we need to make sure to focus on the areas where there is no existing structure. and i would love to work with some wordings between now to strengthen that. i think it is important. i have personal knowledge where they went in and made loan guarantees in areas where we already had service. i think this program, as you point out, was designed to focus on the communities where they're underserved or not served at all. >> thank you very much. certainly tracking with those remarks, the priorities of the program goes to the unserved areas, and i know that in my working with the administration, they've been very sensitive to feedback that you've given, particularly with an eye towards making sure that they're moving to unserved areas and also rural areas. so if there's a way that we can

refine this, hopefully with acceptance of this amendment, then certainly i would look forward to working with my colleagues. >> gentleman yields back. the je nan from kansas seek recognition? >> yes. i strike the last word. >> gentleman is recognized for five minutes. >> just a couple quick questions. it's my understanding that congress awarded the usda $2.5 billion for rural broadband projects. i'm trying to understand the 35 million. is that the total for this program? this is just a drop in the bucket based on what they spent during the stimulus package. >> these are two programs now. i'm dealing with the low interest loan program which last year we finished the stimulus program and we had the first year of the new and improved rus program, that is to say the tweaks that were made to the

progr program. unfortunately the program, there were no loans that came out. and when i asked why, i mean, one of the reasons why is the state of the economy. but another one was is just having this at a point that the practice is to be used. but this is not the stimulus program. >> thank you, mr. chairman. i appreciate that. i noticed one entity received $100 million in grants and loans. it doesn't seem like $35 million will do much of anything in the area. i appreciate the clarification. >> the thing to know is this is money available for loan, and, you know, what it does is allow for significant -- for example, the $6 million that i sponsored last year was a loan guarantee that allowed for over $200

million. so if that helps to answer your question. gentleman yields back the balance of his time. >> i move to strike the last word. >> gentleman is recognized for five minutes. >> we come from districts that adjoin one another. and those areas are clearly underserved and extremely rural. and it's important for both economic, held and safety reasons that we have the ability to expand broadband. and you would urge you to take that into account, the entire package that we're looking at and how it's going to impact mr. gibson's constituents and mine, and i suspect many others around the united states. thank you, and i yield back.

>> additional requests? seeing none, we'll proceed to vote on amendment number 12. all those in favorite signify so by saying aye. opposed, signify by saying nay. nos appear to have it. gentleman requests oo recorded vote. clerk will call the role. mr. goodlack, no. mr. king? >> no. >> mr. king, no. mr. conway? >> no. >> mr. conway, no. mr. thorntonbury? >> no. >> no. big, no, no, no.

mr. rooney, no. mr. gibbs, no. yes. mr. gibson, no. mr. sutherland, no. mr. crawford? >> no. >> mr. crawford, no. mrs. heelscamp, no. mr. gibson? >> yes. >> mr. holgrin? >> no. >> -- is this. >> this agriculture markup started at 10:00 eastern this morning and could go until 9:00

tonight. the legislation reduces spending by $1.6 million our live coverage of a markup is using to the companion network, c-span 2. in a few moments, a discussion of the tax provisions of the 2010 health care law. and in an hour and a half, a hearing on state and federal cooperation on border security. >> when you realized they were trying to escape really into the west, that's when he collapsed, when he felt he realized finally it had come to an end.

his main priority is not to be captured by the russians. he was afraid of being ridiculed. so he was determined to die. >> now a discussion of the tax provisions of the 2010 health care law. this is an hour and a half. >> for the next hour and a half or so, we're going to look at the specific tax provisions that are located within the affordable care act. we asked two gentlemen to join us to talk about the things. not only explain them. but particularly explain what it means for you and me. joining us now is joseph henchman with the tax foundation. he's the legal president and donald marin of the urban

brookings tax policy center. welcome. >> thank you. how much of the success of the affordable care act is based on the tax vstructure it had? >> from a budget point of view, taxes are important for paying for the health care costs. in addition, several tax provisions serve to make them work better. most famously to encourage them to get in the discussion. also penalties on employers to do the same. there are also tax provisions to help coverage. to help cover some of the costs. >> well, there are also a lot of problematic provisions in the bill. on the tax side. i think a lot of people support the bill or oppose the bill based on the health care

provisions. but on the tax side, you have some provisions that can be very problematic. how that will take effect. and as well as the new investment tax that goes to the medicaid payroll. >> so as far as the structures themselves, what else about the structure? >> well, it's certainly not anything that most economists would design for a tax system. it relies a lot on -- let me give you one example. there's a provision in there that if a 50 employees they have to provide health care. if they have less than 50 employees, they don't. if you have 49 employees, you don't have to cross the line. that can create some very

