▶ 0:21:59The committee will come to order. Without objection, the chair is authorized to declare a recess at any time and the gentleman from California, Mr. Fong, will be permitted to participate in this hearing to provide a brief opening statement and ask questions of the witnesses. I want to start off by thanking both the Young Americas Foundation and the Ronald Reagan Presidential Foundation and Institute for graciously hosting us.
▶ 0:22:2910 years ago, President Trump stood up on the debate stage here at the Reagan Library and made a bold promise to the American people. He promised middle class Americans a major reduction in their taxes.
▶ 0:22:46He delivered on that promise in 2017 and he delivered on it again just a few weeks ago when we signed into law another another big middle class tax cut in the one big beautiful bill. The Ways and Means Committee placed a crucial role in developing this legislation and much of that work happened outside of Washington in field hearings just like these.
▶ 0:23:16We heard from regular working Americans and turned their ideas into law. This will be our 14th such fil hearing and we look forward to discussing how hardworking Americans and the strength of the American economy benefit from these permanent reforms in the tax code. The media love to claim that the president's agenda creates chaos, but the truth is the exact opposite.
▶ 0:23:44President Trump just made proworker progrowth tax policy permanent in the one big beautiful bill for working folks across this country. Those who wait tables, labor on the factory floor, make payrolls, and harvest crops. The one big beautiful bill makes a real difference in their lives.
▶ 0:24:09It means at least a $600 tax cut for the average family beyond what they currently pay today. For tipped workers, a $1,300 tax cut. Overtime hourly workers, a $1,400 tax cut. And seniors, they get a $63 billion tax cut.
▶ 0:24:35nearly $11,000 more in take-home pay to cover the mortgage, fill the grocery cart, and get away for a summer vacation. New plants and factories opening up in local more open for business signs in main street storefronts, small towns dotted by productive and thriving family farms, and more of the necessities of everyday life
▶ 0:25:05like medicine being produced right here in America. The alternative was unacceptable for workers and families. Had Congress failed to act, America would have seen the largest tax hike in our nation's history.
▶ 0:25:24$4.5 trillion that would other otherwise have gone toward new investments, equipment purchases, and payraises would have gone straight to Uncle Sam. Millions of jobs, including those from small businesses and manufacturing, would have been lost. America would have surrendered our competitive edge to nations like China.
▶ 0:25:50Instead, President Trump and Republicans in Congress pass the largest tax cut in American history. Because of that, the average American who gets up every Monday and goes to work has a better shot at providing a decent life for themselves and their family.
▶ 0:26:12the R&D credit, immediate full expensing, interest deductibility, the 20% small business deduction, and the te death death tax exemption are permanent. For the first time, we are unleashing new incentives to build new factories and production facilities right here in America.
▶ 0:26:38Manufacturers in America have never had more tax certainty than under Donald Trump. Progrowth tax breaks will help American businesses invest and build here at home to beat our foreign competition abroad. Farmers and rural communities have more tax relief in this bill than at any other time.
▶ 0:27:04We drive new rounds of investment to truly rural areas with a return of opportunity zones while helping farmers secure more lowerc cost loans to expand their operations. The one big beautiful bill pairs permanent progrowth tax policy with the largest the largest mandatory spending cut in American history to improve our nation's fiscal health.
▶ 0:27:33The result will be more jobs and prosperity restored back to America. The one big beautiful bill protects and creates 7 million jobs, including 1 million manufacturing jobs. Small businesses alone will create 1 million new jobs each year.
▶ 0:27:54Forecast show economic growth will increase by more than a full percentage point each year for the next four years and actually drive down our deficits each year as a result of this bill.
▶ 0:28:10We can choose to mock those predictions or realize that those same predictions after passage of the 2017 Trump tax cuts were much closer to what actually occurred than the numbers from internal Washington scorekeepers. I'm so glad that we are joined to today by some of the Americans who are the winners of the one big beautiful bill. small businesses, and manufacturers.
▶ 0:28:41Thank you for taking the time away from your family and work to share how the one big beautiful bill will improve your life, your employees lives, and your communities. We also want to hear from all of you in the audience. There will be clipboards um right there that will be passed around during the hearing for you to share with the committee how the one big beautiful bill affects you.
▶ 0:29:10We want to hear your voice and your story as we implement President Trump's progrowth and proworker agenda. Those comments will then be entered into the official record for this hearing. I'm pleased to recognize the ranking member, Miss Sanchez, for five members, five minutes to provide her opening
▶ 0:29:33Thank you, Mr. Sherman. I want the people in the audience who and those that are watching to understand that Republicans are trying to trick working Americans into believing that they are getting a tax break while they are delivering the single largest health care cut in American history. Let that sink in. While the Republican party pretends to be the party of the working class, they consistently prove the opposite.
▶ 0:30:01Facts are facts, and I'm going to spit some facts. This bill gives the top.1% an average tax cut of $39,000 in 20207 alone. Los Angeles County's child poverty rate is 17.7% which is over 4% higher than the national poverty rate.
▶ 0:30:25Do you know what the average Angelino parent could do with an extra $300,000 a year? That breaks down to $847 a day that billionaires get in tax relief. Imagine if that money was going to children in poverty instead.
▶ 0:30:44And Republicans might say, "But we did expand benefits for children in poverty." Well, for people making under $50,000 a year, the expansion amounts to only 68 cents a day, far below what it takes to lift a child out of poverty. If those numbers were flipped, we could give working families hundreds of dollars a day in benefits. Do you know how much child care, how much food, how much college savings that would mean for the average American family?
▶ 0:31:14But Republicans don't care. This bill delivers crumbs to working families while stealing their health care. So yeah, they may get a tiny crumb of a tax break, but what they are taking away with the other hand is far greater. This bill will also raise all of our health care premiums, cut coverage for over 17 million Americans. That's not good for America. Close hospital doors, particularly in rural places where there is already a rural health care crisis, and cut doctor payments.
▶ 0:31:45Republicans are cutting kids health care. 1.6 million children in California are enrolled in the children's health insurance program. This cruel bill locks children out of CHIP coverage and imposes annual and lifetime limits on care. They also want to cut healthcare for our parents and our grandparents.
▶ 0:32:05The so-called party of fiscal responsibility is exploding our national debt, which is why I find it comical that they pretend that it's somehow magically going to erase our debt. It triggers $500 billion in cuts in Medicare. This is after repeated promises to not touch someone's health care. The elderly and people with disabilities will get kicked out of their long-term care facilities. Hospitals and clinics will close.
▶ 0:32:33Nursing homes, which primarily take Medicaid dollars, will shutter their doors. Republicans on the committee boast about no tax on tips, which this bill does do. Taxpayers, though, are still required to pay payroll taxes on their tips, which especially for low-wage workers tend to be the highest. And those provisions are temporary. All of the so-called benefits to middle class are temporary while the tax cuts to billionaires are permanent.
▶ 0:33:02And President Trump has been bragging about no tax on Social Security, which isn't even in this bill. To my Republican colleagues, you have failed your constituents. Once again, Mr. Chairman, your district has over 250,000 Medicaid enrolles. Did you not think about them when you voted for this bill? Or do you just care about the 1% who is benefiting the most? I am proud to stand here for all Americans, not just the wealthy few.
▶ 0:33:31I thank you and I yield back the balance of my time. I'm pleased to recognize the gentleman from California, Mr. Fong, for one minute to provide a brief opening Uh thank you Chairman Smith and the entire Ways and Means Committee for having me here in my home state of California.
▶ 0:33:53It's an honor to be here at the Reagan Library in Semi Valley uh to as we hear directly from local business owners on how the one big beautiful bill will support our farmers, our ranchers, and our small businesses by making the 2017 Tax Cuts and Jobs Act permanent. This bill delivers a historic tax cut to Central Valley farmers and and families.
▶ 0:34:15uh an area that I'm proud to represent uh relief of over $3,000 a year and locks in the 20% small business deduction benefiting nearly 42,000 local businesses in my community. It also restores full expensing for business investments driving economic growth for my agricultural community and our state's agriculture community.
▶ 0:34:38This bill makes the death tax exemption permanent, helping over 3,200 family farms and ranches in my community stay in the family. It also invent invests $1 in critical water infrastructure like canals, reservoirs, and groundwater water recharge to support droughtstricken areas and regions right right here in California.
▶ 0:35:02And by expanding trade and crop programs, it ensures long-term support for the valley's worldclass farmers. Simply put, this bill builds a stronger economy, a competitive workforce, and a more affordable future for California and our nation. Thank you, Mr. Chairman, and I yield back.
▶ 0:35:19I'm pleased to recognize the gentle gentlewoman from California, Miss Chu, for one minute to provide a brief opening statement. From the moment he was elected, President Trump has manufactured chaos in California.
▶ 0:35:33He's taken over our National Guard, deployed Marines to Los Angeles, threatened to arrest our governor, and is stalling disaster aid for our state that is so desperately needed to recover from the deadly LA fires that destroyed homes, displaced thousands, and took 31 lives.
▶ 0:35:51Now, Republicans have flown in to do his dirty work, staging a sham hearing to push lies about this big, ugly bill that will devastate workingclass Californians and small businesses. Let's be clear, this bill is the largest transfer of wealth from the poor to the rich in modern history.
▶ 0:36:15Republicans are ripping health care away from 15 million Americans, the most ever in our nation's history, including 2.3 million Californians. This hearing is pathetic political theater. Californians won't fall fall for it, and we won't forget who sold us out. I yel back.
▶ 0:36:42I would like to remind the audience that clapping is a disruption of a congressional proceeding. I've allowed it a couple times, but um uh please honor the federal rules of order within a congressional hearing. Um I'm pleased to recognize the the gentleman from California, Mr. Gomez, for one minute to provide a brief opening statement.
▶ 0:37:07Uh thank you, Mr. Chairman. I um I've never I've always wanted to come to the Ronald Reagan Library because I thought he was um he represented some of the best parts of I I think of the Republican party. And I want to read just something that he said in his one of his farewell addresses. He said, "We lead the world because unique among nations, we draw our people our strength from every corner in every country around the world. And by doing so, we continuously renew and enrich our nation.
▶ 0:37:37While other countries cling to the stale past, here in America, we breathe life into dreams. We create the future and the world follow us follows us into tomorrow. Thanks to each wave of new arrivals to this land of opportunity. We're a nation forever young, forever bursting with energy and new ideas, and always on the cutting edge, always leading the world to the next frontier. This quality is vital to our future as a nation.
▶ 0:38:04If we ever close the door to new Americans, our leadership in the world will soon be lost. I think that this Republican party has turned their back on the legacy of Ronald Reagan. Turn the back on the legacy of America and what makes us unique. And no matter what JD Vance, no matter what Donald Trump say, America is for immigrants. With that, I yield back.
▶ 0:38:29I will now introduce our witnesses. Kevin Kester is a rancher at Bear Valley Ranch. We have Raymond Huff is president of HJB Convenience. And we have William Fulton is vice president of business development at Robinson Helicopter Company. We also have Jay Timonss um is president and CEO of the National Association of Manufacturers. We have Dr.
▶ 0:38:56Josh Row is a senior fellow at the Hoover Institute and we have John Kim is the president and CE CEO of Catalyst California. I want to thank you all for joining us today. Your written statements will be made part of the hearing record and you each have five minutes to deliver remarks. Mr. Kester, you may begin when you are ready.
▶ 0:39:19Good morning, Mr. Chairman and members of the committee. My name is Kevin Kester. I am a fifth generation rancher from Parkfield, California. I'm the owner of Bear Valley Ranch and Vineyards. I have the good fortune to be there with my wife June, my children, and my grandchildren, and together we raise healthy cattle and nutritious beef for consumers across the country.
▶ 0:39:43I am here today on behalf of the National Cattleman's Beef Association where I previously served as the president and I also served as chair of the tax and credit committee. NCBA has been the trusted leader and definitive voice of the US cattle and beef industry since I am honored to share our perspectives on the important benefits of the big beautiful bill.
▶ 0:40:11On behalf of cattle producers throughout America, I offer my sincere thanks to the members of the committee and to President Trump for developing a tax package that enables family businesses like ours to compete and succeed for years to come.
▶ 0:40:29Thank you for providing long-term relief from the death tax, for permanently extending section 199A, increasing section 179 deduction, and restoring 100% bonus With these tools and others in the tax rural family businesses like ours are more equipped to compete with larger corporations and spur growth in our local economies.
▶ 0:41:01For cattlemen like me, long-term relief from the death tax is a significant victory. I cannot overstate that. The death tax relief we fought to secure in the 2017 tax cuts and jobs act was set to expire at the end of this And for many cattle producers, that would have triggered a massive tax on many estates. Farm and pasture land is our most valuable assets.
▶ 0:41:31And sadly, many families must sell parts or all of their operation to pay for the death tax. This is land is used to produce food and it is land that we have paid taxes on for decades. Taking land and livestock out of production hurts the profitability of our family agricultural operations across this NCBA published the results of a nationwide tax survey.
▶ 0:42:00And of the 1,200 respondents, 60% of cattle producers would have negatively been impacted if the death tax reverted back to its previous levels. And unfortunately, I have firsthand knowledge of the devastating impact of the death tax. It took many years for me and my family to pay it off. That is something I hope no farmer, rancher, or family business ever has to face.
