>> is that something at this point you're ready to support? and why? >> i don't support constitutional balanced budget amendment that claims balance by raiding the social security trust fund. i don't think that's serious in terms of balancing any budget. >> you keep talking about the need to keep focusing on entime. and what the president like to do with social security and medicare. would you like more leadership from the white house to take the step up the lead? >> i think he made it clear that he made it very specifically on the entitle programs and especially the medical accounts

the health care accounts. that's where the spending is most rapidly and that is the interest on the dead. >> are you part of the bipartisan effort in the senate and put the budget recommendations and what the timeline is on it. on the corporate tax, do you think that could be tackled looking at the corporate tax? could it be tackled outside of the big tax code overhaul or does have it to be done together? >> i personally believe it has to be done together. we formed a commission and we did it after hours and hours and hours of discussion. one of the conclusions we reached it's got to be a grand compromise. you've got to have all the elements of a package together. that's the only way it's going to be big enough to address the problems that we confront. second, we believe everything had to be on the table. third, we believed everyone had to be at the table including the

administration. you'll recall in our design of commission, the secretary of the treasury and the head of omb were two of the 18 commissioners. when we lost the vote in the senate, we didn't get a super gyre that was required to advance that proposal. we got 54 votes which is a majority but we didn't get a super majority. we were then left with the only option being a presidential commission which we convinced the administration to form. when it was formed, the secretary of treasury and the head of omb were not included. i think to reach conclusion here, it's imperative you have the leadership of the house and the senate and representatives of the white house at the table negotiating. >> can you talk about the bipartisan effort to translate some of the recommendations of that year? >> i'm net aware of a timeline. it's a fairly large group of senators, republicans and

democrats. >> senator conregard, you were able to pass the budget last year, going into it at this point you see realistic change? and are you going to try for the first time in a long time bring democrats and republicans to pass a bipartisan resolution and these have been basically partisan documents which seems it would be symbolic since the house is republican. is this really the vehicle for maybe getting some bipartisanship early in the process. >> it may be. i personally believed what i said publicly and privately is there needs to be a summit involving the white house and the house and the senate to agree on a one-term plan that goes way beyond the five-year budget outline. i personally never thought the budget resolution was the place to do the long-term plan that's

required because almost always congress does a five-year budget. what's required here is much longer term than five years. yeah. >> you clearly stated your view that there's a need for this but just looking at the political situation you're facing, how likely is that there's going to be any actions -- >> it's extraordinarily difficult. and let's be very, very clear. when the american people are asked what they want done and to prioritize what they want, they want the deficits dealt with. but when they are asked very specifically, will they support changes in social security? the polls say no. changes in medicare? the polls say no. changes in defense spending? the polls say no. changes in defense spending? the polls say no.

there's got to be leadership to help persuade the american people this problem is so big that you've got to deal with all of those things. nothing can be sacrosanct, nothing can be excluded. [inaudible] >> we'll take a break and have congressman van holland make a statement and then we'll go go back to answering questions. >> thank you. i want to thank the senator for all his leadership on these very important budget matters and issues and imports to our financial growth. a long history and i will look forward to working with you. i'll answer a few questions and i look forward to answer ago few questions with the senator. what this cbo report says -- and i should say i just came from

the first hearing in the house budget committee today, is a mix of, you know, good news and bad news. it indicates the economy seems to be on a sustainable growth path forward. that the double-dip recession that many of us feared is not likely to happen. and i think it's pretty clear that that's the result of a lot of measures that have been taken by the congress and the president over the last two years that helped provide stimulus and support to of small businesses and other businesses around the country to help get the economy moving again. obviously, two years ago when the president was sworn in, that first state of the union speech, the economy was in free-fall. the good news the economy seems to be rebounding and obviously the most important thing we can do in terms of resolving -- getting ourselves back into at least a little better territory when it comes to deficits is to

get economic growth going. now, the bad news. obviously what it shows is we continue to face a very difficult fiscal situation and the longer term problems are very real and cannot be answered by economic growth alone. and the senator, i'm sure, discussed some of the challenges we face and he served on the commission. so let me just end with this. our number one priority has got to be pursuing two tracks. one is to make sure that we don't do anything to damage the economic recovery which is in a very frannil state. and it would be a big mistake as mark zandi and other economists have said to take deep, immediate, draconian cuts. that puts the brakes on a fragile economy and risks

putting people at work. do we need responsible immediate reductions? yes, and the president talked about that. second thing, and senator conrad has been a leader on this. we need to act now. we need to act as soon as possible on a bipartisan basis to put together a plan that puts this country on a sustainable, fiscal course. i think the president last night indicated that he wanted to work with republicans in a serious fashion. and i have told the new chairman of the house budget committee that democrats look forward to working with him and the white house and, of course, the senate to try to do that. >> thank you. excellent statement. >> yes, sir. >> a group of republicans seek to prioritize repayments of the debt, the debt ceiling has reached by putting principal and interest owed to investors to the front of the line.

what do you guys think of that idea and could there be some contingency plans? >> i think it's a dreadful idea. basically what they're saying we'll pay china first. we're going to forget about the american public and the things they need. somehow they're secondary and paying the chinese and the japanese is the first priority of this country. i mean, i don't even know how to describe that idea except a very, very bad one. >> just to tack on with that, what they're saying eventually is that the full faith and credit of the american government extends to a lot of foreign countries but it doesn't extend to the american people themselves. we have other questions but we'll be happy to end there if there are any further questions. >> you mentioned the short-term

deficit, at what point does the short-term deficit become a problem? i mean, when do we know we have to make some immediate cuts? >> you know, most economists that have come before the commission -- if you listen to chairman bernanke he has been clear on this. we need another 18 months to two years before we start imposing the tough medicine that is going to have to be imposed if we have to deal with this long-term death threat. and it's interesting. if you look at all the bipartisan commissions, that is what they have concluded. some that had some of the most distinguished people in the country serving on it, came to that conclusion. don't endanger this growing recovery. but, adopt a plan now that is credible and gets us back on

track. that is what the president's fiscal commission concluded. all of them bipartisan. all of them said do not impose draconian cuts now. the economy is sill too weak with 1 in every 6 americans either underemployed or unemployed, but adopt now a credible plan that you enact that in 18 months or two years pivots and begins to bring the debt down. you know, we have a level of debt now, at the end of this year, it will be about 69% of gdp, publicly held debt, that we can manage. what we cannot manage is where we're headed. and we're headed as i indicated earlier by 2040 with a debt that would be over 230% of the gross domestic product of a country. so we got to make decisions now

that affect that long-term outlook ombudsman not endanger this recovery. >> republicans rolled out a balanced budget amendment earlier today. [inaudible] >> what's your take on announcing that? >> well, obviously within our caucus we have a mix of views. i think probably the consensus position is that if you can balance your budget, let's do it right here right now. one of the things was the results of the last election is our republican colleagues share responsibility for government. so let's show by their actions with budget and appropriations how you put together a long-term plan to do it. i think we all know from the past -- you may have different views on the balanced budget amendment but they've been filled with loopholes and gimmicks and the most serious approach, i believe, to dealing with this problem is to get

together on a bipartisan basis and put together a long-term plan rather than to pretend that these things are filled with loopholes that do the job. >> let me go back to the plan that was made earlier because congressman van hollen wasn't here. so often in the past -- and i've not studied what they've just introduced. the balanced budget amendments defined a balanced budget as one that raided the social security cookie jar in order to balance. they were claiming balance based on the use of social security trust fund money. if that's what we adopt around here as a definition of balanced budget, god help us all. >> from the long term to the short term, what is the democrats' game plan on this. are they just waiting fo-republicans to come up with the cuts and are you going to come up with your own short-term solution? what is becoming in the next few weeks?