perverse incentives. it's going to be a big decision to make that 50th hire. if you have 55 or 53, maybe you want to get rid of some to get below the threshold. that's just one example. there's a number of others in the bill. is that the employer mandate fee that we're talking about? >> right. different from the individual mandate that we heard. >> you can talk about the structure and give your perspective on it as well, the way it's shaped. there's a challenge of how you encourage people to get health insurance in a world where we, the united states, appear to want a significant private market. and there was a lot of desire to have health insurance structure that you can't rule out people in the same conditions are charged with. and it's difficult to design a system that does that without something to encourage the vast mmt of people to get insurance. the nick principle is to

encourage people to have a better functioning market. so the employer market starts in 2014. you get $2,000 for full-time employees. with fewer than 50 full time employees, the first 30 -- so there's a lot of rules there. >> the idea is a lot of americans get their health insurance from their employers today. they will get subsidies paid for by the tax payers. and so to have them pay a fee, a penalty, a tax, whatever you want to call it.

if they end up getting subsidies from the federal government. and there's a lot of bells and whistles about that. >> so specifically 15 and below that we're talking, as far as employers are concerned. >> the 15 below is so there's a credit to help small businesses provide coverage. and separately there is a penalty, an employer mandate on large businesses if they have folks who go into the exchanges. >> what does that mean as far as my payroll? my checking? the things i have to do as far as economics are concerned? >> well, you have to provide coverage. dr. marron talked about the importance of providing incentives, and those are in the bill. we can debate if those are good

or bad ideas. those are distinct from the penalties. and the subsidy works how? >> well, a lot of it we have yet to see. as, of course, the bill has been upheld we're really moving towards implementation. and it's new. the health and human services department still needs to write a lot of regulations. the irs needs to figure out how to implement this. we had the election this year. >> so our gress will join us to talk about the tax provisions in the affordable health care act. here is the number to call.

202-628-0205 for independents. our focus for this time is to kind of look at specific tax provisions. the role of the irs, how does it change now. >> it's been interesting over the last 20, 25 years. increasingly congress calls upon the irs but also to be a tool for implementing social and economic policy. the irs will be in the position of distributing subsidies to employers to help them get health insurance and imposing the penalties to discourage people from not having coverage and discourage employers from not offering it. >> is the irs prepared for this? >> i don't think they are. although they're hiring

thousands of new agents to get ready for it. i think dr. marron is right. we've been more an implement of policy. our view is the tax code is used to raise revenues not to encourage or discourage the behaviors frankly because the irs isn't good at it. those are problematic when you use them to achieve certain social policies. they're very good for raising revenues. there's a reason a lot of people are afraid of the irs and very concerned about the privacy issues of having the irs become the new inch lemters of the health care law. >> let's take calls, bellevue, nebraska. carol is on the republican line. good morning. go ahead.

>> caller: thank you. my question is, if we have this law, why can't the person who does not want to be involved and mandated to pay into the insurance, why can't they sign a simple form stating that if they get sick, ill or hurt in my way that they will be totally responsible for all the costs? without any government help? >> the issue is whether people can sign to wave their right in the future to seek assistance. i think the view of congress is you can't do that in the future. you can say you weren't going to get government support. the private sector has a lot to provide. an approach like that wouldn't be enforceable.

>> washington, d.c., good morning, joe, democrat's line. >> caller: how are you? >> i'm doing well, thank you. >> caller: i have two questions for you. the first is the foundation is listed by source watch as receiving significant support from exxon mobil and the coach family foundations and was, in fact, founded -- and so the question is that it's hardly an unreasonable leap to regard your organization as one that is devoted to protecting the interest of those large corporations and their tax privileges. and it's true. and it seems in all honesty likely to be true.

>> caller, we'll let the guest respond and then have your follow up. >> we were founded by a lot of businessmen who were concerned about making sure americans have access to good information. we get accolades from people across the ail having reputable, reliable work. although we get funding from individuals and businesses and foundations no one funder provides more than 8% of the total funding. >> so caller, what do you have a question about as far as the affordable care act? >> caller: well, the affordable care act is mr. enchman just stated that he should be regarded on the quality of the data well, the fact of the matter is the foundation has been criticized by a tax with regard to the data on such acts by the center on policy

priorities method logical areas. >> we'll let that stand. let's go to the individual mandate penalties. it starts in 2014 with a penalty of 95 dollars. in 2016 it goes to $695. talk about that. >> like many things it's not complicated. or, 2.5% of your income above the threshold up to a cap. so this is kind of complicated. we have a new report on the website. they give some examples of families of different sizes at 20,000, 55,000, 75,000 and what that means in dollar terms.

