you are why we spent so much time in this state a few years ago. because even then, those ideas - the idea that's at the very heart of the american dream - felt like it was slipping away for a lot of people. it was wonderful visiting with patrick and donna, and we were talking about the fact that patrick has been -- patrick festa has been teaching in the school system for 25 years now, donna has been a graphic artist. but they're still worried about if the washer/dryer goes out, or if they have to do a car repair. things are tight. and they're pretty lucky that they've got a good job, steady jobs. for a lot of folks, it's a lot tougher. and we've gone through a difficult decade for middle- class americans. more good jobs in manufacturing left our shores over the last decade. more of our prosperity was built

on risky financial deals and homes that a lot of folks couldn't afford. and a lot of you watched your incomes fall or your wages flatline. meanwhile, the costs of everything from college to health care were all going up. and then, after all that, the financial crisis hit because of the irresponsibility of some on wall street. and that made things a whole lot tougher. today, we all know folks who've spent months looking for work. we all know families making deep sacrifices just to get by. we all know young people who have gone to college, they've taken on a bunch of debt. now they're finding that the opportunity that they worked so hard to find is getting harder

and harder to come by. so there's a sense of deep frustration among people who've done the right thing, but don't see that hard work and that responsibility pay off. and that's not the way things are supposed to be, not here in america. but here today with all of you, i'm thinking about something that is probably joe's favorite expression. and some of you know joe's story. he went through some tough times when he was a kid. and his father used to tell him, champ, when you get knocked down, you get up. you get up. and scranton, we've taken some punches these last few years. but there's one thing i know about people here in scranton, people in pennsylvania, and people all across america, we are tougher than the times. we are america. we get back up. we fight back. we move forward. we don't give up. we get back up.

and even though our economic problems weren't caused overnight and so they're not going to be solved overnight -- even though it's going to take a few more years to meet all the challenges that were decads in the making -- we're fighting to make things right again. we're fighting to make sure that if you are working hard and you are carrying out your responsibilities and you're looking out for your family, that you can live a good, solid, middle-class life. that is what america is all about. and we are going to be fighting for that every day, every week, every month and every year that we're in office. we want an america where hard work is valued and responsibility is rewarded. we're fighting to rebuild an economy that restores security for the middle class and renews opportunity for folks that are trying to get into the middle class.

we're fighting to build an economy that's not based on outsourcing and tax loopholes and risky financial schemes, but one that's built to last -- one where we invest in things like education and small businesses an economy that's built on manufacturing and building things again and selling them all around the world. and we're going to keep fighting to make our economy stronger and put our friends and neighbors back to work, to give our young people opportunities greater than the opportunities that we had. that's what we've been doing for the last three years. but two months ago, i sent a particular piece of legislation to congress called the american jobs act. this is a jobs bill that will put more americans to work, put more money back in the pockets of working families.

it's contains ideas that historically have been supported by democrats and republicans. it's paid for by asking our wealthiest citizens to pay their fair share. and independent economists said that it would create up to 2 million jobs, and grow the economy by as much as 2 percent. and that's what we need right now. now, here's the problem -- there is a problem. folks in washington don't seem to be getting the message. when this jobs bill came to a vote, republicans in the senate got together and they blocked it. they refused to even debate it. even though polls showed that two-thirds of americans of all political stripes supported the ideas in this bill, not one single republican stepped up to say, this is the right thing to do.

>> booo. >> not one. but here's the good news, scranton. just like you don't quit, i don't quit. i don't quit. so i said, look, i'm going to do everything that i can do without congress to get things done. so let's just take a look over the past several weeks. we said, we can't wait. we just went ahead and started taking some steps on our own to give working americans a leg up in a tough economy. for homeowners, i announced a new policy that will help families refinance their mortgages and save thousands of dollars. for all the young people out

here we reformed our student loan process to make it easier for more students to pay off their debts earlier. for our veterans out here -- and i see some veterans in the crowd we ordered several new initiatives to help our returning heroes find new jobs and get trained for those jobs. because you shouldn't have to fight for a job when you come home after fighting for america -- you shouldn't have to do that. and in fact, last week i was

able to sign into law two new tax breaks for businesses that hire veterans, because nobody out here who is a veteran should -- we have to make sure that they are getting the help that they need. >> thank you, mr. president. >> and by the way, i think we're starting to get, maybe, to the republicans a little bit, because they actually voted for this veterans bill. i was glad to see that. i was glad that democrats and republicans got together with this bipartisan legislation. now, there's a lot more to do, though, if we're going to get every american back to work who wants to work, and to rebuild an economy that works for every american, which is why we're going to give congress another chance to do the right thing with the american job act.

we're going to give them another chance to help working families like yours. last year, both parties came together to cut payroll taxes for the typical household by $1,000. now, that's been showing up in your paychecks each week. you may not be aware of it, because times are tight. but you actually got a tax cut of $1,000 this year. now, i know you hear a lot of folks on cable tv claiming that i'm this big tax-and-spend liberal. next time you hear that, you just remind the people who are saying it that since i've taken office, i've cut your taxes. your taxes today -- the average middle-class family, your taxes today are lower than when i took office, just remember that. we have cut taxes for small businesses not once, not twice, but 17 times. the average family's tax burden is among the lowest it's been in the last 60 years.

so the problem is not that we've been raising taxes. we've actually been trying to give families a break during these tough times. but here's the thing, that payroll tax cut that we passed in december of last year, it's set to expire at the end of this year, one month from now. if that happens -- if congress doesn't act to extend this tax cut -- then most of you, the typical middle-class family, is going to see your taxes go up by $1,000 at the worst possible time. a young lady just said she can't afford that. it would be tough for you. it would also be a massive blow for the economy, because we're not fully out of the recession yet. don't take my word for it, this is what every independent economist says. we can't let this tax cut lapse right now. and that's why my jobs bill --

part of the american jobs act was to extend this tax cut for another year. in fact, it does one better. it says, let's expand that tax cut. instead of a $1,000 tax cut next year, the typical working family under my plan would get a tax cut of $1,500. instead of it coming out of your paycheck, it would be going into your pocket. now, that's money that you can spend on a small business right here in scranton. if you're a small business owner, my jobs bill will cut your payroll taxes in half. so if you've got 50 employees making $50,000 each, you'd get a tax cut of nearly $80,000. that's money that you can then use to hire some more workers and get this economy moving again. that's a good thing. now, this really should not be controversial. a lot of republicans have agreed with this tax cut in the

past. the republican leader in the senate said it would -- i'm quoting here -- it would "put a lot of money back in the hands of business and in the hands of individuals." that's what he said. another republican leader said it would help small business owners create jobs and help their employees spend more money, creating even more jobs. one republican even called it a "conservative approach to help put our economy back on track." so what's the problem? the bad news is some of those same republicans voted "no" on my jobs bill and those tax cuts. i don't know whether it's just because i proposed it. i don't know. taxesaid "no" to cutting for small business owners and working families. one of them said just two years ago that this kind of tax cut would boost job creation, and now that i'm proposing it, he said we should let it expire. i mean, what happened? republicans say they're the party of tax cuts. that's what they say.

a lot of them have sworn an oath to never raise taxes on anybody as long as they live. that doesn't square with their vote against these tax cuts. i mean, how is it that they can break their oath when it comes to raising your taxes, but not break their oath when it comes to raising taxes for wealthy people? that doesn't make any sense. i mean, i hope that they don't want to just score political points. i hope that they want to help the economy. this cannot be about who wins and loses in washington. this is about delivering a win for the american people. that's what this is about. you know, $1,500 -- that's not a band-aid for middle-class families, that's a big deal. how many people here could use an extra $1,500?

yes, i thought so. so i'll tell you what, scranton. they may have voted "no" on these tax cuts once. but i'm already filled with the christmas spirit. there's kind of some chill in the air. i saw some christmas decorations at the festas. so i'm in a christmas spirit. i want to give them another chance. i want to give them a chance to redeem themselves. we're going to give them another chance. so as early as friday, this friday, in a couple of days, we're going to give them a chance to take a simple vote on these tax cuts. if they vote "no," then the typical family's taxes will go up by $1,000 next year. if they vote "yes," then the typical family will have an extra $1,500 in their pocket. so let's just be clear, if they vote "no," your taxes go up,

vote "yes," you get a tax cut. which way do you think congress should vote? they should vote "yes," it's pretty simple. now, if you want to see what this vote will mean for your bottom line, we have this spiffy new tax calculator on our internet site, whitehouse.gov. so you can go on there and you can punch in your numbers and figure out what it would mean to your family. but this is real money that would go into the economy at a time it needs it. now, i really do think your voices are already getting through, because some of the folks in congress are starting to say, well, maybe we're open to this thing. maybe we'll be open to these tax cuts. and that's good news. but i want to make sure that we do this responsibly. so what i've said is, to pay for this tax cut, we need to ask wealthy americans to pay their fair share. we're asking -- what we've said is let's ask the folks who've seen their incomes rise fastest, who've gotten bigger tax breaks under bush, let's ask them to help out a little bit, because they made it better through the recession than most of us.

let's ask them to contribute a little bit more to get the economy going again. and i just want to point out i've done pretty well over these last few years. so i've said, let me pay a little bit more. i promise you, i can afford it. i really can. we're asking people like me to sacrifice just a little bit so that you guys have a little bit of a leg up. and by the way, let me say this, when you talk to most folks who are making a million dollars a year, they are willing to do more if they're asked. warren buffett is a good example.

they're willing to do more if they're asked. now, i mean, i don't want to exaggerate. it's not like they're volunteering. but if they're asked, if they feel like it's going to help middle-class families, help grow the economy, help to reduce the deficit, they're willing to help. i can't tell you how many well- to-do folks i meet who say, look, america gave me a chance to succeed. somewhere along the line, somebody gave me a good education. somewhere along the line, somebody gave me a college scholarship. somewhere along the line, somebody built the information and transportation networks that have helped my business grow. somewhere along the line, somebody gave me a shot. and so now it's my turn to do the next generation that same good thing. i've got to give something back to them as well. because, scranton, this is

something everybody in this audience understands. when you think about the history of scranton and the immigrants who came here and worked hard, each successive generation doing a little bit better -- you guys know that what america is about is that we're all in this together, that each of us has to do our own individual part, but we also have to be looking out for one another. and that's the very simple choice that's facing congress right now, are you going to cut taxes for the middle class and those who are trying to get into the middle class? or are you going to protect massive tax breaks for millionaires and billionaires, many of whom don't even want those tax breaks? are you going to ask a few hundred thousand people who have done very, very well to do their fair share? or are you going to raise taxes for hundreds of millions of people across the country -- 160 million americans? are you willing to fight as hard for middle-class families as you do for those who are most fortunate?