>> you know, we're just back together now. i don't think there is a finished plan on how to deal with the continuing resolution. that will be a subject of discussion in the days ahead. >> comment on the house situation, look, as you probably know, yesterday we passed what was termed a budget resolution, a house with no number in it. there's no number in it. it's not 100 billion, not 60 billion. we won't know what it is. we were told that you had to wait with cbo to come out with our numbers and maybe later today we can have what they are. the speaker of the house was asked on tv just a few weeks ago to identify any specific cuts he would make. he didn't come up with one. now, senator conrad has pointed out for fy11, the commission that was tasked with reducing the deficit and the debt assumed

in their projections a number that actually in terms of fy11 spending that was slightly above where we are with the current cr. and so let's see what the republicans come up with in the house, see what their number is but i think it's important to stress they're playing with fire in the immediate term. they're talking about draconian cuts and that's not just -- look, the senator was on the commission but that is what the commission indicated. >> would you personally agree to any cuts to the current spending levels rather than, you know, just proceeding on auto pilot? >> look, i supported the commission plan. the commission plan was 30 billion below the president's suggested level. >> the debt limit increase is coming out, you know.

the republicans are saying and demanding major reforms both at the budget process and the significant budget cuts. do you think that's an appropriate debate or is there a potential there that you don't face the debt limit and you have some catastrophic debt situation? >> well, first of all, we have no choice but to extend the debt limit. to do otherwise would put in jeopardy the full faith and credit of the united states and virtually every economist said that would be catastrophic to our financial standing in the world. so these are debts we've already run up. they have to be paid. it would be like getting your credit card bill and saying, gee, i regret what we did before so now i'm not going to pay it now. that doesn't work. i personally believe we should ask for and insisted upon a long-term planning to be agreed to before we have any long-term

extension of the debt so that we keep the pressure on is to right the long-term plan that virtually everyone agrees is important to the country. just on final point on this, mr. bernanke, the head of the federal reserve has made very clear -- he does not believe we ought to impose draconian cuts now. he believes we ought to adopt a plan now that gets america back on track over time. and i believe he's exactly right. that is what is required of us. but that means we need a plan. it's fought a five-year plan. we need a plan that goes well beyond five years to get us back on track. >> in want to be clear, are both of you saying that when the cr comes up on march 4th, they

would like to see a reduction of spending and it should not go down for the remainder of the fiscal year? >> well, what i said in relationship to the president's budget request, the commission reported a $30 billion reduction. >> the republicans are talking about reducing the current spending levels. do you see it going down? do you think it would be appropriate for it to go down at all? >> i think what would be appropriate as what i stated. what i thought was $30 billion below for the president, which is about the level that the cr -- in other words, reductions have already been made very substantial reductions from the president's budget. of and i would support the reductions that the commission called for from the president's budget. >> i second that. i got to run. i've got 2 minutes on the vote. so sorry. >> thank you.

[inaudible conversations] >> on c-span2 today, the house ways and means committee considers the economic

>> but no question on 9/11 we defined the presidency because it made it abundantly clear, that my most important job was to protect the country. and i took -- i made a lot of controversial decisions to do that. many of which i describe in the book. and the truth of the matter is if i had to do them over again, i would have done them again. >> former president george bush talks about his bestselling memoir "decision points" with students from southern methodist university, sunday at 8:00 on c-span's q & a. >> c-span2 one of c-span's public affairs offerings weekdays live coverage of the u.s. senate and weekends, booktv. 48 hours of the latest nonfiction authors and books. connect with us on twitter, facebook, and youtube and sign up for schedule alert emails at c-span.or

c-span.org. >> >> at this hearing the house wayses and means committee look at the health care law. the house repealed the law last week. we'll hear from the chairman of the white house council advisor austin goolsbee. >> the committee will come to order. good morning. today's hearing is on the health care law's impact on jobs, employers and the economy. we'll have two panels today. our first panel will feature austin goolsbee who's chairman of the council of economic advisors. i'll begin by making an opening statement and then i'll yield to my friend and ranking member, mr. levin. i want to start by reading the following quote.

i know one of the things that's come up is that the 1099 provision and the health care bill appears to be too burdensome for small businesses. it just involves too much paperwork, too much filing. it's probably counterproductive. it was designed to make sure that revenue was raised to help pay for some of the other provisions, but if it ends up just being so much trouble, that small businesses find it difficult to manage, that's something we should take a look at. so there are going to be examples where i think we can tweak and make improvements, end quote. that was president obama on the day after the november election. the president was saying the health care law appears to be too burdensome for small businesses. it involves too much paperwork, too much filing. and last night, in his state of the union address the president again referred to the 1099 provision as we've come to call it as a flaw. but more importantly, the president asked us to identify and bring to him items that need

to be fixed. and clearly in a bill that's over 2,000 pages long, there's more than just the 1099 provision we need to address. with unemployment rates stuck above 9% for the last 20 months and with my home state's unemployment at nearly 12%, i have one simple question today. how is it that congress passed a health care bill that is, quote, counterproductive to american producers? especially at a time we need to be looking at solutions that encourage not impede job growth. the health care law and the impact on its economy and employees and their workers. it was signed in law, the democrats health care law imposes more than half trillion dollars of tax increases and thousands of pages of mandates and owners regulations on employers. my friends on the other side of the dais argue we shouldn't be arguing health care anymore and focus on jobs and the economy. what they need to recognize is that employers of all sizes are

expressing concern that the new mandates and regulationless deter them from hiring new employees, threaten their ability to retain existing workers and harm their ability to increase wages for existing employees. the new health care law compounds the uncertainty employers and entrepreneurs are facing under the most challenging economic climate since the great depression. making matters worse, many insurance companies and employers have already increased their health care premiums to comply with the new health care law. exacerbating the drag on the u.s. economy from rising health care costs. that's the problem with the health care law that puts washington, d.c., the federal government at the center instead of patients and doctors. and when you take a washington's knows best approach to legislation you end up with a bill that ends up for washington instead of working for the american people. at the end of the day the health care law fails to control costs, it fails to let americans keep the insurance that they have in like, despite the president's promise to also protect jobs, it fails to ensure seniors have access to their doctors and

hospitals and fails to prevent tax increases from hitting middle class families and the small businesses we need to move our anemic economy. the first is one of many and to give the employers, the large and small the opportunity they did not have when this law was being written to testify in an open hearing about the impact this law will have on them. we know what the experts have said. we all know that the nonpartisan congressional budget office has estimated the health care law will increase premiums for millions of families by up to $2,100 on average by 2016. that's $3200 more expensive than the republican alternative i offered last congress. we all know that the obama administration's own officials have predicted that as many 7 out of 10 employers will have to change the coverage they offer to their employees because of the law. we all know from the joint committee on taxation that there are well over $500 billion in new taxes, many which have will

hit middle class families and small businesses. that's what the expert have told us. today we will hear from something. we'll hear from real employers and what they think the law and what the impact will be on their businesses and their employees. i look forward hearing this testimony and getting more of this insight in the future. after all, these are the very people who have to live with the decisions that are made here in washington. but before we do, i ask unanimous consent that all members be allowed to submit an opening statement for the record. hearing no objection, i now yield to ranking member levin for purposes of an opening statement. >> thank you, mr. chairman. dr. goolsbee will be here until 10:00. he'll have a chance to respond to some of your criticisms that i don't think are valid. but we don't to hear from you, dr. goolsbee. so i'll be brief. last night the president said

some very clear things about the health care issue. he said and i quote instead of refighting the battles of the last two years, let's fix what needs fixing and move forward. end of quote. my concern about the hearing is that indeed we'll be refighting the battles of the last two years. for example, the 1099, we introduced legislation in the last session. it passed here. it was proposed by the then minority because of the pay-for. ironically, much of what is -- was in the pay-for is now the law of the land. we should have acted on 1099 at the last session. in his speech, the president also said, and i quote, what i'm

