ issues brought up during those discussions.
276
+ We did not agree on everything, but in the end, the
277
+ conversations that we have had and issues discussed were
278
+ helpful and productive.
279
+ It is my hope that our Committee continues to work in this
280
+ manner on our future legislative endeavors. There is no
281
+ question that many small businesses were affected by Hurricane
282
+ Katrina and that the SBA's disaster response was in question.
283
+ The RECOVER Act of 2007 requires that the SBA have a plan
284
+ in place for such disasters and makes tools available to
285
+ provide relief in a quicker, more efficient manner. I strongly
286
+ believe the RECOVER Act of 2007 will help prevent a situation
287
+ like what occurred after Hurricane Katrina from ever happening
288
+ again.
289
+ The devastation cost by Hurricane Katrina resulted in many
290
+ small firms losing out on a great deal of revenue. The
291
+ Disadvantaged Business Disaster Eligibility Act introduced by
292
+ Mr. Jefferson gives more time to entrepreneurs who have been
293
+ harmed by the Gulf Coast hurricanes to participate in federal
294
+ contracts.
295
+ The third bill, the Small Business Lending Improvements Act
296
+ of 2007, introduced by Ms. Bean and Mr. Chabot will reduce the
297
+ financial and regulatory burden placed on small businesses.
298
+ Most importantly, it will make loans more economical while
299
+ providing long-term stability.
300
+ With the adoption of these bills, we began work on bringing
301
+ the Small Business Administration back to its original mission,
302
+ providing entrepreneurs with competitive tools for today's
303
+ marketplace.
304
+ There is no doubt that these programs are valuable for
305
+ entrepreneurs. And today's legislation will help ensure SBA
306
+ will be the premier resource for our nation's 26 million small
307
+ businesses.
308
+ I would now like to yield to the ranking member, Mr.
309
+ Chabot, for his comments.
310
+
311
+ OPENING STATEMENT OF MR. CHABOT
312
+
313
+ Mr. Chabot. Thank you very much, Madam Chairwoman. And I
314
+ want to thank you for holding this important markup today to
315
+ consider a number of bills, among them being an important
316
+ bipartisan legislation that will improve and strengthen the
317
+ primary lending programs of the Small Business Administration,
318
+ the 7(a) and the 504 programs.
319
+ In regards to this bill, the Small Business Lending
320
+ Improvements Act of 2007, which is 1332, while many changes are
321
+ suggested for the 7(a) loan program, I believe one of the most
322
+ beneficial aspects of the program, its independence from
323
+ appropriations, is also an aspect that deserves fierce
324
+ protection. Nothing in H.R. 1332 alters that principle.
325
+ I do have one reservation about Title I of the bill. I am a
326
+ little concerned that the SBA may have technical difficulties
327
+ in adequately recalculating the fees to lenders and borrowers
328
+ on a quarterly basis. Even with this reservation, I believe
329
+ that the approach adopted in H.R. 1332 is the best means to
330
+ have the SBA reduce fees to both borrowers and lenders in the
331
+ 7(a) loan program.
332
+ Title II of the bill provides much needed improvements to
333
+ strengthen the certified development company program, improve
334
+ its mission of community and local economic development, and
335
+ lower the costs of the program through improved returns on
336
+ liquidations of bad loans.
337
+ H.R. 1332 is an important bill that deserves strong
338
+ bipartisan support when it reaches the House floor. The other
339
+ two bills, we will also have the opportunity to consider the
340
+ RECOVER Act of 2007, which is 1361.
341
+ This bill is designed to improve the SBA's response, one
342
+ that was unacceptable, I think we all agree, in the aftermath
343
+ of Hurricane Katrina to future natural disasters.
344
+ I believe that this bill is well-intentioned and contains
345
+ some policies that would improve the agency's response in the
346
+ future. For example, the legislation would improve coordination
347
+ between the SBA and FEMA to reduce the loan processing time for
348
+ disaster victims.
349
+ However, despite some beneficial aspects of this
350
+ legislation, I remain troubled by specific provisions related
351
+ to grants, double compensation to disaster victims, and certain
352
+ congressional reporting requirements, that they be on a monthly
353
+ basis, rather than quarterly. I will be introducing some
354
+ amendments to address these issues during the course of this
355
+ markup.
356
+ The final bill that we will be marking up is the
357
+ Disadvantaged Business Eligibility Act. H.R. 1468 provides a
358
+ common sense approach to the time limit problem, many 8(a)
359
+ program participants who were located in Louisiana affected by
360
+ Hurricane Katrina.
361
+ The displacement associated with that hurricane certainly
362
+ made it difficult for 8(a) program participants to operate
363
+ their businesses and obtain federal government contracts. It
364
+ seems equitable to extend their participation by 18 months. In
365
+ addition, to simple fairness, the extension will help in the
366
+ necessary recovery of the area.
367
+ Finally, I would like to thank Chairwoman Velazquez for
368
+ incorporating a number of ideas proffered by myself and other
369
+ Republican members of the Committee into some of the amendments
370
+ that she will offer today.
371
+ Clearly there are disagreements, especially concerning the
372
+ most financially prudent means to respond to natural disasters.
373
+ Nevertheless, her staff did not let these differences interfere
374
+ with the sharing of ideas and legislative drafts needed to
375
+ improve legislation.
376
+ And while I expect other legislation to demonstrate
377
+ principled disagreements on issues, I am hopeful that we can
378
+ continue to have a frank and open discussion of legislation
379
+ among members and between our respective staffs. I want to
380
+ again commend you for working in a bipartisan manner.
381
+ I yield back.
382
+
383
+ Chairwoman Velazquez. Thank you, Mr. Chabot.
384
+ Do any other members wish to be recognized for the purpose
385
+ of making a statement?
386
+ [No response.]
387
+
388
+ STATEMENT OF CHAIRWOMAN VELAZQUEZ ON H.R. 1468
389
+
390
+ Chairwoman Velazquez. Well, our first order of business is
391
+ to consider H.R. 1468.
392
+ Chairwoman Velazquez. That is the Disadvantaged Business
393
+ Disaster Eligibility Act introduced by Representative
394
+ Jefferson.
395
+ This legislation allows 8(a) participants who have been
396
+ impacted by Hurricane Katrina to have 18 more months in the
397
+ program. This is not a significant amount of time, but it could
398
+ play a major role in assuring that these businesses are able to
399
+ participate in the rebuilding of their home states.
400
+ There are fewer than 225 current and former 8(a)
401
+ participants in the State of Louisiana that could be eligible
402
+ for this assistance. As currently structured, the program is
403
+ very limited as part of the length of time that companies are
404
+ allowed to participate. In this way, it is unlike any other SBA
405
+ procurement initiative. Others allow recertification in
406
+ increments of three years.
407
+ The 8(a) program is for nine years and nine years only. If
408
+ a company fails at any point during this time, the individual
409
+ owners may never be accepted into the program again.
410
+ In this respect, the program is unprepared for catastrophic
411
+ events, which not only force owners of participating businesses
412
+ to evacuate their location but also to in many cases rebuild
413
+ their companies from the ground up. That is why Mr. Jefferson's
414
+ bill is so important. This legislation is a common sense
415
+ approach to resolve a problem that the 8(a) program is not
416
+ currently structured to deal with.
417
+ I close by urging members to support this bill as I intend
418
+ to. I now recognize Mr. Chabot.
419
+
420
+
421
+ STATEMENT OF MR. CHABOT ON H.R. 1468
422
+
423
+ Mr. Chabot. Thank you, Madam Chairwoman. I will be very
424
+ brief.
425
+ As I mentioned in my opening statement, I believe that this
426
+ is a good piece of legislation. I think it is equitable to
427
+ extend participation by 18 months. It seems like simple
428
+ fairness to do that when one is considering the devastation
429
+ that these people went through.
430
+ And I would commend Mr. Jefferson for offering this
431
+ legislation, would urge my colleagues to support it, and yield
432
+ back my time.
433
+ Chairwoman Velazquez. I recognize the bill's sponsor, Mr.
434
+ Jefferson, for a statement.
435
+
436
+
437
+ STATEMENT OF MR. JEFFERSON ON H.R. 1468
438
+
439
+ Mr. Jefferson. Thank you, Madam Chair. And thank you, Mr.
440
+ Chabot. Particularly I appreciate the bipartisan approach to
441
+ this. And there is no point in my adding to the explanations
442
+ that have been made by you and the Chair Lady.
443
+ I will simply say that many of the 8(a) firms back home are
444
+ hoping to have a real chance at participating in the recovery
445
+ of the area. This permits them an opportunity to be involved in
446
+ bringing back their city and also into recovering the very
447
+ fundamentals of that business. So it is pretty important.
448
+ I thank the Committee for recognizing me. And I just urge
449
+ the committee to adopt the bill.
450
+ Chairwoman Velazquez. Thank you.
451
+ Do any other members wish to be recognized on the bill?
452
+ [No response.]
453
+ Chairwoman Velazquez. The bill is now open for amendment at
454
+ any time. Are there any amendments?
455
+ [No response.]
456
+ Chairwoman Velazquez. Seeing none, I move a Committee vote
457
+ on final passage of H.R. 1468. All of those in favor say
458
+ ``Aye.''
459
+ [Chorus of ``Ayes.'']
460
+ Chairwoman Velazquez. All those opposed say ``No.''
461
+ [No response.]
462
+ Chairwoman Velazquez. The bill is agreed to. I move that
463
+ the bill be reported and the staff be directed to make any
464
+ technical corrections prior to the filing of the bill. Without
465
+ objection, so ordered.
466
+ The next piece of legislation that the Committee will
467
+ consider is the Small Business Lending Improvements Act of
468
+ 2007.
469
+
470
+
471
+ STATEMENT OF CHAIRWOMAN VELAZQUEZ ON H.R. 1332
472
+
473
+ Chairwoman Velazquez. While small businesses are this
474
+ nation's economic drivers, accessing the capital they need to
475
+ start and grow their firm is always challenging. SBA loan
476
+ programs are essential for small businesses. There is no
477
+ question there needs to be a decreasing cost and increasing
478
+ access to these programs in under-served areas.
479
+ The Small Business Lending Improvements Act of 2007 is a
480
+ bipartisan effort introduced by Ms. Bean and Mr. Chabot. This
481
+ bill will make loans more economical while providing long-term
482
+ stability.
483
+ H.R. 1332 will accomplish a number of important public
484
+ policy initiatives. It will allow for veterans to be able to
485
+ secure funds to start or expand their firms should they choose
486
+ to from F.Y. 2005 to F.Y. 2006. The number of loans to veterans
487
+ steadily decline. With veterans returning from Iraq and
488
+ Afghanistan, the need for affordable financing is more
489
+ important than ever. After the commitment they have made to
490
+ this country, it is important for us to show our commitment to
491
+ their entrepreneur success.
492
+ While enabling small businesses to thrive, H.R. 1332 would
493
+ also positively impact the community. It provides incentives
494
+ for medical professionals to locate to low-income areas. As we
495
+ heard from one of the witnesses in last week's hearing,
496
+ Kathleen Roth from the American Dental Association in support
497
+ of this legislation stated that those in under-served areas are
498
+ especially in need of such a provision.
499
+ One of the strengths of the Small Business Lending
500
+ Improvements Act of 2007 is that it touches every aspect of the
501
+ SBA lending initiatives. By making much needed and long overdue
502
+ changes, it secures ties between local CDCs and the community.
503
+ It also keeps the initiative affordable by enabling CDCs to
504
+ improve the liquidation process, making fees reasonable.
505
+ An important component of this bill is that it increases
506
+ the access to capital for socially and economically
507
+ disadvantaged small business owners and establishes a rural
508
+ lender program to attract small lenders back into the program.
509
+ Clearly the legislation under consideration today
510
+ strengthens the SBA access to capital programs, giving small
511
+ businesses the tools they need to be competitive and
512
+ successful. It ensures SBA programs are the premier lending
513
+ tool for entrepreneurs. And I strongly urge support of this
514
+ bill.
515
+ I would now like to yield to the ranking member, Mr.
516
+ Chabot, and sponsor of the bill for his comments.
517
+
518
+
519
+ STATEMENT OF MR. CHABOT ON H.R. 1332
520
+
521
+ Mr. Chabot. Thank you, Madam Chairman. I think you have
522
+ summed up what the bill does very well. And we agree with your
523
+ comments. So I won't repeat them in order to save time here.
524
+ I would note that one of our colleagues, Ms. Fallin from
525
+ Oklahoma, does have an amendment to offer at the appropriate
526
+ time.
527
+ Thank you. I yield back.
528
+ Chairwoman Velazquez. Mr. Gonzalez?
529
+
530
+
531
+ STATEMENT OF MR. GONZALEZ ON H.R. 1332
532
+
533
+ Mr. Gonzalez. Yes. I seek recognition at this time, Madam
534
+ Chairwoman, to enter a colloquy with you regarding section 104
535
+ of the proposed bill. And the question would go, as I
536
+ understand it--
537
+ Chairwoman Velazquez. The gentleman from Texas is
538
+ recognized.
539
+ Mr. Gonzalez. I'm sorry. Thank you very much, Madam Chair.
540
+ Section 104, medical professionals in designated shortage
541
+ area programs. And, of course, this is about loans to doctors
542
+ and dentists in these designated areas. And what I wanted to
543
+ make clear--and I know this is a pet project of mine, and so I
544
+ ask my colleagues to bear with me. But I wanted to make
545
+ absolutely clear that the purpose of these loans could go again
546
+ for the purchase and such and acquiring and obtaining health
547
+ information technology because I would hate to think that these
548
+ individuals in the under-served areas would be deprived of what
549
+ no doubt will be one of the most necessary tools to health care
550
+ professionals.
551
+ Chairwoman Velazquez. The loans that are provided under
552
+ this section of the bill can be used for the purposes mentioned
553
+ by the gentleman. And I agree about importance of health
554
+ information technology. I will make it clear that in the
555
+ Committee report language on the bill, it states that these
556
+ loans can be used for health IT.
557
+ Those in under-served areas should have access to the best
558
+ health care available. And it is clear that is the intent of
559
+ the gentleman from Texas.
560
+ Mr. Gonzalez. Thank you very much. I yield back.
561
+
562
+ Chairwoman Velazquez. And now I will recognize one of the
563
+ sponsors of the bill, Ms. Bean, for an opening statement or a
564
+ statement on the bill.
565
+
566
+
567
+ STATEMENT OF MS. BEAN ON H.R. 1332
568
+
569
+ Ms. Bean. Thank you, Madam Chair. I want to thank Chairman
570
+ Velazquez and Ranking Member Chabot for scheduling today's
571
+ markup on the Small Business Lending Improvements Act of 2007,
572
+ which I introduced earlier this month.
573
+ The expedited consideration of this bill as well as the
574
+ bipartisan support that it has received underscores the
575
+ importance of ensuring access to capital to our small business
576
+ community.
577
+ Coming from a business background, I have a special
578
+ appreciation for the need for entrepreneurs and small business
579
+ owners to have access to affordable capital. That is why I have
580
+ long been active in my support of measures to improve and
581
+ expand SBA loan programs which offer low interest, long-term
582
+ loans to business owners that many times wouldn't qualify for
583
+ assistance elsewhere. This bill is no exception.
584
+ H.R. 1332 makes much needed changes to SBA's lending
585
+ initiatives and, most importantly, helps preserve the original
586
+ intent of these programs to help make available affordable
587
+ sources of financing. This is of particular importance as the
588
+ cost of capital through these programs has risen rapidly over
589
+ the last few years. This bill helps to reverse this trend and
590
+ create long-term stability in the program in a fiscally sound
591
+ way.
592
+ In addition, H.R. 1332 addresses the need for lending in
593
+ our rural communities by restoring the low doc program and by
594
+ strengthening the 504 initiative, which is integral in
595
+ stimulating economic development in communities throughout the
596
+ nation. Together these initiatives will bring small lenders
597
+ back into SBA's lending programs and can spur economic
598
+ development in areas that need it the most.
599
+ Again, I commend this Committee under the leadership of
600
+ Chairwoman Velazquez for recognizing the importance of this
601
+ legislation. Small businesses are the backbone of our economy
602
+ driving domestic job growth. And their success as well as the
603
+ success of our economy is dependent upon their ability to grow
604
+ and expand. This legislation helps provide them with the
605
+ fundamental tools to do just that.
606
+ I urge your support of the bill. Thank you. And I yield
607
+ back my time.
608
+
609
+ Chairwoman Velazquez. Do any other members wish to be
610
+ recognized?
611
+ [No response.]
612
+ Chairwoman Velazquez. The Committee will now take up the
613
+ manager's amendment, which makes a series of technical changes.
614
+ Chairwoman Velazquez. Section 103 will be amended to
615
+ provide the SBA with additional flexibility that it needs to
616
+ ensure that the community express program can achieve its
617
+ mission of improving access to capital for socially and
618
+ economically disadvantaged small business owners.
619
+ Other changes were suggested by the minority and will
620
+ revise Title II of the bill to ensure that the appropriate
621
+ terminology is used in referring to the certified development,
622
+ economic development, loan program.
623
+ I urge adoption of the manager's amendment. And I yield to
624
+ the ranking member for his comments.
625
+ Mr. Chabot. Thank you, Madam Chair. We agree with the
626
+ manager's amendment. We appreciate your incorporating some of
627
+ our suggestions in that and yield back the balance of my time.
628
+ Chairwoman Velazquez. Thank you. Do any other members wish
629
+ to be recognized?
630
+ [No response.]
631
+ Chairwoman Velazquez. If no further members wish to be
632
+ recognized, we will move to the adoption of the manager's
633
+ amendment. All of those in favor say ``Aye.''
634
+ [Chorus of ``Ayes.'']
635
+ Chairwoman Velazquez. All opposed say ``Nay.''
636
+ [No response.]
637
+ Chairwoman Velazquez. The manager's amendment is agreed. I
638
+ ask unanimous consent that the text that is amended by the
639
+ manager's amendment be considered as the original text for the
640
+ purposes of amendments. The bill will be open for amendment at
641
+ any time.
642
+ Are there any amendments?
643
+ Mr. Chabot. Madam Chairman?
644
+ Chairwoman Velazquez. Yes?
645
+ Mr. Chabot. I believe Ms. Fallin has an amendment on our
646
+ side.
647
+ Chairwoman Velazquez. Ms. Fallin, you will be recognized.
648
+ And I ask the Clerk to distribute the amendment.
649
+
650
+
651
+ STATEMENT OF MS. FALLIN ON H.R. 1332
652
+
653
+ Ms. Fallin. Thank you, Madam Chairman, Chairman Velazquez.
654
+ I appreciate the time today. And thank you, Ranking Member
655
+ Chabot for the opportunity to speak.
656
+ I have an amendment on the floor that I would like to offer
657
+ and then immediately withdraw. And it's amendment H.R. 1332
658
+ that addresses the issue of certain franchises who, by all
659
+ intents and purposes, are small businesses but not being
660
+ allowed to receive the 7(a) loans to do their affiliation with
661
+ larger franchisers.
662
+ The intention of the amendment of H.R. 1332 was to modify
663
+ the SBA's affiliation standard to allow a business that if it
664
+ is affiliated with another business and, therefore, determined
665
+ to be something other than small, to still be eligible for a
666
+ loan if it had no financial recourse to its affiliates for
667
+ repayment of any of its debt.
668
+ And I understand, Ms. Chairman, that there are technical
669
+ issues that need to be addressed. And I would appreciate the
670
+ Chairwoman continuing to work with me and my staff in order to
671
+ ensure the legislation comes to the House floor and contains
672
+ language that would address this problem.
673
+ Chairwoman Velazquez. I thank the gentle lady for
674
+ withdrawing the amendment and also raising this important
675
+ issue. I agree this is an issue that we need to address. And I
676
+ will make a commitment that I will work with you and your staff
677
+ on this matter before the bill is considered on the floor.
678
+ Ms. Fallin. Thank you, Ms. Chairman.
679
+
680
+ Chairwoman Velazquez. Any other amendments?
681
+ [No response.]
682
+ Chairwoman Velazquez. Seeing no further amendments, I move
683
+ that the Committee vote on final passage of H.R. 1332. All of
684
+ those in favor say ``Aye.''
685
+ [Chorus of ``Ayes.'']
686
+ Chairwoman Velazquez. All those opposed say ``No.''
687
+ [No response.]
688
+ Chairwoman Velazquez. The bill is agreed to. I move that
689
+ the bill be reported as amended and the staff be directed to
690
+ make any technical corrections prior to the filing of the bill.
691
+
692
+
693
+ STATEMENT OF CHAIRWOMAN VELAZQUEZ ON H.R. 1361
694
+
695
+ Our next order of business is to consider H.R. 1361, the
696
+ RECOVER Act.
697
+ Chairwoman Velazquez. The 2005 Gulf Coast hurricanes
698
+ exposed numerous problems with the SBA ability to provide
699
+ timely and effective assistance to small businesses devastated
700
+ by a major disaster. In many instances, these problems could
701
+ have been avoided through improved planning.
702
+ Experts from small business and disaster readiness
703
+ organizations, including James Lee Witt, the former Director of
704
+ FEMA, has testified before this Committee that comprehensive
705
+ disaster planning will enable SBA to provide timely assistance
706
+ after a variety of different kinds of incidents. Many of the
707
+ problems that SBA borrowers experience began with root causes,
708
+ like failures to plan ahead for additional staff and space
709
+ needs.
710
+ The RECOVER Act provides for thorough disaster planning and
711
+ directs the SBA to ensure that they are prepared for a wide
712
+ range of disasters.
713
+ This legislation also adds to the tools SBA can use to help
714
+ small businesses who are facing difficult circumstances after a
715
+ disaster.
716
+ For many economically viable small businesses along the
717
+ Gulf Coast, SBA loans and state-run programs were not the right
718
+ solution. This legislation creates a grant program that will
719
+ allow the SBA to help those businesses that could be successful
720
+ contributors to their community's recovery barring any need of
721
+ an infusion of resources to get started again.