▶ 0:42:31Thankfully, because of your leadership, many families can breathe a sigh of Likewise, the permanence of 199A small business deduction will ensure that the pass through businesses can compete on equal footing with corporations. Many cattle operations are structured as pass through businesses and many of them would have faced a tax increase if the deduction expired.
▶ 0:42:58By permanently extending 199A, cattle producers are empowered to make thoughtful planning decisions for the future without worrying if they will face a tax increase down the line. Like other small businesses, cattle operations require significant investments in machinery, equipment, and depreciable assets.
▶ 0:43:22And we rely on section 179 and bonus depreciation to afford those necessary investments. Increasing section 179 and restoring 100% bonus depreciation is a major win for small businesses. and making these provisions permanent will give us the flexibility we need to invest wisely in our businesses.
▶ 0:43:48The tax package of the one big beautiful bill contains many provisions that will help my family and many other ranching families as we plan for the future and spur economic growth. I greatly appreciate the opportunity to participate in this hearing and I look forward to answering your questions. Thank you, Mr. Chairman.
▶ 0:44:11Thank you, Mr. Huff. You're now
▶ 0:44:15Thank you, Mr. Chairman, ranking member, members of the committee for allowing me to talk about the one big beautiful bill and how it helps small businesses like mine. My name is Raymond Huff. I'm president of HJB Convenience. I'm also a board member for the National Association of Convenience Stores. I've been in the convenience industry since 1988, and my business has seen its ups and downs.
▶ 0:44:41From having stores in the World Trade Center during both 911 and the 1993 bombing to providing a livelihood for a great group of employees who have stayed with me for an average of 20 years. Today I operate seven convenience stores 16 and have 16 employees. Two of those stores are in Los Angeles area.
▶ 0:45:06I've come a long way from the 15year-old who got my first job because I picked up trash outside of an office before my first interview. But my business has struggled over the past five years. Pri prior to 2020 I had 23 stores. uh operate convenience stores inside high-rise office buildings. When COVID hit, people stopped coming to those offices. We had to close twothirds of our stores.
▶ 0:45:37Frankly, the tax cuts and job act saved me. I was able to invest in selfch checkout technology in my before the pandemic because of the 199A tax deduction and bonus depreciation. Without that, I could not have survived the downturn. With no profits, I've not been able to make use of the tax deductions for the fast uh past five years.
▶ 0:46:04Now, and in the future, however, I need those tax benefits, and I'm working towards profitability again. The tax provision of the bills are a critical part of my plan. For example, the bill's provision that returns 100% bonus depreciation is a key to allow me to invest in expanding and hiring employees.
▶ 0:46:26Bonus depreciation alone will help me double the size of my most profitable store that will allow me to add five more employees, an increase in my workforce of onethird. In addition to expanding our best performing store, the numbers now make sense for me to reopen two of my stores that I closed after the fallout of the pandemic. That could add another four employees to my company.
▶ 0:46:53All told, I expect to increase my employee numbers by 50% or more. If that's the impact on just my business, multiply that across thousands of small businesses and the impact on the US economy is immense. Making section 199A permanent, increasing the allowable business interest deduction together with bonus depreciation creates a virtuous cycle for my business.
▶ 0:47:21First, these tax provision make it possible for me to afford investment in growth. Then they ensure that those gains won't be erased by taxes we have to pay. The bill will help ensure the debt that I take on won't become an albatross around my neck. The tax provisions mean I can be profitable next year and keep it going. That certainty is a key to allowing me to expand in the first place.
▶ 0:47:50Some might look at my gray hair and think I'm a short-timer, so it wouldn't matter. But that kind of thinking would miss an essential essential point about business, my business and other small businesses. Our businesses are not just about ourselves. They're for the future. They're about creating something for our families, our and for the long term.
▶ 0:48:16Because of that, I would argue that the permanence of the long-term certainty matter more for small businesses than they do for larger competitors. That is why the estate tax changes in the bill fit so well. Your bill will let what I've built stay here for our communities, our employees, and my family after I'm gone. With the passage of the bill, you've allowed small businesses to plan, invest, expand, and hire.
▶ 0:48:45Thank you for understanding that business owners like me need a level playing field and a fair shot at success. Your bill has done that and provided the boost small businesses really need. Thank you for your time today and I welcome your questions.
▶ 0:49:03Thank you, Mr. Fulton. You're now
▶ 0:49:07Good morning, Chairman Smith, Congresswoman Sanchez, and members of the Ways and Means Committee. Thank you for your leadership and on behalf of manufacturers across the United States and for the opportunity to appear before you today. My name is Will Fulton and I'm the vice president of business development at Robinson Helicopter. I'm a proud US Army veteran having had the honor and privilege of flying Longbow Apache helicopters through two combat deployments.
▶ 0:49:35After serving my country, I have now worked in the aerospace and manufacturing industry for more than 15 Robinson Helicopter Company, founded by Frank Robinson in 1973, specializes in helicopter design, assembly, inspection, flight testing, manufacturing, and production. All in America. Our Torrance, California manufacturing facility is the world's leading commercial helicopter manufacturer. Period.
▶ 0:50:06Robinson is a fully vertically integrated facility that builds 100% Americanmade helicopters and unmanned platforms for our first responders, wildfire prevention, disaster relief, and both commercial and military flight In fact, we are currently competing to win the US Army's next generation flight school trainer with the only helicopter that is truly 100% made in America.
▶ 0:50:36Our code is simple. The work we do makes the world work. Accordingly, we take every step necessary to make sure we execute at the highest level. We manufacture 80% of the components used in our products from raw material ourselves with the majority of the remaining 20% supplied throughout the United States. Most of those critical suppliers remain within 100 miles of our headquarters in Southern California.
▶ 0:51:03Our 1300 employees make more commercial helicopters in a year than any other company in the world. Many of our employees come from families who have worked at Robinson helicopter across multiple generations. And we are proud of the work we do which will the one big beautiful bill act supports by driving our ability to accelerate domestic investment expansion and growth. Before the passage of the bill, we are looking at two very different paths for next year.
▶ 0:51:31either preservation of the tax cuts and jobs act that empowers companies like Robinson or large tax increases that could further erode local business growth and job I am here today because Congress chose the first path and I want to thank you for the impact that decision will have on Robinson Helicopter. This legislation helps accelerate our ambitions into a more near-term reality.
▶ 0:51:57To achieve our goals, we will need to push the boundaries of manufacturing technology while investing in the equipment, workforce, and facilities needed to further expand Robinson product offerings. For each of these key steps, the one big beautiful bill retained a 21% corporate tax rate that underpins the baseline for our global competitiveness and included critical provisions to reduce the cost of investment that will facilitate our product and job growth plans.
▶ 0:52:24Manufacturers are innovators and one of the most important provisions of HR1 is the restoration of immediate R&D Though manufacturing accounts for only 10% of the country's GDP, we make up 53% of all private sector research spending. These tax provisions help us to invest both in the design of new technology and its production processes. We recently launched our newest helicopter, the R88, which will offer more robust first responder capabilities.
▶ 0:52:53Our R&D efforts for the R88 include the ability to fit that helicopter with more advanced technology and equipment for firefighting, disaster response, and emergency medical services. That helicopter will act as an operational control center to a fleet of fire surveillance drones to better scan for any signs of ignition, ensure faster response times, and expand the capacity of fire departments to contain fires earlier.
▶ 0:53:19The research needed for these new products will also help prevent the destructive wildfires that have been prevalent in California. It's impossible to overstate how important this is to our local communities, especially those recently displaced by the Los Angeles wildfires earlier this year. In addition to leading across innovation, Robinson helicopters plan for expansion requires us to build out manufacturing capabilities.
▶ 0:53:44And as we build these production lines, the immediate expensing of equipment will enable us to do so faster, cheaper, and better. Thanks to your leadership, Congress and the administration have empowered Robinson Helicopter to create jobs, invest in equipment, innovate through R&D, and drive economic growth faster. On behalf of the 1300 employees at Robinson Helicopter, thank you, and I look forward to your questions.
▶ 0:54:09Thank you, Mr. Timonss. You're now Chairman Smith, Ranking Member Sanchez, and members of the committee. I'm Jay Timonss, and I have the privilege of leading the National Association of Manufacturers. And on behalf of manufacturers in America, I want to begin simply by stating thank you. Because you have made the investment of a generation in America's manufacturers. You have strengthened the hand of the 13 million people who make things in America.
▶ 0:54:39and you have delivered historic progrowth tax legislation powering every manufacturer in America to invest, innovate, and lead. Let's remember what was on the line. The tax cuts tax cuts and jobs act of 2017. Well, it was rocket fuel for our industry. And powered by that legislation, our industry kept our promises. We created the most jobs in 20 years and the strongest wage growth in 15 years.
▶ 0:55:07We put more factories into motion, more shovels into the dirt, and more prosperity into our communities. Put simply, tax reform worked. Yet, all that momentum was at stake. The rocket was running out of fuel. Several of the key provisions from 2017 had already expired, as would nearly all others by the end of this year. So, this year was a time for choosing.
▶ 0:55:33We could double down on an investment that worked and make the 2017 provision stronger and permanent. Or we could let those provisions expire and wipe out six million jobs, more than half a trillion dollars in wages, and more than a trillion dollars in GDP. The time had come for Congress to choose, and Congress stood with us. As a result, this is a manufacturer's law through and through.
▶ 0:55:59By making immediate R&D full expensing of capital equipment, and interest deductibility permanent, this manufacturing law delivers for investment and innovation through the pass through deduction, reduced individual tax rates, and estate tax provisions for family-owned businesses.
▶ 0:56:17This manufacturing law delivers for small businesses that power our economy through protecting the 21% corporate tax rate and through strengthening the international tax system that incentivizes companies to invest here, build here, hire here. This manufacturing law will help deliver another American century. It was President Reagan who inspired my entry into public service.
▶ 0:56:42His 1981 and 1986 tax cuts showed me what can be accomplished through strategic policy choices and steady leadership. An investment in the people and the communities of our country from Chilikathy, Ohio, where I grew up to countless others like my hometown.
▶ 0:57:00A conviction that a strong manufacturing base is essential to America's global As I speak with you today in the library that bears his name on behalf of the industry that you have re-energized, I think back to President Reagan's very words when he signed the 1986 Tax Reform Act. Sadly, I'm old enough to have watched it live. President Reagan spoke of the American people.
▶ 0:57:27He said, "It was their hard work that built our cities and farmed our prairies. their genius that continually pushed us beyond our boundaries of existing knowledge, reshaping our world with the steam engine, polio vaccine, and the silicon chip. It was their faith and freedom and love of country that sustained us through trials and hardships and through wars. And it was their courage and selflessness that enabled us always to prevail. That's the story of manufacturing.
▶ 0:57:56It's a story that must go on. Because when manufacturing wins, America wins. Here's why. Every investment in manufacturing ripples outward, helping every community stand taller from the heartlands to the coasts. Higher investment, more American jobs, increased wages, the dignity of Now, I acknowledge that not every American, let alone every member of Congress, is convinced.
▶ 0:58:27But I can promise you this. Through the power and potential of these reforms, manufacturers will work every day to make sure that all Americans benefit. On that, you have my word. And just as we did after 2017, manufacturers will deliver again. Thank you, Mr. Mr. Chairman, thank you. Dr. Ralph, you're now recognized.
▶ 0:58:53Chairman Smith, Ranking Member Sanchez, members of the committee. My name is Joshua Ralph and I'm an economist at Stanford University. Strong economic growth benefits all Americans by raising incomes across the board. But in January, the CBO projected growth to average just 1.8% over the next 10 years. Had growth been that slow over the past 50 years, the US economy today would be 40% smaller.
▶ 0:59:20Fortunately, Congress recognized the imperative for progrowth tax policy in the big beautiful bill. Let's start with the business tax reforms. First, the act restores and makes permanent full expensing of business equipment and temporarily extends it to certain structures. In research with my co-authors John Hartley and Kevin Hasset, we found that the 2017 business tax reforms led to substantially higher investment rates. So these extensions are a powerful step for growth and productivity.
▶ 0:59:50Second, the act restores permanent full expensing for domestic R&D. Since 2022, firms could only deduct R&D costs over time. Reversing that change will boost innovation. Third, the act fixes the limit on business interest deductibility to apply in a way that reduces distortions against investments. The Tax Foundation estimates that these three changes alone will raise long run GDP by 0.8%, roughly $250 billion per year in today's terms.
▶ 1:00:21Beyond these provisions, the act renews other critical progrowth tax reforms. Most notably, it makes permanent the TCJ's individual income tax rate reductions and the qualified business income deduction for America's vital pass through businesses by extending rate relief and improving access to the QBI deduction. The act cuts taxes for households and also strengthens incentives for pass through firms to invest, hire, and grow.
▶ 1:00:48In my research on California's steep tax hikes, where the top marginal tax rate here is now 55% higher than it was 20 years ago, I have shown that elevated tax rates suppress economic activity. Not only through out migration, but especially for those who stay. When federal tax rates rise, the same happens nationally. When you cut rates, you unleash prosperity.
▶ 1:01:16Now, one obstacle to progrowth tax reform is how the CBO and JCT measure the supposed costs of tax policy changes. These agencies routinely underestimate the economic growth effects of tax cuts. Compounding the problem is a lack of transparency in their economic models. Congress should address this by requiring these models and their source code to be made publicly available.