not willing to do is to go back to the days when insurance companies could deny someone coverage because of a preexisting condition. he went on to point out that the law is now making prescription drugs cheaper for seniors and giving uninsured students a chance to stay on their parents' coverage. so i repeat he then went on to say instead of refighting the battles of the last two years, let's fix what needs fixing and move forward. i think that's exactly what we should do. and i would hope that would be the tone of the hearing today. i yield back. >> well, thank you. welcome to the ways and means committee, mr. goolsbee. under our rules you'll have 5 minutes. your written statement will become part of the record. and so welcome and you may begin. >> thank you, mr. chairman and

i'd like to say good morning to chairman camp, ranking member levin and all the members of the committee. thank you for inviting me to testify here today. and i know we were up late and i saw several of you last night. and i appreciate your time. the affordable care act was designed to make sure that health insurance coverage was affordable for individuals, families and businesses. and while millions of people are benefiting now, much of the impact of that act will begin when the major coverage provisions take effect in 2014. the best evidence that we have gathered from outside experts suggest that in addition to slowing the growth of medicare spending and significantly reducing the deficit over the next 10 years and the at the point years after that, that the affordable care act can be a significant benefit to the job market by easing the burden of health care costs on small businesses and by reducing the growth rate of health care costs

for all businesses. now, the impact of the affordable care act on the labor market is an important topic. i applaud you for having this hearing. i believe there has been a significant amount of confusion on this issue, and i'm happy to have this opportunity to try to clarify that. i think the president laid out last night in a way that is -- that is most helpful and you it rated in your testimony -- in your opening statement, mr. chairman, that we should try to work together to improve whatever is broken or problematic. we should fix together anything that reduces costs is going to help jobs in this country. health care has for years been one of the most pressing cost issues facing the business world. those costs have been rising dramatically long before there

was ever an affordable care act and the affordable care act intention is to try to address that. i would highlight two basic mechanisms that i think the affordable care act can have -- has had and will have a significant positive impact on the job market. the first mechanism is in the area of small business. now, the role of entrepreneurs and small businesses in job creation and in the economy is well-known. equally well-known is the fact that small businesses have for years consistently said that the cost of health care is one of their most significant problems. what small businesses that want to provide insurance for their workers face much higher costs than large firms do for exactly the same plans. and in many states, they also face the risk that a single sick employee or even an employee's ill family member will send their premiums through the roof

for all of their employees. the affordable care act has begun to help make small business more competitive by making the health insurance more accessible and more affordable. one of the first provisions to take effect is the small business health care tax credit which helps offset the cost of coverage. that applies to as many as 4 million small businesses that may be eligible right now for that small business tax credit. in addition, it levels -- it can level the playing field for small businesses by giving these businesses and their workers access to the same kind of stable premiums that larger businesses enjoy. the exchanges pool risk and reduce administrative cost for small businesses, new insurers will not be able to raise rates when some individual in the group becomes six and this will allow small firms to offer competitive health benefits. people can start their own company or go work for a

fast-growing small business without worrying that they would have to give up access to secure affordable coverage. and that impact on job mobility is critically important. the other mechanism that i would highlight are the many that it does to reduce the inflation rate. these include the immediate reduction in the implicit tax from the uninsured. right now the uninsured get health care in emergency departments or in other very high cost ways. the estimates suggest that is a hidden tax passed on to everyone else of up to $1,000 per worker. and by covering the uninsured, the affordable care act will reduce that hidden tax directly. second, it makes innovations in the delivery systems and medicare and medicaid that if we have successful innovation there

is that are adopted in the private sector can reduce cost. >> if you could just sum up very quickly. >> sum up to prevention and wellness to patient-oriented outcomes and to modernizing the health i.t. system, those cost reductions and the small business credits can have a quite beneficial effect on the job market. >> thank you. and as i said your full statement will be part of the record. and thank you for that. last night the president did say of the ongoing health care reform debate that instead of refighting the battles of the last two years let's fix what needs to be -- needs fixing and move forward and he mentioned specifically the 1099 provision. what else does the president believe needs to be fixed in this new law? >> well, i would say the 1099 provision which was designed to reduce tax evasion but put this burden on small business was identified early as an important one. you saw the president last night also say he was open to look at

things. i know that there have been people that said we should have done more off medical malpractice reform and the president said he was open to looking at that. now, i would highlight that the affordable care act does have create -- different states have experiment with ways to address medical malpractice reform and it authorized examining and creating pilots to help us figure out what works in that area but i would say that's an area that the president is open to ideas and we would want to work with you on. >> so there's 1099 and medical liability reform. those are two items. are there any other items? >> i would say that the president is open to working with you if you identify other items, but the basic thrust of the act of trying to get costs down and trying to help small business to afford care is fundamentally the right

approach. and so i think that we want to stick when it >> well, in regard to holding costs down, which i appreciate that sentiment and goal, both the cms actuary and the congressional budget office says the legislation that was enacted will likely increase not decrease national health expenditures. and if they're right, isn't the health care law an economic failure that will increase health care spending and cost jobs? i'm not asking if you agree with cms or cbo but if they're right isn't this form a failure in? ? >> i don't think it's a failure it's trying to get it is health care cost inflation rate down. if more people are being covered and having their health improved and have the security to know that they cannot be denied coverage because of a preexisting condition, the

amount of total health spending is different than looking what the prices are and try to control health care inflation. in my view that wouldn't be the right way to evaluate it. >> but the expert, nonpartisan agencies that we rely on like the congressional budget office, like the actuaries at cms tell us that overall health spending is likely to go up under this legislation. and if the stated claim that holding down health care costs is really a justification for this bill and will help the economy and help businesses particularly, small businesses and that isn't going to happen, how is this committee expected to evaluate this legislation other than it doesn't meet the stated goals that the reform that was purported is a failure? >> well, i was trying to make the distinct and i apologize if i didn't. between the amount of total

spending and the essentially spending per person or the cost of the same procedures. so the congressional budget office and many health economists out in the country believe that the things that i have described in my testimony are ways that we can for any given business reduce the health care cost inflation rate and make them more competitive for small businesses giving health care credits that they can use to help offer health care to their workers where they do not now. that is important. that will facilitate job creation. that is a different question than the one i think you're asking, mr. chairman, which is what will be the total spending on health care overall, no the on the prices but on total spending and total spending has been rising quite dramatically for many years. and i would observe that cms' data suggested that health care spending overall rose at the

lowest rate this past year that it has since they have been keeping records. >> well, the congressional budget office also indicated as i said in my opening statement and i don't want to repeat it but that the health care premiums for millions of families will go up by $2,000 per family. and obviously in contrast to a reduction in premium which occurred with the bill that i offered. so whether -- however you slice it, whether you look at the macro sense or you look at individual families, costs are going up and as you said in your opening statement, getting costs under control in health care is a very important goal. and i absolutely one we should look at. well, thank you very much. at this time i'll yield to the ranking member. he has five minutes. >> thank you, dr. goolsbee. you're very polite. and i think proceeding that way is important. but i think there needs to be

driven home very clearly the distinct you make. driving down costs does not mean necessarily that expenditures will not go up. we have now over 50 million people who have no insurance, whatsoever. and bringing most of the 50 million people so they have health care insurance and have health care may increase overall expenditures while we drive down the cost per patient. and there's nothing inconsistent. and john boehner's proposal has been analyzed. it would add only 3 million people to the insured. we are the only country, industrial country, on this globe that has anything like 50

million people who have no insurance, whatsoever. the only nation like that. so you said it very discreetly but i think it was clear and i think we need to make those distinctions very clear indeed. now, let me ask you about another argument that's made about the health care reform and now that language has been somewhat moderated. i'll use what's been said here. that it's a job-killing bill reform. i don't think we should use that language. whatever language we use, would you comment on that. >> well, what i would say it's a strictly factual manner, i think it's inadequate to say job-killing. i think the role of small