what's it going to be? that's the choice in front of congress. and i hope members of congress think hard about this, because their actions lately don't reflect who we are as a people. what does it say about our priorities when we'd rather protect a few really well-to-do people than fight for the jobs of teachers and firefighters? what does it say when we -- about our values when we'd rather fight for corporate tax breaks than put construction workers back on the job rebuilding our roads and our bridges and our schools? what does it say about us if we're willing to cut taxes for the people who don't need them, and raise them on folks who do need a tax break? we are better than that. america is better than that. we celebrate individual

achievement, we expect everybody to work hard, but we don't believe in every person for themselves, we believe that out of many, we come together as one. we're a people who reach for our own success, but we also reach back for the people -- to bring somebody up. reach back to help others earn their own success as well. and we believe that if the folks at the bottom and the folks in the middle succeed, then american succeeds, and the folks at the top succeed as well. the decisions we make today are going to determine whether or not our kids grow up in a country where those values still thrive. and scranton, i don't know about you, but i want our kids to grow up -- i want malia and sasha and all your kids, i want them to come into a country that is built on those big, generous values an america that reflects the values that we inherited from our parents and our grandparents.

so if you agree with me, i need you to tell congress where your priorities lie. members of congress, they work for you. scranton, you've got a great senator in senator casey. i love senator casey. so i want you to know, casey is already on the program. but to everybody who is here, everybody who is watching, send your senate a message -- send your senators a message. tell them, "don't be a grinch." "don't be a grinch." don't vote to raise taxes on

working americans during the holidays. make sure to renew unemployment insurance during the holidays. stop saying "no" to steps that would make our economy stronger. put our country before party. put money back into the pockets of working americans. do your job. pass this bill. scranton, the american people are with us on this. it is time for folks to stop running around spending all their time talking about what's wrong with america. spend some time, roll up your sleeves, and help us rebuild america. that's what we need to do. there is nothing wrong with this country that we can't fix. we're americans, and our story has never been about things coming easy to us. that's not what scranton has been about. that's not what pennsylvania,

that's not what america is about. it's been about rising to the moment, and meeting the moment when things are hard. it's about doing what's right. so let's do what's right. let's prove that the best days of america are still ahead of us. god bless you, and god bless the united states of america. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

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at the candidates are saying. >> ray yuma's on the path. >> young people are here today. including the ones that were chanting at me. you're the reason i ran for office in the first place. >> every household would say $25 a year.

they said they have say $2,500 a year on health insurance. >> read the latest comments on the media partners. >> a hearing looks at the pros and cons of internet purchases which are not subject to sales tax. then mitch mcconnell and lugar on the keystone pipeline. the house debate on unions in the workplace. every american prisoner will be out of this and out of the cell and that, in america where they belong. >> this was the 1972

presidential election. he suffered a landslide defeat that year. his groundbreaking campaign change american politics. he is speaking this week on "the contenders." >> said the committee explore several pending house bills that would allow states to collect sales tax from online purchases. in 1992, the roads that retailers with no physical presence did not have to take taxes. executives from online retailers ebay, amazon, and overstock testified. >> the committee will come to

order. we welcome everyone here. it will be of great interest. this is reflected in the audience. i will recognize my opening statement. we will then proceed to questions. last friday was the unofficial beginning of the holiday season. many americans have begun to wait until the monday after thanksgiving to shop. online merchants offer deal similar to the brick and mortar stores on black friday. they usually do not collect sales. the grants congress the exclusive power to regulate internet commerce. the clause prohibits a state

from taxing a substantial nexus. it refers to relationship of the tax authority and the taxpayer. they established a bright line physical presence. the supreme court was concerned of the small businesses. it had a physical presence. each have their own tax bases and rates. they have concepts like this to show requirements. it has the power to tax.

it places an undue burden on interstate commerce. they have the impact of them on their operations. this hearing books for two issues. first by the congress and the power to enact before legislation and if congress should act, and how we can do so in a manner that does increase compliance burdens on america's small businesses. some in the community believe that physical presence is a fine role. allows them to transport goods to customers. most states cannot require the retailers to do this. some argue that few was

precisely the benefits and that congress should take no action. it is precisely this reality that frustrates the retailers to claim to suffer a disadvantage compared to their online counterparts. revenues are also affected. they have a sales tax. the also have a use one equal to the sales tax rate which they must pay for the consumption or storage of goods purchased in a non president states. a shopper in austin texas to buys goods online that lacks the physical presence in texas is expected to pay texas tax even though they pay no sales tax on his transaction. states rely on taxpayers to sell the one.

online purchase issues save it all together. it should also find a way to enforce it. those who like to see it are eliminating the need for the package. i am aware of three legislative proposals that can give state nexus over on-line and other remote sellers. congress has reintroduced the main street fairness act. they have introduced the marketplace equity act. this is an oversight hearing. i am by the witnesses to comment. a look for to hearing from our witnesses. i look forward to

hearing his statement. >> thank you. >> i have to go to a hearing on the house administration to cite how much we will cut every committee. i miss that. >> >> i ask unanimous consent on the proposed streamlined sales fact be made a part of the record. >> without objection. michiganentleman from missio is recognized for an opening statement. >> thank you. i want to associate myself with the chairman's opening statement and description of why we're

here this morning. i am glad that he mentioned my bill. we can enjoy the benefit of his support. we all know about the decision. since the decision, there has been a tremendous growth in online commerce. the number and diversity is a good purchased from march online retailers with little physical presence. it has dramatically increase.

it does increase 38% over the weekend. it is now online. the result is that online retailers have an unfair advantage over local and small businesses who are required to collect sales taxes. we are exploring the need for legislation to level the playing field between small businesses and online retailers. main street retailers, a local mom and pop stores and even some of the big retailers sufferer when they have to collect a sales tax and online retailers

don't. fewer purchases means less local jobs. if i might suggest to you that the 38 present retail number is going up. for the number of people purchasing is going up. it is at 38% are ready. lower sales and local retailers means lower revenue for local and state governments as sales taxes constitute a significant revenue source at each and every state. with ever increasing online sales of state and local governments anticipate larger and larger revenue losses, it is

up and use taxes. michigan estimates it has lost a round $368 million each fiscal year and that it will lose more than $450 million in fiscal year 2013. the impact is reflected in reduced school programs, extracurricular activities in public school systems around the state, bridges and roads in need a critical repairs are for police and firefighter protection.

would grant the consent of congress to the streamlined sales. would simplify the sales tax moues and administrative requirements, making it easier for businesses to have sales tax across state lines? 24 states have changed their laws to comply. i await your consideration of the great witnesses we have. we urge that we consider the merits of all the bills.

by thank you. >> thank you. i like to recognize steve womack. thank you. a one-out good to the introduction of eyewitnesses. -- i will now go to the introduction of eyewitnesses. >> thank you. i am happy to introduce our first witness at this hearing. he is a small business owner from lansing, mich.. he comes from a family-owned chain of music stores. he has seven stores located throughout michigan. i should visit u.s. often as i

can when we have the time in busy congress. his parents founded the store in in 1948. it has grown and is doing well. he now has 300 full-time and part-time employees. music instruments and offers performance spaces. i'm doing quite a bit of advertising for you today. i am glad that you are here to tell your story on behalf of many of the small business owners in country. thank you. >> thank you. >> our next witness is dr. patrick byrne.

he is a ut internet based retailer who has been trading since 2002. he takes orders over the internet and relies on this. they reported $1.2 billion in revenue. he received a bachelor's degree in philosophy. he has a doctorate in philosophy from stanford. he has frequently guest lecturer on businesses. >> the net when this is my state representative from texas. -- my next witness is my state

representative from texas. they had a population of about 5000 and a high school football stadium that seats 7000. it is always full on friday nights. by trade, he is a cpa. he has served on the house appropriations committee. he is the vice chairman on the ways and means committee. in 2008 he was chosen to share the appraisal reform. texas monthly has named him one of the 10 best legislators in taxes. he is a graduate of texas a&m. orange back tonn

celebrate the texas game. >> our next guest is the vice president of government relations for ebay. they are adding paypal and which require in 2002. 2006 he became responsible for the intellectual property work. he received highest honors from the george washington law school in 1992. before that he worked as a congressional aide. ebay facilitate private transactions between private buyers and sellers. ebay boasts 100 million users worldwide.

2010 the total value was sold for $62 billion which is more than $2,000 every second. the next witness will be introduced by the gentleman from indiana. >> thank you for the courtesy of having a chance to introduce and welcome my friend and fellow hoosier. after a long career, it is his first opportunity to testify before congress. he is a five term indiana state senator. he has provided exceptional leadership on fiscal responsibility and policy. he is chairman of the senate

committee for appropriations. i hasten to add indiana has found a way even in these difficult times to balance our budget without raising taxes. he has been a driving force in making indian of the fiscal standout of the nation. he answered the call of this country and enrolled in the school for the u.s. army and graduated first in his class. he returned to harvard to get his law degree. he comes before us today on behalf of the streamlined board

as president. they have been a leading advocate for their collection. i am confident his experience in this area will be of great benefit to the committee as the work toward an equitable solution for all parties concerned. thank you for the courtesy of allowing me to introduce this esteemed fellow who's year. i yield back. >> thank you. my final witnesses, eisner. paul meisner. he earned his law degree from george mason. he works for amazon and represents the positions worldwide as well as managing policies in asia and north

america. amazon the filled orders and 45 countries all shipped from his home garages. he is now preparing gourmet foods over the internet. we appreciate the witnesses who are here today. mr. marshall, we will begin with you. >> your microphone is on. is it on? >> thank you. good morning. i represent the martial music

company, and a chain of retail music stores. i'm here to speak on behalf of the michigan retailer association. it is an association of small business entities totaling roughly 4800. i am here to speak on behalf of retailers. this is done on level playing field -- an unlevel playing field as retailers having customers every day and every hour that we operate coming in and price shopping in comparing our price with internet retailers that and not collect the michigan sales tax. he started in in 1948 by my

mother and father. i am a second generation family leadership. we have seven locations. we provide sales and service from musical instruments. we call on music educators throughout the state of michigan. i cannot tell you what challenges retailing in a state like michigan have presented. myself and other mainstream retailers have adjusted to the economic realities. we are prickly comfortable with

the absence of competition. the size of small business i think is something that somehow gets lost in the shuffle. michigan retailers, a casual measurement, roughly 70% are doing less than $300,000 a year in business. many times it is a husband and wife. it is not a big numbers game. it is replaced with retailers just like my family who every

day employ cigna began numbers of people for services and support. we got 8 inches of snow overnight. there is snow removal companies removing snow from all of our parking lots. internet retailing is a wonderful opportunity for small business people. it allows us not to sell everything we have a in inventory -- we're not prepared are capable of providing the support. it represents our entire

project. in virtually every instance, there is some area of expertise , whether it is oddball obsolete that uses a merchandise to promote that to a much larger market. this is exactly what we do. we will put it on the internet and find a buyer and a larger market. i understand and accept that we have to be competitive. we are. b. price match every day. we price our products according to what the marketplace dictate. to have that additional 6%

different create an unlevel playing field and does more really makes sense to me our other retailers. why they have to pay sales tax when they buy from a local merchant or an internet a presen michigan, where as if they do business with somebody who is not employing people were supporting the michigan economy, that retailer does not have to collect sales tax. as far as requiring us to collect sales tax from of the state sales, i see that as a doable in denver. -- endeavor. if people perceive a need, they are going to flock to fill that need. the resources available today make collection possible. i am sure it will make it easier and more streamlined if you

provide states like michigan legislation to allow us to have all engine that retailers collect cat. >> thank you. -- all internet retailers collect tax. >> thank you. >> good morning. my name is patrick, i am the chairman and ceo of overstock.com. thank you for inviting me to share my views on sales tax and the commerce. my view is that a brick and mortar has become a 87% -- big box has become 87% of brick and mortar. we are trying to get a lot that will suppress competition from small, remote sellers. for that reason, we support the current law, the quill decision.