722
+ This new grant program is carefully targeted and will
723
+ enable small firms to grow stronger, hiring more employees, and
724
+ giving back to their neighborhoods. Both Congressman Richard
725
+ Baker and the National Black Chamber of Commerce made it clear
726
+ in their testimony that this program has brought and gives
727
+ support because it is vital to the recovery of the Gulf Coast.
728
+ I recognize that there is a cost associated with the grant
729
+ program proposed in this legislation. That cost has been
730
+ carefully considered. And we took steps to ensure that it was
731
+ as minimal as possible while still providing the assistance the
732
+ Gulf region needs.
733
+ The grant program is at the discretion of the SBA. If the
734
+ agency--and I just want to make this clear. If the
735
+ administrator and the agency decide that grants are not needed,
736
+ then it does not have to provide those grants.
737
+ In addition, the grant program is only for the major 2005
738
+ hurricanes. It does not create a permanent program going
739
+ forward.
740
+ Finally, based on specific criteria in the bill, only a
741
+ small subset of those businesses affected by Hurricane Katrina,
742
+ Rita, and Wilma will be able to actually receive a grant.
743
+ This bill also creates a one-time program to resolve the
744
+ problem with SBA coordination with state grants programs,
745
+ specifically the road home grants. Again, this provision just
746
+ applies to the major 2005 hurricanes and does not create a
747
+ permanent authority.
748
+ The bill permits the administrator to exclude these forms
749
+ of assistance, which in most cases are not duplicative when
750
+ considering the total damages victims are contending with. The
751
+ changes allow states and the federal government to work
752
+ together to get as much assistance as needed to capitalize
753
+ rebuilding to business owners as quickly as possible This
754
+ measure, while limited, will remove an obstacle that has caused
755
+ frustration and confusion.
756
+ In response to concerns raised by borrowers who found
757
+ themselves lost in the long processing system, the RECOVER Act
758
+ creates a private lending program to supplement SBA's lending
759
+ in times of heightened demand. In addition, this bill also
760
+ creates a short-term bridge loan to speed small loans to
761
+ businesses and help them return to work faster.
762
+ I urge my colleagues to consider the problems that small
763
+ businesses have asked us to address and to support this
764
+ important legislation. It is essential that we take steps now
765
+ to modernize and reform the SBA disaster program before the
766
+ next Katrina hits.
767
+ I now yield to Mr. Chabot.
768
+
769
+
770
+ STATEMENT OF MR. CHABOT ON H.R. 1332
771
+
772
+ Mr. Chabot. Thank you very much, Madam Chairwoman. I will
773
+ be brief.
774
+ As I mentioned in my opening statement, I do believe that
775
+ this bill is well-intentioned and contains some policies that
776
+ would improve the agency's response in the future; for example,
777
+ requiring better coordination between FEMA and the Small
778
+ Business Administration. We would be very supportive of that.
779
+ And reducing the loan processing time for disaster victims I
780
+ think also is very commendable.
781
+ However, there are a number of aspects which we will be
782
+ addressing in three amendments relative to the grants and also
783
+ the double compensation to disaster victims and the
784
+ congressional reporting requirements requiring that to be
785
+ monthly reports back to Congress at a time when a disaster
786
+ could be ongoing. And we are afraid that might slow our process
787
+ down.
788
+ So, for those reasons, we will be offering a few amendments
789
+ at the appropriate time. And I yield back. Thank you.
790
+ Chairwoman Velazquez. Thank you.
791
+ Are there any other members who wish to be recognized? Yes,
792
+ Mr. Akin?
793
+ Mr. Akin. Thank you, Madam Chair. I wanted to thank you for
794
+ working with us and our staff on essentially what was a bill
795
+ that we introduced the last year or two, which I believe you've
796
+ got in your manager's amendment, which is coming up. I just
797
+ wanted to thank you for the bipartisan way that you worked with
798
+ us.
799
+ Chairwoman Velazquez. That's correct.
800
+ Mr. Akin. And that is a provision which allows if somebody
801
+ is in the Reserve and they may be a key player in a small
802
+ business and, all of a sudden, they get a call that they are
803
+ going to go East about 8,000 miles, this is a way that we can
804
+ try to give a little bit of protection in a loan that they can
805
+ take to help cover their company in their absence.
806
+ And I think that is important, particularly with the people
807
+ that are on Reserve that are deployed now. And I thank you for
808
+ working with us on that.
809
+
810
+ Chairwoman Velazquez. Thank you.
811
+ Any other member who wishes to be recognized?
812
+ [No response.]
813
+ Chairwoman Velazquez. The Committee will now take up the
814
+ manager's amendment, which makes a series of changes that will
815
+ achieve three goals.
816
+ Chairwoman Velazquez. First, these changes will strengthen
817
+ the underlying bill and will make disaster assistance more
818
+ readily available to veterans.
819
+ Second, these changes will help ensure that taxpayers'
820
+ dollars are used responsibly in assisting the most severely
821
+ affected victims of the 2005 hurricanes.
822
+ Finally, this manager's amendment continues our efforts to
823
+ achieve bipartisan cooperation and has been shared with and
824
+ includes provisions from the minority.
825
+ Section 101 will be amended to require that the
826
+ comprehensive disaster response plan be developed and
827
+ maintained by an individual with substantial knowledge in the
828
+ field of disaster readiness and emergency response. This
829
+ amendment will assure that the SBA's disaster plan is developed
830
+ with the knowledge and expertise that a skilled disaster
831
+ planner can provide.
832
+ Improving the SBA disaster program will require enhanced
833
+ agency organization at the highest levels but should not result
834
+ in increased bureaucracy. For these reasons, section 106 will
835
+ be amended to clarify that the newly established director of
836
+ disaster planning and the director of disaster lending should
837
+ not directly result in an increase in the number of agency
838
+ full-time employees.
839
+ To ensure that the grant assistance only goes to the most
840
+ needy small businesses and is only used to spur redevelopment
841
+ in communities that have experienced a failure of market
842
+ forces, section 210 will be limited to businesses located in
843
+ the communities that were most severely affected by Hurricanes
844
+ Katrina, Rita, or Wilma.
845
+ Additionally, section 211, which addresses the duplication
846
+ of benefits by state grants programs, will be narrowed to only
847
+ include disaster victims affected by Hurricanes Katrina, Rita,
848
+ or Wilma.
849
+ To make the disaster program more responsive to the needs
850
+ of businesses affected by military deployments, a new provision
851
+ will be added extending to one year the period during which a
852
+ small business may apply for an economic injury loan as the
853
+ result of an essential employee being deployed for military
854
+ services. This provision will also enable these businesses to
855
+ file a preliminary application so that the disaster assistance
856
+ can be expedited when the employee is actually deployed.
857
+ Taken together, these amendments make H.R. 1361 a more
858
+ balanced and effective piece of legislation for ensuring that
859
+ the SBA has the tools it needs to carry out its disaster
860
+ assistance mission. I urge adoptions of the manager's
861
+ amendment. And I yield to the ranking member for his statement.
862
+ Mr. Chabot. Thank you, Madam Chairwoman. Once again, I will
863
+ be brief.
864
+ Because it narrows the scope of the applicability of the
865
+ bill, we would be supportive of this. In addition to that, it
866
+ includes a very welcome amendment by the gentleman from
867
+ Missouri, Mr. Akin, which we think is a very good amendment.
868
+ And so, for those reasons and others, we would welcome the
869
+ manager's amendment and support it.
870
+ Chairwoman Velazquez. Thank you. Do any other members wish
871
+ to be recognized?
872
+ [No response.]
873
+ Chairwoman Velazquez. If no further members wish to be
874
+ recognized, we will move to the adoption of the manager's
875
+ amendment. All in favor say ``Aye.''
876
+ [Chorus of ``Ayes.'']
877
+ Chairwoman Velazquez. All opposed say ``Nay.''
878
+ [No response.]
879
+ Chairwoman Velazquez. The manager's amendment is agreed to.
880
+ I ask unanimous consent that the text as amended by the
881
+ manager's amendment be considered as the original text for the
882
+ purposes of amendments. The bill will be open for amendment at
883
+ any time.
884
+ Are there any amendments?
885
+ Mr. Chabot. Madam Chair?
886
+ Chairwoman Velazquez. Yes? Mr. Chabot, you will be
887
+ recognized.
888
+
889
+ Mr. Chabot. Thank you, Madam Chair. I have three amendments
890
+ at the desk. I would like to start with amendment number
891
+ 15.[The amendment offered by Mr. Chabot follows:]
892
+ Chairwoman Velazquez. The Clerk will report the amendment.
893
+ The Clerk. An amendment is offered by Mr. Chabot of Ohio to
894
+ strike section 210--
895
+ Chairwoman Velazquez. I ask unanimous consent to dispense
896
+ the reading. Without objection, so ordered.
897
+ Mr. Chabot. Thank you, Madam Chairman. Move to strike the
898
+ last word.
899
+ Chairwoman Velazquez. The gentleman is recognized for five
900
+ minutes.
901
+ Mr. Chabot. Thank you.
902
+ Madam Chair, I offer an amendment to strike section 210 of
903
+ H.R. 1361, the bill that we are considering at this time. The
904
+ grants are offered to those businesses that otherwise are not
905
+ eligible for an SBA loan.
906
+ In essence, this would authorize the administrator to give
907
+ grants to businesses that the administrator determined would
908
+ not have sufficient resources and prospects to repay a loan. I
909
+ cannot in good conscience support that type of government
910
+ spending.
911
+ We also have heard that large sums of grant money have not
912
+ been distributed to victims of Hurricane Katrina. And I think
913
+ the Congress should figure that out before launching yet
914
+ another program to offer grants.
915
+ And, finally, history demonstrates that Congress passes
916
+ special legislation to reply to disasters. And if grants are
917
+ needed, they should be considered at that time, not in
918
+ legislation designed to improve the overall capacity of the SBA
919
+ to respond to all disasters.
920
+ And, for those reasons, I would offer this amendment, urge
921
+ my colleagues to support it, and yield back the balance of my
922
+ time.
923
+ Chairwoman Velazquez. Thank you.
924
+ Let me just say, Mr. Chabot, what this grant does is that
925
+ it gives the administrator a choice. He could decide whether or
926
+ not to provide grants. It is a choice. It is not a mandate. And
927
+ while I appreciate your concern for this issue, this amendment
928
+ will eliminate an important tool for helping otherwise viable
929
+ businesses rebuilt in the most devastated communities. These
930
+ businesses need financial assistance that the disaster loan
931
+ program cannot provide.
932
+ This Committee is well-aware of the damage caused by the
933
+ 2005 hurricanes. Entire communities were destroyed. In many
934
+ places, no homes, no businesses, no public institutions were
935
+ left standing. In these circumstances, ordinary market forces
936
+ cannot spur redevelopment. In these circumstances, there are no
937
+ market forces because there are no businesses and there are no
938
+ people.
939
+ This Committee has heard victims and experts testify that
940
+ the SBA's current disaster loan program is inadequate to help
941
+ victims in these circumstances. In this community, no small
942
+ business owner is willing to risk what little they have for a
943
+ loan to rebuild in a community where there are no homes for
944
+ their customers, no school for their children, and no place to
945
+ buy supplies for their businesses.
946
+ Under these circumstances, the disaster assistance program
947
+ cannot pursue a one size fits all approach. The SBA must have
948
+ tools that are more responsive to victims' needs.
949
+ H.R. 1361 will provide the SBA with authority to administer
950
+ a limited grant program to help the most severely affected
951
+ small businesses damaged by Katrina. To ensure that the grant
952
+ assistance only goes to the neediest small businesses and is
953
+ only used to spur redevelopment in communities where market
954
+ forces have failed, this legislation has been limited to very
955
+ narrow circumstances. So this program has been narrowly
956
+ tailored to ensure that the taxpayers' dollars are spent in a
957
+ responsible manner while providing vital support to the small
958
+ businesses.
959
+ So I urge members to oppose this amendment. Yes, Mr.
960
+ Gonzalez, you are recognized.
961
+ Mr. Gonzalez. Thank you, Madam Chair.
962
+ I would oppose the amendment by Mr. Chabot. Let me explain
963
+ why. Any of us who were present during the impassioned
964
+ testimony by our colleague Representative Baker I think would
965
+ understand that the relief that we are attempting to provide a
966
+ specific area, victims of specific hurricanes is really
967
+ extraordinary in many ways.
968
+ Mr. Baker even pointed out himself that for the first time
969
+ in his life, politically and otherwise, he realized there had
970
+ to be extraordinary measures, both from the government and the
971
+ private sector, to address the enormity of the problem and the
972
+ challenge. Otherwise the rebuilding of New Orleans and the rest
973
+ of the affected areas is not going to occur.
974
+ So I appreciate Mr. Chabot's good faith objection,
975
+ philosophically and otherwise, to this particular provision.
976
+ But I would ask that all of us would keep an open mind and be
977
+ more flexible when it comes to specific circumstances that
978
+ require extraordinary remedies. And if you want to classify
979
+ this as extraordinary, that's fine. But I think you are going
980
+ to see this replicated in other pieces of legislation.
981
+ And either we are truly dedicated to the proposition that
982
+ we can address the aftermath of these hurricanes or we
983
+ shouldn't be introducing the legislation and giving false hope
984
+ to the many people who are affected.
985
+ And, with that, I would yield back?
986
+ Chairwoman Velazquez. Any other member who seeks
987
+ recognition? And I would ask to be very brief because I would
988
+ like to take a vote before we go.
989
+ Mr. Jefferson. Madam Chair?
990
+ Chairwoman Velazquez. Mr. Buchanan?
991
+ Mr. Buchanan. Yes. I would only like to support Mr. Chabot
992
+ on this because in Florida, we have been hit by eight
993
+ hurricanes in a period of two years, completely devastated a
994
+ lot of our areas, like an area I represent. Charlie hit there.
995
+ We still have tarps on building. Unless the federal assistance
996
+ can be evenly handed, what right do we have to choose between
997
+ winners and losers?
998
+ And I just want to be careful about that because I think
999
+ our governor of state has been prepared. In dealing with these
1000
+ disasters, I think Jeb Bush has done a great job, but we still
1001
+ have a lot of folks who need help down in those areas. In a lot
1002
+ of these areas, people are still waiting on assistance in
1003
+ Florida. So I want to duly note that.
1004
+ Mr. Jefferson. Madam Chair?
1005
+ Chairwoman Velazquez. Yes, Mr. Jefferson?
1006
+ Mr. Jefferson. If I might say briefly, the New Orleans
1007
+ experience was extraordinary. We lost 80 percent of our city
1008
+ under water. Twenty thousand businesses were lost. They lost
1009
+ records. Most of the small business people now who would
1010
+ attempt to go back are basically pioneers because the customers
1011
+ aren't there.
1012
+ They are ineligible for loans in many cases because they
1013
+ can't make the argument that you usually make pro forma when
1014
+ you gauge how many customers are going to be there to buy your
1015
+ product. It is impossible to do it.
1016
+ The SBA representative testified here that usually they
1017
+ approve 60 percent of the loans that are made for after
1018
+ disasters. In this case, 38 percent were approved because of
1019
+ those reasons, some of which I have just mentioned.
1020
+ Chairwoman Velazquez. But, Mr.--
1021
+ Mr. Jefferson. So I will just leave it here, Madam Chair,
1022
+ and urge the Committee to reject the amendment.
1023
+ Chairwoman Velazquez. If we are doing a grant program for
1024
+ Iraq business people, we can do it for the people of the Gulf
1025
+ Coast.
1026
+ Mr. Bartlett?
1027
+ Mr. Bartlett. Thank you. Thank you, Madam Chair. I would
1028
+ like to yield my time to Mr. Chabot.
1029
+ Mr. Chabot. Thank you. Thanks for yielding. I will be very
1030
+ brief.
1031
+ I just want to reiterate that what we are talking about, it
1032
+ has already been recognized that these are businesses that, in
1033
+ all likelihood, won't be able to repay the loans. And when you
1034
+ are giving tax dollars out in something like this, I just think
1035
+ we have to be very prudent in our responsibility and how we
1036
+ handle those tax dollars. And I don't think that is
1037
+ particularly prudent.
1038
+ The other thing is that also we know we have had testimony
1039
+ here that a lot of the money that is available out there hasn't
1040
+ even been given out. And it is not really a matter of just
1041
+ throwing more money at the problem here. It is a matter of
1042
+ getting to the bottom of why the money hasn't been distributed
1043
+ that has already been allocated for this.
1044
+ So I just think that this particular thing is unhelpful.
1045
+ And so I would ask for a vote on the amendment.
1046
+ Chairwoman Velazquez. The question is on the amendment
1047
+ offered by Mr. Chabot. All of those in favor say ``Aye.''
1048
+ [Chorus of ``Ayes.'']
1049
+ Chairwoman Velazquez. All opposed say ``No.''
1050
+ [Chorus of ``Noes.'']
1051
+ Chairwoman Velazquez. In the opinion of the Chair, the noes
1052
+ have it.
1053
+ Mr. Chabot. Ask for a recorded vote.
1054
+ Chairwoman Velazquez. Yes, a recorded vote is requested.
1055
+ The Clerk shall call the roll.
1056
+ The Clerk. Ms. Velazquez.
1057
+ Chairwoman Velazquez. No.
1058
+ The Clerk. Ms. Velazquez votes no. Ms. Millender-McDonald.
1059
+ Ms. Millender-McDonald. No.
1060
+ The Clerk. Ms. Millender-McDonald votes no. Mr. Jefferson.
1061
+ Mr. Jefferson. No.
1062
+ The Clerk. Mr. Jefferson votes no. Mr. Shuler.
1063
+ Mr. Shuler. No.
1064
+ The Clerk. Mr. Shuler votes no. Mr. Gonzalez.
1065
+ Mr. Gonzalez. No.
1066
+ The Clerk. Mr. Gonzalez votes no. Mr. Larsen.
1067
+ Mr. Larsen. No.
1068
+ The Clerk. Mr. Larsen votes no. Mr. Grijalva.
1069
+ Mr. Grijalva. No.
1070
+ The Clerk. Mr. Grijalva votes no. Mr. Michaud.
1071
+ Mr. Michaud. No.
1072
+ The Clerk. Mr. Michaud votes no. Ms. Bean.
1073
+ [No response.]
1074
+ The Clerk. Mr. Cuellar.
1075
+ Mr. Cuellar. No.
1076
+ The Clerk. Mr. Cuellar votes no. Mr. Lipinski.
1077
+ Mr. Lipinski. No.
1078
+ The Clerk. Mr. Lipinski votes no. Ms. Moore.
1079
+ [No response.]
1080
+ The Clerk. Mr. Altmire.
1081
+ Mr. Altmire. No.
1082
+ The Clerk. Mr. Altmire votes no. Mr. Braley.
1083
+ Mr. Braley. No.
1084
+ The Clerk. Mr. Braley votes no. Ms. Clarke.
1085
+ Ms. Clarke. No.
1086
+ The Clerk. Ms. Clarke votes no. Mr. Ellsworth.
1087
+ Mr. Ellsworth. No.
1088
+ The Clerk. Mr. Ellsworth votes no. Mr. Johnson.
1089
+ Mr. Johnson. No.
1090
+ The Clerk. Mr. Johnson votes no. Mr. Sestak.
1091
+ Mr. Sestak. No.
1092
+ The Clerk. Mr. Sestak votes no. Ms. Moore.
1093
+ Ms. Moore. No.
1094
+ The Clerk. Ms. Moore votes no. Mr. Chabot.
1095
+ Mr. Chabot. Aye.
1096
+ The Clerk. Mr. Chabot votes yes. Mr. Bartlett.
1097
+ Mr. Bartlett. Yes.
1098
+ The Clerk. Mr. Bartlett votes yes. Mr. Graves.
1099
+ Mr. Graves. Yes.
1100
+ The Clerk. Mr. Graves votes yes. Mr. Akin.
1101
+ Mr. Akin. Yes.
1102
+ The Clerk. Mr. Akin votes yes. Mr. Shuster.
1103
+ [No response.]
1104
+ The Clerk. Ms. Musgrave.
1105
+ Ms. Musgrave. Yes.
1106
+ The Clerk. Ms. Musgrave votes yes. Mr. King.
1107
+ [No response.]
1108
+ The Clerk. Mr. Fortenberry.
1109
+ Mr. Fortenberry. Yes.
1110
+ The Clerk. Mr. Fortenberry votes yes. Mr. Westmoreland.
1111
+ [No response.]
1112
+ The Clerk. Mr. Gohmert.
1113
+ [No response.]
1114
+ The Clerk. Mr. Heller.
1115
+ [No response.]
1116
+ The Clerk. Mr. David Davis.
1117
+ Mr. Davis. Yes.
1118
+ The Clerk. Mr. Davis votes yes. Ms. Fallin.
1119
+ Ms. Fallin. Yes.
1120
+ The Clerk. Ms. Fallin votes yes. Mr. Buchanan.
1121
+ Mr. Buchanan. Yes.
1122
+ The Clerk. Mr. Buchanan votes yes. Mr. Jordan.
1123
+ Mr. Jordan. Yes.
1124
+ The Clerk. Mr. Jordan votes yes.
1125
+ Chairwoman Velazquez. The Clerk will report the vote.
1126
+ The Clerk. Madam Chair, there are 10 yes votes and 17 no
1127
+ votes.
1128
+ Chairwoman Velazquez.The amendment is not agreed to. And we
1129
+ will take a recess and go to the House and vote and then come
1130
+ back here. Thank you.
1131
+ [Brief recess.]
1132
+ Chairwoman Velazquez. This hearing will come back to order.
1133
+ I recognize Mr. Chabot for the purpose of offering his
1134
+ amendment.
1135
+ Mr. Chabot. Thank you, Madam Chair. I would move to have an
1136
+ amendment at the desk, number 16.