business and job creation and the role of reducing the health care cost inflation rate in job creation is the two tenets of the afford health care act may have a significant positive impact on the job market. you may have seen health economists and david cutler who said what would that mean for job creation or destruction and found it would be job creating in the nature of hundreds of thousands of jobs per year. if you look at the evidence on its employers, health care costs have been rising dramatically every year for many years. and that has been a tremendous burden on them and has limited employment growth. so anything we can do to reduce that inflation rate will have a

positive impact. and i did not mean in any way to say to the chairman or to anyone else that we should close our minds and not be open to important ideas on how to improve this or how to find other ways to get costs down. we should. the president has made that clear. and i would like to reiterate it. that we are open to sensible ways to improve care, to improve coverage and to get costs down. i think to describe it as job killing is not accurate based on the evidence that we have. >> can you just briefly -- my time will end soon. in your testimony you referred to patients-centered outcomes research institute as something that can help make treatments work better. and that means, i think, affect cost and try to get ahold of cost. do you want to comment briefly on that. you have about 30 seconds. you need washington is going to dictate the care patients

receive. >> it's not -- that institute is not a dictation machine. it is not meant to that. it is meant so that we can share information across the country what do we find -- what kind of treatments work? the best analogy is my -- when i was a kid, it was routine to take everybody's tonsils out. i got my tonsils out and i was in the hospital three days. and of our own kids, i have three children, the studies indicated that that was not effective except in certain circumstances. now, our middle son had -- i'm not a doctor but some kind of inflamed tonsils and had his tonsils removed but our other two kids did not and that is a case where looking across the country, studies showed that it was more effective, that it was in some sense more dangerous to routinely just take all kids' tonsils out and it -- it's quite

a significant expense to both families and to the health system that we were routinely doing that. i would use that as kind of a personal example of what the intention of this would be, would be to share that information. >> thank you very much. >> thank you very much, mr. chairman. and mr. goolsbee, i thank you for appearing before us and your testimony but as i listen to you there seems to be and an administration a night and day difference between what i hear you saying on lowering of health care costs and what the obama-care is doing for our small business and creating jobs and what i hear small businesses in my district tell me. and later this morning we will be hearing from some small business owners who do know firsthand what it takes to create jobs. it's one thing to come up with academic argument for why a

particular policy will be good for job creation. it's another thing to have those results actually demonstrated in the real world. what we're going to hear from business owners in my district -- what i've heard from small businesses is a very different story than the one you've presented. their near unanimous opinion is that this health care law is going to absolutely be devastating to their small businesses and to creating jobs. let me share with you some of the feedback that i received from business owners in my northern california rural district. robert boise of bernie california writes i'm a small businessman whose retired and collect social security. i started my business in january of 2008 and it immediately took

off. in 2009, i made more money than i ever had in my life and i was ready to add one or two employees when they started talking about obama-care. i have now decided not to expand and to contain my business at a smaller size, closed quote. and then from a charles watts of chico, california, writes, i have been a business owner, builder, contractor for 35-plus years. and i've survived three other recessions. this being the worst. what i don't understand is how our government figures that business owners can maintain work and with an economy housing market with no future in sight of recovery for years. our company is hanging on by a thread and if i have to provide health care for employees, i will have to close it down, no

questions asked. i would have no other options, closed quote. and then a mike mullen in cotton wood, california, writes as it stands right now, i can't afford to grow or hire new employees. currently the paperwork alone is a nightmare. and labor costs. if obama-care is not repealed, it would definitely increase labor costs which is the most expensive part of running a business. also, the 1099 deal definitely needs to go. if i have to cut a 1099 to every vendor i use, i won't have time to do my work, closed quote. mr. goolsbee, this is just a sample of what i and other members of this committee are hearing from small business owners in the real world.

i have double-digit unemployment in every one of my 10 counties, in my district. we cannot afford to get this wrong. can you explain why the administration's claims are so out of touch with what we're hearing from people who are actually creating jobs? >> well, congressman, i respect that question and i appreciate you bringing that evidence. i think the -- one thing i have noticed when i have talked to many small business people and large business people is some misunderstanding on the part of some business people of what's in the law or what provisions would apply to them. so small businesses -- if you have 50 employees or fewer, you are not required to provide

coverage to your employees. second, small businesses up to 4 million of them right now would qualify for a very substantial tax credit to help cover their cost that they have never had such a credit before. and third as we move to the exchanges for the first time, small businesses will be able to get insurance coverage at a price that is comparable to the price that large businesses currently offer. so among very small businesses in the country, the majority do not offer any health care coverage now. and the surveys of the nfib and other small business organizations have shown again and again before there ever was an affordable coverage act that health care costs are one of the most pressing problems facing small business. that they had very hard times hiring employees to come work at their businesses because the employees that were at large companies would say i would love

to work at that startup but i can't get coverage if i move there. it will be too expensive. >> your time has expired. >> i apologize, mr. chairman. >> mr. johnson is recognized. >> thank you, mr. chairman. you know, you've said a lot of things that don't seem to be true in the real world. maybe you ought to get out there and talk to people. but, you know, that health care tax credit, for instance, very few small businesses that i've talked to and their employees will benefit from the credit. in fact, cbo estimated that 88% of those who get health insurance from a small business work for a business that will not receive the credit. there are different credit amounts and eligiblibility requirements prior to 2014 than exists after the exchanges are operational and after 2013 an employer can only claim the credit for two years. that's not giving them much.

one of the purposes of this hearing is to look at the impact of health reform law on jobs. i think we can all agree it is critical to pursue policies that create jobs, not eliminate them. and the health reform law places significant restrictions on physician ownership of hospitals. you've almost put it to a complete halt and yet my experience with physicians at hospitals, they are far above the benefits to the patients of a regular hospital. they're precise and they know what they're doing. many projects in planning had to stop and expansions were curtailed. every one of those decisions had a negative impact on jobs in states like texas. industry experts tell me at least 30,000 jobs would have been created if this provision had not been enacted. can you explain to me how the

administration could have supported a provision they new would negatively impact well-paying health care jobs in many communities? >> well, congressman, i will need to look into this exact provision. and i will get back to you. i know that the primary goal of the various provisions in the act are how do we provide the best possible care at the lowest possible price or with the lowest rate of inflation if there are things about physician-ownership of hospitals or any other subject that we can get together and work on and find evidence that it could improve care and reduce cost, the president is open to look at any such ideas. so i will have to get back to you on this. i'm not familiar with the details. >> okay. >> well, that's just one area

that -- of that bill that doesn't appear to be beneficial to the industry. you know, we talk about 1099 reporting requirements and i presume now that you're in agreement that we need to get rid of that provision. is that true? >> that is true. >> okay. i'm hearing it from you and the president. >> yep. >> all right. well, then let's do it. the health care overall provides health plans on existence on the date of the law's enactment that they would not be required to meet all the requirements of the new law. and y'all argued that it would allow individuals to keep the health insurance they have and like. the statute did not define grandfathered plans other than to ensure that all plans resulting for the length of the agreement. it's clear that many employer plans will not enjoy the grandfathered plan protections from the new law. can you discuss that a little bit? have to choose

what counts as the same plan. there is flexibility. if you are getting the same insurance but want to change providers that is still

permissible and you can still keep the grandfathering. if you fundamentally change the nature of what else you are getting, the point of the grandfathering would not apply. >> two years after you do that? >> it depends which but on some of these there are phase-outs. >> thank you, mr. chairman. mr. mcdermott is recognized. >> austan goolsbee. i fly across the country 35 times a year for 20 years and i have been flying with united airlines' attendants who have gone a little earlier -- older. i doubt there's a single flight i fly at where there's not one flight attendant who is working simply to keep her benefits because her husband has a job

that doesn't have benefits. when i read the attack on the job killing aspects of this bill, the report sounds like they're saying we're going to kill jobs but in fact that flight attendants would gladly give up her job if she had held care for her family in some other mechanism. is that killing the job for is choosing to leave the workforce? >> to me that so unlike a retirement. the report you are saying they did make clear that there would be a reduction of total jobs but most of those would be on what they call the labor supply side of people not having to work as many years just to keep their medical benefits. to me that would be a