it allowed a vibrant, innovative e-tailer. we oppose the bill that would cause for most retailers to be sales tax collectors. had those obligations existed in 1999, we would not be here today. in 1999, we had 18 employees, carried 100 products, and had $100 million in revenue. if we had to collect sales tax on behalf of other governments without compensation, our chance of becoming an employer affecting hundred american workers would be small. the taxing jurisdictions, the availability of off-the-shelf software solutions, the cost of employing people to implement

and manage the software, the administration and resolution of state audit. the risk for penalties for software errors and omissions. the question the committee must consider, is whether this innovation will continue if congress altus' current laws -- laws. currebntnt the pending bills allow states to shirk their responsibility. instead, but that responsibility on businesses. it would poison the for tell ground for new, innovative e commerce firms. we oppose the bills because we believe taxing jurisdictions should be responsible for collecting taxes for residents and should not unilaterally outsource the burden of collecting taxes from residential states where those retailers have no present.

the absence of any threshold in the bill makes remote sales tax collection a burden. however, if a majority is determined to replace current law, overstock believes that if there come a legislative solution must include three elements. -- that a fair legislative solution must include three elements. the states should be required to provide plug and play software solutions. the current bill claims those are available in the marketplace. they are not. we have been considering opening a warehouse in kentucky. we acquired an affordable plug and play software package that would insure we were in compliance with the tax obligations. the reality is that the off-the- shelf software, free and thousand dollars worth of investment -- $300,000 worth of

investment. it would be difficult for companies like mine. if states want to collect tax on our sales to their residents, they should greet software that makes it possible to do so. they tell you this exists. retailers should be reliable to state. -- should not be reliable to state or plant of lawsuits -- plaintive lawsuits. third, tax authorities should compensate all retailers after implementing state software and collect sales tax on their behalf. it is expensive to implement a software and collect and remit the tax. i cannot force of the parties to

work for free. state should not make businesses do their work. i have attached my written testimony. i believe it will garner support from e commerce companies and brick and mortar companies. particularly, smaller and midsize and big retailers who would otherwise be heard by the pending bill. thank you. >> thank you. >> thank you, chairman. since 1992, a quill the has been the le -- the quill decision has been the law of the land. over the last 19 years, technology has advanced to the point that a physical presence can be controlled and isolated it to a few states while selling

into many states. if you doubt that, you have two online retailers, i would be curious to know how many states they sell into purses how many they claim a physical presence in. if action is not taken and quill remains the law of the land, are we not picking winners and losers? hr 3179 levels the playing field while protecting state's right. that is important here. previous legislation that has been introduced has contained it a requirement that the state joined the contact in order to receive the benefits of that legislation. while i support the right of states to join the compact, i do not believe a state should be forced into joining the contact in order to receive the benefits of legislation. hr 3179 leaves it up to each

state, whether they wish to join or not. let me also point out, in my opinion, the state will comply with the requirements as soon as they adopt a small-business exemption. they are at an advantage in regards to how closely they can implement hr 3179. let me address what i think is best serves the interest of states. it requires that small-business exemptions -- it requires a uniform tax rule in the state, centralized filing and remitting within the state, it also offers options on the tax rates, it can be a state-only rate, if you cannot be your local jurisdictions to apply -- if you cannot get your local jurisdiction to apply. it also has an address-based

rate. in my opinion, the requirement for uniform tax is desirable. it may cause delays in implementing the provisions of hr 3179 in some states. this is going to be the biggest issue, how can states implement this? over what time period? in texas, we do not meet again until 2013. it will take several legislative sections -- sessions to get to a uniform tax base if you want to collect local jurisdictions as well. i believe the flexibility provided in this bill best serves the interest of the states in allowing us to level the playing field. i do not fault anyone taking advantage of quill. the marketplace has changed in 19 years.

we have not. if we are going to be fair, what encouragement and by offering to my local business in texas to build a store front as opposed to putting his business online? those of the kinds of businesses that support the local community, they have a physical presence, they are contributors to the little league, they employ my local people. that is why it is important to me that a bill that would follow the fed lends as set out in hr 3179, if congress is going to take action, this is the best legislation i have seen proposed. thank you. >> thank you. >> chairman, ranking members, my name is todd cohen.

ebay and powers and connects millions of buyers and sellers across the globe. our priority has always been the treatment of small business retailers. it creates jobs, but there's competition, and promotes innovation. the internet and mobile and methodology -- mobile technology is part of every business going forward. small business retailers have used the internet to survive and grow. the remote sales tax debate is decades old. well the pro-tax rhetoric stays the same, the world of retail has changed around it. the idea that this debate is about the internet versus offline stores is a false paradigm. all retail business models use

the internet. they also involve physical facilities, like stores, warehouses, and distribution centers. a term you should be comfortable using it as brick and click. it is a number of stores, all combined in a single retail business model. large in store retailers operate rick and click businesses. to give some perspective, 96% of retail goes on in stores. almost 45% of in-store sales are web enabled. big and small retailers offer different benefits on different scales. the models come with different cost. giant retailers with national's board distribution networks offer services like same day -- with national networks offer services like same day delivery. being a giant greeks advantages. -- creates advantages.

they are growing their market share. rick and click retailers are 18 of the top 25 retail -- brick and could retailers are 18 of the top 25 retailers. small-business retailers are losing market share, even under the sales tax status quo. it has been the case for decades. the fundamental threat is coming from billion dollar competitors, not other small businesses. you hear a lot about fairness. if and sized businesses face stiffened conditions -- different sized the this is faced different conditions and different rules. there are higher shipping costs, cut costs, and difficulties dealing with the returns. retail competition is about more than remote sales tax.

the benefits come with tax. that is fair. if remote sales tax laws change without protecting small businesses, consumers will face new challenges. this consumer will not gain any retail benefit. without a small-business exemption, remote sales taxes will tip the scales for the against small business retail ers. that is why retailers of national stores would distribution networks support changing current law. current law is not perfect. a few large retailers have not operated in the spirit of the law. some states have used tax related incentives to encourage large retailer investment without offering similar investment incentives to small businesses that fulfill their in state tax obligations. that is not fair.

congress has the ability to address inequities without putting a new tax barrier in front of small businesses. irreal small-business exemption would meet at -- 8 real small- business exemption would meet that goal. there will always be small businesses you want to protect and grow. protecting small businesses is not a new concept. this is a traditional bipartisan legislative goal. house resolution 95 is in that spirit. they are championing small- business retailers. it retains an aspect of the current law that works. the base stands willing to work with the committee to ensure that any changes include meaningful small-business protection to create an opening for small retailers to grow. i appreciate the opportunity to testify. >> thank you.

>> members of the judiciary committee, i chair the senate appropriations committee in indiana. i am a long time retailer. i come before you as a role of someone who is responsible for creating a balanced state budget. as a resident of the streamlined sales-tax governing board, the most successful business? -- business tax initiative. interestingly, 3/4 of the legislators on that board are republicans. as a law student in harvard, i never imagined i would be testifying before congress about the core's interpretation about sales tax. with the development of the internet and e commerce, both wonderful development for

consumers, issues for state budgets and retailers have come to the forefront. today, local retailers compete with internet retailers, they must do so at a 6% government mandated price disadvantage. in quill, the u.s. supreme court made it clear that this capability is going to depend on the authority granted by congress. i come before you to ask you to exercise that authority. the supreme court has made it clear that voluntary agreement among states are constitutional exercises of state authority. according to the department, e- commerce sales were $87 billion. this year, it will total more than $175 billion. the quarterly sales have increased on the average 70% above last year's figures.

sales on cyber monday increased 22%. retailers across this country find themselves acting as the display case for consumers who come in, try a product, solicit information, allows consumers tn product codes, check prices, and buy a product from an on-line business before they leave the store. today's technology makes tax collection simple, cheap, and reliable. it has enhanced the ease of collection. we provide free software for company and are certified provider system will provide collection and remission services. in many ways, the internet is the perfect environment in which to collect sales tax. it is something that can be automated. any small-business exemption

will for the discriminate against the local small brick and mortar businesses who do not receive the exemption. in any case, with the free collection service offered, the perceived burdened is removed. the only burden is the 6% government mandated price disadvantage based on local retailers. is this a tax increase? paying a tax you legally zero but were not previously pang is not a tax increase. this is already owed -- paying a tax illegally zero but were not previously pang is not a tax increase. this is already owed. none of us elected officials are likely to run a campaign on the platform of do not pay taxes and get a tax decrease. the obligation to pay exists today. asking one retailer to collect without asking the same of all

retailers does not seem like equal protection under the law. some say we should use other ways to collect the tax with a tighter audit system. this seems like overzealous enforcement. it fails to adhere to our standard believe that most people file their returns with integrity. three bills have been piled on the subject. there are some differences among the bills. the original bill is the most business family in terms of simplicity and uniformity. that bill does not offer an alternative to non-streamlined state. s. through supporting technology in the work of business and states, progress has been made. the differences reflected are about the only serious issues left to resolve. those issues are clearly

identified. i come before you as a state legislature who develops budget to ask you to exercise your authority to grant states the ability to solve these problems. >> thank you. >> thank you. amazon has long supported sales tax collection. to that end, we have participated in a streamlined sales tax product. we are -- pleased to participate in this hearing. we support the enactment of a federal bill. congress should authorize the state to require collections. lavalin the playing field for all sellers. congress should protect the state's right. doing so would not file it

pledges that a limited to questions of income tax rates and deductions. congress should help address the state goes of budget shortfalls without spending federal funds, by authorizing states to require tax collection. congress should not exempt too many sellers from collection. the sellers will contain an immobile plainfield. -- unleve playing field. technology, widespread collection would not be a burden on commerce. congress can authorize states to acquire all sellers to collect. much attention has been paid to the size of this exemption. such a threshold, which would exempt some companies, must be kept low to obtain the objective of protecting states rights.

