[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
FIELD HEARING ON THE STATE OF THE AMERICAN ECONOMY: THE HEARTLAND
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HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MARCH 7, 2023
__________
Serial No. 118-3
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Printed for the use of the Committee on Ways and Means
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U.S. GOVERNMENT PUBLISHING OFFICE
53-101 WASHINGTON : 2024
COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma SUZAN DelBENE, Washington
CAROL MILLER, West Virginia JUDY CHU, California
GREG MURPHY, North Carolina GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania DON BEYER, Virginia
GREG STEUBE, Florida DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
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C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Jason Smith, a Representative from Missouri, Chairman....... 1
Hon. Richard Neal, a Representative from Massachusetts, Ranking
Member......................................................... 2
Advisory of March 7, 2023 announcing the hearing................. V
WITNESSES
Bryan Jackson, Owner, Route 66 Meat Processing................... 5
Chuck Mills, Owner and President, Mills Machine Company Inc...... 11
Kelli Payne, Former President, Oklahoma National Stockyards...... 15
Joe Brevetti, Managing Member, Charter Oak Production Co......... 20
Shiloh Kantz, Executive Director, Oklahoma Policy Institute...... 29
LOCAL SUBMISSIONS
Local Submissions................................................ 101
PUBLIC SUBMISSIONS
Public Submissions............................................... 103
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THE STATE OF THE AMERICAN ECONOMY: THE HEARTLAND
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TUESDAY, MARCH 7, 2023
House of Representatives,
Committee on Ways and Means,
Washington, D.C.
The committee met, pursuant to call, at 8:02 a.m. at
Express Clydesdales, 12701 W. Wilshire Blvd, Yukon, OK 73099,
Hon. Jason Smith [chairman of the committee] presiding.
Chairman SMITH. The committee will come to order.
Without objection, the gentleman from Oklahoma, Chairman
Lucas, is authorized to participate in the hearing and ask
questions.
Welcome to the second field hearing of the Ways and Means
Committee.
Thank you to our host, Express Clydesdales, and to
Representative Hern and Representative Lucas, for hosting us in
your beautiful State.
The committee is in Yukon, Oklahoma, today to listen to
working Americans about how to make life better for their
families, neighbors, and communities. Oklahoma is a place where
self-reliance and the frontier spirit run deep. Oil, natural
gas, and agriculture built Oklahoma. America's heartland is the
story of the people who fuel, feed, and build our country.
Today, two-thirds of all the energy produced in Oklahoma is
exported across the country and the world. The State is the
number one producer of rye, one of the top producers of beef
cattle, and it has the fourth largest number of farms in
America. And yet, Democrats in Congress and the White House
have targeted communities like this one for the heavy hand of
government regulation. ESG standards will limit the capital
needed to expand Oklahoma's oil and gas leadership and put
radical climate and social policies ahead of the retirement
security of working families.
The President's policies have made life unaffordable for
middle-class families. Even here, a State with plentiful
energy, diesel prices were 62 percent higher at their peak than
the day Joe Biden became President. Over the last decade, 92
farms in Oklahoma went bankrupt.
President Biden, in his budget this week, will want to make
it even harder to pass the family farm down to the next
generation. He wants to repeal stepped-up basis and increase
the death tax, treating family farms like piggy banks to pay
for more welfare for the wealthy. When it comes to Oklahoma
manufacturing, the prices that producers pay have risen 17
percent during President Biden's administration. Small
businesses can barely make payroll and pay rent with their
razor-thin margins.
I am pleased to welcome Bryan Jackson, an Iraq veteran and
founder of a meat packing company; Chuck Mills, owner of a
family owned manufacturing company; Kelli Payne, a fifth-
generation rancher from Mustang, Oklahoma; and Joe Brevetti, a
small oil producer; and Ms. Kantz from Tulsa.
In 2 days, President Biden will release his latest budget.
If history is our guide, America's heartland should expect a
budget that continues Washington's assault on their way of
life. Biden's last budget threatened $45 billion--$45 billion
in new taxes on American energy producers. It spent $330
billion on policies that discouraged work, worsened supply
chains, and leaves Main Street littered with ``help wanted''
signs.
Biden's 25 percent increase for the EPA would supercharge
an agency that thinks it is their business to tell farmers
whether a small stream, pond, or farm dust is is harming the
environment. We must humbly listen to the working Americans who
are living under these failed policies so we can chart a better
course.