▶ 1:01:43The CBO estimates that the bill will raise primary deficits by at least $3.4 trillion. But if they had used behavioral assumptions consistent with the findings of the research that I just cited to you, the score, the cost would be and will be far lower. Just a half percentage point increase in productivity growth. A half percentage point increase very plausible outcome would raise annual growth to 2.5% per year and reduce deficits by $2 trillion over the decade.
▶ 1:02:12that would offset more than half of the CBO's projected costs and that's not even counting any tariff revenue raised by the administration. The beautiful bill is not exploding debt. It is exploding prosperity. I also want to applaud Chairman Smith, this committee for opposing a global tax code which would surrender US sovereignty. Going forward, this committee should make sure that the understanding reached at the G7, which led to the removal of the retaliatory measures from the bill, is properly implemented.
▶ 1:02:42Congress must retain its full constitutional right to cut taxes without seeking foreign approval or pledging revenue to other nations. America did not fight a revolution so that 250 years later, we'd have to ask France for permission to cut our tax rates. Congress should now keep going down the path it trailblazed with the 2017 and 2025 acts. A top priority should be permanent full expensing for all capital purchases and rate reductions for individuals and businesses paired with more limits to other deductions.
▶ 1:03:11Beyond taxes, regulatory reform is critical for growth. I think permitting reform may offer bipartisan opportunities. The majority could also seek further board rule compliant provisions that reduce regulatory burdens. A terrific example is your section 6026 of the bill which allows applicants to pay 25% higher fees for expedited federal environmental reviews.
▶ 1:03:36That is an ingenious provision since the economic costs of delay and uncertainty from these reviews dwarfs the review fees. Finally, no tax policy is sustainable without spending discipline. The beautiful bill made progress, but further restraint is needed. Without it, today's tax cuts won't remain truly permanent because tomorrow's taxes or inflation, which is also a tax, will pay for unchecked spending. Four decades ago, President Reagan asked Americans to help put our financial house in order.
▶ 1:04:04So, the tax, spending, and monetary policies would support, not hinder growth. As we meet here at the Reagan Library, the challenge is even greater, but the call remains the same. Thank you, and I look forward to your
▶ 1:04:16Thank you, Mr. Kim. You're now recognized. Thank you, Chairman Smith, Ranking Member Sanchez, and members of this committee for the invitation to speak today. My name is John Kim, president and CEO of Catalyst California. For over 25 years, Catalyst California has been working to build just and equitable public systems and increase access to opportunity for all Californians. I appreciate the opportunity to speak on the economic and real life implications of HR1 here in California.
▶ 1:04:45We know the national picture, what that'll look like. First, according to the CBO, HR1 is the most costly bill in history, adding 3.4 trillion to the deficit through disproportionate handouts to billionaires while cruy cutting life-saving programs like Medicaid and SNAP. By 2027, the top.1% of Americans will receive, as mentioned, an average tax cut of $109,000.
▶ 1:05:15Comparing that with lowincome earners who will only receive an average tax cut of $247 per year, that is 68 cents a day for workingclass Americans. All while the unprecedented cuts to Medicaid and SNAP will trigger a wave of mass poverty by severely limiting access to health care and taking food and groceries off the table for millions of Americans. So, what does this mean for California?
▶ 1:05:45This means that the cuts to Medicaid will put more than 3.5 Californians at risk of losing coverage by adding red tape and bureaucracy. This means that the failure to extend the ACA premium tax credit will put an additional 660,000 Californians at risk of losing health coverage through the state marketplace. These cuts will shrink or close hospitals and health clinics in rural areas and low-income urban communities.
▶ 1:06:13And the 20% contraction of the SNAP program will mean 3 million California families, including children, seniors, and people with disabilities, will be in danger of increased poverty and food Secondly, we sit here in Southern California, which is still reeling from the effects of a man-made humanitarian disaster by the federal and ice siege of Los Angeles.
▶ 1:06:40For weeks, unidentified mass men have been roving our streets, terrorizing communities, and violently disappearing our hardworking neighbors, service providers, food vendors, and construction workers. As the numbers show, these coordinated federal enforcement actions are not about going after criminals. The vast majority of those detained have not committed a crime since coming to this country. This is about performative terror. This is about control.
▶ 1:07:10At the same time, because of these violent raids, we are seeing an invisible humanitarian crisis unfold as whole communities go deeply underground. Children kept indoors and not sent to summer programs. Parents unable to go to work and earn enough for food and rent. Crimes not being reported. Doctor's appointments skipped. Small businesses shuttered.
▶ 1:07:33HR1 will massively expand this fear-based detention and deportation machine, which will destabilize lives and local economies all across this country as it did here. And finally, on state and local budgets, according to the Kaiser Family Foundation, California stand to lose between 112 billion to 187 billion in federal healthcare funding over the next decade.
▶ 1:07:59You add that another 2.5 billion per year with the tax cuts uh from the SNAP program. That means that California would have to backfill 13 to 20 billion a year. And that's on top of dealing with the impacts of the tariffs and tariff induced inflation. Here in Los Angeles County, local leaders already announced that congressional actions will drain a billion dollars out of our county's health system.
▶ 1:08:24These cuts will not only affect those who rely on those programs, but will mean overflowing emergency rooms, longer waits, fewer hospital beds, and higher costs for all of us. While I'm sharing California and LA specific numbers and impacts, we should be clear that versions of this devastation will be felt in states across the country, not just in blue states and cities. We may celebrate specific tax benefits within HR1.
▶ 1:08:52But for the average American, the next few years of HR1 will feel like they've been given crumbs all while their lunch has been stolen. In the end, though we may have polar opposite opinions on this bill, I am not the enemy. The communities and hardworking people of LA and comm and California are not the enemy. The enemy are those who pit us against one another while picking all of our pockets.
▶ 1:09:20And the fastest way for our country to fail is if we continue to believe the lie that we are somehow separate from one another. that my fate is not tied to your fate or not tied to the farm worker in the Central Valley or that young child left hungry in San Diego. In the end, we must do better to see all of us in this together or we're all doomed to fail separately. Thank Thank you. I would remind the audience again about clapping or disruptions.
▶ 1:09:51Um we will now move to questions. Um, we'll I will defer my questions till later in the hearing and I'll I'll call on Mr. Smith for his questions.
▶ 1:10:02Thank you, Mr. Chairman. Thank you to my colleagues for taking the time to be here. Thank you to our panel for being here. Thank you to all those who have taken time to share your perspective perhaps uh observe also what is what is happening. Uh certainly, Mr. Trulio, thank you for uh shining a light on President Reagan's legacy here at this facility.
▶ 1:10:22Uh um I'm particularly a Reagan junkie and uh always love coming back here, but it's nice that there's always something new too that will reflect how great President Reagan was for our country and uh not only past and present, but well into the future. So, thank you to you and your team.
▶ 1:10:44Last year we passed a bill slightly different circumstances, different A lot of the same issues though in a bill that was bipartisan. It was celebrated with House passage and it wasn't 100% supported on either side, but largely the bill that we passed last year relating to family and business taxes has been included in the bill this year. And Mr. Kim, I think you you uh reflected a bit that we can celebrate some of the tax benefits in the bill.
▶ 1:11:13I hope we can do that and and sticking to the facts at hand and and Mr. Kim, I appreciate your comments that um those who might disagree are not the enemy. Absolutely not. And that's why I think this bill actually strengthens the safety net to make sure that the folks who need the help will receive the help and that we will have the resources. And I appreciate I represent one of the the most rural constituencies in the US House.
▶ 1:11:43I've been uh eagerly speaking with uh healthc care providers in my district uh who are uh telling me the facts and uh there resources in our bill that help rural health. They appreciate that. They celebrate that and uh they also are constantly telling me how vibrant their operations are. I appreciate that.
▶ 1:12:04So, as we move forward here and reflecting on how productive, if I might emphasize the word productive what we did in 2017 was because I think Mr. Huff, Mr. Kester, uh, Mr. Fulton touched and Mr. Simmons touched on productivity in our economy, especially manufacturing from Mr. Timonss, but agriculture, small businesses. Our goal was to increase productivity with a tax cut so that the American people could benefit without triggering inflation.
▶ 1:12:34administration changed in January of 2021, pushed all this cash out there, triggered inflation. We didn't want to do that again. That was a big mistake. And so that's why we shifted gears here to pass the bill that we ultimately did the other day that uh I think will be great for workers. We heard from workers yesterday very eager to experience the benefits of the new bill because they experienced the benefits of the last bill in 2017.
▶ 1:13:00what we did increased wages at a faster rate than executive A lot of folks don't really want to talk about that, but that's the fact. So, Mr. Kester, uh, thank you for being here. The death tax, many would say it's a double tax. I would love to get rid of it entirely and permanently, but that's not where we ended up. But we did end up with an exemption and it is permanent.
▶ 1:13:27Can you speak to the usefulness of that permanence in terms of uh perhaps agriculture operations and other small businesses as well?
▶ 1:13:35Absolutely. uh for the estate tax, which we not so fondly refer to as the death tax. Uh my family has over the last 30 years has spent tens and tens of thousands of dollars trying to plan legal expenses, plan for mitigating the different rates and exemption amounts over the years.
▶ 1:13:59And so now with the permanency of having a baseline indexed up, we can plan and uh wisely try to transition for our generational family ranching operation. It's it's I can't overstate how big that is to have that certainty and knowing what the limits are going to be and at the same time hopefully we can have the discussion about full exemption in the future.
▶ 1:14:23But it is uh hugely important to my family and many other egg operations, familyrun businesses to have that permanency and certainty of what the numbers are so they can properly plan for future
▶ 1:14:37Thank you. I appreciate that perspective and I wish I had more time. But Mr. Timmons, just briefly, could you reflect slightly on the importance of interest deductibility and how that is carried out with your members? AB:
▶ 1:14:49Absolutely. Thank you and thank you for your leadership. uh on interest deductibility. Congressman, um you spoke to our small and medium manufacturers group earlier this year and it was one of the top issues that you heard from them. Uh because when especially when a small manufacturer wants to invest in new plants or equipment, uh if they want to invest in research and development activities, if they want to um if they if they want to build a new facility, uh obviously they probably have to borrow some money.
▶ 1:15:17And the cost of interest has for the last few years because that provision expired, the 2017 provision expired, the cost of interest here in the United States has been much higher than it has been in other countries around the world, which is a competitive disadvantage. So by restoring that uh you've enabled uh businesses, frankly, of all sizes uh to to increase their investment capacity um and to grow their businesses and to create more jobs.
▶ 1:15:43Yeah. Thank you. I yield back. Miss Sanchez is recognized.
▶ 1:15:46Thank you, Mr. Chairman. You know, five minutes is not nearly enough time to list all the ways in which this bill is going to hurt Californians. From the 3.4 million Californians who risk losing medical to the 70,000 jobs put in jeopardy by the cuts to clean energy credits, the one big bill does nothing but put us in a worse spot than we were before President Trump was in office. This bill raises prices on everyday Americans.
▶ 1:16:13It raises health care premiums and it raises taxes for the working class. And this comes at a time when Trump and Republicans are already increasing costs for working families at the grocery store and for back to school shopping through their ridiculous on again off-ag again will we won't we tariff policies. Even President Reagan, whose trade policy couldn't be different more different than my own, has been on record saying that tariffs raise prices on consumers. Sound familiar?
▶ 1:16:42It should sound familiar to you, Mr. Timonss. Your organization, the National Association of Manufacturers, put out this press release in April of this year, which I would like to submit for the record.
▶ 1:16:54Without objection,
▶ 1:16:55Mr. Timmons, in this press release from April of this year, you stated that 87% of small and medium-sized manufacturers indicated that they may need to raise prices. Since we have seen tariff after tariff levied on our closest trading partners, do you deny that tariffs have caused some businesses to raise prices?
▶ 1:17:15Well, thank you for that question, Congresswoman. Um, I would I'd like to address a couple of things that you said there.
▶ 1:17:25I just asked a simple question and I've got limited time so a yes or no answer would suffice with a brief explanation. Sure. Do you deny that tariffs have caused some businesses to raise prices? So, as I've said, businesses are very concerned right now about the tariff policy, and we'd like to know, frankly, what the uh solution is going to be and what what the administration is going to negotiate with various countries. Uh having said that, one thing that is important and I wanted you to be aware of this.
▶ 1:17:51One thing that is important to know is that even if we turned on every machine in this country right now and we filled every single job that we have open, which is 400,000, and we ran those machines 24 hours a day, 7 days a week, we could still only produce about 84% of critical inputs that are necessary to grow manufacturing capacity in the United States.
▶ 1:18:11I'm not sensing an answer to the question, though. Well, you should because 16% of those critical inputs do have to come from other countries. And if we raise the prices on those, it makes it more difficult to to experience a growth in manufacturing. So, we want to see some sort of a program that allows some sort of a speed pass to allow those issues or those products.
▶ 1:18:31Thank you, Mr. Chairman, for reclaiming my time. I just want for the record to note that beef prices are hitting records, rising almost 9% since January according to the Department of Agriculture and retailing for 9.26 a pound. If you do grocery shopping weekly like I do,
▶ 1:18:46I don't imagine most of you guys do. I bet you have others that do it for you. You notice you notice the increase in prices. Um June's consumer price index also showed that steak and ground beef prices are up 12.4% 4% and 10.3% respectively over last year. Fasteners are up 10 to 30% according to the CEO of the Boser group and roasted coffee prices in the US surged 12.7% in June compared with a year prior.