1137
+ Chairwoman Velazquez. The Clerk will report the amendment.
1138
+ The Clerk. An amendment is offered by Mr. Chabot of Ohio to
1139
+ strike section 211 of H.R.--
1140
+ Chairwoman Velazquez. I ask unanimous consent to dispense
1141
+ with the reading.
1142
+ Mr. Chabot. I move to strike the last word.
1143
+ Chairwoman Velazquez. The gentleman is recognized for five
1144
+ minutes.
1145
+ Mr. Chabot. Thank you, Madam Chair. And again I'll be
1146
+ brief.
1147
+ I certainly empathize with those who suffered as a result
1148
+ of Hurricane Katrina. I know that we all do. We heard many
1149
+ stories in committee about the devastation that was reaped
1150
+ there. However, those who suffered should not be compensated
1151
+ twice.
1152
+ And, as I understand H.R. 1361, it prohibits the SBA from
1153
+ counting grants as a duplication of benefits. Under the bill,
1154
+ an applicant for an SBA disaster loan also could receive a
1155
+ grant from some other source. Both would have been offered as
1156
+ compensation for damages.
1157
+ And a strong possibility exists that the individual would
1158
+ have received compensation, once in a grant and once in a low-
1159
+ cost loan twice for the same injury. We certainly don't allow
1160
+ that in our courts. And I think in good conscience, we
1161
+ shouldn't here. And, therefore, I can't support it.
1162
+ And so I offer this amendment on that one narrow issue. And
1163
+ I yield back.
1164
+ Chairwoman Velazquez. Thank you. Let me just say again this
1165
+ grant is optional. It gives the authority to the administrator.
1166
+ And he will decide whether or not to issue waivers.
1167
+ Let me talk about the road home grant. This was developed
1168
+ primarily for housing assistance. We shouldn't penalize a small
1169
+ business owner for needing assistance for both their home and
1170
+ businesses.
1171
+ So if a person in Louisiana lost his home, he cannot access
1172
+ any grant to rebuild his home because he also lost his
1173
+ business. And so he will have to make a choice whether he goes
1174
+ for a small business loan for his business or a road grant to
1175
+ rebuild his home. Well, if he doesn't have a business, why does
1176
+ he want to rebuild his home if he can pay or sustain his
1177
+ business to help him?
1178
+ The adoption of this amendment will put a small business
1179
+ owner in the predicament of having to choose between repairing
1180
+ their home and repairing their business. And this is not a
1181
+ situation that we should put them in.
1182
+ Let me remind you that Mr. Baker came here. And he
1183
+ testified. And he made it clear that there was not duplication
1184
+ of benefits for victims who receive no assistance in the first
1185
+ place.
1186
+ So I will urge my colleagues to vote no on this amendment.
1187
+ And any members who will seek recognition? Mr. Jefferson?
1188
+ Mr. Jefferson. Thank you, Madam Chair Lady. I want to
1189
+ subscribe to your remarks and to say that it is even more
1190
+ complicated than that in some respects because people back home
1191
+ now--remember, we lost 220,000 houses back home.
1192
+ For small business people, when they go into business, the
1193
+ home is usually the collateral for the loan. And most of them
1194
+ now have to pay their mortgage in addition to seeking new
1195
+ sources of support to get back in the house and back in the
1196
+ business.
1197
+ So assume you are a person who had a business and a loan on
1198
+ it, your house collateralized it, and your home flooded. What
1199
+ you do now is your home mortgage still stays there. You don't
1200
+ get away from that. You still must pay that.
1201
+ So you go to the SBA. And you don't qualify for as much as
1202
+ you as need to build back your house because you still have
1203
+ this outstanding requirement to pay your home mortgage. So you
1204
+ always fall short on the SBA. So there is very little chance of
1205
+ a duplication occurring here because you aren't going to
1206
+ usually make it to that point.
1207
+ And so the way the bill is tailored I think, as the Chair
1208
+ Lady has said, there is a lot of discretion with the secretary.
1209
+ There is a very limited opportunity here for any such problem
1210
+ spoken of here. And on the up side, for the most part, this is
1211
+ going to be extraordinarily helpful to the recovery.
1212
+ And I appreciate this conclusion in the bill. And I will
1213
+ join the Chair Lady in objecting to this amendment's adoption.
1214
+ Chairwoman Velazquez. Does any other member seek
1215
+ recognition on this amendment? Mr. Akin?
1216
+ Mr. Akin. Madam Chair, would it be all right to inquire of
1217
+ the maker of the amendment? I am just curious. Is this
1218
+ theoretically somebody could get a state grant, somebody could
1219
+ get a federal grant, and it could be both grants for the same
1220
+ thing? Is that correct?
1221
+ Chairwoman Velazquez. No. The state grant, in this case the
1222
+ road grant, will be for rebuilding their homes. And the
1223
+ business grant will be to help rebuild their businesses.
1224
+ Mr. Chabot?
1225
+ Mr. Chabot. My understanding is that yes, that is possible.
1226
+ Now, before it gets to the floor, we can get more clarification
1227
+ on that. But it is my understanding that is possible.
1228
+ Mr. Akin. So this is to prevent double dipping, is what you
1229
+ are trying to do?
1230
+ Mr. Chabot. That's correct, yes. Again, if any of these
1231
+ things come up, we can always get clarification prior to the
1232
+ floor. But that is the reason for offering the amendment, that
1233
+ we're trying to be as prudent as possible with limited tax
1234
+ dollars and to avoid double dipping, which isn't fair to the
1235
+ taxpayer.
1236
+ Mr. Akin. If somebody had a home, would they have flood
1237
+ insurance on that? So would insurance have covered that or was
1238
+ that couldn't you get flood insurance down there?
1239
+ Mr. Chabot. Would the gentleman yield?
1240
+ Mr. Akin. Yes.
1241
+ Mr. Chabot. Well, certainly it is possible. Many people
1242
+ had. A lot of people didn't have flood insurance either. And
1243
+ you couldn't double dip in that circumstance. But under this,
1244
+ perhaps you could.
1245
+ Mr. Akin. Thank you. Thank you, Madam Chair.
1246
+ Chairwoman Velazquez. Any other member who seeks
1247
+ recognition on this amendment?
1248
+ [No response.]
1249
+ Chairwoman Velazquez. Well, the question is on the
1250
+ amendment offered by Mr. Chabot. All of those in favor say
1251
+ ``Aye.''
1252
+ [Chorus of ``Ayes.'']
1253
+ Chairwoman Velazquez. All opposed say ``No.''
1254
+ [Chorus of ``Noes.'']
1255
+ Chairwoman Velazquez. In the opinion of the Chair, the noes
1256
+ have it.
1257
+ Mr. Chabot. Madam Chair, ask for a recorded vote.
1258
+ Chairwoman Velazquez. The Clerk shall call the roll.
1259
+ The Clerk. Ms. Velazquez.
1260
+ Chairwoman Velazquez. No.
1261
+ The Clerk. Ms. Velazquez votes no. Ms. Millender-McDonald.
1262
+ Ms. Millender-McDonald. No.
1263
+ The Clerk. Ms. Millender-McDonald votes no. Mr. Jefferson.
1264
+ Mr. Jefferson.
1265
+ Mr. Jefferson. No.
1266
+ The Clerk. Mr. Jefferson votes no. Mr. Shuler.
1267
+ [No response.]
1268
+ The Clerk. Mr. Gonzalez.
1269
+ Mr. Gonzalez. No.
1270
+ The Clerk. Mr. Gonzalez votes no. Mr. Larsen.
1271
+ [No response.]
1272
+ The Clerk. Mr. Grijalva.
1273
+ Mr. Grijalva. No.
1274
+ The Clerk. Mr. Grijalva votes no. Mr. Michaud.
1275
+ Mr. Michaud. No.
1276
+ The Clerk. Mr. Michaud votes no. Ms. Bean.
1277
+ Ms. Bean.. No.
1278
+ The Clerk. Ms. Bean votes no. Mr. Cuellar.
1279
+ Mr. Cuellar. No.
1280
+ The Clerk. Mr. Cuellar votes no. Mr. Lipinski.
1281
+ [No response.]
1282
+ The Clerk. Ms. Moore.
1283
+ [No response.]
1284
+ The Clerk. Mr. Altmire.
1285
+ [No response.]
1286
+ The Clerk. Mr. Braley.
1287
+ Mr. Braley. No.
1288
+ The Clerk. Mr. Braley votes no. Ms. Clarke.
1289
+ Ms. Clarke. No.
1290
+ The Clerk. Ms. Clarke votes no. Mr. Ellsworth.
1291
+ Mr. Ellsworth. No.
1292
+ The Clerk. Mr. Ellsworth votes no. Mr. Johnson.
1293
+ [No response.]
1294
+ The Clerk. Mr. Sestak.
1295
+ [No response.]
1296
+ The Clerk. Mr. Shuler.
1297
+ Mr. Shuler. No.
1298
+ [No response.]
1299
+ The Clerk. Mr. Shuler votes no. Ms. Moore.
1300
+ Ms. Moore. A question, please. Sorry.
1301
+ [Laughter.]
1302
+ Ms. Moore. No.
1303
+ The Clerk. Ms. Moore votes no. Mr. Chabot.
1304
+ Mr. Chabot. Aye.
1305
+ The Clerk. Mr. Chabot votes yes. Mr. Bartlett.
1306
+ Mr. Bartlett. Yes.
1307
+ The Clerk. Mr. Bartlett votes yes. Mr. Graves.
1308
+ [No response.]
1309
+ The Clerk. Mr. Akin.
1310
+ Mr. Akin. Aye.
1311
+ The Clerk. Mr. Akin votes yes. Mr. Shuster.
1312
+ [No response.]
1313
+ The Clerk. Ms. Musgrave.
1314
+ Ms. Musgrave. Yes.
1315
+ The Clerk. Ms. Musgrave votes yes. Mr. King.
1316
+ [No response.]
1317
+ The Clerk. Mr. Fortenberry.
1318
+ Mr. Fortenberry. Yes.
1319
+ The Clerk. Mr. Fortenberry votes yes. Mr. Westmoreland.
1320
+ [No response.]
1321
+ The Clerk. Mr. Gohmert.
1322
+ [No response.]
1323
+ The Clerk. Mr. Heller.
1324
+ Mr. Heller.. Yes.
1325
+ The Clerk. Mr. Heller votes yes. Mr. David Davis.
1326
+ Mr. Davis. Yes.
1327
+ The Clerk. Mr. Davis votes yes. Ms. Fallin.
1328
+ [No response.]
1329
+ The Clerk. Mr. Buchanan.
1330
+ [No response.]
1331
+ The Clerk. Mr. Jordan.
1332
+ [No response.]
1333
+ The Clerk. Mr. Larsen.
1334
+ Mr. Larsen. No.
1335
+ The Clerk. Mr. Larsen votes no.
1336
+ Chairwoman Velazquez. The Clerk will report the vote.
1337
+ The Clerk. Madam Chair, there are 14 no and 7 yes.
1338
+ Chairwoman Velazquez. The amendment is not agreed to.
1339
+ Mr. Chabot. Madam Chair?
1340
+ Chairwoman Velazquez. Yes, Mr. Chabot?
1341
+ Mr. Chabot. Thank you. I have one additional amendment at
1342
+ the desk, amendment 17.[The amendment offered by Mr. Chabot
1343
+ follows:]
1344
+ Chairwoman Velazquez. The Clerk will report the amendment.
1345
+ The Clerk. Mr. Chabot from Ohio has offered an amendment to
1346
+ on page 26 of H.R. 1361 to stroke--
1347
+ Chairwoman Velazquez. I ask unanimous consent that the
1348
+ amendment be considered as read.
1349
+ Mr. Chabot. Thank you, Madam Chair. Move to strike the last
1350
+ word.
1351
+ Chairwoman Velazquez. The gentleman is recognized for five
1352
+ minutes.
1353
+ Mr. Chabot. Thank you again. And I will try to be brief.
1354
+ I certainly understand the need for Congress to be informed
1355
+ of how Executive Branch agencies are carrying out their
1356
+ statutory mandates. That requires these agencies to report to
1357
+ Congress to report to us.
1358
+ Given the recent history of the SBA, it certainly makes
1359
+ sense to have the agency report annually to Congress on its
1360
+ disaster response. However, the bill also requires the
1361
+ administrator to report monthly during an incident of national
1362
+ significance.
1363
+ Given this Committee's complaint that the SBA's disaster
1364
+ response, it seems somewhat illogical to divert resources, even
1365
+ small amounts, from the pressing disasters, those that rise to
1366
+ the level of an incident of national significance. I just think
1367
+ it doesn't make sense to require a monthly type of report at a
1368
+ time when their full resources ought to be devoted to
1369
+ addressing the disaster and helping those who really need the
1370
+ help.
1371
+ So, for that reason, I would urge passage of this amendment
1372
+ and yield back the balance of my time.
1373
+ Chairwoman Velazquez. I will oppose this amendment. And,
1374
+ Mr. Chabot, I understand your concern about the burden that it
1375
+ might impose, but let me be clear. This amendment has no burden
1376
+ on SBA. These are reports that they produce in a daily basis.
1377
+ After Katrina, this Committee under the previous
1378
+ administrator, we held so many hearings. Hector Barreto came
1379
+ before this Committee and told us that everything was fine,
1380
+ that nothing was creating any problems in terms of the disaster
1381
+ relief that they were providing to the victims of Katrina.
1382
+ And report after report, paper after paper in this country,
1383
+ victims spoke about the inefficiency coming out of SBA. In
1384
+ hearings after hearings, Katrina, the SBA told this Committee
1385
+ that everything was fine.
1386
+ Let me just say what this means is oversight. And the
1387
+ problems that we saw during Katrina and the lack and inadequate
1388
+ response that came out of SBA was a result of the lack of
1389
+ oversight coming out of this Committee. And that is not going
1390
+ to happen anymore.
1391
+ So this agency in its oversight, especially during major
1392
+ disaster, the American public and the American people, they
1393
+ need to know that the federal government will do everything
1394
+ they can to provide the assistance that we promise to them and
1395
+ that we committed to provide.
1396
+ Mr. Chabot. Would the gentle lady yield?
1397
+ Chairwoman Velazquez. Sure.
1398
+ Mr. Chabot. Okay. I thank the gentle lady for yielding.
1399
+ And, again, I will be very brief.
1400
+ I would just note that, even though it is a written report
1401
+ that the administrator has to put together, I think the time
1402
+ and effort that goes into that and the time of people
1403
+ underneath the administrator to do that does take some
1404
+ considerable period of time. And so I think that monthly is
1405
+ just too often.
1406
+ Chairwoman Velazquez. I respectfully disagree with the
1407
+ gentleman. You know quite well that the DCMNS generates this
1408
+ data on a daily basis, that if they have a disaster plan in
1409
+ place, there has to be communication between the administrator
1410
+ and the director of the disaster relief effort, that this
1411
+ communication and information that they share is all we are
1412
+ asking them to provide to us. So this provision has no cost.
1413
+ This provision doesn't impose any burden upon the work that the
1414
+ SBA and the administrator have to provide.
1415
+ If any other member wishes to seek recognition? Yes?
1416
+ Mr. Ellsworth. Madam Chair?
1417
+ Chairwoman Velazquez. Mr. Ellsworth?
1418
+ Mr. Ellsworth. As someone who has been through a natural
1419
+ disaster not nearly the size of Katrina, but certainly in our
1420
+ community it was devastating, this was something that required
1421
+ a report in the days when we were talking about food, medicine,
1422
+ and shelter, I could agree.
1423
+ But in this world of mass media, they are asking us
1424
+ questions immediately and for reports and expect us to know
1425
+ that. So I don't think a 30-day report is too much to ask when
1426
+ we are asked the questions when we go back home.
1427
+ So I would not support this amendment.
1428
+ Chairwoman Velazquez. Any other member wish to be
1429
+ recognized?
1430
+ [No response.]
1431
+ Chairwoman Velazquez. The question is on the amendment
1432
+ offered by Mr. Chabot. All of those in favor say ``Aye.''
1433
+ [Chorus of ``Ayes.'']
1434
+ Chairwoman Velazquez. All those opposed say ``No.''
1435
+ [Chorus of ``Noes.'']
1436
+ Chairwoman Velazquez. In the opinion of the Chair, the noes
1437
+ have it. The amendment is not agreed to.
1438
+ If there is any other member who wishes to be recognized
1439
+ for the purpose of any amendment? Mr. Michaud?
1440
+ Mr. Michaud. Thank you very much, Madam Chair. I have an
1441
+ amendment at the desk numbered--[The amendment offered by Mr.
1442
+ Michaud follows:]
1443
+ Chairwoman Velazquez. The Clerk will report the amendment.
1444
+ The Clerk. An amendment is offered by Mr. Michaud of Maine
1445
+ at the end of Title II to add the following, section 216,
1446
+ ``Economic Injury''--
1447
+ Chairwoman Velazquez. We ask unanimous consent that the
1448
+ amendment be considered as read. Without objection, so ordered.
1449
+ The gentleman is recognized for five minutes to discuss his
1450
+ amendment.
1451
+ Mr. Michaud. Thank you, Madam Chair.
1452
+ The RECOVER Act is a great bill that makes a lot of needed
1453
+ changes to the SBA disaster planning and assistance program. I
1454
+ want to thank you and Mr. Chabot for having this markup today.
1455
+ As you know, the SBA makes economic injury disaster loans
1456
+ to small businesses that have been adversely affected by
1457
+ specific disaster events. Last year SBA was newly authorized to
1458
+ provide these loans in cases of drought. My amendment simply
1459
+ adds the lack of snowfall as a category eligible for economic
1460
+ injury disaster loan assistance.
1461
+ Small community and businesses in the State of Maine, in
1462
+ the north part of the state, and other states depend on winter
1463
+ tourism traffic and other weekend outdoor activities. The lack
1464
+ of snowfall can severely threaten their well-being. And,
1465
+ unfortunately, these businesses cannot qualify currently under
1466
+ SBA authority for drought assistance since lack of snowfall
1467
+ doesn't meet the criteria of drought assistance.
1468
+ My amendment simply offers equal treatment for small
1469
+ businesses affected by the lack of snowfall that are currently
1470
+ falling through the cracks. I hope the Committee will accept
1471
+ the amendment.
1472
+ I yield back, Madam Chair.
1473
+ Chairwoman Velazquez. Does anyone else seek to be
1474
+ recognized on this amendment?
1475
+ Mr. Chabot. Madam Chair?
1476
+ Chairwoman Velazquez. Mr. Chabot?
1477
+ Mr. Chabot. Thank you, Madam Chair. I move opposition of
1478
+ this particular amendment.
1479
+ Chairwoman Velazquez. The gentleman is recognized for five
1480
+ minutes.
1481
+ Mr. Chabot. Thank you.
1482
+ The concept behind this amendment is to address the problem
1483
+ of lack of snowfall in areas that rely on providing winter
1484
+ sports recreation. There are a number of problems with this
1485
+ amendment in my view.
1486
+ First, how does one measure the lack of snowfall,
1487
+ especially in ski areas that can make snow?
1488
+ Second, a lack of snowfall in areas actually affects all
1489
+ businesses, including those that sell winter sports equipment,
1490
+ even if they are not located in the area hit by a lack of
1491
+ snowfall. Should those businesses be eligible? And if not, why
1492
+ should only businesses located in an area with lack of snowfall
1493
+ be subject to the disaster declaration?
1494
+ Thirdly, how does one determine the scope of the area? What
1495
+ happens if some facilities can make snow and others cannot?
1496
+ Should the federal government declare a disaster area because
1497
+ of lack of investment, for example? Does this mean that
1498
+ recreational areas without snow-making equipment can apply for
1499
+ a disaster mitigation loan to purchase such equipment?
1500
+ Fourth, would a place that people who winter to avoid harsh
1501
+ snow conditions be able to apply for a disaster loan because
1502
+ people did not travel to avoid snow because of the lack of snow
1503
+ in other areas? In other words, would parts of Florida be able
1504
+ to claim a natural disaster for the lack of snow in the
1505
+ Northeast because it cut down on the number of individuals
1506
+ vacationing in Florida to avoid winter weather?
1507
+ Obviously you could go on and on with this. So I just think
1508
+ there is too much mischief possible in this particular
1509
+ amendment and would strongly urge my colleagues to oppose it
1510
+ and yield back the balance of my time.
1511
+ Chairwoman Velazquez. Thank you.
1512
+ Well, what I see here is another instance of language
1513
+ within the Small Business Act being too restrictive for many
1514
+ small businesses in need of assistance. And it will be
1515
+ important that we look at areas of improvement within the act
1516
+ as we continue our work on the reauthorization of the Small
1517
+ Business Administration statute.
1518
+ So given that fact, I just would ask the members of the
1519
+ Committee to support this amendment.
1520
+ Yes, Mr. Fortenberry?
1521
+ Mr. Fortenberry. Madam Chairwoman, I actually intended to
1522
+ support the underlying bill. However, if this amendment passes,
1523
+ I will not because throwing open the door this wide with
1524
+ limited ability to define or these definitions being so broad
1525
+ in their scope and with, actually, a limited ability to have a
1526
+ clear definition here, it would be just as easy for me to put
1527
+ in a lack of rainfall as an amendment to this one.
1528
+ And then suddenly the narrow scope of this bill, which I
1529
+ think has some very good provisions that I intend to support,
1530
+ in spite of some concerns brought up by the ranking member,
1531
+ this would in my view undermine the very purposes, again, of
1532
+ the narrow tailoring of the larger bill.
1533
+ I yield back.
1534
+ Chairwoman Velazquez. Does anyone else seek recognition on
1535
+ this amendment? Mr. Michaud?
1536
+ Mr. Michaud. Yes. Thank you. Just to address the concerns
1537
+ that were raised, there is a process that you have to go to
1538
+ through, the government would have to go through, as far as
1539
+ declaring a natural disaster. And the process is already in the
1540
+ statute. And this would follow through for that same process.