For those of you from the community attending today, or
employees of Express Clydesdales, we also want to hear from
you. There will be notebooks and clipboards passed around in
the back, and I want to encourage every audience member to
please share your experiences and ideas to help us get this
country back on the right track. These will be entered into the
official hearing record to guide this committee's work.
I want to thank our witnesses for taking the time away from
their families and busy schedules to be here today, and we look
forward to your testimony.
I am pleased to recognize ranking member from
Massachusetts, Mr. Neal, for his opening statement.
Mr. NEAL. Thank you, Mr. Chairman.
I want to thank Frank, and I want to thank Kevin for their
warm welcome to Oklahoma.
If you are wondering what my interest was in Oklahoma, any
place that produced Mickey Mantle has got to be a great place
to live.
So, I want to thank you, Mr. Chairman, and thank our
witnesses for joining us this morning.
President Biden and congressional Democrats, our economic
agenda is focused on building the economy from the bottom up
and the middle out. And the legislation delivered by the Ways
and Means Committee and Democrats has already delivered for
Oklahoma, and most importantly, for its workers.
The State GDP outpaced national growth in the third quarter
of 2022, and unemployment hovers at historic low rates. I see
the motto of ``work conquers all,'' and I know you don't take
it lightly in Oklahoma. But a desire to work isn't all that is
needed. In even a strong economy, workers must be able to work
fairly and be compensated fairly.
Further, supercharging our economy will only come when we
take action on affordable childcare and universal paid leave
realities, which will eventually happen. This is why Federal
direct investments in workers and their families have been so
crucial to these communities. Democrats expanded the child tax
credit, which brought nearly 60,000 Oklahoma children out of
poverty, cutting the poverty rate in half. No policy has done
more to reduce child poverty than this one.
The American Rescue Plan permanently increased desperately
needed Federal care in terms of child investments across
Oklahoma and other 49 States. The critical step was first in
expanding that child credit and enabling workers to reenter the
workforce. I will say again that we will continue to defend
Social Security and Medicare and not to have any cuts based
upon some of the proposals that we have heard about.
We also put money back in the pockets of working Americans
with the Inflation Reduction Act. We helped lower healthcare
costs by allowing Medicare to negotiate high-cost drugs,
capping out-of-pocket costs for 21,000 Oklahoma seniors and
reducing health insurance premiums for millions of Americans.
All of these life-saving policies will provide more certainty
for American families.
We have already seen this law drive industry action. Just
this week, a major insulin manufacturer announced a universal
cap on insulin costs. And our work in spurring growth for small
businesses and workers and families across the State of
Oklahoma, in places just like Yukon, will continue, you can be
assured. This is one of the top States for clean energy
development, thanks to Oklahoma's ample wind, solar, and hydro
energy potential, existing infrastructure, and talented labor
force.
When coupled with the bipartisan infrastructure law and tax
credits championed by the Ways and Means Democrats in the
Inflation Reduction Act, the clean energy economy in Oklahoma
is accelerating. I must tell you all today that I hope that
this State, like others, will take full advantage of $369
billion of tax credits for battery power storage, which this
State is particularly well positioned to take advantage of.
An estimated 2,000 clean energy jobs have also been created
in Oklahoma since last August, and that is just the beginning.
Companies across the heartland are capitalizing on incentives
to drive R&D and turbo charge manufacturing right here at home.
From electric vehicles to wind power, economic growth will be
felt by rural and industrial communities alike.
And as you will hear today, the contrast is clear: We want
to make sure that the wealth of America is evenly distributed
across this great country of ours. We know that the state of
our economy is strongest when government puts the interest of
the middle class over the well-connected and the wealthy.
We are going to continue to build on that work to expand
affordable childcare, paid leave, protect Social Security and
Medicare, and for those who are openly advocating tearing up
those benefits from the people of Oklahoma. We too understand
the importance of promoting economic opportunity for family
farmers and other business in the agricultural sector. One of
the great things that happened in this country was the unity
that was caused by great farmers in the farmland of this
country and what it did for urban people who needed food. You
helped contribute to making that a reality.
So, thank you, Mr. Chairman, and I want to thank our
witnesses for being here today. I look forward to them sharing
their experiences with us.
Chairman SMITH. Thank you, Ranking Member Neal.