retirement. >> it really is political theater. to make it seem like this bill kills jobs. >> i am just -- >> not to -- >> let me ask another question. they have another panel and rounded up some people who is a this doesn't help stop small-business and i am sure if you go through this country of three hundred million people you will find some small businessman or woman for whom it doesn't work but from reading your testimony it sounds like more small businesses are buying insurance today. define read the figures you have for united health and kansas city's blue cross blue shield program at sounds like people are actually getting in because of the small business tax credits. >> i think that is true. i would make three points. the first is if you don't have insurance which the smaller the employer you get the greater the

share do not offer insurance now because they would have to pay substantially more for the same policy as large employers do. small business health care credit gives them the opportunity to offer insurance for the first time and you have seen substantial pay cuts. even if you already offered, the small business credit reduces the cost and where that has never existed before and we should not underestimate the importance of the exchanges that will be coming on line which will allow small businesses to get insurance at the kinds of prices and steady levels large employers have had. those three things are critically important to small business and for years before there was affordable care act, they have been wanting to have for some time these types of

credits and access to this type of insurance. >> they also talked about wanting to pool so that small businesses could join a pool and they could buy like boeing or warehouse, one of the large companies. this really gives them the ability to get that kind of benefit is what you are saying. >> that is a better way to say what i was saying. that is what the exchanges are for. allows them to pull and get prices as if they were large employer. >> you might not have read the testimony of people following after you but can you think of any reason why a small businessman or woman could not find a way for healthcare if they are making money, is there any reason beyond they don't want to do it? is there some economic reason? i don't understand. if you are making money in a business, how you can't put some of that money toward the health

care of your workers. you certainly care about your workers on would guess. >> it would be presumptuous of me to tell other folks -- i don't know what the circumstances of different businesses are. if you take employers that are employing people without giving them health care coverage, the reason there would be a mandate is to try to get away from the system we have now which is people don't have coverage, still gets sick and they go down and get medical care at the highest possible expense and it doesn't become free just because it was in the emergency department. that is a cost that gets passed directly to the employers who do cover their employees and that cost is as high as $1,000 a worker. i don't put any moral judgment of any kind. ten have been through a very tough spot in the last two years

and everybody is trying to get by and we are trying to turn the corner to grow our way out of these problems. i think small business credit's to help them afford to give coverage as well as giving them the opportunity to buy at the prices larger businesses do, doing everything we can to slow the growth rate of health care costs is important. >> mr. tberry is recognized. >> the president repeated mention throughout the debate and after words that americans making less than $200,000 or families earning less than $250,000 would not see their taxes increase with respect to the democrats's health care bill. i would like you to tell me whether each of the following in the yes or no answer would suffice that were included in the health care law constitutes an increase in taxes for individuals or families making

less than $250,000. a new tax on individuals who do not purchase government improved health insurance. >> i don't think that is an actor way to describe it. >> not a new tax? >> i don't think that is accurate. >> a new ban on the use of flexible savings accounts, h r as, pre-tax income to purchase over the counter drugs? >> that is not tax increase of a normal form and that is part of the broader reform effort. >> an increase from 7% to 10% of income the threshold after which individuals can conduct out of pocket medical expenses? not a tax increase? >> i do not consider the affordable care act as a whole

to be a tax increase on people > $2,500 cap on family's ability to use pretax dollars to fund and ffa. >> i don't consider that a tax. >> a new 10% tax on indoor tanning services? not detecting prius? and that seems like a strictly voluntary thing that one can choose. >> but not a tax increase? here is the point, austan goolsbee. i am quoting from the billing number of things that will impact people, individuals who make far less than $200,000. i have a lady contact me in december whose said she had just found out from her employer and dr. that she could no longer

manage her kids's health care costs with respect to over-the-counter drugs and now she was going to a have to contact the doctor every time she wanted to deduct something from her flexible savings account and had just found out in december months after the health care bill was signed into law that her tax was going to increase, her income tax was going to increase because her f s a was going to go from $5,000 to $2,500 and so her income was going to go up with respect her taxes which means she would be paying more taxes and we do things were occurring in her mind. that she was going to be paying more taxes and her ability to manage her health care was going to be taken away from her and she was going to have to call her physician's office which was going to make the physician's

office ironically more involved, not less involved and there's a cost to that as well. you chuckle about this but the president was very firm that nobody making less than $200,000 would see income taxes go up, any taxes go up. now we see a department of justice -- this bill is constitutional because it is a tax. individual mandate is a tax. and once and -- side reseda is not a tax or you say it is not a tax the dismally administration and on the other hand you say it is a tax so which is it? >> i was only chuckling about the tanning salons. i wasn't meaning to make light of it. we are open. if we look at the faa rules. all i say is this was part of a broader package. picking out one the thing in

isolation and not taking into account other benefits, if you are paying for something but it is going to reduce health-care cost inflation or we are going to get additional coverage that you didn't have before, you do have to take into account -- >> here is my point. if you are telling the american people and the president is telling the american people and i'm advising you and you say it is not a tax increase and mrs. smith who sees her as a go from $5,000 to $2,500 and she can't buy the aspirin from the store and deducted from her as a she looks at it as a tax increase. there's a credibility issue. we can chuckle about it but -- >> my only brief response is a changes cfs a rule but simultaneously gives her a significant reduction in the

cost of her health care that should not be viewed as a tax increase even though looking at one component you would say i had a disallowed expenses on an f s.a. but the point taken into account is not -- >> thank you. >> it all depends on what the meaning is. this is a back to the future moment when taking it in totality. it is a huge tax increase with constituents in all places in the economic spectrum and they talk about a lack of purchasing power. they see their dollars go down. contrary to the gentlemen who say this is not job killing i have met with hundreds of business owners in the last two years, release since this bill was implemented business after business, chambers are congress members are saying they're not hiring people because they cannot afford to provide coverage which leads me to a

question. since we referred to the tanning tax as strictly voluntary i don't think the irs agents would feel that way but i want to ask about the burden of the democratic health care law on small business. suppose you own a small business with 50 or more employees and that business is not eligible for the small business tax credit and can't afford to patches -- purchase health care to your employees. rates have gone up significantly and will continue to go because we didn't go after cost drivers. the health care law requires you to provide health insurance. and our would having to afford the cost of health insurance or pay a fine help your company grow and create jobs because one would get into the pricing issue there is a faulty assumption that businesses have a limited supplies of money. the vast majority deal with vendors with fixed cost of materials as part of a supply chain and on the outside particularly if they are dealing

with larger established businesses, price dealings they cannot exceed so that margin, the manufacturing co. considered successful might make an 8% profit margin at the end of the year and we are watching health-care go up at an astronomical rate. here's my question. how would having to board the cost of health insurance or paying the fine help grow jobs? it is a tax in your bill. >> here's what i would say and i appreciate the evidence and we are open to looking at the evidence. if you take large employers, more than 95% of them offer health care. if you go to the 5% that do not and say isn't it going to hurt those 5% then they will be required to provide health care, i do think it is appropriate that we consider what is the cost they are applying on to other employers when they aren't

offering health care and that is the hidden tax that already exists. the growth of health-care costs has been astronomical year after year after year before there was ever an affordable care act. the affordable care act is trying to bring them under control. that the majority of small businesses in the country, some four million would qualify for the credit is good for those businesses into try to find an individual business who did not provide health care before over 50 employees is not planning to use the great benefit of the exchange to -- so they would have the opportunity to get significantly lower prices for their health care to he feels a little selective example. >> the small companies -- wouldn't that make sense? to be able to handle this issue