▶ 1:19:15And according to data from the Bureau of Labor Statistics, instant coffee saw a 16.3% increase. So I think it's fair to say that the tariff policy is causing an increase in prices. Um, there's another burden that this bill places on my constituents that I would also like to discuss because the bill allocates an additional $75 billion with a B towards ICE detention centers, enforcement, and personnel.
▶ 1:19:40This rogue agency has been racially profiling and harassing constituents, US citizens, many of them, for weeks now in my district. Republicans on this committee are adding $4.1 trillion dollar to our national debt and they are largely spending that money to illegally detain and deport US citizens, harass and beat protesters and shut down the local economy.
▶ 1:20:05Last month, ICE officers urinated on school property mere feet away from an elementary school that was in session for summer school. And the same officer who violently arrested and detained a 20-year-old US citizen in my district was arrested for sexually assaulting a woman at an LA restaurant a few weeks later. And Republicans want to spend our tax dollars to give bonuses to these people with zero accountability. Mr.
▶ 1:20:32Kim, how have these recent ICE rates harmed Californians and small So, California is home to the largest share of immigrants in the US and are an integral part of California's social fabric. They pay taxes and contribute to our economic success. Of the more than 2 million Californians who are undocumented, they actually contribute 8.5 billion a year in state and local taxes.
▶ 1:20:58Nationally, undocumented immigrants contribute nearly 60 billion in federal taxes despite their exclusion from most public benefits. Given these indiscriminate deportations and detentions, given the fear induced self deportations, we'll not only see broad sectors of the economy shrink without both their labor and their economic activity, but we'll also see this tax revenue starting to get taken off the table.
▶ 1:21:23I'll also just mention you cannot overstate the economic, the personal, and the psychic impact of these raids over the past two months. Uh we've seen reports of eight-year-olds walking down the streets in some of the highest hit neighborhoods trying to carry two or three pizza boxes at a time, as many as their arms can carry because they're the only ones with documentation in their households to bring food home to their
▶ 1:21:48Thank you, Mr. Kim. I couldn't agree with you more. I just want to close with this quote from Ronald Reagan. I believe amnesty for those who've put down roots and lived here, even though they may have entered illegally. I would remind my Republican colleagues that if you're going to put him on a pedestal, you remember what his teachings are. And with that, I yield back.
▶ 1:22:06Mr. Fong.
▶ 1:22:08Uh thank you, Mr. Chairman. Um as someone who represents the food production capital of California, this bill is no doubt a positive uh and necessary thing for our agriculture community. Um, my comm my region is just 1% of the total farmland in our country. We produce a quarter of our country's food. My region grows under over 250 different crops. We're 40% of the nation's fruits, nuts, and vegetables.
▶ 1:22:37We grow we produce dairy, grapes, cattle, lettuce, almonds, pistachios, strawberries, tomatoes, carrots. So for those who go to the grocery store, I would like everyone to thank the farmers and ranchers in my community that produce the food that we all enjoy. Mr.
▶ 1:22:53Kester, thank you for what you do uh to make to grow cattle um in in our community and across the Uh, I was wondering if you could talk about how lifting the financial burden um that that uh this bill does allows you to empower yourself and your family to reinvest in your ranch and uh whether it's buying uh a new tractor or any other equipment. Uh what what does it mean in in your operation to allow you to produce the food that we enjoy?
▶ 1:23:24Oh, it means everything. uh we were hamstrung in our operations for uh more than a decade because of having to pay the federal government death tax liabilities over that period of time.
▶ 1:23:37And so now that having bonus depreciation and the increase in section 179 deductions, uh, it means everything for us being able to have the capital to to re stay in reserve and not have to pay for taxes to use it for investing in our communities. It it vibrates all the way through our economy uh, with equipment manufacturers, feed stores, uh, retails, and so it's it's vastly important.
▶ 1:24:06And I'd like just to say real quickly for high retail beef prices, it has nothing to do with tariffs. It's a simply a supply and demand issue. And we have the lowest beef herd since 1961 here in the US. Consumer demand even at the high retail prices. Uh US consumer demand hasn't dropped one iota to my happy surprise. And it's because of the quality of beef here in the US. So it's not related to uh tariffs or anything else. It's simple supply and demand.
▶ 1:24:34and we just need to grow our beef herd a little bit more.
▶ 1:24:38Thank you for that. You read my mind. I was going to ask you to address the the beef price issue. Um so I I think you and I had that conversation uh uh earlier and so I think this is important to emphasize that when we talk about supporting our farmers and ranchers, this bill is a huge step forward. And I can say as someone who represents the the food uh the the food producers uh in California that that's that's why this bill is so important and why it had to be done. Um uh to Mr.
▶ 1:25:05Fulton um as someone who represents an area also that has been dealing with catastrophic wildfires and of course as you mentioned before our entire state um is in a year- round fire season. Uh I read about your um the technology that you're uh investing in to help our state uh uh uh meet the demands and to combat wildfires. Something that's top of mind.
▶ 1:25:30Um I think it shows again a real world example of how this bill allows for uh this research and development uh uh expensing for companies like yours to actually real have have meaningful impacts uh to to the safety of our communities. Could you talk about how um the R&D expensing and how it allows you to accelerate technological innovation uh within aerospace or within uh the research you're doing to innovate and develop new technologies and new
▶ 1:26:01Yeah, thank you for the question. Um absolutely very excited about this um we are going to be able to have predictability and with that predictability comes accelerated advancement and accelerated economic inputs and for us and for our suppliers which I mentioned earlier are all throughout California.
▶ 1:26:27we are able to really take hold and grasp that and then you know expense those R&D expenses for the new RD8 that I mentioned right and we can do that faster and when we do that faster we're going to buy more machining and when we buy more machining we're going to hire more workers and we're going to continue to expand that footprint but more importantly it it's actually going to go to serve the community so that new helicopter with those drones are going to be able to go out
▶ 1:26:57with one person on board to actually find ignition points of ignition faster. And we think that's really important. We are in Los Angeles County. We were impacted by the fires. Our workers were impacted by the recent fires. Uh they see the need for this enhancement and they see the need to do it 100% in the US.
▶ 1:27:21And and once again, I like to circle around to the fact that we our factories are really the closest thing that you will see, we believe, to a modernized World War II factory that exists in our nation. We take raw material and we turn it into aircraft and flying vehicles. The advancement of R&D expensing allows us to do that much fast, faster, better, and cheaper. Quite frankly, we just get more bang for our
▶ 1:27:46Thank you. I've run out of time, but I just want to thank you for the for the testimony. But when you go to the grocery store or you see those helicopters that are fighting the wildfires in our in our state, in our community, um they're benefited by the bill uh the bill and and the benefits of of what we've done. So, thank you and I yield back,
▶ 1:28:01Mr. Kelly.
▶ 1:28:02Thank you, Mr. Chairman. U first of all, thank you all for being here and taking time out of your lives to to come and talk with us. I I think that chairman Smith when we first started uh session we thought that let's take the committee out into the country instead of waiting for the country to come into Washington DC because that's an expensive trip.
▶ 1:28:21But meeting with you right here on your ground is I think it's amazing and I keep uh I'm fascinated by everybody's love of President Reagan because I actually was alive when President Reagan was alive and I don't think any president ever got more criticism than President Reagan. And so I guess it's like people who paint pictures. Uh nobody appreciates your talent until after you're gone. But one thing I Dr.
▶ 1:28:45Rob, I thought that as I looked through your testimony, I thought this was really interesting what you said because as we we talk about President Reagan and this is I'm going to read it because I think it's really important. Four decades ago, President Reagan spoke to the nation about the risk of a growing federal deficit. His words remain just as revolent today.
▶ 1:29:05President Reagan said, "I'm asking all of you, Democrats, Republicans, and independents, to give me your help to put our financial house in order so that our tax spending, and monetary policies will not hinder growth, but encourage it. It is not in not send inflation, interest rates shooting back up, but keep them heading down and not down and not drown us under a tidal wave of debt, but protect us in safe harbor of financial stability with a sound and powerful economy." So when I read that,
▶ 1:29:35I think there's sometimes people don't understand. I I really like to look at because sometimes just reading somebody's resume really puts into effect, is this a person that actually knows what they're talking about or are they just talking? Uh I will tell you this, my parents in 1953, my dad was a parts picker in a Chevrolet warehouse. My mother ran the switchboard at that same warehouse. He went off to war. He came back home, went on the road for General Motors, selling parts to dealers. He became a dealer in 1953. I bought that store from him in 1997.
▶ 1:30:05My son now runs it for me. But I think we always get so wrapped around the axle on what it is that is really going on in this country. So much like Charles Dickens in the Tale of Two Cities, it was the best of times. It was the worst of times. We've all seen the worst of times. We've seen the best of times. Uh, so when I read all your your resumes and stuff, I thought this is really important because you've actually been on the field.
▶ 1:30:31I personally feel that nobody should serve in the public office unless they've actually been in the private sector and lost their job at least once through no fault of their own. You really start to wonder what who the heck is making these policies if they've never been on the field, never been in the game. How are they making policies?
▶ 1:30:46So if you can I and every one of you have an interesting story maintaining a business keeping a business going making sure that all these different benefits by the way it's not just the government that provides healthcare it's not just the government that provides pensions private industry does an awful lot of it and the biggest part of private business are the small businesses so for Mr. I was looking at your resume. You share a little bit about where you started and where you are now. I find that absolutely fascinating and and the same with all of you.
▶ 1:31:16Uh Mr. Case, you can't do what you do without having actually done it. So, but Mr. Huff, I was really fascinated with your resume.
▶ 1:31:25Thank you. Um I I my first job was uh working for Marriott. Um, and on the way in, I picked up a piece of trash and they noticed that I picked up a piece of trash. And so all the other people who were applying, they they hired me. And from there, I was hired away.
▶ 1:31:45And I now uh had the opportunity in uh 1988 to get hired away from Marriott to build out the chain that I now um uh uh I actually own now. I purchased it in And uh it's been a very interesting uh ride just because of all the places that I've been and all the things that I've seen. So I appreciate that. Thank you.
▶ 1:32:11No, thank you. I uh I'm fascinated by we talk about how many things are wrong in America and yet for some reason millions and millions of people want to come to America. We don't have a problem with people leaving because we know what America is. I when we're on these panels sometimes it's fascinating. We can go a deep dive in all the different details and all the different codes and acronyms that we use now to describe everything in our lives.
▶ 1:32:38The people in the room today and the way we think about President Reagan and the way we talk about America that we once knew that is not the America that I grew up in. I will guarantee you that. Uh but there's still at the end of the day this is the only place in the world for opportunity. You're not going to have equal outcomes, but you have to have equal opportunity. You all exemplify exactly what that what that opportunity is. So, thank you all for being here today.
▶ 1:33:06Thank you for the people that came to the Reagan library, our library today to take a look and listen to where we're talking about. But it is truly those on the ground that have actually done it themselves. Uh I really I I get mixed up with when I hear people talk policy. I said, "That's really interesting. So when you were in your business, is that the way you did it?
▶ 1:33:27And they look at you and they kind of say, "Well, I I have no idea what you're talking about." I said, "I I realize that you couldn't possibly know unless you've actually been through it." Again, working on a commissionon basis and losing your job at least once. That's the wakeup call. That is the wakeup call. And I just guarantee you there is nobody leaving America because it's such a horrible country. We take care of everybody. They were the first responder anytime anything happens, not only in our country, but any place in the world.
▶ 1:33:56And I really get a little bit more than upset when I hear people talk about this isn't the country that is supposed to be. It is really, really, it is. It is. And we're always going to be that that shining city that the president talked about so much. So, thank you all for being here today. We really appreciate your input.
▶ 1:34:13Thank you, Miss Chu.
▶ 1:34:16Mr. Kim, Republicans spent months claiming they cherish Medicaid and care about working families and small businesses and then they turned around and passed the most egregious attack on health care that we've ever seen.
▶ 1:34:29Their big ugly bill slashes over1 trillion dollars from our health system and it acts the enacts the largest takeaway of health care from the American people in our nation's history by gutting Medicaid, ending ACA premium tax credits and cutting $500 billion from Medicare. All to fund tax breaks for billionaires.
▶ 1:34:53Now, I spent many years on the House Small Business Committee, and one thing I know is that in California, millions of people rely on Medicaid and the ACA premium tax subsidies, including one in five small business owners, workers, and their families. When people lose coverage, they skip care, end up in the ER, and go into enormous medical debt.
▶ 1:35:22And that's only if they make it to a hospital before it's too late. So, Mr. Kim, what happens to our economy and small businesses when Republicans rip health care away from owners and the very workers like servers, mechanics, daycare providers, and delivery drivers who keep our small businesses running.
▶ 1:35:44Thank you, Congress member. Uh, I appreciate the question. My father was a small business owner all of his working career and so I know how tenuous uh that existence can be. But for most households as we know health care is their biggest expense other than housing. When households lose their health care they become financially destabilized, less able to meet their basic needs, less able to stay housed and to stay employed uh and of course less able to take care of their families.
▶ 1:36:12The impacts on small business who are already struggling with the uncertainty of the tariffs, the high cost of goods and services will now be exacerbated by the struggle to find a stable quality workforce to help them run those businesses.