I am pleased to recognize the gentleman from Oklahoma, Mr.
Hern, for 1 minute.
Mr. HERN. Thank you, Chairman Smith.
I want to start by thanking our host and welcoming my
colleagues to the heartland of America and my home, the great
State of Oklahoma.
Although my fellow Oklahomans here today are facing many
challenges under this administration's economic policies, it is
fair to say we are all proud to be Americans, but we thank God
we are from Oklahoma. Most don't know this, everybody thinks of
us as a 95 percent oil and gas State, but almost 50 percent--
over 50 percent of our energy in our State are from renewables,
something that needs to get out across America. We believe in
the all-the-above energy for all of America.
You know, over the past few years, our State has welcomed
families and businesses, both small and large, from States like
New York and California, and we are represented today from our
members from New York and California. We want them to
experience--and maybe you all will want to come here also. Not
in your current capacity, but--in fact, census data shows that
Oklahoma is among the top ten States in the country where
people are moving to. But while Americans can migrate to States
with friendlier business climates, they still face an
overbearing Federal government and burdensome policies from the
Biden administration that stunt their growth.
I am excited for my colleagues to hear the stories of
hardworking Oklahomans. Unfortunately, many job creators and
entrepreneurs face unnecessary struggles because of this
administration's harmful regulation and reckless spending.
I want to thank our witnesses for being here today. I
appreciate your time away from what you do every day to come
here and speak to us. Your testimony today will inform our
legislative process. And as a former business owner who spent a
lifetime on farms--I literally sold a farm to buy my first
McDonald's restaurant--I know firsthand the American people,
not Washington, know what is best for all of us.
Thank you, Chairman Smith, for coming to the heart of
America and allowing Oklahomans to highlight the devastating
effects of the Biden economy. I yield back.
Chairman SMITH. Thank you, Mr. Hern.
I am pleased to recognize the other gentleman from
Oklahoma, the chairman of the Science Committee, Mr. Lucas.
Mr. LUCAS. Thank you, Chairman Smith. And I would like to
extend a very warm welcome to you and Ranking Member Neal and
all the other members of the illustrious Ways and Means
Committee to the great State of Oklahoma.
For those of you who are not familiar with the committee
process, I, like many other members, belong to a variety of
other committees. But my friends here would note to you there
is only one Ways and Means Committee. Correct, Mr. Chairman?
Chairman SMITH. That is correct.
Mr. LUCAS. The topic of this field hearing is not only
timely and appropriate, but the location is too. I can't think
of a single industry in our State that is not directly impacted
by the work of this committee. The future of ag, energy,
manufacturing in Oklahoma and across the country is dependent
on tax and trade policies that work for these industries, not
against them.
I look forward to joining my colleagues today in learning
more about the challenges these witnesses are facing on the
ground and how Congress can help address those issues.
With that, thank you again, Mr. Chairman. Thank you to the
committee, and I yield back.
Chairman SMITH. Thank you. Mr. Chairman.
I would like to introduce our witnesses. Mr. Bryan Jackson
runs Route 66 Meat Processing & Market, Oklahoma's only USDA
inspected meat processing facility. He is a West Point graduate
and served in the Army for 6 years for which he was awarded the
Distinguished Service Cross and Purple Heart.
Mr. Chuck Mills is owner and President of Mills Machine
Company, Incorporated, a major custom manufacturer of Earth-
drilling tools founded by his family in 1908. The company now
exports an average 25 percent of its products to an estimated
70 international markets.
Ms. Kelli Payne is a fifth-generation farmer and rancher
from Mustang, Oklahoma, and serves as north central district
vice president for the Oklahoma Cattlemen's Association and was
recently appointed as chairperson of the Oklahoma Cattlemen's
Foundation.
Mr. Joseph Brevetti manages all aspects of oil and gas
operations, prospect and property evaluation for independent
exploration and development for Charter Oak Production.
And Ms. Shiloh Kantz is the executive director of the
Oklahoma Policy Institute, an organization she has worked with
since 2010.
The committee has received your written statements, and
they will all be made part of the formal hearing record, as I
also want to let others in attendance know that they too may
provide a written statement. Please find the clipboards and
forms that our teams will have throughout the hearing where you
can fill those out and submit your information into the record.
Now for our guests, you each all have 5 minutes to deliver
your oral remarks.