and have the government stay out of the private market work? i ran a company for 12 years and we ran into this time after time were costs did go up. and they're going up dramatically. now people won't hire employees because they will go over the threshold. what should i hire somebody if i will be taxed? >> you are selecting a group of employers, some specifics liver. i am highlighting that there are millions of businesses just below that which are the majority of small businesses in the country -- >> let me point something out. you asked us to take in totality. we probably pointed out 20 individual examples pointing to significant increases on cost under this bill and we come back to the details. we have to address the cost drivers and we don't address the cost drivers beginning in

washington with creating a huge new bureaucracy that places more overhead. if you ask any business owner about this bill there will ask how you can create 100 new agency commissions and boards, massively increase the regulatory side of this and reduce costs while raising taxes on businesses and cutting direct access to benefits? every doctor calls this a denial of care bill when they look at the economic aspects of this and dealing with different sets and definitions of terms. can't be fluid about that. >> time is expired. mr. neel is recognized. >> i would like permission to insert the preliminary analysis of the repeal of health care association to the official record. if we were to repeal the health care bill as some are proposing that means eliminating $40 billion worth of tax credits. does that represent a tax

increase? >> it would be problematic and particularly problematic on small-business but it would be a major tax increase. >> let me take you to some of the effect. one of the difficulties in discussion of this legislation is if our friends on the other side are asked by local news media and their respective constituencies where there is a favor banning pre-existing condition they will say yes. if they are asked is it not a good idea to keep your children on your health care plan until 26 they will say yes. if they are asked if it is a good idea to cap out expenses they will say yes. carrying insurance from one job to the other they will say yes. the problem with that argument is from an actuarial reality or risk analysis, how do you accomplish those outcomes if you don't require those who can afford insurance to buy it and help those who can't afford it

to get into the risk pool? through mandate? i want to say something for the record. this is very important. the mandate was the compromise in massachusetts that was proposed by mr. romney. that is how we got there. senator kennedy advocated for years talking about health care. the difficulty is in attempting to do it, the compromise became a mandate. speak to that issue of actuarial reality, risk analysis and what insurance companies might do to suggest they could accomplish the former as i outlined it to get us to the latter? >> i do think the basic point of the matter is to get away from the economic problem of cream skiming and figuring out who is more likely to get sick and dropping them and when you have circumstances like that a lot of

times markets--the free market can fatal when you have differences of information like that. that has plagued the health-care system along and that is the point of the affordable care act, to try to get everybody into the system so you can't either free ride off of your neighbor and on the other side they can have some assurance that the probability of whatever illness is approximately the probability in the overall population as opposed to everybody that knows they have some disease signing up only once they get sick. that is the basis. >> i would encourage all members of this committee to visit an emergency room on a friday or saturday night. if you can't do that or you live in a rural area it is more difficult but i encourage you to be in touch with local hospitals

loss to find out what coker delivery is in the emergency room. for that man or woman who walks out of the emergency room thumbing their nose by suggesting they beat the system they really didn't beat the system. those costs are passed on to all of us. that is the whole idea of spreading risk. which i would have thought the other side would pale lot of attention to for the suggestion we allow the market to work. >> the uncompensated care is a hidden tax on everybody and it's a big one. $1,000 a worker by some estimates. we cannot forget that that tax exists. it is very important and we cannot get the cost down. that is a big cost driver. >> mr. nunez is recognized. >> were you involved in the

president's state of the union address, writing or reviewing it? previewing it? >> a little bit. >> to are familiar with the health care portions? so the new 1099 reporting requirement, paraphrase the president called it a flaw. at what point did he have the e epiphanies that it was a flaw? >> i don't know the answer to that specifically but the chairman quoted the president from a significant time ago. it wasn't at the state of the union. >> did the president or the white house or anyone affiliated with the executive branch ever hear from members of congress that this was a problem during the yearlong health care debate? >> i wasn't involved in the legislative discussion but it is probably fair to say yes.

>> so the president has now admitted that the policy he supported was flawed. he asked for other creative ideas. where should this committee start? what creative ideas should we look at to identify additional flaws and other areas where we could reduce costs, improve the quality of health care? where should we start? >> i do think the previous congresspeople have identified hearing from constituents and business leaders themselves if there are ways to reduce administrative costs, reduce regulatory or compliance burdens -- >> any specific ideas? anything we should strip of the current health care law or anything we should put in? >> 1099 is a good one.

we should look together at the medical malpractice issues that can lead to defensive medicine that strikes me as a productive place to look. >> we should look at medical malpractice. any other areas you can think of? >> those two plus the general approach of talking to the small business community strike me as three important ones to begin with. >> i want to focus on the uninsured. we heard members of this committee this morning say there are fifty million uninsured. that was the number. maybe there is more than that. at least people think there is more than that. i was under the understanding when we passed this, two new entitlements adding to all the entitlements of medicare and medicaid and health care, that

this would be utopia for healthcare. and everyone would now be covered. is that happening? >> i would say we are dramatically increasing the number by tens of millions in who is covered. there was the issue of undocumented immigrants who were never intended -- >> the laws that implemented would have been covered under the old laws. >> the full coverage provisions don't go in to complete effect until 2014 but the estimates are in excess of -- >> why did we wait until 2014 to implement this when we have this health-care crisis and all these folks uninsured? you look at the numbers.

>> i look at the numbers on any significant change of this nature. usually there's some transition period. >> is it possible to hide the budget consequences of the health care provision? >> no. >> so we don't have a debt problem? >> we have a problem facing the country but does this have a part of that? >> in reducing it. >> this health care bill will reduce the deficit? >> according to the nonpartisan congressional budget office. and a quarter trillion dollars over the next ten years. >> thank you, mr. chairman. >> i have been taking some notes while you are answering

questions. the affordable health care act was designed to reduce costs? yes? improve access, increase access, reduce health-care costs? >> that is the intention. >> and reduce the deficit. >> on am just an old retired cop. i have not been in the medical profession so i am trying to understand this like every other american across this country. these were the goals. i want to go back to what some others pointed out. i am having a tough time understanding the 1099 form. it gets included in a bill that

is supposed to accomplish these things because if i'm not mistaken do you know how the 1099 provision on the bill. or what member of congress came up with the language or the administration -- >> it wasn't administration proposal but wasn't involved -- >> this is your project. >> you are just a spokesperson. >> i am an economist. >> why are you here today? >> to help evaluate -- >> the 10994. we don't know how it got here. somehow it increases the bill by

$19.2 billion. how can -- the american people have a credibility issue. when you're here to reduce costs and all of a sudden miraculously you discover there is a $19.2 billion cost that shouldn't be there. how did that happen? >> i wasn't involved -- what i will say is people who supported it were trying in the goal, bipartisan goal of reducing the amount of tax evasion. people who do not pay taxes on income than they should pay -- [talking over each other] >> i know what the bowl was but how did get into the bill. the whole premise that this was to reduce costs. $19.2 billion gets inserted into the bill. [talking over each other] >> did i hear you say you keep

the health care plan if you like it. >> that is the intention. that is why the grandfathering clause exists. >> when president obama visited our retreat last year, he was asked that question and we heard time after time after time you can keep your health care plan if you like it. however, in his comments to us, there may have been language snuck into the bill that runs contrary to that premise. how do you explain that for? >> you are telling me you can keep the health care plan if you like it but the president says there is language in the building runs contrary to that premise. >> i'm not trying to be coy. i haven't heard the president

say that. i would like to look at that before we make any -- >> it is in print. >> can you see why the american people are confused about this bill and if it applies any benefits to them, weather does those things you laid out earlier, decreases costs and increase access and is good for business and reduces the deficit. i just pointed out two things that have quite a bit of controversy and it seems to be rather serious conflicts with the promises you laid out in this bill. i yield back. >> mr. thompson is recognized. >> thank you for being here. my colleague mr. neal announced the current cbo analysis be read into the record and our would like to ask on that issue i am glad he did that. is an important fact we need to take into consideration but that analysis as you pointed out, to

repeal this bill would drive the deficit up by $250 million over the first ten years. over a trillion and change over 20 years. if that were to happen and have this upward push on the deficit, how would that impact business and investment in this country? >> i believe certainly addressing our longer debt issues is a bipartisan -- an area of bipartisan agreement that we need to do that and to not do it increases and 77 making the problem worse would likely add more uncertainty. >> and a hat on the businesses we are trying or hopeful will get going to get the economy up. on the uncompensated care issue i just want to point out everyone can find this out, i did the run in my rural district

in northern california. last year the uncompensated care cost was $70 million. the uncompensated care doesn't deliver a check to the hospital when that happens. that is spread out and the rest of us space through that through higher taxes, higher insurance premiums. on the 1099 issue is important to point out we took up the repeal of that bill last year in congress. they voted to repeal that. this is not a new found issue. this is something we tried to fix in the last congress and i want to point out when this came up in the debate i went to everyone of my county and ask the business people, chambers of commerce as to the impact of that and there was concern that it was going to be problematic.