▶ 1:36:26At the same time, ripping away this health care, food assistance, other benefits will mean depressed economic activity, and the buying power of millions of Americans will turn down, which begs the questions, what happens to these small businesses when large portions of the customer base no longer have the money to shop with them.
▶ 1:36:45Mr. Kim, Donald Trump and Republicans have repeatedly lied about the big ugly betrayal this bill that they claim will help the working class and small businesses by providing them with tax relief. And so after they made a massive tax cut for corporations in 2017 from taking it from 35% to 21%, they came up with this 199 cap deduction claiming at that it would help small businesses.
▶ 1:37:16But the truth is that this so-called small business tax relief, the 199 cap deduction is just another giveaway to the wealthy. In fact, in 2022, the top 10% of taxpayers got pass through deductions, this deduction, that were 3,000 times larger than those at the bottom.
▶ 1:37:39And in fact, it is really shocking, but the data shows that 70% of the benefits flow to the wealthy wealthiest 4.5% of the recipients. that is that means that the crumbs go to the you know the rest of the 30%.
▶ 1:37:58And this is because it's so complicated to claim the smallest entities either don't earn enough income to take advantage of it or can't hire accountants to navigate its overly complex rules. So this this tax in this big ugly bill is really a sham. and after it was set to expire. It's just being continued. But this isn't about small business.
▶ 1:38:28It's about making the rich richer. So, Mr. Kim, is making a tax deduction permanent that flagrantly caters to millionaires over the smallest of business owners, including those earning $50,000 a year. Is that good for California small business? Again, watching my parents run a small mom and pop business, they did not have resources to hire accountants or lawyers.
▶ 1:38:52Oftent times when they didn't understand some tax document, they would hand it to me or my brother uh while we were in high school. Um and so yeah, they clearly inculcated in me a sense that these rules are for the big boys and not for the mom and pops.
▶ 1:39:07Uh, at the same time, beyond the misguided inequitable tax cuts, the failure to extend the temporary enhancements to the ACA premium tax credits means that small business owners in California will see their health care costs skyrocket come November, not a couple years from now, just a few months from now. Many simply won't be able to afford health care uh in the marketplace. Or if they do pay the higher premiums, that means they'll have less money to invest in their small businesses or their workers.
▶ 1:39:35Thank you. I yield back.
▶ 1:39:36Mr. Schwhiker.
▶ 1:39:37Thank you, Mr. Chairman. Um, Professor, you and I are going to run through some math. So, everyone that hates math, please, you know, you can tune out. Um, also for the fun of it, um, for those of you who actually have the Wall Street Journal app as of this morning, skip the story that says Democrats are at their 35-year low in favorability, go to the um article that's very detailed, simple graphs to look at on distributional effects of this tax cut and you'll
▶ 1:40:08actually see once again the wealthy are paying substantially more. the middle class actually um middle class actually gets a higher percentage of the benefit than the upper income. So instead of the political class trying to spin all of you actually just go look at the actual math. Um professor um and I know um you know I'm a fan of some of a lot of your work and the joint economic committee has quoted some of your work over over the years.
▶ 1:40:37Um, one thing that I believe your team has actually worked on is the morality and actually future economic vitality of populations that participate in the economy. Um, it's really a University of Chicago study a few years ago for leading PhD economist did the report that saying if you don't have work requirements, they're poorer at the end of 10 years. you do have requests to participate in the economy at the end of 10 years, they're wealthier.
▶ 1:41:08Do you find that in your own literature?
▶ 1:41:10Well, absolutely. And and I've actually been somewhat shocked today at uh the exaggerations of the supposed catastrophes that are going to happen uh if we in if we given that we are now including work requirements uh for Medicaid. you know, the the the the CBO projections of how many people are going to they use the word lose health insurance.
▶ 1:41:35They don't consider the fact that a lot of people will voluntarily will voluntarily move off of Medicaid onto private health insurance, which is actually which is actually the point. And so, no, that's right. I I also would like I also I also just want to you want to in some numbers uh Medicaid roles have increased since 2019 by 7 million
▶ 1:41:58and professor and look for anyone who says it's a cut it's not it's a slowdown in the growth um we also have to deal with some math reality and it's not Republican or Democrat it's demographics in seven years Medicare doubles in spend it doubles in spend and much and one of the great sins we do as a committee Republicans Democrats is we somehow think healthcare is the subsidy.
▶ 1:42:24Think about every word you've heard from the Democrats here in the discussion of healthcare is the subsidy. Sorry, ACA is a finance bill. Met Republican alternative was a finance bill. Medicare for all is a finance bill.
▶ 1:42:37When will we actually unleash the technology the healthcare revolution to change what we pay, not how we finance and ask for uh professor um and I think it's actually something your colleague did which showed that the inflation we had the previous four or five years was actually the biggest punch in the gut to income inequality in America because those of us with assets we get wealthier
▶ 1:43:08the other populations get poorer and the only choice we have is to build a tax system regulatory system incentive system for Am I wrong?
▶ 1:43:21You're absolutely correct, Congressman Schwer. Productivity is the only is the only answer for us to get out of the situation that we're in. Let's just talk about the the the medical uh systems for a moment. Okay. Federal government uh you know, it spends about a third of its of of the total expenditures on Medicare and Medicaid. And these have gone up so much. You know, the federal government in 2019 spent 409 billion on Medicaid. In 2025, they spent 655 billion on Medicaid. And people are crying about cuts. Okay.
▶ 1:43:51We need to get much more efficient efficient with these programs and unleash productivity improvements in the programs in well over 800.
▶ 1:44:01Yeah. Yeah. And it's going it's going forward going forward. It's only going to it's only going to increase unless we can incentivize productivity improvements. It's just simply unsustainable. The money is not there. Mr. Mr. Speaker, excuse me, Mr. Chairman, professor.
▶ 1:44:18Um, and I know we only have seconds, but also in your written testimony, you do something that I really hope we do some future hearings on is what policies can we adopt that now go handin glove with we now we have expensing, research and development expensing. We have the incentives to invest in that productivity.
▶ 1:44:38How do we get the alignment of now our laws, our regs, our statutes to actually make them work so we maximize that GDP growth and therefore maximize prosperity for every I I think you have to look at as I mentioned in my testimony more uh that you can do in order to contribute to the deregulation of the economy in ways in ways that uh that that enhances productivity particularly in medicine you know things like teleaalth um
▶ 1:45:08uh things like the use of AI in medicine some uh who benefit from the current system uh actually are against that but I believe that's the only way the only way that we're going to be able to get out of the fiscal problems that we are in because these medical programs, the spending on the medical programs has exploded, will keep exploding, and is is eating up increasing shares of our budget. We're not going to be able to afford the military.
▶ 1:45:33We're not going to be able to Our interest payments are already over 20% of our debt uh of our of our of our revenues, rather. Interest payments are over 20% of our revenues. If you take Social Security payroll tax off the table, there are over 25% of our revenues excluding the Social Security payroll tax. and we just don't the money is just not going to be there. We need these productivity improvements.
▶ 1:45:54I I don't want to try the chairman's patience, but thank you for your um your tolerance. Thank you. And thank you,
▶ 1:46:01Thank you, Mr. Murray.
▶ 1:46:03Thank you, Mr. Chairman. It is indeed a distinct honor to be here at the Ronald Reagan Presidential Library. When I talk of tax cuts, I'm reminded that every major tax cut in this century has strengthened the economy, generated renewed productivity, and ended up yielding new revenues for the government by creating new investment, new jobs, and more commerce among our people. Those were the words of Ronald Reagan in 1980. He was right then and President Trump is right today.
▶ 1:46:32At its core, the One Big Beautiful Bill is about liberty. It's about prosperity, stability, and certainty. That's what President Trump's one big beautiful bill means for families, farmers, and small businesses. It's lower taxes, lower regulation, and reduce spending. This is the pathway to economic growth, personal freedom, and restored hope in the American dream. Mr. Huff, you have indeed lived the American dream.
▶ 1:46:59Thank you for sharing your story today as you started picking up trash at the age of 15 and now you are the owner and and operator of several convenience stores and a software technology company. That is indeed the American dream. But you said along the way you've had your ups and downs. As a business owner since 1988, I'm sure that's true. As the person that has taken the ris risks of those up and downs, don't you believe that business owners should also reap the rewards?
▶ 1:47:29When your business in particular keeps more of its hard-earned money in the form of profits, what are you able to do with those extra profits? Uh, typically our extra profits are reinvested in the business. We grow the business, we hire more employees, we buy more um coolers, product, we keep that the economy going.
▶ 1:47:51Yeah, that's exactly what I hear from small businesses around the nation is when they get more money back in the form of additional profitability, they put that money back into either expanding their operations or their businesses, creating a new site, investing more in the employees, providing additional benefits to those employees, raising their wages, expanding their facilities, buying more equipment, all of the things that have been mentioned today and so much more because that is hard-earned money that you risk everything to make. Isn't that true? Yes.
▶ 1:48:22And because of that, we should recognize that it is in fact people like you that have built these companies. It is not government that has built these companies. Would you agree with that?
▶ 1:48:31I would agree with that.
▶ 1:48:32I think that is indeed true. Mr. Fulton, I want to come to you now. Thank you for your testimony. I want to applaud uh much of what you said in a similar fashion. You you represent a business that's kind of in a niche industry. Fully made in America helicopters. That's really impressive. I applaud you in particular for performing your duty uh with honor for your country. Those are three words that I know you know in particular. Duty, honor, country. So, thank you for that.
▶ 1:48:59You mentioned that some of the benefits uh to to of the tax cuts that we have today to Robinson helicopter will help the business itself as a benefit to the business. But who are some of the intended beneficiaries down the chain? Who are the real beneficiaries of the breaks that you guys are going to get?
▶ 1:49:20Thank you for the question. I first of all, it's really our workers. Our workers are the ones that get this benefit. Um, and we have a number of overtime workers, right? So, our number of overtime workers will directly benefit from no tax on overtime. And in addition to that new policy, we're better equipped to invest in that workforce. Um, and in addition to that, our suppliers, as I mentioned before, will have more predictability. When they have more predictability, they grow as well.
▶ 1:49:49So, we see this not just with our core products, but with our workforce, our manufacturing facilities, and our strong Americanbased supply chain. And when you produce these newly developed helicopters, they're going to help with firefighting. They're going to help with California land owners who are facing those fires. They're going to help with military personnel that are engaged in battle across this uh this this world because they're going to have more reliable equipment.
▶ 1:50:16Those are additional beneficiaries are going to see uh as a result we're going to see as a result of the one big beautiful bill. Gentlemen, I want to thank you all for your stories today. I wish I could get to all of you. I want to end with this last quote from Ronald Reagan. He says this quote, "My fellow Americans, our nation is poised for greatness. We must do what we know is right and do it without with all our might.
▶ 1:50:39Let history say of us, these were the golden years when the American Revolution was reborn, when freedom gained new life and America reached her best. Thank you, President Reagan, for charting this course. And thank you, President Trump, for returning us to it. With that, I yield back.
▶ 1:50:58Mr. Gomez.
▶ 1:51:00Thank you, uh, Mr. Chairman. I I just want to kind of highlight a few things. Um, you know, these hearings to me are uh particularly strange because they tend to do them in a kind of very controlled fashion so that uh the public isn't allowed in in a in a in a in a big sense, right? Yesterday in Las Vegas, there was like maybe 20 people from the public.
▶ 1:51:22It's all it's all a dog and pony show to try to sell a bill that actually hurts the American people because when they have a chance to go and do town halls, I'm not saying every single one on this disas, but do to do town halls in their districts about this bill, in-person town halls, they choose not I I went to a district in North Carolina because that member of Congress, Republican, hasn't had a town hall since 2017.
▶ 1:51:49I went to David Valadeo's, sorry, David Valadeo's district up the street and he refuses to do an in-person town hall. I went to another district in Orange County. I had three live town halls in my district, including a telephone town hall and including a Zoom town hall. Here's the thing. This is all a dog and pony show because they want to control it, but they also want to avoid the responsibility for making their decisions.
▶ 1:52:13That's why even this past week they canled votes because they refused to vote on an issue that they didn't want to piss off their base about. Mr. um Mr. Chairman, I'd like to enter uh ask for unanimous consent to enter an article into the record. Uh Johnson, Speaker Johnson cuts short house business to avoid vote on releasing Epstein files. Without
▶ 1:52:40I would also like to uh introduce another uh article. Johnson shuts down house early to block Epstein vote.
▶ 1:52:48Without objection.
▶ 1:52:50In the in the end, it's about being there to do the work. I even offered the chairman yesterday, hey, let's actually have a real hearing. We'll pick a district out of a out of a hat randomly. We will divide the audience. 300 people, Democrat, Republican, independent, and let's have a real debate about this bill because what they end up doing is cherrypicking information to say how this hurts or doesn't hurt, how it helps or doesn't help different people.
▶ 1:53:18I understand that's how the game is played, but even mur gentleman from Arizona failed to um one even the Republican uh polling in that bill in that article is terrible. It's in the negative. So it's like saying, "Oh, you guys suck more than we do, but we suck as well." Right? On the one regarding how Democrats pull. And then he leads leads off this provision about who it helps. This bill and this article from the Wall Street Journal, it actually said says um what does it says?