1541
+ So I don't envision it to open up a wide door. This
1542
+ definitely has affected a lot of small businesses in Maine
1543
+ because of the lack of snow. And I would encourage my members
1544
+ to support it because there is a process already in place to
1545
+ declare a natural disaster. And I just want to include snowfall
1546
+ in that.
1547
+ Thank you.
1548
+ Chairwoman Velazquez. Any other member who wishes to be
1549
+ recognized?
1550
+ [No response.]
1551
+ Chairwoman Velazquez. The question is on the amendment
1552
+ offered by Mr. Michaud. All of those in favor say ``Aye.''
1553
+ [Chorus of ``Ayes.'']
1554
+ Chairwoman Velazquez. All those opposed say ``No.''
1555
+ [Chorus of ``Noes.'']
1556
+ Chairwoman Velazquez. In the opinion of the Chair, the ayes
1557
+ have it.
1558
+ Mr. Michaud. Madam Chair?
1559
+ Chairwoman Velazquez. Yes?
1560
+ Mr. Michaud. Ask for a recorded vote on it.
1561
+ Chairwoman Velazquez. A recorded vote is requested. The
1562
+ Clerk will call the vote.
1563
+ The Clerk. Ms. Velazquez.
1564
+ Chairwoman Velazquez. Aye.
1565
+ The Clerk. Chairwoman Velazquez votes yes. Ms. Millender-
1566
+ McDonald.
1567
+ Ms. Millender-McDonald. Aye.
1568
+ The Clerk. Ms. Millender-McDonald votes yes. Mr. Jefferson.
1569
+ Mr. Jefferson. Aye.
1570
+ The Clerk. Mr. Jefferson votes yes. Mr. Shuler.
1571
+ Mr. Shuler. No.
1572
+ The Clerk. Mr. Shuler votes no. Mr. Gonzalez.
1573
+ Mr. Gonzalez. Aye.
1574
+ The Clerk. Mr. Gonzalez votes yes. Mr. Larsen.
1575
+ Mr. Larsen. Yes.
1576
+ The Clerk. Mr. Larsen votes yes. Mr. Grijalva.
1577
+ [No response.]
1578
+ The Clerk. Mr. Michaud.
1579
+ Mr. Michaud. Yes.
1580
+ The Clerk. Mr. Michaud votes yes. Ms. Bean.
1581
+ Ms. Bean. Aye.
1582
+ The Clerk. Ms. Bean votes yes. Mr. Cuellar.
1583
+ Mr. Cuellar. Aye.
1584
+ The Clerk. Mr. Cuellar votes yes. Mr. Lipinski.
1585
+ Mr. Lipinski. Aye.
1586
+ The Clerk. Mr. Lipinski votes yes. Ms. Moore.
1587
+ Ms. Moore. Aye.
1588
+ The Clerk. Ms. Moore votes yes. Mr. Altmire.
1589
+ [No response.]
1590
+ The Clerk. Mr. Braley.
1591
+ Mr. Braley. Aye.
1592
+ The Clerk. Mr. Braley votes yes. Ms. Clarke.
1593
+ Ms. Clarke. Aye.
1594
+ The Clerk. Ms. Clarke votes yes. Mr. Ellsworth.
1595
+ Mr. Ellsworth. Yes.
1596
+ The Clerk. Mr. Ellsworth votes yes. Mr. Johnson.
1597
+ Mr. Johnson. Aye.
1598
+ The Clerk. Mr. Johnson votes yes. Mr. Sestak.
1599
+ Mr. Sestak. No.
1600
+ The Clerk. Mr. Sestak votes no. Mr. Chabot.
1601
+ Mr. Chabot. No.
1602
+ The Clerk. Mr. Chabot votes no. Mr. Bartlett.
1603
+ Mr. Bartlett. No.
1604
+ The Clerk. Mr. Bartlett votes no. Mr. Graves.
1605
+ [No response.]
1606
+ The Clerk. Mr. Akin.
1607
+ Mr. Akin. No.
1608
+ The Clerk. Mr. Akin votes no. Mr. Shuster.
1609
+ [No response.]
1610
+ The Clerk. Ms. Musgrave.
1611
+ Ms. Musgrave. No.
1612
+ The Clerk. Ms. Musgrave votes no. Mr. King.
1613
+ [No response.]
1614
+ The Clerk. Mr. Fortenberry.
1615
+ Mr. Fortenberry. No.
1616
+ The Clerk. Mr. Fortenberry votes no. Mr. Westmoreland.
1617
+ [No response.]
1618
+ The Clerk. Mr. Gohmert.
1619
+ [No response.]
1620
+ The Clerk. Mr. Heller.
1621
+ Mr. Heller. No.
1622
+ The Clerk. Mr. Heller votes no. Mr. David Davis.
1623
+ Mr. Davis. No.
1624
+ The Clerk. Mr. Davis votes no. Ms. Fallin.
1625
+ [No response.]
1626
+ The Clerk. Mr. Buchanan.
1627
+ Mr. Buchanan. No.
1628
+ The Clerk. Mr. Buchanan votes no. Mr. Jordan.
1629
+ Mr. Jordan. No.
1630
+ The Clerk. Mr. Jordan votes no.
1631
+ Chairwoman Velazquez. Any other member who wish to cast
1632
+ their vote or change their vote?
1633
+ [No response.]
1634
+ Chairwoman Velazquez. The Clerk will report the vote.
1635
+ The Clerk. Madam Chair, there are 14 yes votes, 11 no
1636
+ votes.
1637
+ Chairwoman Velazquez. The amendment is agreed to.
1638
+ Mr. Chabot. We are getting closer.
1639
+ Chairwoman Velazquez. Yes. Are there any other members who
1640
+ wish to be recognized for the purpose of offering amendments?
1641
+ Mr. Braley. Yes.
1642
+ Chairwoman Velazquez. Mr. Braley?
1643
+ Mr. Braley. Yes. Madam Chair, I have an amendment at the
1644
+ desk.
1645
+ Chairwoman Velazquez. The Clerk will report the amendment.
1646
+ The Clerk. There is an amendment offered by Mr. Braley of
1647
+ Iowa. At the end of Title II, add the following in section 216,
1648
+ ``Economic injury disaster''--
1649
+ Chairwoman Velazquez. I ask unanimous consent that the
1650
+ amendment be considered as read. Mr. Braley, you will be
1651
+ recognized for five minutes.
1652
+ Mr. Braley. Thank you.
1653
+ Madam Chairwoman, Ranking Member Chabot, I am here today as
1654
+ a voice for 350,000 Iowans who lost power during the recent ice
1655
+ storm to offer an amendment to H.R. 1361, the RECOVER Act,
1656
+ which would revise the language within the Small Business Act
1657
+ to clarify the definition of the term ``disaster'' to include
1658
+ blizzards and ice storms.
1659
+ Just a couple of weeks ago, Iowa was hit with a massive ice
1660
+ storm, one of the worst in its history, which caused extensive
1661
+ damage throughout the state and left hundreds without power.
1662
+ Weather in Iowa can be unpredictable and dangerous. And
1663
+ this was no exception. I was personally affected by this ice
1664
+ storm when a 40-foot ice-coated branch struck my home in
1665
+ Waterloo. With the help of my neighbors and our chain saws, I
1666
+ was able to cope with some personal property damage and
1667
+ inconvenience. But my situation paled in comparison to the
1668
+ constituents I met while visiting storm emergency shelters in
1669
+ Iowa's First Congressional District.
1670
+ These Iowans were there because they had been displaced
1671
+ from their homes as a result of their ice storm, including many
1672
+ from their businesses. Currently the SBA has to wait for the
1673
+ President to declare something a disaster area before giving
1674
+ disaster loans to small businesses.
1675
+ There are well-known exceptions. These include severe
1676
+ situations, such as floods, hurricanes, tornadoes, earthquakes,
1677
+ fires, explosions, volcanoes, windstorms, landslides or mud
1678
+ slides, tidal waves, commercial fishery failures, fishery
1679
+ resource disasters, riots, civil disorders, etcetera.
1680
+ This language in my amendment gives the SBA the authority
1681
+ to make disaster loans in certain situations, even if the
1682
+ President has not authorized the area as a disaster area.
1683
+ Unfortunately, the terms ``ice storm'' and ``blizzard'' do not
1684
+ appear on this list of exceptions.
1685
+ The amendment I propose today would include these terms in
1686
+ the definition of a disaster, strongly benefiting small
1687
+ business owners who are trying to get back on their feet
1688
+ following an ice storm or blizzard.
1689
+ I urge my colleagues to recognize that some disasters,
1690
+ which profoundly impact small businesses occur in the winter
1691
+ and ask them to support this amendment. And I yield the balance
1692
+ of my time.
1693
+ Chairwoman Velazquez. Thank you.
1694
+ I will support this amendment. I think that it is
1695
+ important. Winter storm had a dramatic impact on Iowa's
1696
+ economy. At the peak of losses, 250,000 customers were without
1697
+ power, 60 counties were declared disaster areas.
1698
+ Currently SBA is able to make disaster loans. When the
1699
+ President has declared a disaster area or in certain other
1700
+ specific situations, including everything from floods to
1701
+ commercial fishery failures, extending this language to include
1702
+ ice storms and blizzards fits within existing rationale.
1703
+ So I will ask my colleagues to support this amendment. And
1704
+ I will recognize Mr. Chabot.
1705
+ Mr. Chabot. Thank you, Madam Chairwoman. And I move to
1706
+ strike the last word.
1707
+ Chairwoman Velazquez. The gentleman is recognized for five
1708
+ minutes.
1709
+ Mr. Chabot. Thank you. I won't take that time. I commend
1710
+ Mr. Braley for offering an amendment. I think it is a good one.
1711
+ Ice storms can and in many areas do as much damage, if not
1712
+ more, than other events classified as natural disasters. It
1713
+ seems to make sense that the definition of a disaster be
1714
+ expanded to include ice storms.
1715
+ It is important to note that an ice storm represents a very
1716
+ measurable event. One knows when it starts. One knows when it
1717
+ ends. And one can ascertain the damage from, for example, lost
1718
+ fruit in the case of Florida or California, damage to goods
1719
+ that lose refrigeration, et cetera, from the loss of
1720
+ electricity. Blizzards are somewhat harder to define to be
1721
+ getting around.
1722
+ And it may be somewhat more difficult to assess the damage
1723
+ associated with blizzards, but I still believe this is a very
1724
+ good amendment and would urge my colleagues to support it and
1725
+ yield back the balance of my time.
1726
+ Chairwoman Velazquez. Any other member who seeks
1727
+ recognition on this amendment, Mr. Braley's amendment?
1728
+ [No response.]
1729
+ Chairwoman Velazquez. The question is on the amendment
1730
+ offered by Mr. Braley. All of those in favor say ``Aye.''
1731
+ [Chorus of ``Ayes.'']
1732
+ Chairwoman Velazquez. All those opposed say ``No.''
1733
+ [Chorus of ``Noes.'']
1734
+ Chairwoman Velazquez. In the opinion of the Chair, the ayes
1735
+ have it.
1736
+ Any other amendments or comments? Mr. Fortenberry?
1737
+ Mr. Fortenberry. Thank you, Madam Chair.
1738
+ Again I just want to say I was prepared to support the
1739
+ underlying legislation, but given the fourth amendment that was
1740
+ considered, it's too broad. I think it undermines the purpose
1741
+ of why we are meeting today in this more narrow tailored bill.
1742
+ I do appreciate all of the content, much of the content, of
1743
+ this bill. And regarding the comments of the ranking member, I
1744
+ supported his amendments as well but do note that his concerns
1745
+ are mitigated by the fact that the administrator can waive the
1746
+ provisions. It is up to his discretion, rather.
1747
+ But, with that said, again, this last amendment regarding
1748
+ snowfall is far too broad. It is inconsistent in my view with
1749
+ the underlying legislation. And I cannot support it.
1750
+ Thank you.
1751
+ Chairwoman Velazquez. Any other member who wishes to be
1752
+ recognized?
1753
+ [No response.]
1754
+ Chairwoman Velazquez. Seeing no further amendments, I move
1755
+ that the Committee vote on final passage of H.R. 1361. All of
1756
+ those in favor say ``Aye.''
1757
+ [Chorus of ``Ayes.'']
1758
+ Chairwoman Velazquez. All those opposed say ``No.''
1759
+ [Chorus of ``Noes.'']
1760
+ Chairwoman Velazquez. In the opinion of the Chair, the ayes
1761
+ have it.
1762
+ Mr. Braley. Madam Chair, I ask--
1763
+ Chairwoman Velazquez. A recorded vote is requested. The
1764
+ Clerk shall call the roll.
1765
+ The Clerk. Ms. Velazquez.
1766
+ Chairwoman Velazquez. Aye.
1767
+ The Clerk. Chairwoman Velazquez votes yes. Ms. Millender-
1768
+ McDonald.
1769
+ Ms. Millender-McDonald. Aye.
1770
+ The Clerk. Ms. Millender-McDonald votes yes. Mr. Jefferson.
1771
+ Mr. Jefferson. Aye.
1772
+ The Clerk. Mr. Jefferson votes yes. Mr. Shuler.
1773
+ Mr. Shuler. Aye.
1774
+ The Clerk. Mr. Shuler votes yes. Mr. Gonzalez.
1775
+ Mr. Gonzalez. Aye.
1776
+ The Clerk. Mr. Gonzalez votes yes. Mr. Larsen.
1777
+ Mr. Larsen. Aye.
1778
+ The Clerk. Mr. Larsen votes yes. Mr. Grijalva.
1779
+ [No response.]
1780
+ The Clerk. Mr. Michaud.
1781
+ Mr. Michaud. Aye.
1782
+ The Clerk. Mr. Michaud votes yes. Ms. Bean.
1783
+ Ms. Bean. Aye.
1784
+ The Clerk. Ms. Bean votes yes. Mr. Cuellar.
1785
+ Mr. Cuellar. Aye.
1786
+ The Clerk. Mr. Cuellar votes yes. Mr. Lipinski.
1787
+ Mr. Lipinski. Aye.
1788
+ The Clerk. Mr. Lipinski votes yes. Ms. Moore.
1789
+ Ms. Moore. Aye.
1790
+ The Clerk. Ms. Moore votes yes. Mr. Altmire.
1791
+ Mr. Altmire. Aye.
1792
+ The Clerk. Mr. Altmire votes yes. Mr. Braley.
1793
+ Mr. Braley. Aye.
1794
+ The Clerk. Mr. Braley votes yes. Ms. Clarke.
1795
+ Ms. Clarke. Aye.
1796
+ The Clerk. Ms. Clarke votes yes. Mr. Ellsworth.
1797
+ Mr. Ellsworth. Yes.
1798
+ The Clerk. Mr. Ellsworth votes yes. Mr. Johnson.
1799
+ Mr. Johnson. Aye.
1800
+ The Clerk. Mr. Johnson votes yes. Mr. Sestak.
1801
+ Mr. Sestak. Yes.
1802
+ The Clerk. Mr. Sestak votes yes. Mr. Chabot.
1803
+ Mr. Chabot. No.
1804
+ The Clerk. Mr. Chabot votes no. Mr. Bartlett.
1805
+ Mr. Bartlett. No.
1806
+ The Clerk. Mr. Bartlett votes no. Mr. Graves.
1807
+ Mr. Graves. No.
1808
+ The Clerk. Mr. Graves votes no. Mr. Akin.
1809
+ Mr. Akin. No.
1810
+ The Clerk. Mr. Akin votes no. Mr. Shuster.
1811
+ [No response.]
1812
+ The Clerk. Ms. Musgrave.
1813
+ Ms. Musgrave. No.
1814
+ The Clerk. Ms. Musgrave votes no. Mr. King.
1815
+ [No response.]
1816
+ The Clerk. Mr. Fortenberry.
1817
+ Mr. Fortenberry. No.
1818
+ The Clerk. Mr. Fortenberry votes no. Mr. Westmoreland.
1819
+ [No response.]
1820
+ The Clerk. Mr. Gohmert.
1821
+ [No response.]
1822
+ The Clerk. Mr. Heller.
1823
+ Mr. Heller. No.
1824
+ The Clerk. Mr. Heller votes no. Mr. David Davis.
1825
+ Mr. Davis. No.
1826
+ The Clerk. Mr. Davis votes no. Ms. Fallin.
1827
+ [No response.]
1828
+ The Clerk. Mr. Buchanan.
1829
+ [No response.]
1830
+ The Clerk. Mr. Jordan.
1831
+ Mr. Jordan. No.
1832
+ The Clerk. Mr. Jordan votes no.
1833
+ Chairwoman Velazquez. Any other member who wish to cast
1834
+ their vote or change their vote?
1835
+ [No response.]
1836
+ The Clerk. Madam Chair, the vote is 17 yes votes, 9 no
1837
+ votes.
1838
+ Chairwoman Velazquez. The bill is agreed to. I move that
1839
+ the bill be reported as amended and the staff be directed to
1840
+ make any technical corrections prior to the filing of the bill.
1841
+ The markup adjourns.
1842
+ [Whereupon, at 11:39 a.m., the foregoing matter was
1843
+ concluded.]
1844
+
1845
+ [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
1846
+
1847
+ <all>
1848
+ 
1849
+ </pre></body></html>
data/CHRG-110/CHRG-110hhrg33806.txt ADDED
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+ <html>
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+ <title> - FULL COMITTEE HEARING ON THE NEW HIDDEN TAX ON SMALL BUSINESS</title>
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+ <body><pre>
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+ [House Hearing, 110 Congress]
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+ [From the U.S. Government Publishing Office]
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+
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+
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+
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+
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+ FULL COMMITTEE HEARING ON THE NEW HIDDEN TAX ON SMALL BUSINESS
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+
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+ =======================================================================
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+
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+ COMMITTEE ON SMALL BUSINESS
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+ UNITED STATES HOUSE OF REPRESENTATIVES
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+
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+ ONE HUNDRED TENTH CONGRESS
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+
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+ FIRST SESSION
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+
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+ __________
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+
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+ MARCH 22, 2007
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+
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+ __________
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+
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+ Serial Number 110-10
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+
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+ __________
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+
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+ Printed for the use of the Committee on Small Business
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+
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+
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+ Available via the World Wide Web: http://www.access.gpo.gov/congress/
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+ house
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+
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+
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+
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+
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+
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+
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+
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+ U.S. GOVERNMENT PRINTING OFFICE
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+
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+ 33-806 PDF WASHINGTON DC: 2007
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+ ---------------------------------------------------------------------
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+ For sale by the Superintendent of Documents, U.S. Government Printing
51
+ Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800
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+ DC area (202)512-1800 Fax: (202) 512-2250 Mail Stop SSOP,
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+ Washington, DC 20402-0001
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+
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+
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+
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+
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+
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+
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+
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+
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+ HOUSE COMMITTEE ON SMALL BUSINESS
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+
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+ NYDIA M. VELAZQUEZ, New York, Chairwoman
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+
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+
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+ JUANITA MILLENDER-McDONALD, STEVE CHABOT, Ohio, Ranking Member
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+ California ROSCOE BARTLETT, Maryland
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+ WILLIAM JEFFERSON, Louisiana SAM GRAVES, Missouri
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+ HEATH SHULER, North Carolina TODD AKIN, Missouri
73
+ CHARLIE GONZALEZ, Texas BILL SHUSTER, Pennsylvania
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+ RICK LARSEN, Washington MARILYN MUSGRAVE, Colorado
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+ RAUL GRIJALVA, Arizona STEVE KING, Iowa
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+ MICHAEL MICHAUD, Maine JEFF FORTENBERRY, Nebraska
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+ MELISSA BEAN, Illinois LYNN WESTMORELAND, Georgia
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+ HENRY CUELLAR, Texas LOUIE GOHMERT, Texas
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+ DAN LIPINSKI, Illinois DEAN HELLER, Nevada
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+ GWEN MOORE, Wisconsin DAVID DAVIS, Tennessee
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+ JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
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+ BRUCE BRALEY, Iowa VERN BUCHANAN, Florida
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+ YVETTE CLARKE, New York JIM JORDAN, Ohio
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+ BRAD ELLSWORTH, Indiana
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+ HANK JOHNSON, Georgia
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+ JOE SESTAK, Pennsylvania
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+
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+ Michael Day, Majority Staff Director
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+ Adam Minehardt, Deputy Staff Director
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+ Tim Slattery, Chief Counsel
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+ Kevin Fitzpatrick, Minority Staff Director
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+
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+ ______
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+
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+ STANDING SUBCOMMITTEES
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+
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+ Subcommittee on Finance and Tax
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+
99
+ MELISSA BEAN, Illinois, Chairwoman
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+
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+
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+ RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking
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+ MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
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+ BRAD ELLSWORTH, Indiana STEVE KING, Iowa
105
+ HANK JOHNSON, Georgia VERN BUCHANAN, Florida
106
+ JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
107
+
108
+ ______
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+
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+ Subcommittee on Contracting and Technology
111
+
112
+ BRUCE BRALEY, IOWA, Chairman
113
+
114
+
115
+ WILLIAM JEFFERSON, Louisiana DAVID DAVIS, Tennessee, Ranking
116
+ HENRY CUELLAR, Texas ROSCOE BARTLETT, Maryland
117
+ GWEN MOORE, Wisconsin SAM GRAVES, Missouri
118
+ YVETTE CLARKE, New York TODD AKIN, Missouri
119
+ JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
120
+
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+
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+ (ii)
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+
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+
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+
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+
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+
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+
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+
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+
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+ Subcommittee on Regulations, Health Care and Trade
144
+
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+ CHARLES GONZALEZ, Texas, Chairman
146
+
147
+
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+ WILLIAM JEFFERSON, Louisiana LYNN WESTMORELAND, Georgia,
149
+ RICK LARSEN, Washington Ranking
150
+ DAN LIPINSKI, Illinois BILL SHUSTER, Pennsylvania
151
+ MELISSA BEAN, Illinois STEVE KING, Iowa
152
+ GWEN MOORE, Wisconsin MARILYN MUSGRAVE, Colorado
153
+ JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
154
+ JOE SESTAK, Pennsylvania VERN BUCHANAN, Florida
155
+ JIM JORDAN, Ohio
156
+
157
+ ______
158
+
159
+ Subcommittee on Urban and Rural Entrepreneurship
160
+
161
+ HEATH SHULER, North Carolina, Chairman
162
+
163
+
164
+ RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska,
165
+ MICHAEL MICHAUD, Maine Ranking
166
+ GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
167
+ YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado
168
+ BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada
169
+ HANK JOHNSON, Georgia DAVID DAVIS, Tennessee
170
+
171
+ ______
172
+
173
+ Subcommittee on Investigations and Oversight
174
+
175
+ JASON ALTMIRE, PENNSYLVANIA, Chairman
176
+
177
+
178
+ JUANITA MILLENDER-McDONALD, LOUIE GOHMERT, Texas, Ranking
179
+ California LYNN WESTMORELAND, Georgia
180
+ CHARLIE GONZALEZ, Texas
181
+ RAUL GRIJALVA, Arizona
182
+
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+ (iii)
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+ C O N T E N T S
208
+
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+ ----------
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+
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+ OPENING STATEMENTS
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+
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+ Page
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+
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+ Velazquez, Hon. Nydia M.......................................... 1
216
+ Chabot, Hon. Steve............................................... 2
217
+
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+ WITNESSES
219
+
220
+ Iannelli, Vincent, Associated General Contractors................ 4
221
+ Deel, Daryl, American Trucking Associations...................... 5
222
+ Whitman, Lamar, Computing Technology Industry Association........ 7
223
+ Kahn, Chip, American Federation of Hospitals..................... 9
224
+ Coleman, Lonnie, Coleman Spohn Corporation....................... 11
225
+
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+ APPENDIX
227
+
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+
229
+ Prepared Statements:
230
+ Velazquez, Hon. Nydia M.......................................... 30
231
+ Chabot, Hon. Steve............................................... 32
232
+ Altmire, Hon. Jason.............................................. 34
233
+ Iannelli, Vincent, Associated General Contractors................ 35
234
+ Deel, Daryl, American Trucking Associations...................... 43
235
+ Whitman, Lamar, Computing Technology Industry Association........ 46
236
+ Kahn, Chip, American Federation of Hospitals..................... 55
237
+ Coleman, Lonnie, Coleman Spohn Corporation....................... 61
238
+
239
+ Statements for the Record:
240
+ Associated Builders and Contractors.............................. 67
241
+ American Congress on Surveying and Mapping....................... 75
242
+ Aerospace Industries Association................................. 76
243
+ American Farm Bureau Federation.................................. 78
244
+ American Moving and Storage Association.......................... 80
245
+ American Road & Transportation Builders Association.............. 82
246
+ American Supply Association...................................... 84
247
+ American Society of Civil Engineers.............................. 86
248
+ Construction Financial Management Association.................... 88
249
+ Construction Management Association of America................... 92
250
+ The Coalition for Government Procurement......................... 94
251
+ Contract Services Association.................................... 96
252
+ Donald Alexander, Akin Gump Strauss Hauer & Feld LLP............. 98
253
+ Electronic Industries Alliance................................... 100
254
+ Government Withholding Relief Coalition.......................... 105
255
+ Government Finance Officers Association, et al................... 109
256
+ National Electrical Contractors Association...................... 111
257
+ Small Business & Entrepreneurship Council........................ 114
258
+
259
+ (v)
260
+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+
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+ FULL COMITTEE HEARING ON THE NEW HIDDEN TAX ON SMALL BUSINESS
275
+
276
+ ----------
277
+
278
+
279
+ THURSDAY, MARCH 22, 2007
280
+
281
+ U.S. House of Representatives,
282
+ Committee on Small Business,
283
+ Washington, DC.