Mr. Jackson, you may begin when you are ready.
STATEMENT OF BRYAN JACKSON, OWNER, ROUTE 66 MEAT PROCESSING,
YUKON, OKLAHOMA
Mr. JACKSON. Chairman Smith, Ranking Member Neal,
distinguished members of the committee, thank you for the
opportunity to appear before you today. It is truly an honor
for me to be here to share my thoughts with you on the state of
the American economy.
I have had the honor to serve in combat in Iraq, spent a
decade in the oil field, and now own and operate a USDA-
inspected meat processing facility in western Oklahoma. We are
located about halfway between Amarillo and Oklahoma City, so we
serve customers from two States. From our faith in God and a
little perseverance, we built our facility from the ground up
during the COVID pandemic and are one of twelve USDA-inspected
plants in the State. We left the city life to live on my wife's
fifth-generation family farm. To give you an idea of our size,
a large meat packer can process 800 beef in a day. We process
that in a year. It takes dozens of plants like ours across each
State to meet the demands of the local community.
Our first challenge I would like to discuss is labor. And
there is a families quote by Michael Hopf that sums it up: Hard
times create strong people; strong people create good times;
good times create weak people; weak people create hard times.
Coming out of the COVID pandemic, we are still facing an
increasingly challenging work environment where employees may
or may not show up to work for a slew of reasons. As a result,
our ability to complete the work we commit to is made even more
difficult. Today, we find ourselves counseling and coaxing
workers into just showing up to work and doing a satisfactory
job.
I believe a deterioration of our family structure and work
ethic contributes to the rise in mental health issues we are
seeing. Trauma, like what I saw in combat, requires tools to
learn to cope with, and today that is being substituted in our
culture by drugs, alcohol, and other harmful vices. I see
firsthand that we are at a point of weak people creating hard
times due to a widespread entitled attitude.
People in our community are suffering, and part of the
problem is they aren't empowered to change it. Hopelessness and
depression are rampant, yet there are still hardworking people
out there, most living paycheck to paycheck, just not as many
as there used to be. We are grateful for the team we have, and
we take their welfare very personal. In our small farming
community, we don't have an endless supply of workers. We are a
town of 4,800 people, most of whom have to travel for work. We
work what is considered a dirty job, but still an essential
job. For our team of people, it provides them a work-life
balance, but it does require grit.
I have been humbled several times by corporate layoffs and
then later by the experience of starting a small business. To
be as resilient as generations before us, we need to toughen
up. Failure is part of the journey. Being allowed to fail
instead of having your way paved for you is empowering. The
American Dream is not lived on Easy Street. It takes grit and
the discipline to put the work in day after day to realize the
American Dream. Employers must adapt to the current work
environment or risk having to close the shop.
For 2022, we sent out almost four times more W-2s than the
number of employees we currently have on staff. Finding ways to
be more flexible with employee work schedules is key. From my
time in the Army, I learned that in order to have the best team
you have to have high standards, but also take care of them. It
is about respecting other people and their property. And the
fact is, people do not care what you know until they know that
you care.
The second area to cover is inflation. We see firsthand how
out of control costs have gotten in the last several years.
Equipment costs have doubled. If you were to construct our
building today, it would cost at least twice as much. And for
supplies we face both rising freight cost and parts on back
order being commonplace.
Every week we see the purchasing power of our dollar
continue to decline. When it comes to cash flow we are
experiencing delayed payment from customers, sometimes up to 60
days. And for a small business that operates on cash, it
restricts our ability to meet our obligations on time.
Interest rates are high even if you have excellent credit.
The beef industry as a whole is in a tough spot. There is not
much profitability for a rancher because the cost of fertilizer
and feed is too high. We have seen smaller and smaller, less
fed-out cattle come through our facility than when we first
opened 18 months ago.
My brother-in-law is a fifth generation rancher who
supplies all of our beef that we retail on wholesale. And we
provide farm-to-table beef locally raised, locally processed,
and we see the impact of higher costs. I am proud to be an
American and would like to emphasize the importance of creating
value in American-made products. This will continue to create
more pride in the work that we do so that more hardworking
people come to work for the American Dream. At some point, it
seems like we have lost our way. We need to have pride in the
products that come from our country.
And in conclusion, as a nation we face many challenges, but
there is nothing that we cannot overcome by working together.