in this context, several kinds of small volume sellers must be considered. the main street small-business retailers, unless the threshold is kept low, they will face an unlevel playing field. small volume online sellers have received most of the attention. no one wants the sellers to shoulder a loan burden compared to those who already collect sales tax. yet, nobody should want the online sellers to take advantage of an unlevel playing field over small manchin businesses. no one should want governments to pick winners and losers this way. a threshold level and fairness are significant, a surprisingly law fraction of the commerce is conducted by small sellers. 30% of uncollected sales tax revenue is attributed to sellers with annual sales below

$100,000. only 1% of online sellers sell more than this amount. in $150,000 exception would deny the state's 30% of the already owed revenue, but would exempt 99% of online sellers. any higher threshold would keep the playing field even more a model. technology will allow all online sellers to collect and remit taxes. the technology is not limited to large sellers. service providers also make the technology available to medium and small volume sellers. collection is by sellers or four sellers. there are many such service providers today, adp for example. two other examples come to mind, amazon and the bay. both use sophisticated computing technology to serve their

company. well amazon is prepared to make its technology available, the day six to avoid any role -- these claims are made despite the fact that even manages to collect the transaction fees it charges to sellers and that it already cut its state sales tax for a big sellers all the way down to the local jurisdiction of all. amazon will help smaller online sellers collect. in conclusion, congress should and can attain the objectives of protecting state's writes, address and the rights of states, and a leveling the playing -- level in the plant -- leveling the playing field. the time to act is now. amazon is grateful for this hearing. we look forward to working with you and your -- and congress.

>> let me recognize myself the question. if states have the authority to collect sales tax from remote sellers, why should they not also have the means to collect sales tax from the remote sellers? >> decision -- the quill decision establishes that states can go up to a certain line and no further. that is drawn by the supreme court. >> congress can change the line. >> no question you have the power to.

>> the states have the authority to collect a, why should they not be given the means to do so. >> states have the authority to act. >> the u.s. congress has the authority to empower the states to, but they shouldn't, because at this point, what it is really going to be about is amazon and the big box retailers having a way to -- it is very burdensome and it will be for companies online to establish databases or plug into databases and charge appropriate taxes on every kind of product in 10,000 jurisdictions. in some jurisdictions -- some is taxes on candy, or food and gift baskets. it will be extraordinarily complex for us to implement. >> the chairman, we agree that

not only do you have the powers but the means should be provided to the states. it is just a question of small business protection that we believe is where the issue lies, not whether the states should be given the right and the means to collect. >> ms. misener, which of the three bills under consideration would you support? >> there have been free breakthroughs this year. the first was when mr. connors and his colleagues sent up the bill in july which gave to the governing board the right to decide the correct threshold for a small selling exception. the next breakthrough was the bill that recognize that not all states would be able to make the changes required by streamlined. the third character was the senate bill introduced a few weeks ago. >> do you support any of those breakthroughs? >> yes, sir, all three.

we believe it is a subject for discussion here today. >> if we were to enable states to collect a sales tax from remote sellers, wouldn't that increase the cost of merchandise to consumers? if so, is that justified or not justified, mr. marshall? >> i certainly cannot speak as an expert on that topic, but my understanding is that sales tax or use tax is owed by michigan residents on all their purchases, so it is cannot a new tax, it is simply leveling the playing field as to who is required to collect it and voluntarily disclose it in their tax return. >> that was my point, you had the in party and they can impose the taxes, just right now, most aids do not actually collected.

allyost states do not actuy collect it. mr. otto. >> i would agree with what he says. here is one interesting point, though. if you or a business annual sales tax permit in the state of texas, you go through on it, you are going to be found if you have not remitted use tact she should have. in texas, we have no way for a household to remit use tax. there is no state income tax. there is no form or anybody to remit the use tax. >> you are saying the taxes are owed any way, they might as well be collected. >> my perspective is that the only disparity in the competitive world of have today in this arena is the sales tax being imposed on some retailers and not on others. i think if you eliminate that and level the playing field, you are going to see more

competition. i don't think the consumer is necessarily going to suffer in that situation. >> the gentleman from michigan, mr. conyers is recognized for his question. >> i want to thank the witnesses for their individual contributions to this subject. now that we have established that quill gives us the authority, we are encouraged to take some action in this. the question really is, how do we do it as fairly as we can? ironically, as our witness mr.

marshall has pointed out, there is already a attacks on internet transactions, but nobody is paying any attention. am i correct that michigan is in that posture, mr. marshall? >> yes, you are. we are required to report our internet purchases and remit a use tax on that, but there is just the way for the state of michigan to know what transactions or occurring. >> i wonder how many other states are like that. does anybody know how many states might be in the same position that the state of michigan is in? namely that there is a tax

already existing, and by the way, there is a 6% sales tax in michigan. there should be an internet tax, and it is being ignored. mr.dn't someone argue, marshall, that we don't need to do anything, just if everyone followed the law, we would be better off. what do you say to that? >> i just think election ought to be uniform. if some retailers are retired -- required to collect, that all retailers should be required to collect. it is just the unfairness of some of us being required by law to collect sales tax and other retailers that are selling product in our state are not. beck's suppose we pass a law

and everybody did what michigan does, ignore it. what would you say to that? >> mr. conyers, the current lot in the 45 states that have sales tax plus the district of columbia is there is a current use tax obligation for a purchaser who does not pay the sales tax when they purchase the item. some states like texas don't have a way in which they could be revisited. other states like california have a line on the income taxes for use tax collection. it is done. it is the lot. it is very difficult, and i do respect the tax collection efforts by many states that it is very hard to do and it will cost a significant amount of money to do that. therefore, it does seem to make a lot more sense that on large

retailers, you impose a burden that they collect and remit sales tax. that is in 45 states. >> so you support my legislation? >> as currently written, we do not support the legislation. the lack of a sufficiently high small business exception. >> so that is your main reservation about. >> yes, sir. >> let me ask you this. is it fair for some businesses that have a sales tax advantage by not having to collect sales tax, which is why you are for this bill if we could get that small business exception straightened out? >> yes, sir. jeff bezon from 1996. the mail-order business you

have to charge sales tax to customers who live in any state where you have a business presence. the bay area it is that single area for technical talent, but it did not pass the small state tax. there is the advantage he chose for his company place in washington state to take a band of the distance state sales tax exclusion. >> thank you very much. >> i think we have to recognize something here that that choice was made under current law. what we are proposing today is to change the current law. congress has this authority very clearly. let's recall that ebay has facilities in 20 states around the country. it is not an isolated business, as they would suggest. they also are a multibillion- dollar company. doing something to carve out

ebay from collection will have significant ramifications to the state in for fairness. >> can i ask my friend here if he has any rebuttal comments to that statement? >> if ebay was a retailer, of course ebay would have an obligation to collect and remit sales tax in those states. but each day is not a retailer. it is a marketplace in which people offer items for sale and are the sellers, and the sellers have the obligation. wanted that this -- one of the things we are quite proud of it is that our sellers who are in one of the 45 states and district of columbia and collect and remit sales tax. for his sales and the state of michigan online. >> could i get a rebuttal to the rebuttal, please? >> the gentleman from michigan

is recognized for an additional minute. >> thank you very much. amazon also has a platform for sellers. we have over 2 million sellers to sell through our sides. we will make the service of tax collection and remittance available to over sellers. we only ask that the they do the same. >> mr. otto, this committee recently passed the tax simplification act which confirmed a physical presence standard for collection of taxes. would your bill apply just for the sales tax or would it reach into other business taxes as well? >> it is maya understanding that all we are dealing with here is sales and use tax.

>> what do you believe is an appropriate small cellar exemption threshold? you are asking me to get into a battle i am not sure i am willing to get into. [laughter] i am only familiar with my state. you are talking about a bill that is going to affect 45 states and the district of columbia. that is something i understand from the testimony that has been given here today, that is going to be an important issue. i don't have a preconceived idea. i cannot pick a number of the air and say this should be the small-business exemption. it will require some study on this committee's part. i do support the small-business exemption. it is just in defining what is small business. >> i am getting involved in some here say evidence here.

last week a constituent of mine told me that he heard on the radio and and for blinds.com. the gist of it was to buy from blind spot, because there is no sales tax in most aids. -- in most states. is it true that there is no sales tax in most -- no sales tax in most states. would you agree it could present a competitive edge over the brick and mortar sellers? >> would collect -- our business has a physical presence. what we are seeking today's congressional legislation that would authorize the states to require all out-of-state sellers including amazon and blind spot, to collect, regardless of whether their business has a physical presence in the state -- blinds.com.

>> brick and mortar retailers characterize the market place equity act as restoring fairness to the retail industry. how do you respond to that? >> i would say that it cuts both ways. rick and mortar also has the advantage over internet companies. they get to interact directly. they get to hand over the goods immediately. customers can return them right there. there are advantages and disadvantages. they cut both ways. we would not come and say congress has to do something in order to level the playing field on brick and mortars to take away those advantages. >> advocates of sales tax reform legislation insist that

technology can easily calculate and collect sales tax at the destination rate. if this be the case, what would be the burden on ebay's small business customers is such technology were made available to them? >> we have been very clear for at least 11 years i have been working with the company that this is not a technologically difficult thing to do. it is burdensome. it is a morass of many state laws with different taxing jurisdictions. that does not make it impossible for people to collect and remit. our basic point of view is that it would be much more fair if all small businesses were to receive the same fairness that a large retailer were to get, lower shipping costs, economies of scale. this is a place in which tax

policies can be used to make sure the small businesses have an opportunity to participate in the global marketplace. >> how have states affiliate's statues affected your business, and how does amazon use affiliate's? what toll has the ensuing litigation had on your operation? >> affiliates are small websites that place links on their sites to a variety of retailers, including amazon, and when a consumer plan predicts on that and ends up buying something at the retailer, the website get the commission. it is a great advertising and business model. has been -- there have been counterproductive bills enacted around the country where states have tried to describe those

advertising activities as giving an out-of-state retailers -- we rejected, but we have stopped advertising. it is unfortunate. we wish we could get those advertisers back. in north carolina, we would love to be able to welcome back our amazon.com associates. >> the gentleman from virginia, mr. scott, is recognized. >> i does want to ask mr. misener represents amazon, you are one of the big guys, yet you are supporting a fair tax, a balanced tax with the little guys like marshall. is there some explanation for your extraordinary, good moral bearing that you bring to this hearing today?