284
+ The Committee met, pursuant to call, at 10:00 a.m., in Room
285
+ 2360 Rayburn House Office Building, Hon. Nydia Velazquez
286
+ [Chairwoman of the Committee] presiding.
287
+ Present: Representatives Velazquez, Shuler, Cuellar,
288
+ Altmire, Braley, Ellsworth, Chabot, Musgrave, Westmoreland,
289
+ Fallin, Buchanan and Jordan.
290
+
291
+ OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ
292
+
293
+ Chairwoman Velazquez. Good morning. I now call to order
294
+ this hearing to examine the impact of a three percent
295
+ withholding requirement on all government payments.
296
+ Today's hearing focuses on what might seem to be a minor
297
+ change in tax law, but will have a huge effect on small
298
+ businesses across this country. We will discuss the potential
299
+ problems of a provision passed last year that will require the
300
+ government to withhold three percent on many government
301
+ payments.
302
+ While the withholding requirement is not scheduled to
303
+ become effective until 2011, it is important to understand the
304
+ problems now. This change goes far beyond those who do business
305
+ with the federal government. Farmers receiving payments from
306
+ the USDA, health care providers who receive Medicare
307
+ reimbursement, as well as the thousands of small businesses who
308
+ perform contract work for the federal government will all be
309
+ hit. This money will be withheld regardless of what you
310
+ actually owe in taxes.
311
+ This could be an enormous burden for small businesses.
312
+ Taking away three percent of revenues can mean the difference
313
+ between meeting payroll, expanding a company or buying needed
314
+ equipment. It will reduce their ability to compete against
315
+ their corporate counterparts.
316
+ For small government contractors, the results could be
317
+ severe. When you consider that small firms are continuing to be
318
+ squeezed out of the federal marketplace, the last thing
319
+ Congress should be doing is creating another obstacle to
320
+ success. Small firms, which often have fewer resources, may be
321
+ unable to afford to stay in the market. If businesses leave the
322
+ federal marketplace, there will be less competition, which
323
+ could lead to higher prices, costing valuable taxpayers'
324
+ dollars.
325
+ The change will also have a negative impact on the health
326
+ care industry. The sheer volume of transactions affected by
327
+ this change creates a huge administrative burden. Hospitals and
328
+ small business health care providers conduct millions of
329
+ transactions that will be subject to withholding.
330
+ I believe the intent of this provision was a good one.
331
+ Right now there is a $350 billion tax debt. However, I question
332
+ whether this change will really get at that problem. Most of
333
+ the revenues generated by this provision do not come from
334
+ collecting taxes, but from a budget gimmick. It simply moves up
335
+ the collection of money that will have come in the next year.
336
+ We must consider the hidden costs of this legislation. We
337
+ should not increase the cost of running a business by requiring
338
+ an interest free loan to the government. It seems to me that
339
+ the most logical step is to repeal the provision. There are
340
+ better ways to crack down on those who are not paying their
341
+ taxes without creating a hardship on small businesses.
342
+ I appreciate the witnesses coming here today to talk about
343
+ their concerns, and I look forward to today's discussion.
344
+ And now I will recognize the Ranking Member, Mr. Chabot.
345
+
346
+ OPENING STATEMENT OF MR. CHABOT
347
+
348
+ Mr. Chabot. Thank you very much, Madam Chairwoman, and
349
+ thank you for holding this important hearing to discuss, as you
350
+ mentioned, Section 511 of the Tax Increase Prevention and
351
+ Reconciliation Act of 2005, known as TIPRA.
352
+ I find it truly ironic that legislation that was called the
353
+ Tax Increase Prevention and Reconciliation Act, which provides
354
+ for lower taxes on capital gains and dividends and that
355
+ generally helps small business owners, also contains a
356
+ provision added at the 11th hour during a House-Senate
357
+ conference committee that will raise taxes on those same small
358
+ businesses if Congress fails to take action.
359
+ Of course, we hope that Congress will take action.
360
+ Section 511 of the Act, scheduled to take effect in 2011,
361
+ will require federal, state, and local governments with an
362
+ annual procurement budget of at least $100 million to withhold
363
+ three percent from all payments for goods and services as a
364
+ guard against possible business tax evasion, justification that
365
+ I find particularly offensive.
366
+ Section 511 will affect goods and services under government
367
+ contracts, as well as payments to any person for services or
368
+ products provided to a government entity, such as Medicare
369
+ payments or certain grants. This provision is based on revenue
370
+ from government payments and is unrelated to a company's
371
+ taxable income or tax liability.
372
+ As I mentioned earlier, it is particularly troubling to me
373
+ that Section 511 was inserted in the Tax Increase Prevention
374
+ and Reconciliation Act of 2005 during the House-Senate
375
+ conference without open debate on the merits. A provision that
376
+ will likely have this type of impact on small businesses, as
377
+ well as state and local governments and the private sector,
378
+ should have been fully considered in both Houses of Congress
379
+ with inputs from all sides.
380
+ At a time when we are trying to encourage the federal
381
+ government to do more business with small businesses, Section
382
+ 511 is exactly the wrong message to send. Small businesses
383
+ typically work with very small margins, and three percent
384
+ withheld from any payment affects its operating capital and
385
+ could make the different between its ability to submit a bid or
386
+ not.
387
+ Furthermore, companies of all sizes that do business with
388
+ government will likely have to increase prices to account for
389
+ this additional burden. The impact of Section 511 will likely
390
+ be enormous and far reaching. From the cost of construction
391
+ projects to taxpayers, which would likely increase, to the
392
+ already low Medicare reimbursement payments to physicians that
393
+ will likely decrease, which could cause physicians to stop
394
+ accepting new Medicare patients.
395
+ Some companies may be forced to pass some of the
396
+ withholding amount down to subcontractors. This can be
397
+ especially harmful to small businesses down the supply chain.
398
+ According to the Congressional Budget Office and the Joint
399
+ Committee on Taxation, Section 511 amounts to an
400
+ intergovernmental unfunded mandate and would be extremely
401
+ expensive to implement.
402
+ In many cases, governments and the private sector would
403
+ have to adopt new accounting and financial control measures and
404
+ perhaps additional personnel to track these payments. In short,
405
+ Section 511 hurts honest taxpaying small businesses without
406
+ providing any additional enforcement provisions to improve tax
407
+ compliance.
408
+ Section 511 of TIPRA is bad law and bad tax policy. I want
409
+ to again thank the Chairwoman for holding this hearing to
410
+ expose the damaging effects this provision will have on small
411
+ businesses should Congress fail to take action in the next
412
+ several years to prevent it, or should there be an attempt to
413
+ expedite Section 511's implementation, as happened last year.
414
+ We need to be looking at ways to foster growth and productivity
415
+ in the small business sector, not penalize everybody for the
416
+ actions of a few.
417
+ Madam Chairwoman, thank you again for holding this hearing.
418
+ I look forward to hearing from our distinguished panel and
419
+ working with you to address this important issue, and I look
420
+ forward to introduction, if possible, Mr. Coleman who is from
421
+ the great State of Ohio. He does not have the good fortune to
422
+ be from Cincinnati. He is from Cleveland, but close enough.
423
+ [Laughter.]
424
+ Mr. Chabot. I yield back.
425
+ Chairwoman Velazquez. Thank you. Thank you.
426
+ Our first witness is a constituent from New York, the great
427
+ State of New York, Vincent Iannelli. He is the President of
428
+ Iannelli Construction Company, Inc., and a member of the
429
+ General Building Contractors of New York State, Associated
430
+ General Contractors Chapter. Associated General Contractors of
431
+ America represents over 32,000 firms throughout the country.
432
+ Mr. Iannelli, you will have five minutes to make your
433
+ presentation, and I want to excuse myself. I have to go before
434
+ Natural Resources Committee to testify on a bill that I am the
435
+ lead sponsor. So I will ask for you to excuse me, but Mr.
436
+ Shuler will be on the Chair, and I will be coming back as soon
437
+ as I finish.
438
+ Mr. Shuler. [presiding] Thank you, and you may start.
439
+
440
+ STATEMENT OF VINCENT IANNELLI, PRESIDENT, IANNELLI CONSTRUCTION
441
+ COMPANY, INC. ON BEHALF OF ASSOCIATED GENERAL CONTRACTORS OF
442
+ AMERICA
443
+
444
+ Mr. Iannelli. Thank you, Chairwoman Velazquez and Ranking
445
+ Member Chabot, for this opportunity to testify on the new three
446
+ percent withholding law.
447
+ I am testifying on behalf of the Associated General
448
+ Contractors of America, a national trade association
449
+ representing more than 32,000 companies. I am Vincent Iannelli,
450
+ President of Iannelli construction and a member of the General
451
+ Building Contractors of New York State, an AGC chapter.
452
+ My father started our company in 1958, and now my brother
453
+ Thomas and I are running it. My daughter Carla started working
454
+ with us two years ago.
455
+ Iannelli Construction is a family business. We are also 99
456
+ percent public works.
457
+ Small business is big in construction. In 2005, 91 percent
458
+ of construction establishments had fewer than 20 employees.
459
+ Only one percent had 100 or more. According to the 2006
460
+ construction industry annual financial survey, earnings after
461
+ taxes in the most recent fiscal year averaged 2.1 percent, up
462
+ from 1.6 percent in 2005.
463
+ Today, Iannelli Construction works 99 percent on school
464
+ construction. We employ six full-time employees in the office
465
+ and ten to 20 in the field, depending on how much work we have.
466
+ We are 100 percent union, working mostly with the locals from
467
+ the Carpenters Union and the Mason Tenders Unions.
468
+ All of my public projects have retainage. The public owners
469
+ hold back from five to ten percent on each progress payment
470
+ until the project has been substantially complete.
471
+ In addition, some public owners hold out an additional five
472
+ percent of the project for closeout and punch list. It has
473
+ taken me years sometimes to receive final payment after the
474
+ contract has been completed.
475
+ Because these are public projects, all of our jobs are
476
+ bonded. Having bonds on projects insures the taxpayers that the
477
+ jobs will be completed at no additional cost to the public. The
478
+ project must be completed for the price and in the time
479
+ negotiated under the contract.
480
+ The construction contractor is responsible for purchasing
481
+ the bond, and if something happens to the company, the bonding
482
+ company liquidates the contractor's assets to complete the
483
+ project. The taxpayer is protected.
484
+ Contractors must purchase performance and payment bonds for
485
+ government projects. The performance bond insures that payroll
486
+ taxes will be paid on behalf of the employees working at the
487
+ site. If the government determines that payroll taxes have not
488
+ been properly withheld and remitted, then the government can
489
+ ask the bond provider to fill in the gap. Under the bond
490
+ everyone is protected.
491
+ Now the federal government has added an additional layer by
492
+ requiring three percent holding on payments for goods and
493
+ services from every level of government, federal, state, and
494
+ local. This new requirement plus the retainage and closeout
495
+ costs could add up to 15 percent of every progress payment.
496
+ This kind of hit to my cash flow also makes it more costly
497
+ for me to purchase the bonds necessary. Many companies who
498
+ provide the bonds study my books in detail before offering
499
+ coverage. Based on past performances, the ability to perform
500
+ the work for which I bid and my cash flow assurity gives
501
+ Iannelli Construction a bond rating which governs the price of
502
+ the bonds and how much bonding coverage I can receive.
503
+ This is just one of the reasons why cash flow is so
504
+ important. Another is my ability to pay my suppliers,
505
+ subcontractors and service providers. Some suppliers ask for
506
+ payment up front, which means I am paying for things before
507
+ being reimbursed by the government.
508
+ What is frustrating is the government is penalizing good
509
+ contractors for paying their taxes and paying their payroll
510
+ taxes in a timely manner. There should be a better way to do
511
+ this.
512
+ Every couple of years we have to prequalify for certain
513
+ government agencies that we do work for, and one of the
514
+ questions during the process is if we pay our taxes. The agency
515
+ looks into this and someone's tax returns from the previous two
516
+ or three years. If you cannot come up with that, you are not
517
+ qualified to bid on these jobs. This shuts people down if after
518
+ a while they aren't paying their taxes.
519
+ The majority of AGC contractors work on some kind of
520
+ government contract every year, and this three percent
521
+ withholding will have a large impact on the construction
522
+ industry.
523
+ Again, thank you for this opportunity to testify today on
524
+ behalf of the AGC, and I look forward to your questions.
525
+ Mr. Shuler. Mr. Iannelli, thank you so much for your
526
+ testimony and comments.
527
+ [The prepared statement of Mr. Iannelli may be found in the
528
+ Appendix on page 35.]
529
+ At this time I'd like to introduce Mr. Daryl Deel, the
530
+ president of three small business trucking companies and comes
531
+ on behalf of the American Trucking Association, ATA. Mr. Dill
532
+ is the Vice Chairman of the ATA Tax Policy Committee.
533
+ ATA represents carriers of government agencies, and I thank
534
+ you for your testimony.
535
+
536
+ STATEMENT OF DARYL DEEL, VICE CHAIRMAN, TAX POLICY COMMITTEE,
537
+ AMERICAN TRUCKING ASSOCIATION
538
+
539
+ Mr. Deel. Thank you.
540
+ And good morning. Again, my name is Daryl Deel. I am a
541
+ certified public accountant by training and now I am in the
542
+ trucking industry, and I do own three small trucking companies.
543
+ I am here today representing the American Trucking
544
+ Association, or better known as ATA, and we certainly
545
+ appreciate the opportunity to be here today.
546
+ My trucking company specializes in transporting highly
547
+ specialized security sensitive cargo for the Department of
548
+ Defense and the Department of Energy. As a member of ATA, I am
549
+ currently the Vice Chairman of the ATA Tax Policy Committee,
550
+ and for three years prior to that I chaired the Government
551
+ Traffic Policy Committee, which is comprised of motor carriers
552
+ and brokers which provide contract services to haul government
553
+ freight.
554
+ ATA represents the motor carriers who serve government
555
+ agencies with the best freight logistics support in the world,
556
+ and it takes a lot of money and expertise to provide that level
557
+ of service. We take immense pride in the fact that we support
558
+ public missions. We are particularly proud to be an
559
+ indispensable link in the defense supply chain that sustains
560
+ America's war fighters domestically and throughout the world.
561
+ Like most businesses and Mr. Iannelli's business, we expect
562
+ customers to pay with 30 days or net 30. When a customer has a
563
+ good track record of payment, we give them the best rates. When
564
+ the government begins withholding the three percent, we are not
565
+ going to see that money returned to us for much longer than 30
566
+ days.
567
+ Depending on the state of the economy, the motor carrier
568
+ industry's net profit margins range from one half of one
569
+ percent to five percent of revenues, for an average net profit
570
+ of about three percent. Therefore, when the government
571
+ customers start withholding the three percent of the freight
572
+ bill that they owe the carriers, trucking companies may be
573
+ compelled to raise rates just to stay whole.
574
+ Otherwise, all of that profit margin, that three percent
575
+ profit margin becomes unavailable until we file our tax returns
576
+ and then maybe get our refund a year later.
577
+ And then when the economy is down and suppresses profit
578
+ margins for our industry, the three percent withholding will
579
+ more than devour all of the net profit for our industry. This
580
+ is like a loan to the government. Most small business will not
581
+ be able to withstand the negative cash flow impact and could
582
+ eventually go bankrupt.
583
+ A large company with mostly commercial customers and does
584
+ business with governmental agencies, they are likely to be able
585
+ to absorb that three percent by just reducing their quarterly
586
+ estimated tax payments. So they are paying it one way or the
587
+ other way.
588
+ But a small company, on the other hand, that does a lot of
589
+ business with government customers could suffer that 100
590
+ percent withholding of their profit margin and, again, would
591
+ have to wait until they file their tax returns and get a refund
592
+ the following year.
593
+ Worse yet, that three percent withholding could bite into
594
+ the cash needed to provide the direct services to the customer.
595
+ They have to pay their contractors or their employees, and
596
+ their fuel bill, and all of those operating expenses. So the
597
+ negative cash flow impact might force a small company, small
598
+ business, to either raise its rates, but it may be difficult to
599
+ do that in a competitive environment where a larger company can
600
+ withstand the cash flow impact of the three percent, and it may
601
+ make small business not competitive in vying for government
602
+ business.
603
+ So it could force the small company to consider leaving
604
+ government service and increasing their business with
605
+ commercial shippers, those shippers that pay within 30 days,
606
+ the full 100 percent of the freight bill.
607
+ I do have a simple chart that demonstrates the tax and cash
608
+ flow impact of a large business versus a small business for a
609
+ motor carrier. With your pleasure, I will submit that for
610
+ additional testimony.
611
+ For these reasons, I am convinced that if the three percent
612
+ withholding is actually implemented that my three small
613
+ companies may be compelled to raise rates or to exit providing
614
+ service to government agencies. And I believe this is the
615
+ opposite to what Congress intended when this new withholding
616
+ tax or the bill was enacted.
617
+ For these reasons, the motor carriers of the American
618
+ Trucking Association urge the members of this honored panel to
619
+ support H.R. 1023.
620
+ And thank you for the opportunity to be here today. I look
621
+ forward to your questions.
622
+ Mr. Chabot. Mr. Chairman, I would just move that the chart
623
+ that Mr. Deel referred to be admitted to the record, without
624
+ objection.
625
+ Mr. Shuler. Without objection.
626
+ Mr. Chabot. Thank you very much.
627
+ [The prepared statement of Mr. Deel and chart may be found
628
+ in the Appendix on page 43.]
629
+ Mr. Chabot. Mr. Deel, thank you so much for your testimony.
630
+ At this time I would like to introduce Lamar Whitman, who
631
+ is a public policy manager for Computing Technology Industry
632
+ Association, CompTIA. CompTIA has more than 2,000 members in
633
+ the information technology industry. This organization is
634
+ driven by helping individuals obtain skills necessary to
635
+ succeed in the IT industry.
636
+ Mr. Whitman, thank you so much for your testimony.
637
+
638
+ STATEMENT OF LAMAR WHITMAN, PUBLIC POLICY MANAGER, COMPUTING
639
+ TECHNOLOGY INDUSTRY ASSOCIATION
640
+
641
+ Mr. Whitman. Thank you very much for the invitation.