Just as my grandparents did following the Great Depression, the
hard times we are in now will create a stronger nation for our
kids. I am encouraged by your willingness to listen and effect
change.
Thank you for your consideration of my testimony and for
your service to our great Nation.
[The statement of Mr. Jackson follows:]
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Chairman SMITH. Thank you, Mr. Jackson.
Mr. Mills, you are now recognized.
STATEMENT OF CHUCK MILLS, OWNER AND PRESIDENT, MILLS MACHINE
COMPANY INC., YUKON, OKLAHOMA
Mr. MILLS. Good morning, Chairman Smith, Ranking Member
Neal, and distinguished members of the committee. It is an
honor to testify before you today. My name is Chuck Mills. I am
president of Mills Machine Company, custom manufacturer of
shallow infrastructure, Earth-drilling tools and bits located
in Shawnee.
We were established in 1908 and still operate under the
same family ownership. I personally have been managing the
business for 44 years and have guided it through multiple
booms, busts, and recessions. The last 3 years have been the
most difficult.
Before the pandemic, we faced some workforce issues. Our
company, like so many others, struggled to find skilled
workers. Initially, I believe that education was one of the
issues and felt that one solution would be engaging private
sector business people into the classroom to promote applied
learning practices that would be beneficial to the students. I
promoted that while I was the chairman of the State chamber to
try to get other businesses engaged to do the same.
As you can tell, I like to be involved in finding solutions
for common business problems, which is why I have been involved
in workforce development for 22 years serving on local and
State workforce boards, so I have a good idea of what the
problems are.
Locally, I served as the mayor of Shawnee from 2004 to
2008. Though we struggled before to find workers before COVID,
the pandemic made this struggle so much harder on my company
and employers across Oklahoma. It was hard for me and other
business owners to understand how the Federal government could
incentivize Americans to stay home.
A perfect example of our problem with our supply chain is
if my supplier is unable to find employees, he is unable to
provide me the raw materials needed for my business, which
negatively impacts our ability to satisfy our customers' needs.
This caused delays throughout the supply chain. The lack of
workforce, in my opinion, is the root cause of all of our
problems today.
To help alleviate the supply chain concerns for my company,
I had to hire a full-time employee just to source materials.
This staff member spends all day sourcing best materials and
availability. We are constantly looking for new vendors so that
we can remain competitive for our customers.
We have successfully sourced about 40 to 50 new vendors in
the last year. When we do find materials we must outlay more
cash upfront to buy as much product as we can in order to lock
in the price. The lack of workforce and supply chain issues
combined with inflationary pressures have made this economy the
most difficult economy I have dealt with in over 4 decades.
Prior to the pandemic, we had a predictable price increase
from 3 to 3.5 percent a year. In 2021, starting really in
January, we were hammered with compounding price increases for
our raw materials. Really starting in January of 2021, we first
had our increase of 25 percent. The following month we had
another 15, the following 20, and it went from 10 to 25 percent
for the next 8 months compounding monthly.
After 8 months, my vendors finally said, I can't send you a
price list anymore. You will have to call in order to get the
price, which makes it very difficult to price your products to
your customers. The practice continued through all of 2022, and
now in 2023 the prices have stabilized somewhat but have
increased on others. Due to these price increases, we are
forced to reprice our materials every 90 days. We offer
thousands of products, so this is a significant undertaking.
We also have been forced to import materials in order to be
competitive. I have explored options for on-shoring and near-
shoring in response to the tariffs on Chinese metal products,
and it hasn't been competitive. The tariffs simply add 25
percent to the cost of our raw materials making it harder to be
competitive in the world economy. Overall, our sales are
similar to pre-COVID levels, but it is not because we are
selling more product. We are actually selling less at higher
prices.
I am having to spend more and more time on day-to-day
operations like workforce issues and adjusting prices, which
has resulted in less time for marketing, new product
development and business expansion, which will be better for
our business, the local economy, and the country.
I love what I do. I love making things and offering
solutions for our customers. All I ask is for Congress to
please allow me to continue running my family owned business so
that I may be able to pass it to the next generation. Please
encourage all able-bodied Americans to return to the workforce,
and do not raise taxes that would further restrict our cash
flow. I will close by asking to not make it any harder for me
to stay in business here in Oklahoma. Thank you.
[The statement of Mr. Mills follows:]
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Chairman SMITH. Thank you, Mr. Mills.