anywhere from 695 to $200,000. as i said, there's a cam. but the amount can vary a little bit. how we expect it to be implemented, although it has yet to be determined is from massachusetts. there will be a line on the tax form. it will say please write in your account number. >> how many people are going to be penalized? how many people are going to be penalized by estimation? >> a relatively small number of people. a couple percent of the population. >> they estimate by 2020 it would raise $4 billion a year. i think that's as good of guess work as there is. i think it will remain to be

seen. they upheld the penalty in part because it's low. it doesn't cover the cost of insurance. you would always want to take the penalty. it remains to be seen how people will react to the incentive. especially if health care costs continue to rise as they have in the past. >> so health insurance provides benefits to folks and they have to do the balance. what happens if someone decides to pay the penalty year after year? what eventually happens, aside from paying the fee? does anything else happen to them? >> they go each year without health insurance. so they face the risk that something bad will happen to them. and then they face the issue of do they do it out of their own pocket? how hard is it going to be make

to make the case for hardship extension? or how easy, perhaps? >> you know, i don't know. i don't. i think that they don't make it very easy. at the same time, the irs is limited in the things they can do to enforce collection of the tax. as chief justice robert called. they can't garnish wages. they can't pursue penalties. a lot of things they normally do they can't do in this case. certainly to good lawyer or accountant would advise don't pay it. a lot of the legals will not follow for not paying the individual mandate. people who already made the decision that if they do not want to buy health insurance that's in the current market. what will happen if they all pay the penalty instead of getting insurance? we'll still have people showing up in the hospitals and getting care they're unable to pay for.

is there going to be pressure to raise the penalty above what it currently is? and will it raise new constitutional questions on how it was held by the supreme court? >> jeremiah on the republican line, good morning. >> good morning. a question regarding two laws that are into the bill. one is it will take affect in 2013 as a real estate tax. 15% and in 2018 there will be a 40% excise tax. i don't know in you have any information on that. >> let me start with the real estate one. so this turns out to be a widespread misconception. when it starts on january 1st, it's a new tax on net investment income on high income folks. high income as the president has defined them above 200,000 individuals, $250,000 for a

married couple. so capital gains, dividends, interest royalties, all of them. and the question is how do they supply the real estate? and when people sell their homes, they realize capital gains, but for the vast majority of americans those capital gains are exempt and would be exempt from the new 3.8%. only an unusual person who has more than a $500,000 gain on their house and is above the income threshold that would face the 3.8, not 15% tax. >> i would only add to that right now capital gains are taxed at 15%. at the end of the year the bush tax cuts expire. that will go up to 20%. and this new tax will kick in. that will raise it further to 23%. we're talking a significant increase on capital gains.

and this is just the beginning. massachusetts, when they enacted their health care law, expanding coverage and pay r for it out of the public budget, they ultimately had to raise their sales tax to pay for it all. so the whole act is premised on the assumption that it will reduce health care costs and inflation going forward. if that turns out not to be the case, we'll see pressure po see the tax rates. >> you mngsed 3.8%. the other thing is 0.9 medicare payroll tax. 250,000 for individual. can you put that into the perspective as far as people who are going to pay that? >> sure, as folks know you pay social security payroll taxes on your income, your earnings up to 110,000. in addition, there's a medicare

tax that's untaxed advised to the income. the bill increased the tax rate by.9% for foks above the level. so the significant tax in the neighborhood of $100 million to help pay for the health care bill. that is paid in addition to that. the difference is the 3.8% is a normal income tax. it goes into general revenues despite being named in the bill, having something to do with medicare. >> if i could add the caller asked about the 40% tax on cadillac plans. that's another provision. the plan essentially offers congress too much coverage, insurance companies that offer those plans will have to pay a 40% tax on the amount of coverage. it's a very hefty amount of money.

and all the the taxes together. you could see how they will affect your bill, on our website on interactive taxes. we have a nice little calculator tool to put in information about yourself. you can see how it will affect you. zbli good morning, gentlemen. i haven't seen this any place else. there's 21 new taxes n the aca bill. it's going to ask middle class as well as the high earners. has anyone figured the total tax bill for someone who is say in the $100,000 income range? >> it's tough to do. i'm sorry. i would invite you to go to our website. you can enter in your information and see how the taxes would affect your personal situation. but there are taxes that apply to high income earners, middle income earners.

almost everybody is affected in some way or another. >> yes, i have a question. why would anybody who does not have insurance, if they pay this penalty, if they pay the penalty, which they could get away with anyway, why would they buy insurance since the moment they need insurance they can go buy it. with no rejection at all? so the hope is that the penalty we announced perceive the financial cost offspeed for them. and in addition, it has a variety of subsidies to help folks with moderate incomes stop the costs of the insurance.

>> i agree with that. i think it's true. the caller raises a good question. with tens of millions of people uninsured, also unemployed, often times, sometimes a subsidy will not be enough. sometimes the medicaid expansion will not be enough to cover people. especially if a lot of states opt out of the program. so we may have a lot of people that pay the penalty and maybe a few years down the line will realize instead of 30 million uninsured, we have 30 million uninsured who are paying a penalty and we have the same problem we started out with. >> if i could put some numbers on that. the congressional budget office rejects that the bill would reduce the number of