642
+ Good morning, Mr. Shuler and Ranking Member Chabot and also
643
+ distinguished members of the Committee. My name is Lamar
644
+ Whitman. I am appearing today on behalf of the Computing
645
+ Technology Industry Association, CompTIA, representing 20,000
646
+ member companies.
647
+ I want to thank Chairwoman Velazquez and members of the
648
+ Committee for holding this important meeting concerning the
649
+ effects of this impending three percent withholding. While this
650
+ requirement does not distinguish between government payments
651
+ made to either large corporations or small businesses, our
652
+ comments today will concentrate on the effects of this
653
+ provision on our small business members.
654
+ The typical small business does not have an IT department,
655
+ but relies upon the services of an important segment of the
656
+ computer industry referred to as value added resellers, or
657
+ VARs. VARs are small system integrators that design, install,
658
+ and maintain computer systems and networks for other small
659
+ businesses. There are an estimated 32,000 VARs, most of which
660
+ are small businesses themselves, sell approximately $43 billion
661
+ worth of computer hardware, software, and services annually.
662
+ This means that about one third of the computer hardware sold
663
+ in the United States is sold by a VAR.
664
+ A 2006 government VAR survey found that about half of the
665
+ VAR's gross revenue derived from the public sector, which would
666
+ put this somewhere in the magnitude of $20 billion annually; of
667
+ this, about 37 percent is from sales to federal government; 35
668
+ percent sales to state and local governments; and 28 percent
669
+ goes to educational institutions.
670
+ This three percent withholding requirement is unnecessary
671
+ to promote tax compliance and will unfairly penalize compliant
672
+ small businesses. First, we must note the unprecedented nature
673
+ of this new withholding requirement. Historically, prepayments
674
+ of tax had borne some direct relationship to a taxpayer's
675
+ estimated tax liability. However, this new three percent
676
+ withholding departs from the traditional scheme of federal tax
677
+ payments because it bears no relation to the tax liability.
678
+ Indeed, a VAR working under a government contract with a
679
+ slim profit margin could experience a net loss for the year,
680
+ but it would still be subject to the three percent withholding.
681
+ With keen competition, VARs operate on a very small profit
682
+ margin, often three to six percent and sometimes much less. I
683
+ provided two examples in the written testimony. In both
684
+ situations, assume the business receives $5 million in
685
+ government payments with $150,000 being withheld for this three
686
+ percent payment. With a six percent net profit margin, as shown
687
+ in the first example, the federal tax liability is about
688
+ $100,000. However, $150,000 has been withheld from payments to
689
+ that person. So, therefore, they have lost the benefit of
690
+ $50,000 in operating capital.
691
+ The three percent withholding becomes even more absurd when
692
+ applied to a company with a four percent net profit margin, as
693
+ shown in the second example. In that scenario, the business
694
+ would be deprived of about $90,000 of working capital.
695
+ This three percent withhold provision has a regressive
696
+ effect, reserving its greatest penalty for those businesses
697
+ with the lowest net income, typically small businesses.
698
+ In addition to our cash flow concerns, we see a number of
699
+ other adverse issues. In subcontracting situations, this three
700
+ percent withholding will inevitably be passed down from the
701
+ prime to the subcontractor. Without this operating income,
702
+ subcontractors will be forced to use credit, incurring interest
703
+ costs, and this will, in turn, increase the cost of goods and
704
+ services to government purchasers.
705
+ We also believe this new requirement will make it much more
706
+ difficult for government agencies to meet their small business
707
+ contracting goals, something that I know that this committee is
708
+ very concerned with.
709
+ Further, the three percent withholding on pass-through
710
+ entities, such as Subchapter S corporations, partnerships,
711
+ joint ventures, whatever, will need to be allocated out to the
712
+ shareholders for an S corporation or to the partners in the
713
+ case of a partnership. This will further increase the
714
+ complexity of return preparation far beyond that of the
715
+ contracting entities alone.
716
+ The purported justification for instituting this three
717
+ percent withholding was that some recipients of government
718
+ payments were not reporting and paying their federal income
719
+ tax. If, in fact, this is the problem, we believe the proper
720
+ and least harmful course of action is to require government
721
+ payers to report such payments. The goal here should be to
722
+ promulgate effective tax compliance measures, not punish all
723
+ government contractors indiscriminately.
724
+ CompTIA and CompTIA's members were fully supportive of
725
+ efforts to promote tax compliance. However, we object to
726
+ unnecessary and harmful tactics, such as this three percent
727
+ withholding. This new requirement is unfair to small
728
+ businesses, especially of ours, and will force more and more
729
+ small businesses out of the competition for federal government
730
+ procurement opportunities.
731
+ Thank you very much, and I will be pleased to answer
732
+ questions later on.
733
+ [The prepared statement of Mr. Whitman may be found in the
734
+ Appendix on page 46.]
735
+ Mr. Shuler. Mr. Whitman, thank you for your testimony.
736
+ At this time I will introduce Charles Kahn, who is the
737
+ President of the Federation of American Hospitals. FAH is the
738
+ national representative of investor owned or managed community
739
+ hospitals and health care systems throughout the United States.
740
+ Mr. Kahn, thank you for being here today, and we are
741
+ looking forward to hearing your testimony.
742
+
743
+ STATEMENT OF CHARLES KAHN, PRESIDENT, FEDERATION OF AMERICAN
744
+ HOSPITALS
745
+
746
+ Mr. Kahn. Thank you, Mr. Chairman.
747
+ And I appreciate the committee holding this hearing today.
748
+ It is a pleasure to appear before the committee on behalf of
749
+ the Federation of American Hospitals.
750
+ We represent approximately 20 percent of the hospitals
751
+ across the country that serve our communities. Our members also
752
+ pay their fair share of federal, state, and local taxes.
753
+ I would like to make four points today. One, the three
754
+ percent withhold is unfair because it penalizes all because of
755
+ the misdeeds of a few.
756
+ Two, the federal health care agency who will implement the
757
+ three percent withhold for Medicare, as well as the Medicare
758
+ claims payment system itself are ill-suited to adapt to this
759
+ kind of requirement.
760
+ Three, the health care providers will be harmed by the
761
+ three percent withhold and are likely to suffer unanticipated
762
+ problems that the framers of the law could not have
763
+ anticipated.
764
+ And finally, that the GAO report that defines the problems
765
+ points to a solution other than the three percent withhold, the
766
+ federal payment levy program. We need to give this program a
767
+ chance to work before we penalize everyone doing business with
768
+ the federal government.
769
+ First, let me start off by talking about the providers
770
+ themselves. Most health care providers are paid by Medicare
771
+ program on a per claim basis, a per service basis. Under Part A
772
+ and Part B, hundreds of millions of claims are processed each
773
+ year, and a new process will need to be implemented to capture
774
+ the three percent withhold for tax paying health care
775
+ businesses.
776
+ The tax revenue to be generated from three percent withhold
777
+ is smaller than most people think after the first year. Yet the
778
+ implementation costs to the entire federal government,
779
+ particularly to the Medicare program will be enormous and
780
+ continue into the future.
781
+ The Medicare program currently uses some 40 private
782
+ contractors to process Medicare claims. This means the federal
783
+ government will provide significant oversight of its
784
+ contractors which have different from processing systems to
785
+ insure that the three percent withhold is correctly collected.
786
+ Another problem involves Medicare claims themselves that
787
+ are filed, but frequently need to be amended or refiled. This
788
+ common practice usually results in a payment adjustment which
789
+ will mean some type of reconciliation on the tax withholding
790
+ side will be necessary. It is unclear how this will be
791
+ accomplished.
792
+ Third, the health care provider community will be unduly
793
+ burdened by the three percent withholding and are likely to
794
+ suffer unanticipated problems. Medicare providers already
795
+ experience slim operating margins, in large part due to the
796
+ insufficient levels of government insurance payments. In 2007,
797
+ hospitals are expected to experience a negative operating
798
+ margin of 5.4 percent on their Medicare business alone.
799
+ Withholding three percent of Medicare payments off the top,
800
+ regardless of the taxpayer's situation, will exacerbate this
801
+ problem and create additional cash flow concerns, especially
802
+ for start-up or small businesses that need to maximize cash
803
+ flow to survive.
804
+ The administrative burden on the health care industry will
805
+ be similar to burdens the federal government faces and will
806
+ create an expense for businesses that will be unfunded, of
807
+ course, by the government itself.
808
+ The GAO reports focus on the federal payment levy program
809
+ as a solution, which targets delinquent taxpayers by collecting
810
+ what they owe from current government payments. The reports
811
+ make clear that the implementation challenges remain for the
812
+ levy program, and that increased participation by federal
813
+ agencies is essential for the program to reach its full
814
+ potential.
815
+ HHS does not participate in the levy program, but clearly
816
+ should be able to capture much of the money that is not being
817
+ paid in taxes by this program. Congress should consider the GAO
818
+ recommendations on this program and how to improve it and take
819
+ steps to insure greater participation by the federal agencies
820
+ as a solution to this problem.
821
+ So let me reiterate. The Medicare program has millions of
822
+ claims that are processed for those who are serving Medicare
823
+ beneficiaries every day. To take three percent from those
824
+ claims obviously will be extremely complicated and difficult to
825
+ implement, and will have effects on those who are providing
826
+ those services.
827
+ There has got to be a better way, and we believe in the GAO
828
+ report their recommendations for a better way to solve this
829
+ real problem that our taxing system faces.
830
+ Thank you.
831
+ [The prepared statement of Mr. Kahn may be found in the
832
+ Appendix on page 55.]
833
+ Mr. Shuler. Mr. Kahn, thank you.
834
+ I will yield to Ranking Member Chabot for the introduction
835
+ of Mr. Coleman.
836
+ Mr. Chabot. I thank the gentleman very much for yielding.
837
+ It is my pleasure to introduce, as I mentioned before, a
838
+ fellow Ohioan, Lonnie Coleman who is President and CEO of
839
+ Coleman-Spohn in Cleveland, Ohio.
840
+ Founded in 1994, Coleman-Spohn Corporation formed as a
841
+ result of a merger between a residential heating firm and a
842
+ state-of-the-art mechanical engineering company. Today Coleman-
843
+ Spohn is a full service mechanical contractor whose clients are
844
+ some of Cleveland's most noted public and private institutions.
845
+ Lonnie Coleman has received the Small Business
846
+ Administration's Award of Excellence and was recognized as its
847
+ prime contractor of the year. Coleman- Spohn has been honored
848
+ as the Ohio Governor's Minority Business of the Year, the
849
+ Environmental Protection Agency's National Minority Contractor
850
+ of the Year, and the City of Cleveland's Construction Firm of
851
+ the Year.
852
+ I am pleased to welcome to the hearing, as I said, Mr.
853
+ Lonnie Coleman, and we thank you very much for your testimony
854
+ here this morning, Mr. Coleman.
855
+
856
+ STATEMENT OF LONNIE COLEMAN, PRESIDENT AND CEO, COLEMAN-SPOHN,
857
+ ON BEHALF OF THE MECHANICAL CONTRACTORS ASSOCIATION OF AMERICA
858
+
859
+ Mr. Coleman. Thank you, Representative Shuler.
860
+ You have taken the first part of my speech away.
861
+ [Laughter.]
862
+ Mr. Coleman. Thank you very much.
863
+ Good morning to Ms. Velazquez, who has left, and Mr. Shuler
864
+ and the Ranking Member Chabot and the members of the Committee.
865
+ Thank you for inviting me here today.
866
+ My company performs general mechanical and facilities
867
+ management contracts as both a prime contractor and a specialty
868
+ contractor on federal, state, and local projects throughout
869
+ Ohio and in several markets nationwide. And as you have heard
870
+ in my introduction from Representative Shuler, we have had some
871
+ success on the small business level thanks to many of the
872
+ things that the Small Business Committee and Congress have done
873
+ in aiding and assisting small and minority businesses
874
+ throughout our country.
875
+ I am here today representing the Mechanical Contractors
876
+ Association of America, a nationwide specialty construction
877
+ employer trade association. I am also an officer of the MTA,
878
+ serving this year as the Senior Vice President and Treasurer.
879
+ A little bit about MCAA. MCAA's 2,300 member companies
880
+ install, maintain and service all types of mechanical systems.
881
+ The systems range from residential plumbing and heating and air
882
+ conditioning systems to more sophisticated piping systems found
883
+ in the commercial industrial markets, such as nuclear power
884
+ facilities, clean rooms, data centers, and refineries of all
885
+ types.
886
+ Today I am also privileged to represent five other of our
887
+ sister associations, allied in an ongoing legislative campaign
888
+ for quality construction. These groups are the Sheet Metal and
889
+ Air Conditioning Contractors National Association, the National
890
+ Electrical Contractors Association, the International Council
891
+ of Employers of Bricklayers and Allied Crafts, the Finishing
892
+ Contractors Association, the Association of Union Constructors.
893
+ Of these groups, according to the Bureau of Labor
894
+ Statistics figures, our group of specialty construction
895
+ employers represents the vast majority of industry employment
896
+ in our industry and well over 64 percent. In addition, many of
897
+ our groups participate in two wider coalitions: the
898
+ Construction Organizations for a Sensible Taxation, the
899
+ Government Withholding Relief Coalition, both of which are
900
+ adamantly opposed to the three percent withholding provisions
901
+ of the Tax Reconciliation Act.
902
+ Now, what distinguishes our campaign for quality
903
+ construction specialty groups is that we employ highly skilled
904
+ technicians for field construction under local, multi-employer
905
+ collective bargaining agreements with local building trades
906
+ unions. Our bargaining agreements come with high value wages,
907
+ health and welfare, and pension trust fund obligations for our
908
+ employees that require ready cash flow and prompt and reliable
909
+ payments.
910
+ Moreover, the discipline of operating under collective
911
+ bargaining agreements prevents misclassification of the workers
912
+ as independent contractors rather than employees. As we all
913
+ know, in the construction industry, misclassification is an
914
+ area of high abuse and tax avoidance.
915
+ Now, we realize that there is a problem here that needs
916
+ fixing, but at the same time, we feel the three percent
917
+ withholding slated for public contract payments is a bad idea
918
+ and is entirely contrary to the small and minority business
919
+ development goals of your Committee. This Committee is about
920
+ helping, not hindering.
921
+ So we ask that you support the repeal bill H.R. 1023 co-
922
+ sponsored by Ways and Means Committee members, Representatives
923
+ Herger and me.
924
+ We also ask that the repeal is done quickly to avoid any
925
+ further efforts taken to accelerate the effective date of the
926
+ measure for misjudged budget gains and offsets.
927
+ Put plainly, fiscal enforcement policy and sound
928
+ procurement policies do not and should not be mixed. To be
929
+ sure, small and minority owned business enterprises, as well as
930
+ all other responsible firms should not have to compete against
931
+ firms that have the unfair competitive advantage of undetected
932
+ tax avoidance. Burdening tax compliant firms with added
933
+ withholding to encourage tax payments by those otherwise
934
+ inclined to cheat we feel is just not fair.
935
+ And I will tell you our campaign for quality construction
936
+ is squarely in favor of closing the tax gap. The taxpayers,
937
+ public agencies, and our industry benefit by fair and robust
938
+ competition among quality firms that are responsible in all
939
+ aspects of their businesses. So if stopping tax avoidance by
940
+ public agencies, goods and services providers is the target,
941
+ then there are more specific tools to achieve that goal, such
942
+ as the contract eligibility process can be tightened up so that
943
+ successful bidders or offerors are not awarded contracts unless
944
+ they demonstrate, prove and certify tax compliance. In this way
945
+ any competitive advantage of tax cheaters id eliminated. The
946
+ agency gets quality work by qualified firms, and the added
947
+ financing and administrative costs of the three percent
948
+ withholding is avoided.
949
+ The U.S. Congress has passed two prompt payment laws
950
+ recognizing that prompt and fair payment terms are the best way
951
+ to administer public contracts and to avoid all the extra costs
952
+ and delays that result from less sufficient contract
953
+ administrated practices. It really does matter how well firms
954
+ are paid and how fairly contracts are administered. Time and
955
+ again, it proves out that the best projects are the ones that
956
+ are the most competently administered. And all of that matters
957
+ even more for small and minority business enterprises whose
958
+ margins are thinner and cannot carry the cost of public
959
+ contract misadministration the way larger firms can.
960
+ And I should point out what makes this issue even more
961
+ problematic is the outdated and unfair practice of withholding
962
+ five to ten percent retainage from the monthly invoice of
963
+ public and private construction contracts without any regard to
964
+ performance, as my colleagues have stated.
965
+ As a second tier or lower contractor, which many of my
966
+ group are, the wait for delays of invoice processing and
967
+ payment for only 90 percent of what you put out the previous
968
+ month can be very difficult for small, small disadvantaged, and
969
+ small minority businesses.
970
+ Now, on top of that, the Tax Reconciliation Act would add
971
+ an additional three percent deduction even though we have
972
+ always paid our taxes on time and our performances have been
973
+ entirely up to par.
974
+ Members of the Committee, it is a fact that construction
975
+ projects are very complex and risky business propositions.
976
+ Profit margins are thin. Risks are high, and the competition is
977
+ very competitive, and the industry, even with this complexity,
978
+ is relatively easy to enter, which makes it an ideal market for
979
+ small business.
980
+ So the question becomes: who pays for the cost of this
981
+ added three percent? Is it the taxpayer? Is it the small or
982
+ minority owned business that has to close up shop because it
983
+ can't afford the three percent delay in payment?
984
+ Ultimately, as taxpayers, we all pay. We will pay with
985
+ higher bids to cover increased financing costs, and we will pay
986
+ with diminished competition within our industry, and the worst
987
+ part is that all of this is completely unnecessary.
988
+ Let me be perfectly clear. I am opposed to companies
989
+ receiving contracts when they don't pay their taxes. However,
990
+ the government already has the information it needs to address
991
+ this problem without putting the burden on small businesses and
992
+ driving some small businesses out of business.
993
+ When I registered in CCR like every other federal
994
+ contractor, the government validated my taxpayer identification
995
+ number with the IRS. This means that the government had all of
996
+ the information it needed for debt collection and could check
997
+ at that time to see if I had any outstanding tax liabilities.
998
+ When I renew my CCR registry each year, which I'm inclined
999
+ to do, the government could again determine whether or not I
1000
+ had outstanding tax liabilities. I also must supply
1001
+ representations and certifications whenever I submit a proposal
1002
+ that includes a statement that I haven't been convicted of tax
1003
+ evasion. At that time I would be happy to certify that I am
1004
+ current with my taxes. If done, it would insure that tax
1005
+ evaders were caught or risk suspension and debarment of false
1006
+ claims at penalties.
1007
+ Finally, CCR already shares information with agency payment
1008
+ systems. If someone does get a contract--excuse me. I am trying
1009
+ to roll it--and owes tax liability, the government should be
1010
+ able to withdraw the funds at that time. It is my understanding
1011
+ that some agencies already do so. The important thing to
1012
+ remember here is that the government can do all of these things
1013
+ without it costing law abiding small businesses a single penny.
1014
+ Member of the Committee, I ask that you help small
1015
+ businesses. I ask that you help minority businesses by
1016
+ supporting the repeal bill H.R. 1023.
1017
+ Thank you, and I am sorry it took a little longer.
1018
+ [The prepared statement of Mr. Coleman may be found in the
1019
+ Appendix on page 61.]
1020
+ Mr. Shuler. Mr. Coleman recognized when there was a rookie
1021
+ in the chair.
1022
+ Mr. Coleman. Absolutely, a rookie at the table. [Laughter.]
1023
+ Mr. Shuler. Well, I want to thank the entire panel for
1024
+ their testimony today. I, too, can relate to so many of you
1025
+ having a small business myself, being in the construction
1026
+ industry, being the health care industry. I, too, can relate to
1027
+ the added burden that so often is place upon our small
1028
+ businesses.
1029
+ And at this time we will move to questions from the
1030
+ Committee, and I would like to start off by asking Mr. Kahn a
1031
+ question concerning the health care industry. Can you talk more
1032
+ about the impact that this rule will have on small health care
1033
+ providers, especially in the rural areas which I come from?
1034
+ We have one major hospital and 15 small hospitals, and most
1035
+ of which are community managed hospitals. Through the paper
1036
+ work and administrative resources to handle the extensive paper
1037
+ work, can you tell me, you know, more of the problem and truly
1038
+ expand on what your testimony has already given us today?
1039
+ Mr. Kahn. I think if we look at all of the array of
1040
+ providers, particularly in the rural areas, whether it's the
1041
+ physicians that generally have small group practices, whether
1042
+ it's the suppliers, the durable medical equipment, whether it's
1043
+ the small hospitals in the rural areas, many of whom are for
1044
+ profit, half of my members have rural hospitals across the
1045
+ country. We know that the Medicare payments are already sort of
1046
+ very close to the margin so that these payments, if you deduct
1047
+ three percent is really like a three percent cut on a payment
1048
+ that already hardly meets your cost. That's the first issue.
1049
+ The second issue is just the complexity. The number of
1050
+ claims particularly for smaller providers who may be seeing a
1051
+ lot of patients and have a lot of small claims means that
1052
+ there's a lot of paper work that could be added because of
1053
+ this, and the question of whether or not the agency can even
1054
+ handle the administration of this three percent in a fair way,
1055
+ considering the way that claims are frequently refiled and re-
1056
+ adjudicated and payments are made and then payments sort of go
1057
+ back and forth between the providers and the CMS, the agency
1058
+ that administers this program, is mind boggling.
1059
+ So I guess the first question here is did those who wrote
1060
+ this particular law even understand the implications for
1061
+ Medicare and for the Medicare beneficiaries, as well as those
1062
+ providing services, and did they--and I do not think they did--
1063
+ even talk to the agency that would have had to administer this
1064
+ program?