>> personally, and it is worthy of question with me. we have long supported federal legislation. we made this decision right after i joined the company a dozen years ago. at the time we faced the choice. could we draft of the internet tax freedom act moratorium and somehow claim that the internet deserved a privilege, not tax position. we have never taken that position. the three break through some mention this year, starting with your bill in july, really i think are breaking the logjam. we are the point of recognizing the fruits of our labor all these years. >> let the record show that there are corporate good guys in this world.

>> if somebody in washington d.c. builds -- goes to a brick and mortar store in virginia and buys things, do they pay the virginia sales tax? >> if they go to the virginia store, they do. the basis of the tax is on the destination. in other words, where the transaction takes place. and if the virginia store delivered it in washington d.c., a washing machine, for example, who would pay the taxes? >> we spent a lot of hours are doing those points and streamlined, and in some cases it would be in washington d.c., where the sale takes place. but the sale takes place in virginia and they deliver the washing machine to the residence in d.c. >> if they deliver it, it is taxable in washington d.c.

>> are you aware -- is there any small-business exemption to the local sales tax? >> no, i don't think there is in any of the state. everybody is on a level playing field there. >> if the tax is due but not collected by the business, d have an estimate of how often it is actually collected? >> you mean how often is paid for the use tax system? in indiana we have less than 1% of filers to actually fill out a use tax return. >> if the business were to actually collect the taxes, what would they do with the money? how would they get to the various states and localities? >> first off, the small business can use a certified service provider. we actually have one small

business in you -- in new hampshire with less than 50,000 hours of sales was signed up for this in 18 minutes. they are not charged anything to be a participant. the retailer collect the tax when they build a customer and then turn it over to the service provider. they fill out all the returns necessary in the 45 states that have sales tax, and remit it abruptly -- appropriately. >> who pays for that service? >> the state pays for it and then the certified service providers take the amount of compensation that streamlined offers in addition to the regular compensation package. >> is that service actually available to everybody now? >> yes. we have six certified service providers who can do this. many of the larger companies have chosen to implement their own system. amazon has developed a system where they are a certified

service provider on the platform. >> does that include some locale -- some localities have a local sales tax. >> it includes all those jurisdictions with local sales tax as well. no problem. >> you have some software to tell them how much to charge? >> no charge on the software. >> the software tells them how much to charge, they collected, then they send in the aggregate amount and some service will distribute the money at no cost? >> that is right. >> thank you, mr. scott. the gentleman from indiana is recognized. >> thank you, chairman. thanks for holding this hearing. i am grateful for the testimony of all the participants. i want to appreciate mr. misener with amazon.

we appreciate the tone and tenor of your testimony and your remarks today. i wanted knowledge mr. byrne, who i have had the pleasure to meet, because of his association with education reform. this is a distinguished panel, to say the least. i find this discussion enormously helpful, mr. chairman. it is clear that since the advent of the commerce clause itself, that under our form of

government, the congress has essentially granted exclusive power to regulate interstate commerce at the national level. i have long opposed taxing the internet. i greatly associate myself with comments that were made about extraordinary innovation that has occurred in the commerce in this country. i believe it represents bold work of american prosperity in the last 20 years. i believe that moratorium on internet taxation has been prudent. i have strongly supported it. it does strike me that as this marketplace has matured, there is an argument as has been made

eloquently by several on the panel for us to consider letting states decide, but it strikes me that we ought to follow a couple of basic principles. number one is no new taxes. my colleague from texas and i share a particular view of taxes. maybe i am presuming, but we ought to make sure there is no new taxes on the people of the several states. secondly, i do acknowledge that there ought to be no undue burden on commerce. i am also very interested in what would be the recommendation of members of the panel about the proper small- business exemption. i think the two large principles here for me, i don't

think congress should be in the business of picking winners and losers. inaction by congress today results in a system that does pick winners and losers. i am a very strong advocate of federalism, as you are, mr. chairman. it is my judgment that having congress continue to stand in the way of letting states decide if we can meet these other criteria is worthy of our deliberations here, as we preserve and promote and seek to invigorate the principles and practice of federalism across this country. we just heard about a blinds.com radio ad.

we have all heard ads like this, saying in most states, no sales tax. there is no sales tax on internet sales. in a point of fact, is it that there is no sales tax on internet sales, or is it simply that states do not have the authority to collect taxes that are owed? in our very first conversation, i believe someone who owes taxes pays taxes. what is the situation in america today? is there no sales tax on internet sales, or is there in fact a sales tax, it is just simply that indiana and other states do not have the ability and capacity to collected under the law? >> thank you for the question.

first of all, i would say that this is not a tax on the internet. this is a tax on the consumer who is going to receive the government services that are provided in whatever state that is. as your question about whether not -- whether or not there is a tax or the taxes collected, we have noticeably been unable to collect the tax other than by having the retailer remit. that is why we have gone to these great lengths to make it cost-effective or cost free, particularly for small retailers, to be able to have a collection and remission process. if we did not do this, i am afraid we would end up like greece and nobody would pay their taxes. we do not want to go there. it has just been a difficult proposition to work out. once you start down other past

of trying to find ways to collect that use tax which is already due and owed, then you get into saying that you are trying to get information. are we using the heavy hand of government and the tax collector to beat on people unduly? the sales tax system, which has historically been that the retailer collect and remit the tax, that is a historical precedent, and we can make it work in the system due to the advances in technology, even since the internet age of commerce start a. >> but the tax is owed. >> it is 0 in all 45 states. they all have the same situation in that regard. >> congress, and jack e. spier

is a sponsor of the marketplace equity act and has just come into the room. >> thank you for this useful and interesting panel. i did not have the chance to introduce mr. cohen, but ebay is actually headquartered in san jose, so welcome san jose based ebay. we want to stand with the little guys, because small businesses or the engines of the american economy. they are the ones creating the jobs. the difficulty is, who is standing up for the little guys? the question i have for you is,

i know ebay is an entity, but you don't sell stuff. it is a platform, and people are selling. when i go on ebay, it looks like this, mainly small guys. when i go on amazon, which i do a lot, and thank you for having your service. sometimes it is small guys, especially for specialty books, but it is mainly retailers that you get for your site. what percentage of ebay users are what you consider small business, and how would you define that? then i would like to ask the same question of the amazon witness. >> for many of our sellers, ebay is only one channel that they use. whatever statistics we know of their use of our platform, mr.

marshall has only -- has a significant part of his business in the state of michigan. what we believe is important is how you define what the size of a small business should be to take advantage of an exception. we have recommended and endorsed bills that have included the small business administration's determination of what is an electronics retailer. the number is reset annually to determine what is the appropriate size. last year it was approximately $30 million. >> that sounds like a lot, but that is gross, correct? if you had that kind of gross sales, what would that really net you as a business, ordinarily? >> in the state of texas where they don't have personal income tax, you may make a lot more

money than in the state of california or another state. our general impression is that most of those sellers, even up to $30 million in sales, have a very tiny margin. what they are making from that is significantly less than what they are large retail competitors can be. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

the chair recognizes the gentleman from minnesota, mr. kline. mr. kline: thank you, mr. chairman.

mr. chairman, i rise in support of h.r. 3094, the work force democracy and fairness act and yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. clines: thank you, mr. chairman. the -- mr. kline: thank you, mr. chairman. across the country, the american people are asking, how can we get this economy moving again, what will it take to finally put people back to work? and washington is responding with a number of answers. some think we should support more spending, more taxes and more regulations. in essence they're asking the country to double down on the same failed policies of the past. my republican colleagues and i believe we should chart a different course, one that includes removing regulatory roadblocks to job creation. the work force democracy and fairness act is part of that effort. the legislation says we shouldn't allow unelected bureaucrats to dictate policies

that make our workplaces less competitive. in june, the national labor relations board proposed sweeping changes to the rules governing union elections. under the board's radical scheme, employers would have just seven days to find an attorney and navigate a host of complicated legal issues before confronting an nlrb election official. employees will have as little as 10 days. 10 days, mr. chairman, to decide whether they want to join a union, denying them an opportunity to gain valuable information and make an informed decision. the nlrb is already telling employers like boeing where they can and cannot create jobs. now, the board wants to take away a worker's right to make a fully informed decision in the union election. this proposal largely prohibits employers from raising additional legal concerns, denies answers to questions that can influence the vote and turns over to union leaders

even more personal employee information. . let's get something straight. the board scheme isn't about modernizing the election process. this is a draconian effort to stifle employers' speech and ambush workers with a union election. less debate, less information, and less opposition. that's big labor's approach to workers' free choice and it's being rapidly implemented by the activists nlrb. mr. speaker, for four years democrats controlled this congress. to my knowledge not once did they try to streamline the union election process, not once. they did champion a failed effort to strip workers of their right to a secret ballot, but they didn't bother to offer any solutions to the alleged problems they now say plague the election process. today union elections take place on an average of 31 days, giving workers a month to consider the monumental question of whether or not to join a union. one month.

cases where delays have occurred? yes. without a doubt these are the exceptions to the rule, and former and current members of the nlrb have cited partisan shifts on the board as the leading cause of such delay. a broken board is no excuse for trampling on the rights of american workers. i'm aware the board recently revised, meaning yesterday, its earlier proposal and setaside some of the more egregious provisions, however the latest iterations still denies employers access to a fair election process, still drives workers of the opportunity to make a fully informed decision, and still perpetuates the threat of more punitive measures in the future. the board teams utterly determined to finalize a flawed proposal regardless of the damage to the integrity of the board and our workplaces. we must act now. the work force democracy and fairness act reaffirms work force protections our nation has enjoyed for decades.

employers currently have a fair opportunity to prepare for a pre-election hearing. the bill ensures employers have at least 14 days, two weeks, a fair opportunity to prepare for the hearing. employers and unions can currently seek board review of issues raised before the election of the the bill preserves their right to seek board review before the election. workers currently have an average of 31 days to decide their vote. the bill guarantees workers at least 35 days. before the board's reckless specialty health care decision, a commonsense standard determined which employees would participate in the election. once again, h.r. 3094 takes steps to restore traditional standard, ensuring employees continue to have freedom and opportunities in the workplace and employers can effectively manage their labor costs. despite the heated rhetoric we will hear from opponents today, the bill is a responsible effort to set in law, set in law, mr.