a lot of folks, just a matter of time before the software catches up to it and the problem is resolved but everybody irrespective of their position on it noted that it was trying to solve almost $20 billion tax evasion problems. as we repealed this which we will do we need to figure out how to solve that problem. and mr. chairman, on the issue of costs going up, i want to read from a statement by blue shield of california, everybody knows premiums have been going up in my home state. the head of blue shield, quote, these rates reflect trends building in long beach for health reform, individual market medical costs are rising rapidly due to higher provider prices, increased utilization and the fact that health care people are

dropping coverage in a bad economy. health reform will help slow down this trend by expanding coverage which will keep healthier people in the system and through quality and cost containment initiatives such as the independent payment advisory board, center for medicare and medicaid innovation, research institute and other initiatives for prevention and coordinated health care and i would like to ask that the head of blue shield's statement specifically stating that health-care reform has nothing to do with increased price be read into the record. >> to my friend from massachusetts, i have spent countless hours in emergency rooms and there is a hidden tax as you suggest but also your

solution in expanding medicaid coverage is also a hidden tax. is basically an unsustainable situation. we can do better. my medical career spanned 1978 through 2003 and to put it in perspective, in medical school, the first drug that radically change not only the quality of care for folks but the cost of care, all kinds of pharmaceuticals and medical devices that have given patients more than a hope and a prayer. a first generation data blocker, in my career we did complex open heart surgery using all kinds of assist devices, improve quality of life. i can go on and on about

problems with cost coverage, quality and so forth but we're focused on one particular issue. last night the president talked about innovation, research and development, and one area where we have stood out as a country is in our development of medical devices and pharmaceuticals. we are first and foremost in the world on this and we stand to lose that competitiveness. 2.3% tax on medical devices. why is this a danger for innovation, also danger to job growth, to significant job loss. let me point out a couple statistics, 62% of the company's, 62% that develop

these, very small businesses have 26 employees. only 2% have greater than 500 employees. these are small and midsize firms that really take on the responsibility of research and development. my question is will this tax on innovation run contrary to the president's plan to expand research and development. secondly, will it hurt job growth along with innovation and third, how do you reconcile this with the president wants to extend the tax credit and on the other hand wants to impose a new innovation tax? this is very inconsistent. as we look at tax reform and the big picture and the president

talked about cleaning it up and simplifying it, if you look get this bill this lot has added significant complexity to the tax code way beyond where we were just a year ago. unlike you to address those three points. >> let me thank you for your service to the country as a medical professional as well as a doctor. we need more people in the medical profession with a commitment like that. on the issue of medical devices the area of innovation, medical innovation particularly are critically important for our health and industrial base. in this case medical devices fee is being offset to some considerable degree by the fact that there will be an expansion

in the demand for those devices by the fact that we have thirty million new customers. >> that is debatable because a lot of these patients are getting that care. it is just not being compensated for. i have operated on patients -- [talking over each other] >> advanced devices as well. >> if there are areas with a negative impact on innovation we should examine those. the data we came to the table with, suggestion is the increased demand for the medical devices in some sense is far in excess of the impact the charge on the medical device would be but we are open -- >> on r and d tax credit --

[talking over each other] >> an area of the president put as much or more -- dedicated as much or more resourcess to research as anyone has before. >> mr. heller is recognized. >> i appreciate holding this hearing. it is a little backwards to hold hearings after a bill passed but we are having a hearing on the bill so thank you. thank you for being here. last night the president said if you have ideas about how to improve this law by making care better or more affordable, they will work with you. do you believe he meant it when he said it? >> yes. >> he said the same thing in 2010. do you believe he meant it then? >> yes i do. >> he said it in 2009. you believe he meant it?

>> yes. and i hope we will commence working together. >> i got a letter here july 23rd, 2009. i wrote the president asking specific questions about the health care bill because he wanted in put. he didn't reply to the letter. why didn't he reply to the letter? >> i don't know the answer to that. >> september 8th, 2009. i will quote some parts from. this legislation will not be a silver bullet, facing the health care system, this addresses medical liability reform and improve access to breast and lung cancer screenings, takes other steps towards reform but

most americans would support. i never received a response from this letter. why didn't i receive a response from this letter? >> i don't know the answer to that but i will offer to read and respond to a letter or find anyone that would. if your ideas address medical liability reform, other forms of screening or preventive care that sounds like exactly the kind of thing we always want to be on the lookout for good ideas. >> would a reasonable person believe the president has no interest in what the minority party of the time has to say on this piece of legislation? >> i don't think a reasonable person would believe that but it would be frustrating if he did not reply to the letter. >> would a reasonable person believe what he said last night? >> i think they would. i think they did. i am here to say we are open to

the ideas and i would be both open and appreciate that or other letters. >> the president mentioned toward reform. is he serious about for reform? >> he mentioned medical malpractice reform in general. there is some significant pilot projects and working through the states in the bill right now and the president is open to looking beyond that. >> do you agree with the president's assessment that the health care bill signed into law last year will increase -- reduce unemployment? >> yes. i believe it has the potential to be a job creator because of these cost-saving measures i outlined in my testimony. >> when? >> over the next week in years and over the next 20 years. [talking over each other] >> maybe in 2014 will reduce unemployment through this bill?

>> the small business credits can have and have had an important impact right away and there are other parts in 2014. >> we should have at least seen some impact on unemployment with the passage of this bill last year? >> over what it would otherwise be. that is the -- not just my conclusion. that is the conclusion of many outside experts. >> why is the 1 level at 15%? what impact does that have on unemployment in nevada? >> the reason nevada's unemployment rate is high unlike the unemployment rate in the rest of the nation is because we have gone through the worst financial crisis since the great depression. it has had a devastating impact on the economy and we are trying to work our way out of that. the affordable care act is not the cause. >> you don't think unreasonable regulations have anything to do

with it? >> the taxes have been lower. the president cut taxes for 95% of workers and has not raised taxes in that sense. >> thank you. >> because of our time limitations the next question will be the last question for this panel. >> thank you very much, mr. chairman. i would like to go back where you left of a moment ago because this litany of somehow higher taxes and more regulation, if i understand it correctly in your testimony you point out that we have had a million private sector jobs added in the course of the last year. >> 1.three million. >> if memory serves that is more than the net job creation of the entire bush white house years.