Ms. Payne, you are now recognized.
STATEMENT OF KELLI PAYNE, FORMER PRESIDENT, OKLAHOMA NATIONAL
STOCKYARDS
Ms. PAYNE. Chairman Smith and members of the Ways and Means
Committee, I want to thank you for the opportunity to appear
today. My name is Kelli Payne. I am a fifth-generation farmer
and rancher from Mustang, Oklahoma, and I have had the
opportunity to serve on the district staff for former
Congressman Wes Watkins. I have been a small business owner,
worked for a number of cattle livestock auctions and cattle
buying companies, and even ran for Oklahoma City council.
I have also held a variety of economic development
positions with an emphasis on agriculture, including previously
serving as the first-ever female president of the Oklahoma
National Stockyards. I am currently serving as North Central
District Vice President for the Oklahoma Cattlemen's
Association, and was recently appointed as chair of the
Oklahoma Cattlemen's Foundation. I am also a proud Oklahoma
Farm Bureau member. While my primary agriculture operation is
cattle ranching, I also have a family agritourism venture with
my sister.
I would like to begin by sharing some very staggering
numbers relative to the drought. The USDA January 1 inventory
of all cattle and calves in Oklahoma was down 11.5 percent from
2022. That is a decrease in 600,000 head in 1 year. It is
double that of Nebraska, the State with the second largest
decrease in cattle. It is important to remember that this
number reflects all cattle, including the cow herd, replacement
heifers, stockers, and feedlot cattle. The decrease in the
number of cows in Oklahoma alone was 140,000 head, again, the
largest decrease of any State in the Nation.
While these numbers alone are staggering, when one begins
to think of the negative implications the situation absolutely
becomes overwhelming. Oklahoma is a beef cow State. Much of our
rural economy is dependent upon the cow. Every year ranchers
wean and sell their calves, which represents the heart of the
economic engine in rural Oklahoma. With fewer calves to sell,
that means fewer dollars generated. But worse, not only are
there fewer calves, there are also fewer cattlemen and women.
The struggles of drought are exacerbated by high input cost
including fuel, feed, and other supplies. All these negative
impacts have caused some ranchers to sell their entire herd,
and many have indicated that they won't restock anytime soon,
if at all. Fewer cows also means that fewer bulls are needed.
Seed stock operations, like our host today, Express Ranches,
depend upon a robust bull market driven by cow calf producers
with plenty of cows.
Currently, the cattle market is strong. For the last week
of February, 600-pound calves selling at the Oklahoma National
Stockyards were bringing $200 to $215 per hundred weight. This
makes sense though given a drastic reduction in the cattle
supply. But high prices of something that I don't have many of,
or any of, doesn't help me economically. Remember, we have
140,000 less cows. That means 140,000 less calves to sell.
Federal government involvement in livestock production does
have a positive side. The farm bill of 2018 signaled a major
turning point for animal agriculture in the U.S. That important
piece of legislation enshrined permanently many of the programs
that have directly benefited livestock producers, specifically
in times of hardship. Examples include the Livestock Indemnity
Program, the Emergency Livestock Assistance Program, Emergency
Relief Program, and the Livestock Forage Disaster Program, just
to name a few.
The total disaster payments for program year 2022 in these
categories alone in Oklahoma are $4.6 million and rising. Let
me be very clear, these programs are vital and important to
livestock producers, and they must be continued in the 2023
farm bill.
The negative side of the story deals with the overreaching
regulatory agenda that proposes new and debilitating burdens
that will undercut our livestock business. Examples include the
EPA's new waters of the U.S., or WOTUS, rule issued just a
couple of months ago.
While EPA did recognize ponds and watering holes, the new
rule goes backward to regulate ditches and draws that seldom
see water and certainly not in times of drought. The new WOTUS
rule ignores the great work that animal agriculture has done to
preserve and promote a positive impact on our environment.
Modern poultry, swine, and cattle operations have adopted so
many new and emerging technologies that have provided
substantial benefits in decreasing water usage and positively
managing manure as fertilizer.
Here in Oklahoma, the Endangered Species Act has been
employed by administration's U.S. Fish and Wildlife Service to
the detriment of cattle grazers in western Oklahoma. Recently,
the service issued a threatened and endangered listing for the
Lesser Prairie Chicken requiring ranchers to seek an approved
grazing permit--excuse me, plan for their own ranches. Once
again, the great work ranchers have done to improve and
maintain wildlife habitat was ignored, and the service provided
no direction about who can approve a proposed grazing plan.