chairman, protections workers and employers have long enjoyed. i urge my colleagues to support the bill and i reserve the balance of my time. the speaker pro tempore: the gentleman from minnesota reserves. the gentleman from california, mr. miller, is recognized. mr. miller: i yield two minutes to the gentlewoman from new york, ms. slaughter a. member of the rules committee. the chair: the gentlewoman from new york is recognized for two minutes. ms. slaughter: thank you, sir. i appreciate the gentleman yielding. mr. speaker, with millions of americans out of work, job creation certainly should be the number one priority of this congress. and yet where are we today? not creating any jobs here. but when using the precious floor time considering the bill that attacks the rights of all american workers and has no chance of becoming law. that unfortunately is something we do week after week here. as my colleagues have pointed out, rather than minimizing delay in union voting procedure,

today's bill mandates delay. the bill empowers employers to interfere in union elections by adding anti-union employees to voting blocks, gerrymandering the elections. that by itself should be enough to vote against this bill. letting employer delay and manipulate union elections is an attempt to put the fox in charge of the hen house. it is a direct attack on the ability of workers to bargain collectively to protect their rights and we have seen in america with lots of protests and uprisings that american citizens don't like that so much. now, wherever you work, whether it's union or not, if you appreciate a 40-hour workweek, for sick leave and vacation days, for safer working conditions, don't blame the men and women for the unemployment crisis, but thank them for bringing those things to you. it was not a ben nevillent employer that gave you those. it was the union movement.

rather than considering a bill to attack the american worker, we should be working together as we plea on the floor day after day to create jobs so the american people's situation gross more dire every day. so i urge my colleagues to oppose this bill and see if we can get to work to create jobs. i yield back the balance of my time. the chair: the gentlewoman yields back. the gentleman from california reserves. the gentleman from minnesota is recognized. mr. kline: thank you, mr. chairman. the gentlelady just said we should be addressing legislation to create jobs. that's exactly what we are doing today. at this time i'm very pleased to yield three minutes to the chairman of the subcommittee on health employment and labor pensions, the gentleman from tennessee, mr. roe. the chair: the gentleman from tennessee is recognized for three minutes. mr. roe: thank you, mr. chairman. i rise today to urge my colleagues to support the work force democracy and protection act. our country is in the middle of a jobs crisis. the national unemployment rate is hovering at 9%, in tennessee

where i live it's higher. millions of american families are struggling to make ends meet. amidst this economic uncertainty, the house has passed over 20 bills, jobs bills, that would help secure our economy that's sitting on the senate side right down the hallway here unvoted on. sadly the senate isn't the only road block to economic recovery, that's why we are here today. to rein in a national labor relations board that's run amuck. i grew up in a union household. my father was a member of the united rubber workers union and i know about this. lived with it. grew up with it. in june what problem are we trying to fix? currently elections are held as the chairman said within 31 days and unions win almost 70% of the elections held. let's say the first of october of this year you wanted to have an election, by the end of that month you could vote on whether a worker wanted to be in the union or not. a very fair process. if this rule goes into effect as he said, seven days for an employer to find representation

to go through over 400 pages of rules, on this very complicated subject, it gets worse. rely only 10 days, as little as 10 days, to vote. so a worker would have to make their mind up in some cases, it could be as quick as 10 days. imagine voting on the presidency of the ubs in -- united states in 10 days. it gets worse. workers would then be required by law to hand over personal information. what we want to do is allow the employee to decide what information is given to the union about how they want to get contacted. mr. speaker -- mr. chairman, i should say, this just isn't right. nor is the national labor relations decision to redefine how a bargaining unit is determined right. instead of creating jobs, employers will be forced to negotiate with a multitude of small bargaining units which will raise labor costs and destroy possibility of advancement opportunities. something must be done to restore the fairness to the union election process. that's why i'm a proud

co-sponsor of this legislation. the bill simply does this. gives 14 days to pass before a pre-election hearing is held. this hearing will allow both sides to raise any relevant or material issues in a nonadversarial environment. it would protect the workers' right to make an informed choice by requiring an election take place in not less than 35 days. we owe it to our constituents, let them hear both sides of the story, and make up their own minds. workers' privacy should also be protected. allowing the employers of a union's access to what the employee decides they want to be contacted. this bill also restores long-standing rules for defining what a bargaining unit is. it's over three decades of rules. mr. chairman, there's only one way i can describe this bill as common sense. i respect the right of the workers to form unions. that's their right under the law. but i believe that the union election should follow a proses is that is balanced and protects the rights of employees and

employers. not just the unions. i urge support of this bill and i yield back the balance of my time. the chair: the gentleman yields back his time of the the gentleman from minnesota reserves. the gentleman from california is recognized. mr. miller: i yield myself four minutes. the chair: the gentleman is recognized for four minutes. mr. miller: mr. speaker, members of the house. during the depth of the great depression congress gave the american worker the right to band together with co-workers and bargain for a better life. for more than 75 years the national labor relations acted to vest the ultimate decision to form or belong to a union with the workers themselves. the principle underlying this law when workers decide they want a union, they should get a union. these rights and this law have served this country well. it's built the middle class. brought us the 40-hour workweek, safe workplaces. these rights ensure that economically secure families the prospect that our children could build even a better life. these rights have been an unqualified success. they help to create an economic engine unparalleled in the

history of the world. but especially this year forces have gathered that would do anything to take away those rights from american workers, from american families. these forces subscribe to the pervis ideology that says workers should just accept whatever the powerful decide that's good enough for them and that's the end of the discussion. they use real crises as an excuse to gain more power. we have seen it in wisconsin and ohio across the country where the real goal was to takeway the rights of workers not to solve the economic problems of those states. where the real goal was to constrain workers from collective bargaining process not to deal with the economic problems of those states. where they don't control the state houses and state legislatures, they have come to the congress of the united states. this bill today is part of that scheme. this bill is part of a national effort by the republican party, by the chamber of commerce, and the business -- much of the business community in this country to strip workers of their rights at work.

to take ordinary working men and women and they will them they will have no right to join a union. they will not be able to gather for an election because this legislation prevents that election from happening. how does it do that? it does that, one, by having the employer be in the bargaining unit. not the employee as is dictated under the law and as affirmed by this congress over and over again. that decision belongs to them. how does it do that? it stuffs the ballot box at the outset and the employer making up the bargaining unit as opposed to the employee. then they throw in the ability to have whatever frivolous appeals, issues you want to raise, no matter how frivolous, they must be raised before this time, before the election, and all of the appeals must be decided. so while they talk about how this gives us a tight time frame, what we see is endless delays, endless running up of legal costs, of attorneys on

both sides, all in the idea of buying [captions copyright national cable satellite corp. 2011] mpl joining the union, to constantly hold businesses in the workplace, face to face businesses, to advocate against the union so they can turn around the decision that the employees essentially have made when they say we want to go to an election, we want to have a union. this is our bargaining unit. and that's the goal here is to destroy the ability of this law to function. and you cannot have the situation where that exists in this country because this law is not only important to employees in the workplace, it's important to millions, millions of americans who are in the middle class in this economy today. these are people who are there because of the collective bargaining rights of people over the last 75 years in this country to bring the benefits, to bring the wages, to bring the job security, to bring the health care benefits, to bring the pension benefits, and protections to middle class

families. we have seen as the unions have declined, so have the wages, so have the benefits of workers to their own productivity. the american worker continues to increase their productivity. they are the most productive workers in almost every sector of our economy in the world. and yet more more of their productivity is being siphoned off by the 1% if you will. by the employers who decide they need more bonus, by the employers who decide they need bigger paychecks, by the employers who decide they need more shareholder dividend. employers who decide they need more golden parachutes. the chair: the gentleman's time has expired. mr. miller: that's what this is about. it's about stealing from the american workers and not giving them a right to continue to

>> on book tv, on c-span2, "the social animal" by david brooks.

>> in the past two years, tuition and fees have increased. this two-hour hearing is chaired by virginia fox of north carolina.

>> good morning. i would like to thank you for being with -- with be here with us today. we have inweak local economies, increased spending on cack democratic support, and state budget support. as a result, colleges and universities can no longer rely upon the same level of state financial support and must make tough decisions, including cutting services or raising student fees. leaders in washington have long recognized the value of higher

education in preparing students to compete in the global work force. in 1965, congress created the higher education act to help low income students pursue a college degree. as a result last year, more than $169 billion in federal financial aide was disbursed to under graduate and graduate students. up 80% since 2005. however, as i mentioned, unprecedented national debting to increase federal subsidies to supplement the growing cost of college is simply unsustainable. in the last school year, the federal government provided roughly three-quarters of all student aid. despite this, millions are struggling with significant student loan debt burden. clearly the rise of higher education costs is a problem. the answer cannot be found in

federal take-over of the student loan industry. as we continue to rethink our role, we should encourage accountability and transparancy. our end goal should be for the states' post--secondary education. higher education has remained essentially unchanged since its inception with most universities and colleges relying on a classroom of 18 to 22-year-old students who live on or near the campus adding significantly to their cost of attending college. to help reduce tuition and fees, institutions of higher education should be looking for innovative ways to incorporate new technology and better address student needs the federal

government -- we have seen restrictions in academic freedom and clamps down on regular legislation with inappropriate policies. perspective students and their parents must make it a priority to educate themselves about the true cost of attending college. meanwhile colleges and universities must do their part to help streamline cost and lessen the burdens for students and their policies. fortunately some innovative students have taken it upon themselves to do just that. many colleges have eliminated or consolidated duplicative services. others have found ways to make use of empty class spaces to help working students pursue a degree. university of washington and some campuses in the university

of wisconsin system recently implemented accelerated degree programs. these programs help the institution save on operating costs or pricey student services while allowing students to reduce their debt load by graduating in a shorter period of time. as "the chronicle of higher education" recently noted, some colleges are working to reduce fees without lowering scholarships for incoming freshmens. macy university is also working to reduce costs. we look forward to hearing about their initiatives during today's hearing. each of these initiatives helps ensure higher elleds indication remains in america. we should also encourage increased transparancy in the reporting of annual college costs. students and their families look

forward to continued innovations . thank you. >> i would like to thank our distinguished witnesses for joining us here today. this hearing is an opportunity for this committee to reaffirm its commitment to affordability, equity, and student success in higher education. as we look for innovative strategies to reduce college costs and bolster college completion, it is important that we do not create new obstacles for low income first-generation

college and nontraditional and minority students. these populations are entering our ledges and universities in record numbers and must have the opportunity to go on and succeed. as ranking member of this subcommittee, i am deeply concerned that college costs have risen dramatically in the last decade. according to the college board between 2010 and 2012 in-state tuitions rose 8.2%. and at the two-year institutions experienced a sharp increase of 8.7%. in a recent national bipartisan poll conducted by the young in vincibles, making college more

affordable should be a priority for u.s. congress. today shows of students find themselves incurring an inordinate b amount of debt to finance their education. college seniors that graduated in the year 2010, for example, had an average of 25,250 in student loan debt. these trents -- these trends require students to have at least two years of post secondary education and most states are slashing their education budgets. in the past several years, democrats have taken historic steps to make a quality higher education more accessible and affordable. the passage of student aide and

fiscal responsibility act, known as safra, in the fiscal reconciliation act of 2010, make the largest investment in student aid since the g.i. bill. in the 111th congress democrats ended the taxpayer subsidized federally guaranteed federal family education program. and replaced it with the william, d. ford federal direct loan making federal college loans more stable and efficient at no cost to taxpayers.