▶ 1:53:49First, some explanation. The charts look only at the law's tax provisions, not at its reduction to spending on programs such as Medicaid and nutrition assistance, which will tend to affect their lower income beneficiaries. Tariffs, which weren't in the law, aren't part of the calculations. We most mostly compare next year's tax system, which with what would have happened if Congress did nothing. So, it's a very different article. Mr. Kester, you're um you know, I get it. You want to keep more of your family and your farm.
▶ 1:54:19I get that. But that cost $250 billion over 10 years for that entire provision. You could have had left it the same as it was and you still would have been better off. At the same time, when it comes to um the livestock industry, 45% of the people that work in the livestock industry are immigrants. But who is this uh this uh administration going after? Immigrants. Mr. Huff, I'm assuming that you guys accept EBT. Correct.
▶ 1:54:43Yeah. Now they're call cutting SNAP benefits that a lot of working people rely on that go to shop at your store, right? Go and shop at your store. So a bunch of us actually don't have a problem with the 99A provision. We don't. There was a debate amongst our side. How do we make it work? Mr. Folton, Mr.
▶ 1:55:04Timonss, you guys talk about manufacturing, but 56% according to the American manufacturing association of all imports come to the United States to help manufacture things in our country are being uh they're they're imported. They're they're going to be tariffs are going to end up increasing prices. It's actually going to make manufacturing harder. So, I agree with you that we got to we got to do something to make sure the manufacturing thrives. Like deductions, we've been talking about that.
▶ 1:55:33We just have different ideas. Mr. Mr. Raw, I think that's how you say your name. We don't do dynamic scoring because it's insane. Because if we assume that this is going to do X, Y, and Z, say we pass a law and we're saying, "Hey, we're going to do tax cuts and it's going to create this much economic activity when we are not certain, it's a irresponsible way to actually pass laws and budgets. That's not the way we do it. We do stat. We should be doing static budgeting. Static.
▶ 1:56:02That's the way we do it in California. That's the way I was when we're in the legislature because it's the most responsible way. So, one of the things that I want to say is that this bill hurts working families and in the end, no matter what is said here, the facts on the ground are going to speak for themselves. With that, I yield back.
▶ 1:56:24Mr. Estus.
▶ 1:56:27Thank you, Mr. Chairman, for organizing another round of field hearings. It's fitting that we're here today in the Ronald Reagan Presidential Library after Republicans passed the one big beautiful bill. This historic legislation builds on President Reagan's legacy of lowering the tax burden on Americans so they can keep more of their hard-earned money. Through field hearings and tax teams, we spent hundreds of hours traveling the country to talk to Americans to gather their input.
▶ 1:56:52After years of work, the One Big Beautiful bill will put America first, deliver an immediate tax relief to small businesses, farmers, producers, and working families. Small businesses are critical to our economy, and provide an honest living for Americans and their families. Ensuring our tax code is fair, and encouraging growth is a priority to Republicans in Congress. A significant component of the one big beautiful bill is the permanent extension and enhancement of the 20% small business deduction.
▶ 1:57:21With this deduction being made permanent, small businesses will be empowered to reinvest in their operations, hire more workers, and contribute to local economy. Small businesses will also benefit from the doubled small business expensing of $2.5 million because that will enable them to invest in their employees and grow their businesses. Part of ensuring generational growth in business, whether it's a shop in a small town or a family-owned farm in Kansas, we're making sure families aren't overburdened by taxes and government red tape.
▶ 1:57:52Our legislation also raised and made permanent the death tax exemption, which means family-owned businesses and farms will continue to be kept in the family instead of assets needing to be sold solely to pay taxes to the government. A key provision that Chairman Smith and I worked on was a permanent restoration of immediate expensing for domestic research and development or R&D. Supporting American innovation and encouraging investment right here at home is critical.
▶ 1:58:17The R&D expensing provision expired in 2022 which discouraged businesses from investing in job creating activity and we saw plummeting in the investment that was being made after 2022 expiration. Making this provision permanent will boost our economy and lead to more job growth. One of the things we got to we can't lose sight of is that threearters of R&D spending are for wages.
▶ 1:58:41By giving companies certainty to to invest in research here and in the United States, we'll see more manufacturing jobs and a stronger, more competitive America. Mr. Timmons, you've highlighted how critical innovation is to our manufacturers, especially given that they're responsible for 53% of all private sector R&D even though they just make up 10% of the re of the uh GDP. Can you speak on what kind of impact that has on the workforce? For instance, how many employees are you able to hire because of these investments in R&D?
▶ 1:59:10Well, thank you for the question, Mr. Estes. Uh I I think look I think innovation is one of the uh great uh competitive advantages that we have here in the United States. And when that when that um that provision expired a few years ago to your point we saw a reduction in investments in research and development. Why is that important? Well, China has a 200% research uh and development tax credit uh for their uh for the investments made in that area.
▶ 1:59:40And I know the work that Mr. Moran does on that committee um or on on the the select committee. Um we have some very serious concerns about being able to compete uh with China. China simply doesn't view the world the same way we do. Um so I was very pleased that uh through your work and others on the committee, we were able to get that that credit renewed.
▶ 2:00:03Thank you. Mr. Fton, you've highlighted how the corporate tax rate and immediate expensing for research and development uh for for and for equipment uh played a cru crucial role for Robinson Helicopter. Can you share your thoughts on how the new provision allowing immediate expensing of manufacturing facility cost will impact your company's growth and investment here in the United
▶ 2:00:24Thank you for the question.
▶ 2:00:26Thank you for your question. These provisions all capture the core aspects of what a manufacturer must do to compete. We must innovate new technologies uh develop production and deploy pro production processes for those new technologies and then that follows with construction of facilities that can house the production processes for those technologies and the workers to actually run those machines.
▶ 2:00:51So the provisions really reinforce a fully coupled research, manufacturing, and marketing pipeline that allows us to be globally competitive uh with a 100% Americanmade
▶ 2:01:03Yeah. Well, thank you. You know, without our work in Congress on the one big beautiful bill, Main Street and rural businesses would have faced a 43.4% federal tax rate if the small business deduction expired at the end of this year. Now, small businesses across our nation will continue to operate and grow in their local community. With Republicans in Congress and President Trump back in the White House, businesses big and small, are going to see growth in hiring, wages, and prosperity.
▶ 2:01:28We saw those results when TCGA was passed during President Trump's first term, and now in his second term, we've made many of those provisions permanent. As we move forward, we remain committed to cutting unnecessary spending, as we demonstrated with the first recisions package last week. In tandem, the one big beautiful bill is progrowth policy. America's not only on the path to renewed strength, but will continue to be the very best place in the world to start, grow, and sustain a business. Thank you all for being here, and I yield back.
▶ 2:01:54Thank you, Mr. Smucker.
▶ 2:01:58Thank you, Mr. Chairman. I'd like to get back to a comment that Mr. Gomez made during his opening statement uh alleging that Republicans have turned their back on the ideal that President Reagan had talked about in regards to immigration. Um it he did a quote from the president that talked about the importance of immigration to America uh and how America is welcoming to immigrations.
▶ 2:02:26And I'd just like to say that during Trump's first term, there were 3,962,95 new lawful permanent statuses granted. So new almost 4 million uh new immigrants came into the country. That by the way is about the same as during the Biden administration, about a million per year uh and is about the rate uh that we're currently seeing right now.
▶ 2:02:52So the idea that Republicans have turned their back on immigrants is is false, completely uh false, borne out by the numbers. And if you want to talk about securing the border, the American people know the importance of securing the border. They know the importance of ensuring that uh immigrants are coming uh here legally. Uh since we're talking uh about uh statements from Reagan, since we're here, I'd like to say this. This is a statement from Reagan.
▶ 2:03:21He said trust the people. This is the one irreducible belief that separates our side from those who would make the government the allproviding shepherd of the people. I think that encapsulates the differences that you're hearing today from both parties in regards to this bill. Republicans believe in the American people uh rather than big government. Two other quotes.
▶ 2:03:45Uh Reagan said, "We who believe in free market societies believe that growth, prosperity, and ultimately human fulfillment are created from the bottom up, not the government down." And then finally, last quote, fair and simpler taxes will mean that the American people will spend less time trying to outwit the tax collector and more time doing what they do best, earning money, creating jobs, and building the future uh of this
▶ 2:04:15country. Uh I I think it's also worth looking since we're talking about Reagan. Um we were at the Regan uh Semi Valley Ranch last night saw where he signed the tax cut bill uh during his first term and I know it's not an exact position but I think there are parallels in history that we can look at.
▶ 2:04:37Um he took office after the Carter uh Uh we had we were in a a tough recession that started in 1980. unemployment was 6 to 7% interest rates were 21 uh% inflation was around 20%.
▶ 2:04:57He implemented what at that up until that time had been the largest uh tax increase uh or tax decrease I should say uh in our history and the results the results were astounding and in fact Dr. morale to your point uh in regards to economic growth.
▶ 2:05:15We saw during the final years of the Reagan presidency from 1983 to 1989 an average of over 4% annual real growth uh in um uh GDP during that time. If we had that, you would see a remarkable reduction uh in our debt. you would see a marketable increase in opportunity for Americans. So, you know, Mr.
▶ 2:05:44Gomez doesn't want to do um you want to do static scoring. Um you know, the real score is going to be what happens the outcome of this bill. U I'm I'm confident that this will drive the prosperity. I think we're going to see the debt uh the debt grow. But we can place a bet here, Jimmy, and we'll uh we'll see we'll see who's right on that.
▶ 2:06:06You can just look as recent even as the Trump years compared to the Biden years where real income grew $6,000 per family for my constituents. Do you know that in June of this year was the first month in years where we've again had real income growth. This is just after the beginning of the Trump policy. So folks, we're only getting started and I'm excited about what's going to happen. Mr. Kim, I do want to ask you a question very quickly.
▶ 2:06:34you you repeated uh the allegation that Democrats repeated here and I've heard many many times that there's a number and I think you said 150 I think Miss Sanchez like return for highincome earners in this bill due to the tax cut but it's 68% per day for lower income earners. Could could you repeat that number? according to my microphone.
▶ 2:07:05Sorry. Um, so by 2027, the top.1% of income earners will receive average of $39,000 in tax relief, while the average uh workingclass American will only receive 68 cents a day.
▶ 2:07:22And is it your policy? Is it your contention that they should receive an equal amount in tax cuts, both of those individuals? It is my contention as a taxpayer that I'd rather my tax money go to the workingclass Americans and actually that they receive a higher
▶ 2:07:38So, but I I really want to get down to this question because it's the core of the Democrat argument against this. If someone's paying $250,000 in taxes and they get a 10% tax cut, that would be 25,000. And someone else is paying $250 in taxes and they get a $2.50 tax hook. Do you think that's
▶ 2:08:00I think America
▶ 2:08:01they both got 10%.
▶ 2:08:03I think the American uh middle class was grown through a progressive tax system and I think we need to get back to it.
▶ 2:08:08Do do you know that the tax system has gotten more progressive since the Tax Cuts and Jobs Act? The top 10% now the top 10% now pay 72% of all taxes. If if the argument you're making is true, it would be the most massive redistric distribution of wealth ever.
▶ 2:08:27If you think every individual in America should get the same amount of taxes back as a result of a tax cut bill with no regard for what they've paid in the first place, uh that it makes absolutely no economic sense. There is no economist that would agree with the that would that would agree with the argument that you're making here,
▶ 2:08:48Congress member. I'm not making that argument. I'm actually not talking about in in actual amounts. I'm talking about
▶ 2:08:53All right. Thank you, Mr. Smucker. Mr.
▶ 2:08:58Thank you, uh, Mr. Chairman, and to the ranking member. Uh, Mr. Chairman, I I want I want to start by thanking you for hosting this hearing. I think your cause is right. I think getting the committee out of Washington and getting directly to the American people uh to hear about this bill uh is the right approach. Why? Because the more people hear about it, the more they don't like it. Two to one.
▶ 2:09:28They just don't like it. And the more that we can talk to direct individuals, whether it's in places like Las Vegas or here, um, we walk away understanding who this b this bill benefits and who it leaves behind. Uh, professor, I understand that in your testimony, you argued that investment driven growth translates into wage gains, but I want to correct the record from information that was presented by the chairman at yesterday's hearing.
▶ 2:09:59According to researchers from UC Berkeley and uh JCT economist using a comprehensive analysis of W2 earnings, they found that after the TCJA, wage increases flowed almost entirely to the top 10%. Worse, there were virtually no impacts for the bottom 90%.
▶ 2:10:19So, while some businesses may have given temporary bonuses, the fact is that the broader economy did not see wage increases from tax cuts to mega corporations. That seems to be the playbook, though. Temporary pennies to the working people, permanent relief for billionaires and mega corporations.
▶ 2:10:41And research by JCT and the Federal Reserve found that 17% of the corporate tax benefits went to foreign investors and owners. The last tax law gave permanent relief to corporations and scraps to workers. And this new law doubles down on that same imbalance with permanent relief for billionaires, but only temporary provisions for workers.
▶ 2:11:07So, professor, how can you square this up and won't this just deepen income
▶ 2:11:16Uh, thank you for the question, Congressman Horseford. Uh, well, that study has a critical flaw in it and that flaw is relates to the methodology of the study where they compare Ccorporations and pass through entities in the same locality and industry.
▶ 2:11:34And the the problem and the reason you can't do that is because those are integrated labor markets especi those those are integrated labor markets at the middle of the income distribution the parts of the income distribution they're looking at but not so much at the top of the income distribution. So
▶ 2:11:48so thank you.