Many producers, including myself, began diversifying our
operations about a decade ago when we went through our last
drought. By certifying a portion of our own farm in
agritourism, investing in greenhouses and partnering with other
fruit and vegetable growers, we were able to have an additional
revenue stream. We also began hosting two festivals to educate
our urban friends on where their food comes from.
While this has been incredibly rewarding to us, regretfully
we have had to cancel the last two events due to drought in the
current economic State, further reducing our family income, as
well as cutting off a source of fresh food to our customers. We
have enough challenges with mother nature. Let's not compound
the problem with more regulations.
I look forward to any questions you may have. Thank you
again for allowing me to share my perspective on the state of
the American economy in the heartland.
[The statement of Ms. Payne follows:]
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Chairman SMITH. Thank you, Ms. Payne.
Mr. Brevetti, you are recognized.
STATEMENT OF JOE BREVETTI, MANAGING MEMBER, CHARTER OAK
PRODUCTION CO.
Mr. BREVETTI. Chairman Smith, Ranking Member Neal,
distinguished members of the committee, thank you for this
opportunity.
Congressman Hern, thank you for your leadership. It is an
honor to testify before you today on behalf of Charter Oak
Production the Petroleum Alliance of Oklahoma.
I am Joe Brevetti, the managing member of Charter Oak
Production, and we are a small, private oil and gas company
here in Oklahoma City with nine employees. Since founding the
company in 2004, our primary focus has been in the oil-rich
areas of central to southern Oklahoma.
I began my career in the industry as an engineer working in
the field in South Texas. I am a board member of the Petroleum
Alliance of Oklahoma, which represents 1,400 individual and
member companies. I am also honored to have been appointed a
board member of the producer funded Oklahoma Energy Resources
Board, which restores historic well sites and provides
classroom resources for educators from elementary through the
college level.
Charter Oak is one of 4,000 oil and natural gas companies
working in Oklahoma. To put it in perspective, together we make
up more than half of the State's private sector GDP growth. We
are the State's largest taxpayer accounting for about one-third
or $65 billion of Oklahoma's GDP, and generating $2.5 billion
in tax payments to the State.
The oil and gas industry provides employment for 200,000
Oklahomans, 75,000 in direct jobs, and another 125,000 in
supporting sectors. Each year, Oklahoma oil and gas producers
pay more than $2 billion in royalties to mineral owners. These
mineral owners are everyday people who use this money to buy
groceries, they support their family farms and ranches, and
just help pay their daily living expenses.
In the past year, Charter Oak and its dedicated team of
service companies who employ hundreds of people in the field
drilled and completed ten wells to help meet the energy needs
of American families. During that same year, we have seen the
cost of our wells increase from less than $8 million each to
over $10 million each, a 30 percent increase, and that is
considerably more than what we are told the inflation rate is
by the current administration.
Companies like Charter Oak have made the U.S. not just a
world leader today in oil and natural gas production, but we
are also the world leader in greenhouse gas reductions, thanks
to natural gas-powered electric generation. There is no
company--there is no other country in this world that produces
hydrocarbons in a manner as clean and as safe as we do here.
Importing foreign oil production or encouraging the same is
contrary to American principles, and it threatens our energy
security as a nation.
My written testimony provides color on many regulatory
hurdles that we are dealing with today and the challenges we
are expecting later this year. The EPA's proposed one-size-
fits-all rules for methane and waste prevention is a killer for
small family owned companies whose marginally economic wells
are very important to America's energy portfolio.
The administration's permitting reforms for operations on
Federal lands are unnecessarily complex, costly, and delay oil
and gas projects far beyond what is reasonable. A current
example is, last week we were informed that it would take the
BLM Cadastral Office in Santa Fe between 2 to 3 years to review
our river survey just so we could get to the point to nominate
acreage into a Federal lease sale. By the way, we have already
drilled this well, it has been delayed so long. We have altered
the tract of this well so we didn't have to traverse Federal
minerals, but they are still within our unit.
On the tax front, I ask the committee to protect the
ability of oil and gas companies of every size to deduct their
ordinary and necessary business expenses. These intangible
drilling costs, which are expenses like fuel, labor, and
trucking, frequently make up 85 percent of the cost of the new
well.