1065
+ So one of the reasons that we are so fervent in our support
1066
+ for repeal is that we're not sure this is the kind of law that
1067
+ can even be administered fairly. In the contracting area, my
1068
+ fellow witnesses brought up all kinds of issues that arise, but
1069
+ here there's a basic contract, but this is a fee for service
1070
+ environment. It's an environment in which a provider is
1071
+ providing a service and then expects to be paid, and it's even
1072
+ different than the contracting environment where you can
1073
+ anticipate some of the effects, albeit the problems it raises.
1074
+ Mr. Shuler. Thank you.
1075
+ Mr. Whitman, I was wondering if you know of anything
1076
+ preventing the IRS from determining what amount has been paid
1077
+ to the government contractors or which businesses are receiving
1078
+ these Medicare or AG and contracting payments.
1079
+ Mr. Whitman. Is anything preventing the IRS?
1080
+ Mr. Shuler. Yes.
1081
+ Mr. Whitman. Well, currently there is no reporting is my
1082
+ understanding. There is no reporting that these payments made
1083
+ by the federal government or by the state governments. Some of
1084
+ my members have told me that when they're dealing with counties
1085
+ that some counties do provide a 1099; some don't. Some just
1086
+ decide to err on the side of safety and provide this, but there
1087
+ is no reason that governments couldn't simply report these
1088
+ payments that are being made. Therefore, the IRS could
1089
+ determine whether the income is reported, and that's the
1090
+ complaint. Is the income reported?
1091
+ Mr. Shuler. If you could give just one outside of just
1092
+ repealing the rule altogether, you know, that I can go back to
1093
+ my district and when I talk to my hospitals or my contractors
1094
+ or the people, this could be open for any of the members on the
1095
+ panel. If there was one thing that I could say because most of
1096
+ it is not being able to understand the rules, first of all,
1097
+ from so many of our people that say this is an added tax on and
1098
+ continuation of taxes and taxes and taxes pushed down; is there
1099
+ one thing that could help me when I am talking to my small
1100
+ businesses and groups, whether it be a trucking industry or
1101
+ whether it be a construction industry, that can also help us be
1102
+ more clear about how this tax is implemented and the reason and
1103
+ the major impacts that it causes in your small businesses?
1104
+ Mr. Whitman. I am sorry. To explain it more thoroughly?
1105
+ Mr. Shuler. Yes, yes, absolutely.
1106
+ Mr. Whitman. Well, I do not really look upon it as a tax. I
1107
+ look upon it as a penalty for doing business with the
1108
+ government, so to speak, that you lose your cash flow. It is
1109
+ considered to be a prepayment of tax because it is being
1110
+ withheld for federal tax payment.
1111
+ But we already have systems for doing it now. We have the
1112
+ estimated tax system where corporations estimate their tax
1113
+ liability possibly on a quarterly basis, go back and revisit,
1114
+ and make quarterly tax payments. This is just something on top
1115
+ of that that's unnecessary.
1116
+ Mr. Shuler. Right. Thank you.
1117
+ I yield back.
1118
+ Chairwoman Velazquez. [presiding] I now recognize the
1119
+ Ranking Member, Mr. Chabot.
1120
+ Mr. Chabot. Thank you very much, Madam Chair.
1121
+ I'll begin asking Mr. Coleman, if I can.
1122
+ You had requested the consideration of co-sponsoring H.R.
1123
+ 1023, which would do away with this completely and as a result
1124
+ of your request and having studied this pretty closely, it is
1125
+ our intention to do that. So thank you for bringing that up.
1126
+ Secondly, you referred in your testimony to the fact that
1127
+ the construction industry is really keenly competitive and that
1128
+ construction projects are extremely complex. Again, how would
1129
+ the three percent withholding affect your ability to, for
1130
+ example, submit competitive bids?
1131
+ Mr. Coleman. What happens in our industry, Congressman, as
1132
+ Mr. Iannelli probably on the panel has stated earlier, we are
1133
+ already dealing with a ten percent retention, which is deducted
1134
+ from our monthly invoices on an ongoing basis, and we find that
1135
+ in the construction industry retentions are just commonplace,
1136
+ and to put on top of the ten percent a three percent retention,
1137
+ what it does is it creates a situation that we are taking three
1138
+ percent out of our pocket to fund this, and so that puts an
1139
+ added burden on construction companies.
1140
+ Now, we are already in a fight over this ten percent
1141
+ retention. We would like to see that eliminated because it was
1142
+ originally intended to make sure that the workers in the work
1143
+ place were being paid. Now there is all other types of
1144
+ protection against that. You have performance bonds. You have
1145
+ labor material and payment bonds that cover that cost.
1146
+ So you are taking ten percent, which our margins are tight
1147
+ already. So if a contractor is bidding a project and he has ten
1148
+ percent in there for fees, so what you are doing is you are
1149
+ trading dollars until you get to the very end of a project
1150
+ where you can realize the ten percent.
1151
+ But on top of that you take three percent. So I as a
1152
+ contractor have to go in my pocket and say, ``Okay, Mr. Federal
1153
+ Government. I will let you hold my three percent until some
1154
+ time in the future when you are assured that the taxes have
1155
+ been paid and everything is in compliance. Then you will
1156
+ release my money.''
1157
+ That puts an added burden on the contractor, large and
1158
+ small. It is a burden that we have to deal with, and generally
1159
+ we are financing retentions anyway. So we have to go out and
1160
+ find additional financing. If we cannot find the additional
1161
+ financing to be able to cover the cost of the additional three
1162
+ percent, you will see many businesses go by the wayside, and I
1163
+ do not think that is what the Small Business Committee is
1164
+ about.
1165
+ I think you guys are here to help, not hinder.
1166
+ Mr. Chabot. Thank you very much.
1167
+ Mr. Kahn, let me go to you next. One of the chief
1168
+ complaints that we hear from physicians and hospitals is the
1169
+ red tape and the reporting requirements and record keeping, and
1170
+ you have already touched on this to some extent already. This
1171
+ three percent withholding provision would be yet another layer
1172
+ of complexity, and I think perhaps a threat to physicians
1173
+ participating in Medicare, which is already a problem because
1174
+ of the reimbursements, etcetera.
1175
+ Could you comment on that very briefly?
1176
+ Mr. Kahn. Yes. Well, if we look at the physicians, and
1177
+ basically all physicians are for profit except a few that may
1178
+ work in universities, and so they would have three percent more
1179
+ withdrawn from their fees, and unless Congress acts, and I
1180
+ assume Congress will, but if it does not, there is a ten
1181
+ percent real reduction in fees coming January 1 of next year
1182
+ for physicians.
1183
+ So this causes a real problem for physician fees that were
1184
+ already low. It is a bookkeeping issue because Medicare claims
1185
+ are not simply a claim and then a payment is made. There are
1186
+ frequently, as I said, all kinds of contentions about the
1187
+ claims. So getting back your three percent when you file your
1188
+ taxes and the bookkeeping on that is going to be extremely
1189
+ complicated.
1190
+ Finally, Medicare knows physicians, the suppliers, the
1191
+ hospitals that they do business with. I mean, there are
1192
+ Medicare numbers each of these people have to have. There are
1193
+ papers constantly being filed with Medicare. So if IRS can
1194
+ narrow down these individuals, which they ultimately have to
1195
+ do, the bad actors, the GAO report shows they can be found. All
1196
+ you have got to do is have communication between IRS and
1197
+ Medicare, and Medicare can locate the bad actors and action can
1198
+ be taken on the bills that they have filed, and those claims
1199
+ can be held by Medicare, you know, until adjudication.
1200
+ So this issue of affecting everybody will have
1201
+ administrative effects. It will have cash flow effects, and it
1202
+ is a big problem. And, frankly, on the hospital side, 35 to 40
1203
+ percent of your business is Medicare. You can't walk away from
1204
+ Medicare.
1205
+ On the physician side, many communities, depending on the
1206
+ practice, many physicians today look at Medicare and say, ``Can
1207
+ I really afford to provide services to Medicare
1208
+ beneficiaries?'' And this adds sort of another piece to that.
1209
+ And when it goes into effect in a few years, if the program
1210
+ continues on the path that it is, it could cause real access
1211
+ problems for Medicare beneficiaries because more physicians
1212
+ could say, ``Gee, I am just not going to put up with the
1213
+ hassle. I cannot afford the cash flow issues or the paper work
1214
+ issues.''
1215
+ Mr. Chabot. Thank you very much.
1216
+ Madam Chair, if I have time for one more question, I'll
1217
+ just put it to the other three witnesses, if you could all
1218
+ comment on this briefly.
1219
+ Part of the SBA mission, as we all know, is to help small
1220
+ businesses to receive a fair share of government contracts, and
1221
+ it is not easy oftentimes for small businesses, given the
1222
+ challenges in contracting with the federal government. Do you
1223
+ think that small business is likely to increase or even retain
1224
+ its percentage of government contracts given this new, complex
1225
+ constraint, and is it possible that small businesses could even
1226
+ lose some of its current share if this is enacted?
1227
+ I will start with you, Mr. Whitman and Mr. Deel and Mr.
1228
+ Iannelli.
1229
+ Mr. Whitman. Yes, my members tell me this. The situation is
1230
+ that by taking out the three percent, especially for the
1231
+ smaller businesses that you mention poses a huge problem with
1232
+ the cash flow situation for these companies, and so they're
1233
+ going to have to take a hard look at whether they can do
1234
+ business with the government with all of the other hoops that
1235
+ they have to jump through.
1236
+ So a few people have told me, and we have discussed this in
1237
+ our small business committee, that they definitely would shy
1238
+ away from doing business with this provision.
1239
+ Mr. Chabot. Thank you very much.
1240
+ Mr. Deel.
1241
+ Mr. Deel. My companies compete in the motor carrier
1242
+ industry, and one of my largest competitors in the segment that
1243
+ we serve, which is the Department of Defense is a large,
1244
+ publicly traded company, very well capitalized with a lot of
1245
+ capacity, thousands of trucks compared to my company of a few
1246
+ hundred trucks.
1247
+ They can withstand this three percent more easily than my
1248
+ company can, and so I would have a difficult time raising rates
1249
+ if they do not raise rates as well because of this, and so I
1250
+ would lose competition because we compete. Price is very
1251
+ important. The lowest price carrier get the bid from the
1252
+ government, and so I would either have to operate at a lower
1253
+ margin or lower cash flow or exit the market. It would probably
1254
+ be difficult to raise rates if our larger competitors do not
1255
+ because they can withstand the cash flow impact of this.
1256
+ And I have a lot of competitors that are small like me as
1257
+ well, who will have the same problem. So, yes, I think the
1258
+ answer is probably fewer motor carriers vying for the
1259
+ government business.
1260
+ Mr. Chabot. Thank you.
1261
+ Mr. Iannelli.
1262
+ Chairwoman Velazquez. Would the gentleman yield for a
1263
+ moment?
1264
+ Mr. Chabot. Yes.
1265
+ Chairwoman Velazquez. Mr. Deel, you know, this three
1266
+ percent withholding applies to prime contractors. So do you
1267
+ think that a prime contractor will withhold if they are doing
1268
+ business with a subcontractor? It will push down to the
1269
+ subcontractor?
1270
+ Mr. Deel. I think that is certainly possible, and even in
1271
+ my company I use subcontractors, independent owner-operators
1272
+ that work for my company, and I would be faced with the
1273
+ decision: do I carry that three percent burden or do I pass it
1274
+ on down to that real small business person?
1275
+ That would be the decision that would have to be made, but
1276
+ likely I think it is going to go downhill to the lowest common
1277
+ denominator.
1278
+ Mr. Chabot. Thank you. I will reclaim my time.
1279
+ Mr. Iannelli.
1280
+ Mr. Iannelli. I would love to pass along a three percent on
1281
+ my future bids, but I know that is never going to happen
1282
+ because the contracting climate in New York City, there is
1283
+ always somebody out there who is going to come along and
1284
+ basically work for less than that.
1285
+ I think I might move to Ohio though.
1286
+ [Laughter.]
1287
+ Mr. Iannelli. Working on ten percent, and I think I would
1288
+ love to do it. So give me your address and I will be there
1289
+ tomorrow.
1290
+ [Laughter.]
1291
+ Mr. Iannelli. Here I come.
1292
+ As far as passing the costs down to the subcontractor, and
1293
+ you also know, too, it could never happen because there's no
1294
+ legitimate reason for me to tell my subcontractors I am
1295
+ withholding three percent of your money because they are
1296
+ worried I am not paying my taxes. It is not going to work.
1297
+ So it is just a bad situation that I think should not be in
1298
+ place.
1299
+ Mr. Chabot. Thank you very much.
1300
+ Madam Chair, this has really been an excellent panel. So
1301
+ thank you.
1302
+ Chairwoman Velazquez. Thank you.
1303
+ Mr. Ellsworth.
1304
+ Mr. Ellsworth. Madam Chairwoman, thank you for calling this
1305
+ hearing. I cannot think of anything that we do in the federal
1306
+ government, anything that needed a light shown on it, it is
1307
+ this subject, and I appreciate that.
1308
+ Mr. Deel, do you pay your taxes on time, your federal taxes
1309
+ on time?
1310
+ Mr. Deel. Yes, I do.
1311
+ Mr. Ellsworth. Mr. Coleman, do you pay your federal taxes
1312
+ on time?
1313
+ Mr. Coleman. Yes.
1314
+ Mr. Ellsworth. Have either of you--sorry.
1315
+ [Cell phone interruption.]
1316
+ Mr. Ellsworth. I pay mine on time, too.
1317
+ [Laughter.]
1318
+ Mr. Ellsworth. Totally forgot my line of questioning.
1319
+ Have either of you ever changed the name of your company,
1320
+ opened a new company and applied for a new TIN in order to
1321
+ secure a new federal contract or avoid because you had not paid
1322
+ one, know you cannot get a contract under your old TIN and so
1323
+ you open a new company or change it in order to get a federal
1324
+ contract?
1325
+ Mr. Deel. No, sir.
1326
+ Mr. Coleman. No, sir.
1327
+ Mr. Ellsworth. Have you ever heard of that or know of that
1328
+ to occur, that somebody opens a new company, changes the name,
1329
+ applies for a new TIN? I think Mr. Coleman alluded to this,
1330
+ that it occurs.
1331
+ Does that occur?
1332
+ Mr. Coleman. Yes, it does.
1333
+ Mr. Deel. Yes, sir.
1334
+ Mr. Ellsworth. Would one or both of you touch on what that
1335
+ is like, how that puts you at a disadvantage? Law abiding, tax
1336
+ paying companies to compete against a person or a company that
1337
+ does that and how that puts you at a disadvantage on a federal
1338
+ contract.
1339
+ Mr. Coleman. Well, one of the things that it does when it
1340
+ happens, it basically takes work away from you. You will find
1341
+ instances where a contractor will do something like that, and I
1342
+ know an example where it has happened, where you feel that, you
1343
+ know, you have put together a very responsible organization.
1344
+ You are paying your taxes. You are employing people. You are
1345
+ paying good wages, and to have a contractor come by to try and
1346
+ beat the system like that, all of the good things that you have
1347
+ done, you know, trying to build and participate and be a part
1348
+ of the American dream, to just go fall off the table, so to
1349
+ speak.
1350
+ And one of the things that in our organization and our
1351
+ campaign for quality construction that we are trying to do is
1352
+ lobby Congress to tighten up the contractor responsibility
1353
+ laws, and if we could get something like that, we could
1354
+ eliminate this problem. Then you can have capable, qualified,
1355
+ good contractors performing the services to our government, and
1356
+ that is what it should be about.
1357
+ We do not need the competition. We do not mind competition,
1358
+ but let the competition play on the same field. Let the playing
1359
+ field be level, so to speak, and that we are all competing
1360
+ under the same guidelines, the same rules, and we are okay with
1361
+ that.
1362
+ I do not mind losing the contract to Mr. Iannelli when he
1363
+ is out doing the same thing, paying his taxes, you know, doing
1364
+ the same things that I am doing as an organization. What we do
1365
+ mind is when you allow someone to not play by the rules, beat
1366
+ the system and drive legitimate taxpaying contractors out of
1367
+ business.
1368
+ Mr. Deel. I agree with all of those comments. It is
1369
+ certainly troubling to know that businesses or individuals
1370
+ avoiding the tax that they would otherwise owe by changing
1371
+ their corporate name or their federal ID number. Those same
1372
+ kind of individuals are not just avoiding federal taxes. They
1373
+ are also maybe not paying their contractors or suppliers, and
1374
+ the list goes on.
1375
+ Those kinds of people that are unscrupulous are just
1376
+ disheartening for us that are quality business people. We pay
1377
+ our taxes and we vie for the business and would like to see it
1378
+ on a fair, competitive playing field.
1379
+ Mr. Ellsworth. Certainly they know that if they are not
1380
+ going to pay their taxes, they can bid that at a lower rate.
1381
+ Mr. Deel. Absolutely.
1382
+ Mr. Ellsworth. Well, again, Chairwoman, I appreciate this.
1383
+ This goes right to the heart, and, Mr. Coleman, you could add
1384
+ me to co-sponsors on the bill you have mentioned. This goes
1385
+ right to the heart of what the people in Indiana and, I am
1386
+ sure, across the country drives them crazy. They do not mind
1387
+ paying taxes. They mind getting ripped off. You are being
1388
+ ripped off, and I will do my part.
1389
+ Thank you very much.
1390
+ Chairwoman Velazquez. Thank you.
1391
+ And now I will recognize Ms. Musgrave from Colorado.
1392
+ Ms. Musgrave. Thank you, Madam Chairman.
1393
+ And I would like to compliment you on the fact that you are
1394
+ holding hearings that really get to the heart of what is
1395
+ affecting small businesses, and I really applaud you for your
1396
+ efforts.
1397
+ You know, when we are talking about this mandatory three
1398
+ percent withholding, it just really illustrates what happens
1399
+ when you have something done in a conference where there has
1400
+ not been open debate and then later everybody raises their hand
1401
+ and says, ``Wait a minute. You know, this is really going to
1402
+ hit small businesses hard.''
1403
+ And we are seeing that today, and I certainly will be a co-
1404
+ sponsor of the repeal. You know, Mr. Chabot spoke with you, Mr.
1405
+ Kahn, about Medicare providers, the impact on physicians with
1406
+ paper work, and you know, I am very concerned as the elderly
1407
+ population increases that we need docs who are going to accept
1408
+ Medicare patients, and here is one more thing now to put on top
1409
+ of it that is going to be a disincentive for them, and that
1410
+ concerns me greatly.
1411
+ Could someone elaborate for me on the federal payment levy
1412
+ program and see how this differs from this mandatory three
1413
+ percent withholding?
1414
+ Mr. Kahn. Well, in the levy program, they identify the bad
1415
+ players and in a sense go after them and their payments. It is
1416
+ a very direct one-two, and at least in terms of our experience
1417
+ in sort of observing that, we deal with the Department of
1418
+ Health and Human Services, and they have been very reticent to
1419
+ get into it, and we think that either the Congress needs to
1420
+ tell or the administration needs to decide that the HHS is
1421
+ going to play because clearly in terms of provider numbers and
1422
+ other information, Medicare has the information to locate
1423
+ providers and physicians who are not paying their taxes if the
1424
+ IRS has the information.
1425
+ So you cannot change a provider number very simply. It is
1426
+ even more difficult than in the other areas that have been
1427
+ discussed. So we think it is a question of the government
1428
+ getting its act together and CMS, the agency that oversees
1429
+ Medicare being told to do it.
1430
+ Ms. Musgrave. Thank you for that response.
1431
+ You know, as I looked at the big picture on this, can any
1432
+ of you address how this will affect your ability to reinvest in
1433
+ your business, grow your business and create jobs if this is
1434
+ not repealed?
1435
+ Mr. Deel. Well, I will start with my particular companies.
1436
+ We do a lot for the U.S. government, and that three percent
1437
+ would amount to for us about a million dollars a year, and that
1438
+ is one million dollars less that I would have available to buy
1439
+ tractors or trailers or grow my business, and that's a million
1440
+ dollars of working capital that I wouldn't otherwise have
1441
+ available to me.
1442
+ So, yes, that is a huge amount of money for my particular
1443
+ group of companies.
1444
+ Ms. Musgrave. Very dramatic.
1445
+ Mr. Deel. Yes.
1446
+ Ms. Musgrave. Does anyone else want to respond to that?
1447
+ Mr. Coleman. I would. In my company, in the construction
1448
+ industry three percent could be ten jobs, and we should be at
1449
+ the point of developing jobs and work for our society.
1450
+ It also takes away cash flow, and in our business we need
1451
+ cash flow. We are already dealing, as I said before, with a ten
1452
+ percent retention which takes away cash flow. So we struggle
1453
+ with cash flow, and for those businesses that cannot go to a
1454
+ bank or cannot go to some type of financial organization to get
1455
+ that finance, they are going to struggle.
1456
+ They will not be able to grow their businesses. Three
1457
+ percent to some major corporations may not sound like a lot of
1458
+ money, but to a small, emerging business, it is a lot of money,
1459
+ and in my organization ten jobs is a lot of jobs. So it is
1460
+ going to have a dire effect on cash flow in our organization.
1461
+ Mr. Kahn. You know, I would like to add that if I
1462
+ understand the GAO reports, a good bit of the problem is with
1463
+ payroll taxes. So, one, this does not go to the heart of
1464
+ payroll taxes, and frankly, in the hospital business, as I
1465
+ said, we are around 20 percent of hospitals. We are competing
1466
+ with tax exempt hospitals that do not pay income taxes. So they
1467
+ will get their full Medicare payment and we will not when the
1468
+ issue is an issue primarily of payroll taxes.
1469
+ And anybody who is not paying their payroll taxes is not
1470
+ just cheating the government. They are cheating their employees
1471
+ and probably should be hung, particularly if they go out and
1472
+ spend the money on luxury items and things, which is what the
1473
+ GAO report concluded.