safra increased payments and investments too to other programs. the pipe passed higher education and opportunity act of 2008 increased transparancy and investment in federal student aid. under h.e.o.a., the u.s. department of education is required to collect and publish lists of tuitions and fees at all u.s. post secondary institutions, holding colleges accountable for rising fees and tuition. those institutions with the largest percentage increases in prices must submit a detailed description to the department of education outlining the reason for the increased costs. heoa also encourages the use of innovative strategies to reduce costs such as need-based grant

aid incentives. while democrats have made great strides in tackling this issue through the federal investment and pell grants in direct loans, and heoa, and safra, i agree with arne duncan that we must did not continue to do more to reign in college costs and reduce individual student debt. i look forward to hearing from today's witnesses upon how we can expand affordability, access yibblet, and student success in higher education and reach our nation's college completion goals. thank you. >> thank you so much. also committee members are be permitted to submit written statements to be included in the

permanent hearing record. without objection the hearing record will remain open for 14 days to allow statements, questions for the record, and other exstrainous material reveraged during the hearing to be submitted -- material referenced in the hearing to be heard -- included in the record. >> jane is from a research and policy organization that works to improve productivity through more effective management of resources. since 1995 she has also been a senior associate with the institute for higher education policies. dr. raul man han is the fifth president of grace college. he also served as the school's professor of biblical studies, vice president of college academicics, and provost there.

jamie merisosis. got it. is the president and c.e.o. of the lumina foundation for education. before joining lumina foundation in january of 2008, he was the founding president of the institute for higher education policy. mr. tim foster was appointed a-- as the 10th president in march 2004. mr. foster previously served as the executive proper for the colorado commission on higher education and is head of the colorado don't of higher education. before i recognize you to provide your testimony, let me briefly complane explain our lighting system. you will have five minutes to present your testimony. when you begin, the light in front of you will tunch green. when one minute is left, the

light will turn yellow, and then the light will turn red. i suggest you wrap up your remarks as best as you are able. members will each have five minutes to ask questions of the panel. i now recognize miss wellman for five minutes. >> thank you very much. good morning, ma'am chairwoman. members it is a pleasure to be here. speaking about the research done by the delta project as a nonprofit, nonpartisan research group focusing on where the money comes from and where the money goes in higher education. i'm going to speak quickly about what we see as some of the major patterns and trend. our data cover public and private nonprofit institutions. i'll be focusing on the time period. roughly 1999 to 2009, because we have spend -- spend tour data

and revenue data. you can mentally adjust for some of the numbers i'm going to be talking about for the last couple of years since 200 when we know there have been continued dislocations in time, particularly in public institutions. you have little versions of these in the testimony. so bear with me and i'll get through them. the first pattern has to do with levels of economic strat identification -- stratification and the differences popping up between public and private institutions over this period. one of the big stories over this decade has been the growing bifurcation with the majority of new enrollments going into

public community colleges and an awful lot of increased spending occurring primarily in a relatively small handful of elite institutions with endowments. you can see on this chart the way we have organized all of these data is by broad sector carnegie categories. the green line here is what's happened since 2009. the purple line is where the enrollments have gone. what you'll see is an unevenness in access to a small handful of elite institutions and the majority of institutions where students are enrolled.

somewhere around $35,000 vs. public where spend sg around $10,000. so the real pattern of differences. second major comment has to do with what's been happening with tuition. there has been a growing difference between growing prices charged to students and spending per student or cost per student.

this is not translating into greater spending. as other revenue sources are evaporating, rather than reducing their spending, and some might argue they can't reduce spending that much, but rather than reducing spending, they are shifting the costs on to student tuition. what you see is cost cutting. what you see is an unsustainable pattern in higher education. if you look at the data here, this figure here shows a one-year change since 200 and 2009.

vs. what they are spending, look at that gap between revenues, spending, tuition and state revenues gives you pretty good snapshot of what's going on. statement the interests tutions were losing on average $751. despite that, they kept spending about flat. probably because they were spending down reserves during that period. you see the same kind of numbers. you see the same pattern of a price in cost in disconnect over that period.

this has to do with where the money is going. one of the patterns we have seen has been a modest erosion but a consistent erosion in the amount of money that is going to pay for the direct cost of student instruction and an uptick in spending that's going for administrative activities, ack congressmenic support, which could be computing, and for other types of function. so you have seen this wind wg down, very modest, but consistent, in all types of institutions in the elite ivy to the community colleges. reduction for spending per instruction and an increase in spending for administration. what we saw in 2009 was an interesting and we hope welcome slight change in that. in the first year of the great we recession, we saw efforts to

control administrative expenses and make the cuts in spending. i'm going to jump to one majy

>> thank you, mr. hinajosa. we will try to be fair to everyone. we won't set the time at seven minutes, we'll leave it at five minutes, and we'll try our best to let people finish their thoughts and we'll be fairly lenient with questions. how about that? >> i have no problem with that. >> thank you. dr. manahan. >> thank you distinguished community members for the opportunity to testify this morning. my name is ron manahan president

of grace college and seminary. an accredited institution of arts and sciences in indiana. grace enrolls over 1,600 students from 36 states and eight countries. thank you for the opportunity to testify and provide you with information regarding our institution's efforts to address rising cost of college education. for a number of years, we have been concerned about this issue. but the economic turbulence of 2008 and beyond made even clearer that our campus had to address rising costs with greater urgency, and that federal and state support of higher education is challenged. we did not simply stand by and wait for help. grace has received the most attention because of its three-year degree options.

we have reviewed many aspects of our college and we have more to do to determine where savings and forms can be made. specifically, we address rising costs in four ways. in 2007, our strategic plan called for the evaluation of every academic program in terms of data points such as enrollment patterns, staffing, cost effectiveness, demand among high school students, job market issues,ets. each program was placed in one of our fourth categories listed in my computer testify. the review was completed in 2009. this led to program adjustments in some cases and the teach out and elimination of six programs. grace helped students either finish grades or transfer to another institution offering the students a program of choice. several programs were added and

focusesed more directly on student program areas and regional need. the second way grace addressed costs was by reviewing institutional operations. for more than eight years grace has taken steps to reduce operational costs by seeking more disht efficient ways to serve students and employees. after thorough reviews the campus strategically aligned food service, publications, marketing, and printing with regional bisses that provide good service. we have been able to contain or reduce costs. a third way grace addressed costs was by exploring innovation. we developed a three-year degree option for every program grace offers. this innovation required an

intense two-year develop many and preparation process and had five goals, among which are requiring 120 credit hours, all bacalaureatt degrees and increased accountability. though the option began just this commefter -- semester, very early results are positive. 48% of students indicate they plan to graduate in three years. freshman are averaging a load of nearly 17 credit hours. felixes are up partly, i think, because of this new option. the agree-year reduces costs 25% compared to the four-year

option. fort wayne and snapssnaps are our first two locations this program matches the first two years of our on-campus four-year degree average. the annual cost fr a full-time location is $4,800 before aide is applied. a third aid is grace's plosms. students meeting constitutional rightia may be eligible for an additional year of undergraduate education tuition free. if they don't find them or -- th

-- a fourth way grace addresses costs was through collaboration and partnership. grace collaborated for two-year engineering. it designed regulatory and clinical affairs in order to meet a regional and critical business need. we realize our three-year option are not for everyone. we believe they are right for us.

higher education must be vigilant in ensuring costs. thank you for your interest in this topic. thank you for this tubt it opportunity to be here. i'm from the nation's largest foundation focused exclusively on post-secondary education and success. stream lining costs isn't just a good idea, it is essential to our future. equity education is an american value that gives every person the chance to succeed and contribute. the most important reason for stream lining costs and reducing tuition in the modern economy is simple. it is jobbeds. recent estimates show by 2018, 16% of jobs will require post secondary education.

today only 40% of adults have an associate osh bachelors degree. this level is only good enough for the u.s. to rank 15th among developped countries. by comparison, a stunning 63% of young ads ults in south korea have a college degree. lumina believes 60% of americans will need a higher quality degree by 2025 for the u.s. to remain economically competitive. much, if not most of this increase, will need to come from low income first generation minority and adults population. unfortunately, we don't have the resources to scale up our population to the size it needs to be in order to produce the number of graduates our economy needs while maintaining and improving the quality of its graduates. the best way to increase the number of highly qualified grads waits is for the education system to become more productive. to meet the big goal of raising

college payment rates to at least 60%, productivity will require a substantial increase in the number of high quality degrees and certificates produced at a lower cost per degree awarded while improving access for the least well served populations. for this end, lume that is working with states and institutions throughout the u.s. to re-sign higher education to employ more graduates at lower cost. worg working with our graduates to educate on how higher education is delivered. the first is performance funding or targeting incentives for colleges and universities to increase college completion for under-served populations, to shorten time to the degree or credentialed or reduce the cost of clifferri. many states are moving to performance lending models that -- rather than just the number

of students enrolled. this spread rapidly. the second strategy is using student incentives to increase course and degree completion. a good example is found at indiana university cocomo where students commit to completing 30 credit hours per year, and making satisfactory academic progress receive three successive years of discounted tuition producing a savings equal to one full year's tuition by the end of the program. a consortium is working to offer redesigned general education courses which can be completed

in some cases twice as fast as traditional courses with the same or better student retention over time. much of what needs to happen here is to encourage cooperation and collaboration among institutions to improve quality and reduce costs. now, with my written testimony i zugs discuss some of the implications of state and institutional efforts to increase productivity related to the critical issues of federal aid, data systems, and quality assurance. for now, let me say federal student aid continues to be the bedrock of support for low-income populations and must be sustained.

in addition, it is important we announce data on student progression toward a college degree and ultimately job placement. in terms of quality assurance, we need to recognize we are on the cusp of a shift away from a system based on time to one based on learning. in a knowledge-based economy, degrees must represent real skills and knowledge, not the amount of time a student has spent sitting in a classroom. as you heard, lumina stands ready to share what we are learning with all of you. thank you very much.