▶ 2:11:49So I can I I dismiss I dismiss that finding and I disagree with conclusions.
▶ 2:11:53Thank you.
▶ 2:11:54I appreciate the point but the the result is what I'm talking about and I asked you specifically how this will address income inequality. Well, this
▶ 2:12:04and I I I I'm reclaiming my time.
▶ 2:12:07I can tell you how it's going to address me. It improves. It actually is.
▶ 2:12:10Professor, we have a very limited amount of time. So, you dominating my time doesn't allow the opportunity for your question which I asked and you did not answer. So, now I want to talk about the fact that Mr. Estus had his R&D expensing permanency bill that I supported and one that the chairman even worked on with the Widen Smith tax peace.
▶ 2:12:38My concern is that there are severe economic and social cost in the way that some of these provisions were made permanent. The Penn Wharton budget model finds that this law will increase the deficit by $3.2 trillion. Since I know that my Republican colleagues will ask, yes, Penn Wharton did a dynamic score and noted slower economic growth, bringing the score to 3.6 trillion.
▶ 2:13:06Yale's budget lab projects that the bill would add $3 trillion. Even the tax foundation document that cited to well above historical averages, driving up interest costs and crowding out investment. Mr. Chair, I would like to submit to the record scores from Pin Wharton, Yale Budget Lab, and the Tax Foundation, as well as Brookings Tax Policy Center.
▶ 2:13:32Without objection.
▶ 2:13:33Thank you. I want to close with the words from Ronald Reagan and he said in 1984, quote, "The most important thing that government can do is not burden the economy with excessive taxation, spending, and regulation. But when it does intervene, it must do so on the side of the working men and women of this country.
▶ 2:13:58Sadly, the one big ugly bill burdens everyday Americans with higher cost, fewer protections, and a system rigged for those at the very top. It rips food from the tables of families. It threatens clean energy jobs and it kicks millions off of their health care all while patting the pockets of the very rich and the This isn't economic leadership. It's economic betrayal.
▶ 2:14:28So let's call stop calling this bill beautiful and let's call it what it really is. One big betrayal of the working people of America. With that, I yield back.
▶ 2:14:40Mr. Moore. Thank you, chairman. Thank you, witnesses, for for being here and taking time out. Uh, but a sincere thank you to the Reagan Foundation and Institute. Being at the Reagan Library is a special place. Uh, I think that um, President and Mrs. Reagan truly represent the best that our nation has to offer. Um, I was born in 1980. My mom has always called me a Reagan baby and I've lived with that and it's it's truly an honor to be making my first visit here.
▶ 2:15:06Um, but what they do also, I mean, right in the next in in a room adjacent to here, they have a whole bunch of high school students here, um, doing a debate, performance, and debate competition. Libby Hancock from Salem Hills High School of of Utah is actually performing right at the same time. Uh, we should have brought those kids up here to debate this bill as well. That would actually be pretty fun. Um, and uh, um, so so again, just thrilled to be here at this institution. Doc, Dr. Ralph.
▶ 2:15:32Um, yesterday in our hearing in Las Vegas, I I highlighted something pretty unique and it's it's it's it's context and data, and I know we don't like to, you know, address that all the time, but more than half of the tax provisions in this bill, more than half is going to two simple things, the child tax credit and the standard deduction, right? None of which can are taken advantage of or can even be taken advantage of with the income caps that we put on it by the wealthy.
▶ 2:15:59And that's not even to include all the other provisions that go directly towards middle class support. But um those are individual provisions and I wanted to just quickly ask you there's business provisions in here too. I think some excellent commentary has been shared. But just talk to talk to us a little bit about some of the business provisions um the progrowth tax policies and how those still go directly to impacting families.
▶ 2:16:24Thank you very much for the question uh Congressman Moore. Um I think the uh uh qualified business income deduction for pass through entities which has been discussed a lot today uh is one of the key features of the business provisions that helps a broad segment of the US population.
▶ 2:16:43You know, it was cited before Bob uh maybe this was uh Congressman Gomez or uh or or Congress Congresswoman Chu that the top 10% of taxpayers were benefiting more from allegedly benefiting more from uh the QBI. Well, you know, it's worth looking at what the top 10% of taxpayers in America actually contribute uh to the economy in terms of the jobs that they create. Those are the reason that they're getting bigger deductions because they're hiring more people.
▶ 2:17:12They're running bigger firms and also how much taxes they actually pay. The top 10% on the latest data earned 49% of income, but they paid 72% of the federal income tax. We already have an extremely progressive system where the top end of the distribution is supporting through a lot of redistribution uh the the bottom.
▶ 2:17:36You know, we're starting from a setting where the top quintile, the top 20% are paying $120,000 net per household net into the system and the bottom quintile is receiving $30,000 net into the system. And this bill doesn't really change those numbers in any material
▶ 2:17:53Thank you. And that actually dubtales with my colleague from Pennsylvania, Mr. Schmucker, and highlighting that we're actually still becoming a more and more progressive tax system. Um and uh that that that's irrefutable and I appreciate the uh your your your highlight of that. Mr. Folultton and Timmans, uh I'm home to my my district's home to Hill Air Force Base and adjacent or surrounding Hill Air Force Base, there's a very dynamic aerospace engineering um and manufacturing industry. Uh just share quickly how tax permanency, right?
▶ 2:18:23A lot of these things were tried out. Hey, we tried them out for a little while and there were some things that went on the chopping block too that are now going to be back in as permanent. Just talk some of these business provisions that and how they're going to they're going to provide um support and help to your industry with the fact that they're permanently going to be in in place now in code.
▶ 2:18:41Yeah, thank you for that question. Um what we heard from our manufacturers uh after 2017 uh was they they actually made a promise. they were going to invest more, hire more, uh raise wages uh in the United States and they did exactly that. There were record uh record numbers for the next three years in those in those areas. But as you know, many of those provisions were were temporary.
▶ 2:19:07And so um making making the provisions permanent has allowed our our companies to actually plan for the future. One of the things we heard earlier this year was uh uh we heard some uncertainty among our manufacturers, especially small manufacturers who are so critical to the supply chain say we're not sure if we want to invest uh in in additional capacity here in the United States because they didn't know if this bill would actually get done.
▶ 2:19:34As soon as it did, you started to see much more um uh much more confidence uh especially by these small businesses that they were willing to make those investments to to grow manufacturing capacity here in the United States.
▶ 2:19:46And I'll just quickly end Thank you, Mr. Sp. I apologize. My time's up. The one section 179 small businesses can now deduct a whole bunch more. That's going to create more business activity. They're going to be paying more taxes. We're going to continue to see revenue growth. Thank you, chairman. I yield
▶ 2:19:59Mr. Kustoff.
▶ 2:20:01Thank you, Mr. chairman, and thank you to the witnesses for appearing today. And it's a real honor to be here at the Ronald Reagan Presidential Library, and I'm sure you all would agree to that as well, being able to testify here. And to my understanding, this may be the first congressional hearing ever conducted at the Ronald Reagan Presidential Library. Mr. Mr.
▶ 2:20:21Timmons, if I could ask you for a moment, you conducted over the last couple of years, I know with with your manufacturers roundts, listening sessions as we were debating uh the the expiration of the tax cuts and jobs act. If I can specifically as it relates to the pass through or noncorp manufacturers, two questions if I could.
▶ 2:20:48one, talk about the importance of certainty, the the passage of the one big beautiful bill before the end of December 31, 2025, the fact that we did it in July versus waiting to the end of the year, the fact that it may have expired uh in toto.
▶ 2:21:07And then maybe if you can for some of your member companies or some of the manufacturers, what would that have meant if this were uh if if these provisions would have expired at the end of December 2025?
▶ 2:21:24Uh thank you for that. So, one of the uh conversations that I know the chairman and I had uh many times uh was about uh the importance of uh businesses and specifically manufacturers who make major capital investments uh their ability to plan into the future.
▶ 2:21:41Um, and the conversation that I had with the chairman was, and I'm very happy that this bill did pass in July because had it happened later in the year, we probably wouldn't have even have uh had the ability to plan for 2026, would have pushed those those strategies out to 2027. So, this has enabled American businesses and American manufacturers uh to make investment and hiring plans for for for 2026.
▶ 2:22:13second part of your question was,
▶ 2:22:14well, let me
▶ 2:22:15Oh, yeah. What was I know what it was. If the bill had not passed, we did some, we did some um um we we we did a study with EY and they came up with the fact that if the bill had not passed, we would have lost six million jobs in the American economy. Over 1.1, I believe, of those would be manufacturing, but a half a trillion dollars in wage loss and about $1.1 trillion in lost GDP.
▶ 2:22:39So it was the lost opportunity cost that um that we were able to overcome by the passage of this bill and and u ensure that we were able to superpower the economy again like we did in 2017 uh with the initial round of cuts.
▶ 2:22:56Thank you, Mr. Tims. Mr. Trump, thank you also for for appearing today and you you've talked about your story and how you were able to acquire your company. I also want to ask you about the section 199a, the small uh benefit deduction because you talked about this in your testimony and in your your written If we had not passed this bill and that had expired, what would that have meant to you?
▶ 2:23:23I mean, you you talk about you've got some employees who have been with you for 20 years or longer. What would the expiration of section 199A have meant to you, the small business
▶ 2:23:36Uh, specifically, if for for me, if it had not uh um been continued and made permanent, I would not be able to uh even consider with my circumstances, losing money for the last five years, etc., to uh consider doubling the size of my store um my best store and hiring
▶ 2:24:00I mean that that's your point. If you can't expand, then you are not hiring Thank you very much. Mr. Kessle, you uh you talked about on a couple of different occasions the raising of the exemption for the for the death tax, what that meant to you for a number of cattlemen across the country and I I represent a large a district in Tennessee. Um pardon me for saying this like this.
▶ 2:24:29You can be uh asset rich and maybe not cash rich. Uh if the exemption had not been raised, what would that have meant for the average cattleman if he or she had to face the the the exec state tax exemptions being lowered back to where they were prior to the enactment of the Tax Cuts and Jobs Act?
▶ 2:24:52Boy, I can't overstate how significant that would have been because of the land values increasing across the whole country, let alone especially places like California, Colorado, New York, other places. Uh, real estate values have increased so much. And you've got non-ag people that have successful businesses wanting to own a part of America, rural America, and so they come and and pay over market compared to egg prices.
▶ 2:25:19And so, um, it drives up the real estate values. And so, uh, to answer your question, having those exemptions lowered is, uh, so impactful to the breakup of a lot of family farms and ranches. And it's also bad for the environment. I haven't made that point yet today.
▶ 2:25:40When you start breaking up and fracturing farms and ranches across this country, that also hurts our environment, animal species, plant species, and u that we don't talk about that part a lot, but it's also significant in in addition to the ruination of family businesses.
▶ 2:25:57Thank you, Mr. Ker. Thank you, Mr. Chairman. I'll yield back, Miss Tenny.
▶ 2:26:01Thank you, Mr. Chairman, and thank you so much to the witnesses, and I really just want to thank the Reagan Library as well for hosting us. Um, I'm uh uh Mr. Moore might be uh the Reagan generation child, but uh I was so excited to vote for my very first presidential election for Ronald Reagan in 1980. And uh he's always been a particular idol of mine and also of my family. And uh I I really think it's important to highlight and I I know everybody's been quoting Reagan, but there's so many wonderful quotes.
▶ 2:26:32Um the one I really me meant the most to me especially uh being a child of the 70s and 80s is freedom is never more than one generation from extinction and that's a great Reagan quote about freedom and I think that's the contrast that you're going to see here on the dis the vision that we have of Reagan and see of Reagan with the hope of America the American people and yes of immigrants coming here and I think of my dad who was a a poor guy from New Jersey whose parents came to the United States
▶ 2:27:02as immigrants who found his way paid his way through college and law school and became a Supreme Court justice in the state of New York. And one of his most absolute favorite things to do as a Supreme Court justice in the state of New York was to attend and preside over naturalization ceremonies for new immigrants coming to this country legally, who revered freedom, who loved the mission of our founders, so beautifully reflected by Ronald Reagan and everything we read about in this room, standing up to
▶ 2:27:32the communism uh and and the Marxism of the Soviet Union and tearing down the wall. so so many important things that Ronald Reagan stood for and yet I come from the state of New York with the highest Medicaid, the highest taxes. Now I think Hawaii might be a little higher and yes, all you Californians, we actually pay more taxes in the state of New York than you do and we have half your population. We also spend more on Medicaid than you do by higher percentages than the population.
▶ 2:27:58We have more people who are ineligible, 8 million people on Medicaid in New York and only five million actually meet federal eligibility standards. We just want to see Medicaid realigned and strengthened for the people who are truly needy and people in my communities. And that's what we're doing because Medicaid isn't actually being cut. It's actually being increased by 20%. That's an increase. And only in Washington DC would an increase be considered a cut.
▶ 2:28:24So these are really important principles coming from my state compared with say California and the reflections of Ronald Reagan and what he saw for individual prosperity and and empowering individuals and bringing them here to this country and and as a small business owner um this bill is really important to me. 95% of the people in my district in rural upstate New York, mostly farming communities, small manufacturing, go to go to work in a small business, not a big giant company.