1474
+ So I think we need to find solutions to this problem, and I
1475
+ understand in the GAO report that they just came out with the
1476
+ other day that five percent of physicians and suppliers being
1477
+ paid by Part B of Medicare have some kind of problem here, and
1478
+ that is a big number. It is shocking.
1479
+ But they should be dealt with. They can be identified, and
1480
+ taking money away from everyone will put everyone at a
1481
+ disadvantage.
1482
+ Ms. Musgrave. Thank you, and I yield back, Madam Chairman.
1483
+ Chairwoman Velazquez. Thank you.
1484
+ And now I recognize the gentleman from Pennsylvania, Mr.
1485
+ Altmire.
1486
+ Mr. Altmire. Thank you, Madam Chair.
1487
+ And I want to thank the panel for being here today and for
1488
+ full disclosure, say that I used to work at the Federation of
1489
+ American Hospitals before Mr. Kahn was there, but I am glad to
1490
+ see you here today as well.
1491
+ My first question is for Mr. Deel, and I just wanted to ask
1492
+ for my own benefit if you could give me an example of how
1493
+ withholding three percent of payment is different from
1494
+ withholding three percent of taxable income from your business
1495
+ perspective.
1496
+ Mr. Deel. Well, three percent of the top line, my revenues,
1497
+ three percent of the gross revenue is entirely different than
1498
+ three percent of the net. In our industry, take just five
1499
+ percent is the pre-tax number of the top line. So if the
1500
+ company has a million dollars a year of gross revenues that the
1501
+ three percent would come out of, that would be $30,000. If that
1502
+ company only makes five percent of that million, that is
1503
+ $50,000 of taxable income and times the tax rate, you can see
1504
+ there that taking a three percent of the gross top line has no
1505
+ correlation to what your bottom line may be. It is just a wrong
1506
+ way of trying to get at the taxes that are not being paid by
1507
+ companies.
1508
+ Mr. Altmire. And if we repeal the requirement to withhold
1509
+ the three percent, how will we be able to offset the cost to
1510
+ the tax breaks from the original legislation? What would you
1511
+ suggest?
1512
+ Mr. Deel. My recommendation would be do what Mr. Kahn has
1513
+ been talking about and additionally implement a 1099 reporting
1514
+ kind of mechanism for any government payments to any company,
1515
+ whether they're large business, small business, sole
1516
+ proprietary; that there is a mechanism to report to the
1517
+ Internal Revenue Service. This is a tried and true method of
1518
+ 1099 reporting.
1519
+ They would know what your federal ID number is. A company
1520
+ would have to sign a W-9 form certifying what your tax
1521
+ withholding number is your federal ID number, and at least the
1522
+ IRS would have the ability to follow and see is this company
1523
+ either filing a tax return, and if they are, are they reporting
1524
+ their revenues correctly?
1525
+ I think the combination of following up and withholding
1526
+ money from companies that do not pay their taxes that the IRS
1527
+ knows about is great, and I think additionally there needs to
1528
+ be reporting similar to when you receive an interest statement
1529
+ from your bank, a 1099. The IRS checks to make sure you put
1530
+ that on your tax return.
1531
+ That would be one relatively simple way of doing it, and it
1532
+ would only be a burden to the government agency once a year.
1533
+ They have to keep track of it during the year, but it is just
1534
+ one piece of paper that has to get sent out, one to the
1535
+ business owner and one to the Treasury department.
1536
+ Mr. Altmire. Okay, and for Mr. Iannelli and Mr. Coleman,
1537
+ you both talked about some of the bonds that are required in
1538
+ your industry to perform certain types of work, and it seems
1539
+ that surety bonding would require that they look at your books
1540
+ to make sure that you are financially solvent.
1541
+ Can you each discuss with the committee the type of records
1542
+ that you think they will look at in determining your
1543
+ eligibility for those bonds?
1544
+ Mr. Coleman. Well, number one is the financial statement.
1545
+ They're going to look at the financial statement. They're going
1546
+ to require audited financial statements. When you reach a
1547
+ certain level of bonds, they're going to require an audited
1548
+ statement and you're going to go through a full blown audit to
1549
+ make sure that you are capable of being able to perform at
1550
+ whatever level that you're performing at. That's number one,
1551
+ first and foremost, with those organizations.
1552
+ And if you don't meet their requirements, chances are you
1553
+ are not going to get a performance bond, and without
1554
+ performance bonds, you don't compete in the public environment,
1555
+ and not only public environment from a federal standpoint, but
1556
+ you're not going to compete with the local and state
1557
+ municipalities as well.
1558
+ Mr. Iannelli. The bonding community in New York City has
1559
+ dried up considerably. So there are not a lot of places where
1560
+ your contractor can go for bonds, and they have regulations and
1561
+ requirements that are about, you know, they basically want to
1562
+ come over to your house and see how you live.
1563
+ And my bonding company every year, the financial statement,
1564
+ wants to check my tax returns and make sure the bottom line or
1565
+ whatever I said that I grossed on my tax returns is what I'm
1566
+ saying is the bottom line on my financial statement. So they
1567
+ check. There are checks and double checks and triple checks. So
1568
+ there is no way out of it, no way I could not pay my taxes.
1569
+ Mr. Altmire. Great. Thank you.
1570
+ I yield back my time.
1571
+ Chairwoman Velazquez. Mr. Jordan from Ohio, you are
1572
+ recognized.
1573
+ Mr. Jordan. Thank you very much.
1574
+ That is a rookie for you right there.
1575
+ [Laughter.]
1576
+ Mr. Jordan. But I do appreciate the panel, and Mr. Deel's
1577
+ testimony as well. You know, there is nothing like mathematics
1578
+ to show what is going on. Sometimes politicians are not too
1579
+ good in that subject, but it is good to have that in front of
1580
+ us. So I appreciate what you are doing.
1581
+ This is just, in my judgment, one more example of
1582
+ government saying we are smarter than the business owner. We
1583
+ are smarter than the family out there. We want to use your
1584
+ money for the year instead of letting you use it and invest it
1585
+ in jobs and business and in our community.
1586
+ So I think it is a good piece of legislation that we should
1587
+ pass, and I appreciate the panel's testimony today, and I yield
1588
+ back.
1589
+ Chairwoman Velazquez. Thank you.
1590
+ Mr. Whitman, it seems that the three percent withholding
1591
+ could have a particularly harsh impact on the tech industry
1592
+ where start-up costs are high and financing is critical. Do you
1593
+ believe that this change could have a negative effect on
1594
+ innovation in technologies because of the unique financing
1595
+ challenges facing your industry?
1596
+ Mr. Whitman. Well, when we were talking about research and
1597
+ development, typically research and development is done by
1598
+ larger organizations. Our members are typically smaller tech
1599
+ companies that are the providers of services. So I would not
1600
+ really speak to whether or not this three percent would affect
1601
+ innovation.
1602
+ Chairwoman Velazquez. Mr. Deel and Mr. Coleman and Mr.
1603
+ Iannelli, maybe the three of you can address my question.
1604
+ As the tax code has become more complex, so have the
1605
+ organizational set- ups of small businesses. The structure of a
1606
+ company can be based on a number of factors, including estate
1607
+ planning, liability concerns, and partnership sharing. Do you
1608
+ think this three percent withholding could be particularly
1609
+ burdensome for certain types of organizations, whether that be
1610
+ an S corporation, a partnership or some other structures?
1611
+ Mr. Deel. I had not thought earlier until one of the other
1612
+ testimonies about the complexities of an S corporation or a
1613
+ partnership. This money is going to be withheld and sent over
1614
+ to the Treasury Department, and they are going to have to match
1615
+ that against the federal ID number, but if the real taxpayer is
1616
+ a member of an S corporation or a partnership, be the one
1617
+ paying the tax on the income, how will that match up that they
1618
+ will be able to get credit on their 1040 tax return when they
1619
+ file it or the money that was paid in under the corporation's
1620
+ tax ID number or the partnership's ID number?
1621
+ That is going to be a nightmare I would just imagine.
1622
+ Chairwoman Velazquez. Yes. Any other witness who would like
1623
+ to answer?
1624
+ Mr. Kahn. Well, I think in the health care situation,
1625
+ particularly in group practices for physicians or in the
1626
+ hospital situation there may be subsidiaries that actually
1627
+ could create a similar kind of situation where some kind of
1628
+ holding entity is actually paying the taxes and you have got
1629
+ other entities that now are going to lose money on their
1630
+ Medicare payment, and the bookkeeping issues, assuming that you
1631
+ can even locate all of the dollars are going to be a big
1632
+ problem.
1633
+ Chairwoman Velazquez. Thank you.
1634
+ The federal government and I have been particularly on this
1635
+ issue for the many years that I have been serving in this
1636
+ committee making sure that small businesses have an opportunity
1637
+ to do business in the federal marketplace, and in fact, the
1638
+ contracting goal of the federal government has not been reached
1639
+ for several years now of 23 percent.
1640
+ I would like to hear from the witnesses on how they think
1641
+ this change will affect small business' abilities to get
1642
+ contracts over large competitors, and do you believe that the
1643
+ cash flow issue will limit the ability of small contractors to
1644
+ perform these contracts?
1645
+ Mr. Coleman.
1646
+ Mr. Coleman. I think it will limit the ability. We're
1647
+ talking cash flow in many cases, and any amount of cash flow is
1648
+ important to a small business. My biggest fear is this three
1649
+ percent will drive some of your small emerging businesses out
1650
+ of the marketplace, and I do not think that we really want to
1651
+ do that.
1652
+ In our group we feel that this three percent is just a bad
1653
+ idea, and there has got to be other ways to be able to reach
1654
+ the goal that you want to see accomplished and closing that tax
1655
+ gap and not penalize small emerging businesses in the process.
1656
+ I just think it is a bad idea.
1657
+ Chairwoman Velazquez. Could the government end up paying
1658
+ more for contracts because of this change?
1659
+ Mr. Coleman. They will pay more. They will pay more in
1660
+ increased costs because those that can finance it are going to
1661
+ try and pass that cost on to the federal government. You will
1662
+ pay more with reduced competition because if you drive
1663
+ businesses out of business, that means you're going to have
1664
+ less competition in the marketplace for the work that you're
1665
+ putting out there for bid or for offerors.
1666
+ Chairwoman Velazquez. Okay. Any other witness? Yes, Mr.
1667
+ Whitman.
1668
+ Mr. Whitman. Yes. And for those businesses that are in the
1669
+ smaller end of the spectrum, as they lose this operating
1670
+ capital because of the withholdings, they will have to go into
1671
+ the market to borrow, if in fact they can borrow, and this is
1672
+ another cost that they will have to pass on to the government.
1673
+ So, I mean, no matter how you cut it, it's going to be more
1674
+ expensive for the government, and it's going to be bad for
1675
+ small business.
1676
+ Mr. Deel. I can give a recent example how the motor carrier
1677
+ industry that serves the Department of Defense transportation
1678
+ needs. Several years ago they made the decision that the way
1679
+ they would pay the carriers is through a system called
1680
+ Powertrack. It's through U.S. Bank, and they withhold
1681
+ approximately two percent from your payment to receive the
1682
+ funds by electronic wire.
1683
+ Well, that two percent charge is a very expensive charge
1684
+ for the cash for that faster payment, and what the industry did
1685
+ was raise rates by approximately the two percent. That was the
1686
+ general reaction.
1687
+ So to answer your question about will the costs go up, it
1688
+ is likely that they will through reduced competition if some of
1689
+ the small business goes out and the bigger guys that are left
1690
+ say, ``Well, we can raise rates now.''
1691
+ And one further thing I'd like to say is that when I
1692
+ started my company ten years ago, had this been in place, it
1693
+ would have been very, very difficult for me to be where I am
1694
+ today. In those early years cash was very, very tight. Cash
1695
+ flow was I refer to ``cash is king.'' I could not have grown my
1696
+ company with this three percent and served the government
1697
+ market.
1698
+ Chairwoman Velazquez. Thank you.
1699
+ I will recognize the gentleman from Georgia, Mr.
1700
+ Westmoreland.
1701
+ Mr. Westmoreland. Thank you, Madam Chairwoman.
1702
+ And I want to say that I look forward to working with you
1703
+ and the rest of the Committee on repealing this crazy thing,
1704
+ and I also want to apologize to the people. I am embarrassed
1705
+ that this was passed during a Republican control of Congress,
1706
+ and I think this is an example of what happens when we
1707
+ hurriedly pass some of these big pieces of legislation, two and
1708
+ three and 400 pages of very technical stuff, and we have a very
1709
+ short time in which to look at it. Madam Chair, I think this is
1710
+ one of those things that got past all of us, and especially the
1711
+ people that are familiar with small business.
1712
+ So forgive us, and hopefully this year if we can right this
1713
+ wrong, I think it will be the highlight of my congressional
1714
+ career in a short three years just to right any wrong, but
1715
+ especially this one.
1716
+ [Laughter.]
1717
+ Mr. Westmoreland. Mr. Coleman, I am a small business guy,
1718
+ too, and I was in the construction business all my life, a Mom
1719
+ and Pop guy, and when I was in the state legislature I fought
1720
+ very hard to make sure that procurement of government contracts
1721
+ was available to all business, small, large, minority, whatever
1722
+ the case is. Everybody had an opportunity to do this, and you
1723
+ know, we passed--I say ``we,'' but I did not have any
1724
+ responsibility for this--but back in the late 1980s, we passed
1725
+ a tax called the AMT tax, the alternative minimum tax, and it
1726
+ was designed to get 150 millionaires who did not pay any taxes.
1727
+ This year I think it is going to affect 20 million people.
1728
+ So something that they did to catch 150 has developed into a
1729
+ bunch of us.
1730
+ In contract, I think it is the same thing. While their goal
1731
+ was good and what they wanted to do--well, I do not know that
1732
+ it was good in what they wanted to do, but it is not small
1733
+ business' job to enforce the tax codes. Now they are wanting us
1734
+ to enforce immigration laws, tax code. I mean, I do not know
1735
+ what else we are going to be responsible for.
1736
+ But in your testimony, and I read your testimony. I am
1737
+ sorry I was not here for you to give it, but in reading your
1738
+ testimony, you said it is anywhere from five to ten percent of
1739
+ your payment. In a small business cash flow kind of crunch,
1740
+ that is a lot, isn't it?
1741
+ Mr. Coleman. Exactly.
1742
+ Mr. Westmoreland. And I know from my experience in small
1743
+ business a lot of these large government contracts, I never got
1744
+ any of them, but--
1745
+ [Laughter.]
1746
+ Mr. Deel. You were lucky.
1747
+ Mr. Westmoreland. Yes, I know I was lucky, yes. I did not
1748
+ have an opportunity to lose money.
1749
+ [Laughter.]
1750
+ Mr. Westmoreland. But three percent was in some cases all
1751
+ of the profit you were going to make, and I think going back to
1752
+ what Mr. Deel said, it is going to drive the small guys out of
1753
+ business, and the guys that had some fat in it that can afford
1754
+ the three percent will be the only ones left, and then once
1755
+ small business is driven out of it, then the prices are just
1756
+ going to escalate at a rapid rate, and I think we are going to
1757
+ see an outcome that is not going to be good for us all.
1758
+ But can you speak to what you were talking about as far as
1759
+ your association of contractors and how you kind of police
1760
+ yourself, I guess, on this?
1761
+ Mr. Coleman. Yes, yes. Our association of contractors have
1762
+ campaigned for quality construction. We like to think of
1763
+ ourselves as a group that want fair legislation, legislation
1764
+ that all can abide by, have that level playing field, so to
1765
+ speak. We want to do the right things.
1766
+ We pay very good wages. Just about all of our members are
1767
+ associated with collective bargaining agreements where we
1768
+ negotiate with the local building trades unions to put forth
1769
+ some very good packages with health and welfare benefits,
1770
+ multi-employer pension plans that are portable. The gentlemen
1771
+ or women in our association are in building trades unions. They
1772
+ can move from state to state, city to city and work and have
1773
+ everything travel and go along with them.
1774
+ And we think that it is a very good situation for all
1775
+ parties concerned, and we all want to do the right thing. We
1776
+ all want to pay our taxes. We all want to be good citizens. It
1777
+ is that when situations are created where that playing field
1778
+ gets tilted, we're running up here on the Hill trying to meet
1779
+ with you and your constituents to help get this thing back to
1780
+ level so that we can all go down the road and do the right
1781
+ thing for our businesses and for our country by paying our
1782
+ taxes so that you guys can have the funds to do what you need
1783
+ to do on the other side back in our district.
1784
+ Mr. Westmoreland. If you find that level playing field,
1785
+ take a picture of it because I've been looking for it for
1786
+ years, and it is always tilted one way or the other.
1787
+ [Laughter.]
1788
+ Mr. Westmoreland. I do not know what it is, and I am sure
1789
+ all of your associations are the same, that you try to police
1790
+ yourselves. You want to be the blue chip association of
1791
+ organization where when your members come in they feel like
1792
+ they have been accredited in some way to be part of it and you
1793
+ are responsible for people.
1794
+ Government does not need to be policing it for you. I think
1795
+ you will do a great job of it yourselves.
1796
+ Madam Chairman, with that I will yield back and just tell
1797
+ you that I am looking forward to working with you and see if we
1798
+ cannot right this wrong.
1799
+ Thank you.
1800
+ Chairwoman Velazquez. Thank you.
1801
+ Mr. Coleman.
1802
+ Mr. Coleman. Yes, I wanted to make one more point that the
1803
+ Congressman raised about the five to ten percent retention. I
1804
+ think to get a clear understanding of what the retention is
1805
+ about, if we had a million dollar contract, and I billed a
1806
+ million dollars a month, they are going to take $100,000 of
1807
+ that million dollars a month away from me, and they are going
1808
+ to hold that until the completion of the project.
1809
+ Now, when I buy equipment, materials, and provide labor on
1810
+ my project, I am not going to pay the labor that I have working
1811
+ 90 percent of what he is due in the week. He will be up here
1812
+ and you will come and shut me down.
1813
+ When I buy equipment, if I have to buy a piece of air
1814
+ conditioning equipment and it costs me $100,000, I have got to
1815
+ pay that $100,000 right then and there. I cannot pay the guy
1816
+ $90,000 and expect him not to put a hold or come after me for
1817
+ the balance of his money.
1818
+ So that money that we are being withheld, that money is the
1819
+ type of dollars that we have to go and finance or take out of
1820
+ our business to be able to make sure that everyone is whole
1821
+ while we wait in the public environment to the end of the
1822
+ project to be able to get those dollars back.
1823
+ And then when you put three percent on top of that, now we
1824
+ are talking 13 percent. We are not talking ten percent, and
1825
+ that is what I mean by the effect of cash flow in our
1826
+ businesses. It is devastating. And if you want to put some
1827
+ small businesses out of business, then pass this legislation.
1828
+ That is how devastating it will be to our constituents across
1829
+ the country.,
1830
+ Mr. Westmoreland. Can I make one comment to that?
1831
+ That is a great point about the ten percent retainage
1832
+ because what we probably need to do is pass some type of
1833
+ legislation that says the government has to give you back that
1834
+ ten percent retainage in a timely fashion. Because I know that
1835
+ sometimes that retainage is tough to get in a timely way, and
1836
+ you may have to wait 90, 120, six months.
1837
+ Mr. Deel. Year.
1838
+ Mr. Coleman. In some cases.
1839
+ Mr. Westmoreland. Years, and a lot of time that ten percent
1840
+ is more than your profit; is that not true?
1841
+ Mr. Coleman. That is true.
1842
+ Mr. Westmoreland. Thank you, sir.
1843
+ Chairwoman Velazquez. The time has expired.
1844
+ I have another question, my last questions, and I want to
1845
+ address it to Mr. Kahn or Mr. Whitman.
1846
+ In your testimony you talk about how the budget score of
1847
+ the three percent withholding requirement was not an accurate
1848
+ reflection of the effect on the federal budget. So I was hoping
1849
+ that you could shed some light on why the $7 billion is not an
1850
+ accurate figure. How much of this is attributable to taxes that
1851
+ will have not been paid otherwise?
1852
+ In other words, how much it will actually close the tax
1853
+ gap?
1854
+ Mr. Kahn. I think what we were referring to, and this is
1855
+ something, joint tax, whatever, would reveal. I am not sure
1856
+ they looked at the Medicare program as one of the sources of
1857
+ revenue here that would be affected by the three percent, and
1858
+ there is some evidence to that.
1859
+ So, one, we think that the estimate understates what would
1860
+ be collected because you're talking about, you know, three
1861
+ percent on the Medicare program, which is hundreds of billions
1862
+ of dollars, and of course, there are tax exempt organizations
1863
+ that would get the three percent, but they only make up
1864
+ probably about 35, 40 percent of Medicare spending.
1865
+ So we think the effect is going to be much greater on
1866
+ revenues than was anticipated.
1867
+ Mr. Whitman. Yes. Are you speaking to the fact as to
1868
+ whether or not this three percent will close the tax gap? Oh,
1869
+ okay. Fine.
1870
+ The three percent withholding does not do anything. It is
1871
+ the reporting of the income that does something. So the IRS can
1872
+ determine if a contractor, if a person has reported that income
1873
+ on the return. So if we have that, we do not need the
1874
+ withholding. Withholding does not close this tax gap in any
1875
+ fashion. It simply is money that would have been paid at the
1876
+ end of the year had it been owed.
1877
+ Chairwoman Velazquez. Thank you.
1878
+ Well, I want to thank you all for taking time to come here
1879
+ and talk to us about this important issue, and you know, this
1880
+ Committee, I want to use it as a vehicle to be able to raise
1881
+ the profile of the impact of this issue on small businesses. So
1882
+ I want to thank all of you for your participation, and without
1883
+ objection members will have five days to submit a statement for
1884
+ the record.
1885
+ With that, this hearing is adjourned.
1886
+ [Whereupon, at 11:36 a.m., the Committee meeting was
1887
+ adjourned.]
1888
+
1889
+
1890
+ 
1891
+ </pre></body></html>
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