>> i believe that is true. >> in terms of taxation, over the course of the last year and a half, isn't it true that taxes were actually lower than they were prior to the president taking office because of the 40% recovery act that was tax reduction? >> that is certainly true and it is true in the aggregate as well. tax collection is a share of income coming down. >> to some how have the speculative bubble that burst in nevada which is probably worse than any state with the exception of what happened in florida and parts of arizona to try to blame that on the

administration's high taxes and -- isn't that turning the fact on their head? [talking over each other] >> i am not trying to get anybody mad at anybody else. i will say the president did not raise taxes, cut taxes, did everything he could to prevent a depression and we avoided a depression and now we're in a phase as the president outlined that we need to compete and he is open to ideas from both sides of the aisle to improve the health care act as well as others. >> could you comment on the trend line we were on in terms of affordability of employer provided health care, before we gave the tax credits that people actually made its easier end the health care plan gives an

alternative to people if the employers jettison them under the reform act. people have an alternative. what was the trend line we are on if the health care act is repealed? >> before the health-care act i would summarize the trend line as bad. if we repeal it and go back to that, it would return to bad. what i would say is the act is attempting to address a series of cost drivers, help small business. there are things like the 1099 aspect of the bill. there are other things that may need improvement. but i fail to see how the correct answer to some flaw is to get rid of tax credits for four million small-businesses to allow discrimination against pre-existing conditions to

reinstate the uncompensated care hidden tax on employers, number of things in the bill that are really good. i don't see why should -- we should get rid of those rather than just fix the things that need to be fixed. >> for the record our committee passed and the house approved legislation to fix the 1099. that is something last congress we were on. i want to conclude on the notion of what impact there are for small business. currently small business pays more than large business. they're doing it without -- until the affordable care act, without the tax credits. howard is small business going to be affected if some of my friends have their way and somehow this bill is repealed? >> if you repeal the bill i believe there will be a significantly detrimental impact on small business. >> you can try to find an

individual small business that sits in some place and say that person would be harmed we know overall four million small-businesses qualify for a health care credit they never had before that they have wanted for decades and to set up exchanges that allow pooling of risk will allow small-businesses to get health care coverage and insurance at prices that are significantly lower than they are now because they have to pay significantly more than large businesses do. >> health care costs went up at a lower rates than ever before recorded. >> it was overall spending. >> time is expired. thank you for appearing before the ways and means committee. appreciate your testimony and since all members have not had a chance to question i would ask you to allow members to submit questions in writing which will become part of the written

record of this hearing. thank you for being here. >> thank you for giving me that opportunity and i would be happy to accept any questions, letters or anything else from members of the committee. >> thank you very much. panel one is concluded and we will move to panel two. [inaudible conversations] >> while our panel gets seated i want to introduce our panel to the committee. we have a three witnesses on panel 2. mr. douglas holtz-eakin is currently president of the american action forum and commissioner and a congressionally chartered financial crisis inquiry commission during 2001-2002 he was chief economist of the president's council of economic advisers. he previously served as the sixth director of the nonpartisan budget office. mr. joe olivo is ceo of perfect

printing in new jersey. it was established in 1979. he was president of the second-generation firm since 1988. it was a originally established as the traditional retail coffee center and he has grown from ten employees to 45 employees. eco owns the company with his wife, mother and two brothers. mr. scott womack is a franchisee and during his time has received numerous sales growth and performance awards and was named midwest franchisee of the year in 1993 and 2005 and regional franchisee of the year in 2008 of the northern region. i want to recognize the ways and means committee. thank you for taking time out of the busy schedule. and the impact on jobs, employers and the economy. each of you will have five

minutes to give your testimony. there's a green light and there will be a yellow light which gives you one minute to some up and the red light is to conclude your testimony and with all the people who want to ask questions we will try to stick closely to that schedule. why don't i began with mr. douglas holtz-eakin. you have five minute. >> thank you. it is a great pleasure to be here. i appreciate the opportunity to appear. i want to make four points that i will briefly summarize here. the first is the mandate and affordable taxes in the affordable care act are an impediment to jobs and growth in the united states particularly at this moment and balancing the affordable careful raise cost of insurance. this will crowd out scarce resources for hiring and increasing pay and directly hurt consumers. the affordable care act has strong incentives to drop insurance. to the extent they do so more

than the cbo anticipates will not only have strong disruption in labor markets, contractual relationships but have a larger budgetary cost associated with the act anticipated and finally even if that doesn't come to pass the affordable care act is indeed a budgetary danger at an important moment in u.s. fiscal history and a strong step in the wrong direction. let me begin by elaborating. of my views on the affordable care act are well known. we are in a situation where the fiscal outlook is a direct threat to u.s. prosperity and freedom. it has a wide array of budgetary gimmicks, relies on unsustainable assumptions on cuts in medicare which counts with particular receipts with class act premiums, recedes into

the insurance fund under various taxes or social security premiums or otherwise of it costs from the legislation itself gives a misleading picture of the budgetary impact and any fair reading is it increases, over the first ten years. we cannot set up two entitlement programs that grow up as far as the eye can see faster than the annual growth, or not fixed the budget outlook. this act did not. turning to labor market implication there are many mandates and taxes and fees will compete for hiring and they produce a bias against labor. the best outcome as it is in all events the best that can happen is nothing. the worst is they will be subject to penalties and fines. those with fewer than 50 employees there is a barrier to

grow. a severe tax and any business will recognize it. there is a small business tax credit. it is temporary. there is no permanent fix for this level. it is very complicated. even as someone wind their way into it has negative economic incentives for growth. there is a tax on success and should be perceived as such. there are $700 billion of taxes in the act. there are taxes -- a surtax on payroll surtax of 0.9%. and 3.8% investment. the same group of small businesses and focus of the recent discussion about the desirability of raising taxes. this bill replicates the mistake the previous congress avoided

and they will hurt jobs for the united states. there are hundreds of billions of dollars of fees with pharmaceutical companies and medical device manufacturers. and they lay out in my testimony these can only be perceived as taxes and sharp as higher premiums and have a dramatic impact if they are not deductible. they are 2-1 more sensitive than they appear. the upshot is these $700 billion will hurt the economy at a time when we can't afford it. we have seen that on top of the additional benefits. this is a bill that would raise premiums. since it doesn't control health-care costs, we see that -- we will see pressure on

health-care costs and insurance premiums. taxes will contribute to that. if you are a worker with coverage dropped you disrupt the labour market bargain. that is bad for the labor market. on top of the growth and jobs incentives we have those lucky enough to have a job. i am pleased to be here today but on balance it is a fair reading of this law that is bad for jobs and growth when we need both. >> thank you very much. mr womack, you are recognized for five minute and you're written statement will be made a permanent part of the record. >> thank you for the temptation to testified today. my name is scott womack, president of womack restaurants. hi am pleased to be here to testify on behalf of the chamber of commerce and come before you on behalf of my company, my industry and small business

entrepreneurs. my first jobs or as a busboy and a coat. i joined the grocery industry after five years and then got fired. i found myself starting over. i was working as a manager at and with the $50,000 loan from my parents are bought my first franchise. after ten years i began building restaurants. in 2006 i purchased a development agreement to expand into ohio. this would mean jobs in ohio not just in my restaurants but in construction, real estate and manufacturing. thanks to this new law those are not going to happen. the restaurant industry serves a certain role in the economy employing 12.7 million people. i like to say it is an industry of first opportunities and second chances. first job is, first career as, first shot at small-business ownership and second chances for people starting over. maybe from a forced career

change or re-entering society from incarceration or second job from people digging out of financial hole. stories like mine are born every day in the restaurant industry. the restaurant business is built on small business model with profit margins of 5% to 7%. we are the most labor-intensive of any industry ranking dead last in revenue per employee at $58,000 per employee. this compares to retail at 170,000 banks and $400,000 in other industries that bring in millions of dollars per employee revenue. the new requirements provide health coverage, is not just a marginal cost increase. this is a huge expense. at $7,000 annually per employee it is beyond our ability to pay. let me be clear about that. i estimate this to be 50% greater than my earnings. please understand me. that is more than i can pay for

coverage. our only alternative is to pay the penalties. those penalties are not tax-deductible so that puts my company at risk and many companies will not be able to pay those penalties and will not survive. restaurants are facing many challenges including rising commodity, fuel and energy prices, state and local taxes and higher unemployment taxes. restaurants are unable to raise prices in this economy. we don't have a way to replace lost income. our only alternative is to cut costs which means cutting staff, reducing hours, pushing people into part-time status. it also means we have to cut outside services further hurting small businesses that serve my company. we will be forced to stop building restaurants and forfeit our investment. this future development would have amounted to $22 million in