▶ 2:28:52most people are going to get a lot of the benefits from this. Uh probably almost probably 95% are going to get benefited from this from this bill. And uh it it's just really important to note that we care about immigration and legal immigration and uh and and making sure that we have people that want to come here and work and and pay into our system. Um and I just wanted to actually point out a couple of things quickly because a lot of people touched on things, but one thing um I wanted Mr.
▶ 2:29:20Timmons, maybe you could comment on this and all of you have done a beautiful job today explaining your points. Um, one of the most important things about this bill is is is you've talked about the one big beautiful bill, full expensing, child care, uh, tax incentives, small businesses. Can you comment on those benefits particularly? I was a single parent who had to go to work and had to rely on child care and many of these things. These are going to be great for my district in upstate New York and the highest tax uh, residents, by the way, in the nation.
▶ 2:29:48Well, look, uh, we have 400,000 open jobs in our sector and anything we can do to incentivize um the ability of individuals to to uh enter the workplace, uh, we we embrace that. So, the child child care deductions are are very important to our workers as well.
▶ 2:30:09Um I I do I do worry quite frankly, Congresswoman, uh that we we have a fairly large um gap in between the number of jobs that are available in all sectors of the economy, but but especially manufacturing since it's the most productive sector uh and the number of workers that we're able to attract.
▶ 2:30:33Now, we're trying to do our our job in the manufacturing sector by inspiring the next generation of of manufacturing workers, but we appreciate uh the work that you're doing. And just as an aside, um on the subject of legal immigration, uh the NAM has a uh has a proposal called a way forward that would help um uh that would help repair the system that's in place right now.
▶ 2:30:59and we hope we can work with Congress to enact that proposal because we believe too uh that immigration is absolutely vital to the lifeblood of this country.
▶ 2:31:08Thank you. I agree 100%. Legal immigration is going to be so important to building this the economy of the future and uh we believe in that as well and I think that's the way to go. Not illegal immigration, not empowering cartels. I have the northern border of New York in my district where 95% 90% of the people on the foreign terror watch list are coming across our northern border to take advantage of the lax laws in New York State and to take advantage of New York City where they can uh live freely in a sanctuary city now under duress
▶ 2:31:39from an actual Marxist anti-semite who is leading the Democratic party in the for the mayor of the city of New York in the largest city in our nation the driving economy in our in our nation. And now here we are in the Reagan Library and a Marxist anti-semite is leading the charge in our our nation's largest city in one of the most important cities in our nation. I think this is a sad state state of affairs and I I I rever the freedom of Ronald Reagan and thank you all grateful to be here. Miss Fishbach,
▶ 2:32:10thank you Mr. Chair. Excuse me. Um, I just wanted really quickly, I know that there's been a lot of comments um that both sides are not being listened to and I think from the um applause at the beginning obviously you can tell both sides are represented in the audience and the chair very thoughtfully pointed out that there were uh clipboards that you could make your comments on and I know that he he does that because he wants to know.
▶ 2:32:35we all want to know what um what the audience is thinking, what people who took the time to attend the hearing are thinking and you know he doesn't have to. It's not a requirement and so he does it because he makes sure that those clipboards are out there so that he can hear from everybody who has taken the time to come to see.
▶ 2:32:52So I think it's um I think it's an opportunity for all of us and and so I think that the charges um and the the comments that we are not hearing from both sides aren't uh necessarily accurate because we spent a year traveling across the country at least a year um traveling across the country hearing from groups actually uh Mr. Kra, I was thinking about I we went to the Shufflebine farm. You might have heard of them. They're from my district.
▶ 2:33:20So, but um uh you know, I I I'm not going to ask any questions because I know we're short. You know, we're tight on time, but I just wanted my district is it's you know, I border Canada, North Dakota, South Dakota. I have a huge district, very aheavy, uh small businesses, middle inome people. Um and and this bill is so important to them. It really is. you know, they benefit from many of the tax provisions.
▶ 2:33:44Those middle uh middle class families benefit from the tax provisions, the child care uh child tax credit, the standard deduction issues, but the small businesses and like uh Representative Tenny pointed out, a lot of folks in my district work at small businesses, work at small manufacturers, family-owned manufacturers. So it it it is all of those fit together to make sure that our economy continues and uh you know businesses 199A and the death tax exemption.
▶ 2:34:12I know we've talked about all these but I will tell you the the farmers and people from the egg industry would come in and visit me for the last year and you know what they always talked about they always talked about 199A and the death tax exemption. those were critical for them and it's critical for the economy in my district and across the country to have those farmers succeed.
▶ 2:34:33Um, you know, and the one thing we don't talk about either and I know we're focusing on taxes, but that a large portion of the farm bill was included in this bill. You know, this has this bill is full of great things for uh uh and we don't talk about all of them, but you know, improvements to the crop insurance program, enhancement to reference pri reference prices for the price loss uh coverage and mar and dairy margin.
▶ 2:34:59Um and so I just wanted to point out because I, you know, I'm if I'm not the last one, I may be second to last, but there are so many good things in this bill that we aren't talking about. And I think that the tax incentives for both small businesses and for families like those child tax credit um really are something that we we need to promote and make sure that people understand how important those are to not only businesses but to our families in the middle in the middle class.
▶ 2:35:27And so, um, I really think that, um, I think we did a a great job in finding out what was important to, um, to the economy, to people, to businesses, and putting it together and to the farm for the for the farmers, too. So, thank you. And, Mr. Chair, and I yield back.
▶ 2:35:45Thank you. Um,
▶ 2:35:47can I enter something into the record?
▶ 2:35:49Yes. um unanimous consent to enter a turning point memo uh article says JD Vance some Americans are more American than others particularly those who fought in the Civil War which I would ask which side
▶ 2:36:02just provide that document to us um uh without exception w without objection submitted into the record um uh I have several questions Mr. Kester. Um, thank you for being here. We heard some comments earlier about uh the high price of beef that is in the um at $9 a pound I think is what was said.
▶ 2:36:329006.
▶ 2:36:33Could you tell me how how much your live cattle sells for?
▶ 2:36:38Yes. Um it depends. We're in some value uh added programs. Um, so, uh, it can range, uh, we sell, we retain our calves, sell them as yearlings, and so they can easily a 900 lb steer plus can make, uh, $3 a pound right now.
▶ 2:36:56Not $9, but $3
▶ 2:36:59$3 per pound. Yeah. So, so roughly uh u you know, $3,000 ahead. So, um, over the last four years with inflation going up Have you seen fertilizer prices go up?
▶ 2:37:18Oh, yes.
▶ 2:37:19Have you seen hay prices go up?
▶ 2:37:23Other feed prices go up?
▶ 2:37:25All prices have gone up.
▶ 2:37:28And over the last four years, that was during the Biden administration when inflation gone up 22%. So, I do want to point out um uh Dr. Ralph um you made a comment talking about the bill earlier saying that this bill will explode prosperity, not debt. Thought that was a a very very good statement.
▶ 2:37:58And I would reiterate, I know that what has been submitted into the record a little bit ago was uh scores of this bill from Pin Warden. We've talked about the Congressional Budget Office. You look at the Congressional Budget Office. Whenever they score this bill, they score it at growth rate at 1.8%. 1.8.
▶ 2:38:21If you look at the growth rate for our nation over the last 50 years, we've averaged 2.7 over the last 50 years, but but the Congressional Budget Office scores it at 1.8.
▶ 2:38:38If we get a 2.8% growth rate, This bill, according to CBO's projections, would cut the deficit by more than a half a trillion, not add to it. Is that something you would agree to agree with?
▶ 2:38:58Thank you, Congressman Smith. Yes. Yes, I do agree with that. And um to to take it further, I think what's very important so that we have uh in the future in future debates about tax reform so that we have fewer uh entities at universities uh throw throwing out their uh their own scores.
▶ 2:39:18Uh I want to reemphasize the point I made before that if the CBO would just make its models public and its source code public then um what could be done is economists uh can will put in numbers that are uh consistent with what we know from the economics literature about just how much uh growth responds to tax policy and we know that growth responds to tax policy um through the research that I cited in a much more vigorous way than is modeled by the CBO.
▶ 2:39:47So I agree very much.
▶ 2:39:49So earlier in your uh questioning you also was talking about um some of the individuals of the numbers that have been thrown out there that they will lose their their Medicaid um are are individuals that just choose not to follow the guidelines.
▶ 2:40:08Um, and I would like to point out that if you according to the Congressional Budget Office, since it has to it loves to be quoted a lot around here, according to the Congressional Budget Office, when you look at the individuals that will be thrown off of Medicaid, 48% of the individuals that they put in their number are able-bodied, healthy adults with no kids who simply choose not to work or volunteer.
▶ 2:40:3820 hours a week. 16% according to the Congressional Budget Office will have access to other forms of subsidized health insurance, including the option to stay on Medicaid. And then there's 13% according to the Congressional Budget Office, they're already ineligible for the Medicaid program and just haven't been removed from the roles. They shouldn't have even been on them.
▶ 2:41:04And then 11% are illegal immigrants and they're not supposed to be receiving it according to federal law, but 11% according to the Congressional Budget Office and then 12% according to the Congressional Budget Office are fraudsters who don't submit the common verification requirements. Um, is that kind of where you were going earlier in your questioning?
▶ 2:41:28Well, absolutely. and and uh and I would I would take it further by also saying that you know studies of the reforms uh of welfare of our uh national welfare program that President Clinton championed in the mid1 1990s those studies show that when you have people when you have work requirements you lead to a situation where people live more lives of of dignity uh where where ultimately um it's uh it's it's it's better even for the even for for for those folks
▶ 2:41:58as you mentioned You know, there are many categories of people uh that are included in these sort of aggregate numbers of people who might go off Medicaid. As you said, some of them should were not actually legally should have been on Medicaid in the first place. Uh others of them are really just, you know, they're voluntarily going to choose to go on to private insurance. Uh and so I think these these stories of of of how catastrophic it's going to be uh for people are are are just exaggerations particularly in light of the fact that there are of course exemptions.
▶ 2:42:27There are exemptions for people who are not able-bodied and cannot work. And as you mentioned, so much of the expansion of Medicaid over the last 10 years has gone to providing it to able-bodied people who can work.
▶ 2:42:37So, Mr. Chairman, point of
▶ 2:42:38It's my time, Mr. Gomez.
▶ 2:42:40Point of clarification. We have a
▶ 2:42:41It's my time. Um,
▶ 2:42:43there's no time. It's just constant.
▶ 2:42:45Another question.
▶ 2:42:48Another question. Um,
▶ 2:42:50point of clarification.
▶ 2:42:52Point of order. I'll feel free to let you interrupt me this moment. What is it, Mr. Gome?
▶ 2:42:58I just want to make sure that I I was point of clarification.
▶ 2:43:03So, the the Congressional Budget Office is only worthy when their their information backs up your point, but is to be discounted if it doesn't back up your point. That's what you're basically telling everybody.
▶ 2:43:14You're putting words in my mouth, so the clarification is wrong. I'm reclaiming my time. What I will say is is there's numerous times that I disagree with the scoring of the Congressional Budget Office. Actually, more times than not, I disagree with their numbers. Um, and I've challenged them because they were off by $1.7 trillion on the 2017 tax cut and jobs act. And $1.7 trillion being off is pretty big.
▶ 2:43:42It and it it has a drastic effect. But if we're talking about CBO, I think it's also important if you love CBO, CBO confirmed in their final analysis of the one big beautiful bill, it's anti-fraud provisions in fact lowers Obamacare premiums by6%. So any comment saying otherwise, according to CVO, is just not true.
▶ 2:44:09And I also want to point out the expanded temporary Obamacare credits that have been mentioned earlier are unargeted and they benefit making um people more than of the federal poverty line. So a family in Arizona making as much as $600,000 a year will receive subsidies under the Democrats expansion proposal. um it would cost $400 billion, but it's not in this bill.
▶ 2:44:39They talk about it, but it's not in this bill. We don't even touch it. It expires at the end of the year. So, there's a lot of um comments about the provisions of this bill not being If you go by um the different provisions according to the Harvard cap, the Harvard poll that just came out in the last couple weeks, it's quite amazing. Like the no tax on tips, no tax on overtime scores over 65%.
▶ 2:45:09The child tax credit expansion
▶ 2:45:11that expires,
▶ 2:45:12the child tax credit expense expansion is over 67%. the health savings accounts that we put in the in the bill was 76%. The Trump accounts savings um for individuals was 65%. So, I could just go on and on. Um but I just want to reiterate how much I appreciate the the Reagan Library for hosting this event.
▶ 2:45:40I think it's extremely important for us to get outside of Washington to hear from people. Um, these are filled hearings. It's the same thing as committee hearings. Um, uh, in Washington, they're not town halls. And so, they're hearings outside of Washington. So, it's easier for people to be part of a congressional hearing. And how we run them on field hearings is the same way that we've run them in Washington DC.
▶ 2:46:07And so, I would like to leave with one quote before I close. Um, we've been quoting Reagan a lot and so I'd like to um say a quote that I think is pretty good.
▶ 2:46:21Reagan said, "You can't be for big big taxes, and big bureaucracy and still be for the little guy." And that's how he served with the 1981 tax cuts, the 1986 tax cuts, and um I just appreciate that.
▶ 2:46:45Um I want to thank the witnesses again for being here um for traveling out of your busy schedule um to testify. This meeting will be adjourned. Thank you.