>> thank you very much. >> thank you members of the committee. it is a pleasure to be in front of you. it is an honor. having not been in front of a congressional compeerks i'm probably a little more nervous than jamie. we were supposed to be in denver talking about this topic but decided to be here and testify about your committee. based on the plane flight i think it was a bad choice. our state is home to one of the most efficient according to the delta project systems of higher ed in the country. i think we are second in batch lower's degrees based on dollars invested. that said, we face the same stresses and strains that institutions into other states face. we took a 30% reduction in state

support over the last two years. the governor's budget proposes an additional reduction of another 10%. we have been preparing for this at c.m.u. for the better part of 10 years. what we have done is on the revenue side went to a pricing model that charges students for every credit hour that they take. surprisingly enough, what we saw when students pay for each credit hour, their credit hour actually went up rather than down. we think their speed to degree will accelerate. we also have done a lot of different things in terms of financial aid. so we do a merit financial aid system where if you are a 3.75 or above and have one of the other two top 5% in your graduating class we give you a

full tuition fee scholarship. we found 59% of our students who -- who have need also qualified for those scholarships. what we also found is because we have higher expectations the retention is higher and we think the graduation rates will increase as well. for middle income students, we looked at work study. work study is one of those things sort of ignored at the federal and state level because students engaged in work study also retained a higher level. so we offer up to 20 hours of work study money to students regardless of need, and again we see a significant increase in the retention. it is the connection to the institution and the connection to the people at the institution which we think is the critical element in that gain. on the spend tour side and with some trepidation from chairman fox, we looked early on and

looked at the vice president of affairs, dean, chair, faculty, students, and we spent about $1 million and made a decision on our campus to do away with gains. clearly don't save $1 million, we save half a million dollars. i don't think our students have missed the expenditures of those funds whatsoever. because of those ongoing reductions, it is a continuing budget-cutting exercise. i will tell you, talking to folks in our region, they pushed me and said, budget cuts or efficiencies, and i would have to concede, most of them are eefficiencies. we have done a number of things in addition to these, including rebidding copying systems. w where we use ground source heat to save us 75% of the cost of heating and cooling

buildings. we get suggestions. in the summer we concentrate all our classes in one or two buildings so we don't maintain our buildings. i could go on and on but i would be way over my five minutes and get in trouble with the chairman. i will tell you, according to our state agency, there are over 500 acredited institutions of higher learning. adam smith -- if there was a competitive marketplace, we see it in higher ed, and i think that's true in most states. if we are not doing a good job, our students tell us. if we are not doing a good job, our parents tell us. i have an open office hour every monday at 2:00. i go to every dorm, every semester. we have pizza and talk about what their experience is, and we try to listen to what our students tell us in terms of what we are doing.

our tuition increase was 4.7%. regrettable. there is affordability and quality. i would submit to you, if we slash quality, it is not experiencing or spending time and money on. and the reverse. it is high quality, and you can't afford it, then it is meaningless. i will tell you, we spend a lot of time and energy trying to compli with and understand directions from the u.s. department of education. for example, we offer a satellite campus. the medical office assistance program, and due to recent rules with the department of ed, we have to submit a change, and that will take us untold time to meet the needs of that community.

this is a requirement in terms of what is on our web site. it is one or two clicks away. this cost us hundreds of hours of staff time. i guarantee you, with 500 choices, students, if they can't find the information, whether it is expense, they less us know, and let us foe with their feet by going somewhere else. i have gone over a little. so with my apologies, mad jam chairman, i will wrap up and say thank you for having us. we think this is a critical issue, and like jamie, the future of this country is based on our continuing efforts in education both young people as well as adults. >> thank you very much, mr.

foster. thanks to all of you. i think you did a commendable job of transmitting a lot of information in the short period of time that you were given. i appreciate the efforts that you made. i will begin now with our questioning from the members to you-all, and most of us make some comments before we do the questions. i did want to say that i appreciate -- i read your written comments last night, and these will be in the record. i want to say to anyone interested in getting a fuller perspective on the things that you said, i would commend the materials that you submitted and i'll make two or three brief comments and then i'll ask a

couple questions. number one p. mr. foster, i really appreciated your saying you didn't mention this in your comments that c.m.u. understands who our cuss are -- customers are. i think as someone who has worked in institutions of higher education, i think too often there is a failure on campuses to recognize that. at some point we should talk more about the benefits because i am not sure we had a full enough discussion of thafment and as somebody who has, gernings worked in the stame system for a long time, or did work in the systems for a long time, i'd like to see us talk a little bit more about what we've known about innovative programs

for a long, long time, and how they are working. it seems to me we have known a lot of these things. peff known about student learning files that i think do not get enough attention in the public arena and are not presented as alternatives to increasing spending. there are ways we could reduce costs. i con let this meeting go by without commenting on the really impressive comments that you made about a system based on learning and not on time. obviously we need to do more of that.

i wonder if you have any examples of how stathes state institutions are dealing with shortfalls. >> the general pat on has been for public institutions to off-load state spending. i think in this recession institutions figure they have hit the wall on that. we see much more evidence now on big systems as well as small institutions paying a lot of attention to cost conducting and productivity. they are paying atense to student credit -- attention to student credit accumulations. they are tackling health care. i think there is a lot of good examples. more now than we have ever seen before.

>> you mentioned scaling back and operational costs. tell me more about how you present some of those concerns. would you mention more and more about that, and how did you address concerns on your campus? that's not a sustainable model. we did the traditional approach, which convened a committee. unfortunately an even-numbered committee. i was not very seasonned at the time. they came back and said we would tie on whether we eliminate these. the other three said, if money is an issue, we would have to join those who say it is time to

walk away. we have also engaged the campus as a whofmente the classroom in the summertime, we have a suggestion spot on our web site. we rebid our insurance. we were able to pull out of the safe insurance pool. we were effectively underwriting the department of corrections and department of transportation which are much riskier than teaching on a college campus. we were able to save money there. from a student perspective, i should go back and say, because we chatted a little earlier, one of the things our students have the ability to do and i think the experience you had whether you were present, was with duel enrollment, sentence can take college credits while in high school. in colorado, the school district pays for those courses. we have students that increasingly start with 20, 30, 40 as much as a full year under their belt. it gives them a running start. maybe they aren't competing in three years, but it somehow feels like they are paying for much less. >> one more quick question.

the program that you mentioned, that you want to take ooth to another place, is that program already approved by all the approval systems on your campus and you are having to do the regulatory process all over again just because you are moving it to another place. is that whey understood? >> yes, ma'am. in colorado it is one of these federal agency trumping states. we are designated as a regional education provider about the size of the state of west virginia. it is a mat our compute would like us to take that 50 miles down the road.

it just -- it makes absolutely no sense to me whatsoever. >> our subject today is not regulatory reform, but it is an issue we are concerned about. >> thank you. i have found your presentations, each one of you interesting and i hope we can take advantage of your suggestions. it is excede seedingly important to follow recommendations throughout the country. briefly tell me how to you square the national college

graduates with tuition increases. >> low-income, first generation, minorities and the important population of adults as well. i think we need to think hard about these issues of productivity and not see productivity as something that is actually being done by to somebody but in fact represents an opportunity to increase the capacity in the systems that serve more students. we can't expect parents and students to bear the high costs without there being costs for us as a country. what we have done is shifted more and more of that burden to them. productivity represents the best path forward in terms of increasing capacity to get students into and through college as quickly as possible and help them to become productive members of our work force and our society.

>> you would elaborate on how the institution can better siss seminature information about those college costs that you talked about? >> i think it is important that we have comparable data on progression, completion, and job placement for students. there are lots of places the data system does not allow us to make effective decisions about how well students are doing and whether or not the system of higher education is serving our goals as a country. in moving where students are the end analysis, i think we have an opportunity to better serve the students by better using these federal data systems to help us better understand where the challenges are. >> tim foster, in your written statement you used the phrase

ash trarey financial calculations. what do you mean by ash trarey financial calculations? are you referring to the calculations used to determine student eligibility for the federal title four program? or is this something else? >> we would be referring to eligibility to pell grants and how much attention we have to pay. the rules change every year. in terms of if you are in ma major, are you make thg much progress, at some point, i served in the state legislature, and i will never forget the district attorney we were dwation, and he said, you have to have some confidence in the district attorney's judgment. i would submit to you, we would be more effective if we had more confidence in the financial officer's ability to help students they want to give that aid to and are making progress.

trust me, they do not want to give aid to students that are not progressing. there are inconsistencies in terms of what my major is, and if i fail this class, examine it is not my major, i am eligible. it is just the sort of one-size fits all parameters that really gets in the way and has all sorts of crazy girations and machinations to maintain those students in college. >> mr. foster, did c.m.u. save $500,000? will you point specifically to where the savings written vested in students attending -- c.m.u. students? >> the chairwoman will appreciate thfment on a college campus you can't start new programs because new programs are like small businesses. you can imagine if we started a new program, a bachelors degree

of nursing or a mechanical can engineering program, none of them will be fully enrolled and none of them will carry themselves. with that half million dollars in savings allowed us to do is have revenues over expenditures so we could start those kind of programs. it is no those kind of programs, and i guess i go back to the old naacp ads which were go to college get a better job, if you don't have those degree programs, all of which have better opportunities, and first generation in particular finds it compelling, if i go to this major, what will i do it afterwards. those enable us to start l a variety of opportunity. for us, our strength as a two-year and four-year graduating institution, you can come in one have your certificate, pursue your

two-year, continue working, pursue your nursing degree, continue working, come back now and get your doctorate of nurse practice. those sorts of things are what we think will help people and keep them committed. they lose focus. why do i need a college education? it is really that employment opportunity. >> thank you very much. my time has expired. i hope one of my colleagues will address grace college's three-year degree program, because that really caught my attention. i yield back. ronald, i liked your discussion with us, your dialogue with us on the three-year program. saying that it ends up offering 25% savings to the full-time grace students paying tuition, room, and board. tell us a little bit more about a few years that you-all have carried this out and why more colleges are not