The recent book minimum tax unfairly penalizes some of the
larger independence from deducting such expenses. For a smaller
independence, the punitive nature of the alternative minimum
tax in the current Tax Code limits our deductibility of the
IDC. We drill out of our cash flow, and the AMT severely
restricts our ability to invest in new drilling.
So let me conclude, we don't want special treatment; we
just want a level playing field to encourage investment.
Burdensome regulations, increased taxes on oil and natural gas
hamper production and the ability of companies like ours to
work. Unchecked inflation has hit all Americans very hard,
including the independent oil and gas producer.
Please address this by slowing Federal spending growth,
balancing the Federal budget as all of us do with our personal
and business budgets. And let's stop going down the same anti-
hydrocarbon road that is wreaking havoc in Europe. That is our
wakeup call, America. We don't want an America like that. We
don't need more energy--I mean, America needs more energy not
less. More energy for America equates to more prosperity for
all Americans, and America-produced energy is translated to
improve American national security.
Thank you for your time, and I am happy to address my
questions.
[The statement of Mr. Brevetti follows:]
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Chairman SMITH. Thank you, Mr. Brevetti.
Ms. Kantz, you are now recognized.
STATEMENT OF SHILOH KANTZ, EXECUTIVE DIRECTOR, OKLAHOMA POLICY
INSTITUTE
Ms. KANTZ. Thank you, Chairman Smith and Ranking Member
Neal and members of the Ways and Means Committee. I am very
honored and thank you for the opportunity to submit testimony
on the topic in what ways can the Federal government make the
economy work for Oklahomans.
My name is Shiloh Kantz, and I am the executive director of
Oklahoma Policy Institute, or OK Policy as we are informally
known. We are a nonprofit, nonpartisan public policy think
tank.
While COVID-19 laid bare economic vulnerability in
Oklahoma, these problems were not new. Oklahoma's poverty rate
is consistently among the highest. Even pre-pandemic, one in
seven Oklahomans, including one in five children, lived in
poverty. In 2018, one in four Oklahoma jobs were in occupations
with a medium wage below the poverty line for a family of four.
Our poverty rates have barely budged over the last decade.
Federal actions during the pandemic made a real difference. It
is a shame those interventions were not made permanent. 460,000
Oklahoma households, including 816 children living in those
households, received the expanded child tax credit. The credit
lifted an additional 59,000 Oklahoma children out of poverty.
That money was spent wisely on food, utilities, clothing, rent,
and transportation, likely minimizing the trauma to our
children. Now, 276,000 Oklahoma children are losing out on that
full credit.
The child and dependent care tax credit expansion helped
our working families secure childcare to continue their
employment. Qualifying Oklahoma families got back up to half of
what they spent on childcare that year. For some households,
that is a game changer. Expansion of the earned income tax
credit meant there was a brief moment when Oklahoma's childless
workers received targeted relief. The expansion tripled the
EITC for childless adults and waved the usual age limits and
reached an estimated 229,000 childless workers in Oklahoma. It
too lapsed at year end.
So where do low-income Oklahomans need support? At work. I
think the testimony we have heard here definitely addresses
that as well. Some Oklahoma workers are covered by the Family
and Medical Leave Act, the FMLA protections, but they can't
afford to take unpaid leave. Only one in 20 of the bottom 10
percent of earners have paid leave. Just one in five workers
have access to paid leave, and those are mostly high-income
earners.
The impact these numbers have on Oklahoma's families are
real. I can't take off if my kid is sick if I don't have unpaid
leave. More than half of Oklahomans, including 68 percent of
rural Oklahomans are in a childcare desert, either no providers
within their ZIP code or there are too few slots. This number
just really hits me hard, because I have got three kids at home
too. In recent years, the number of childcare facilities has
fallen by two-thirds, from 6,000 to 2,300.
Housing was an issue before the pandemic. Oklahoma's two
largest metros were the Nation's top 20 for eviction rates per
capita. Emergency rental assistance during the pandemic helped,
but it also lapsed. Today, more than two in five Oklahomans
working full time can't afford a two bedroom rental. An
Oklahoma worker needs to earn $16.61 per hour to afford that
two bedroom rental; but 17 of the most common 30 professions in
Oklahoma, including teachers assistants, home health aides, and
customer service representatives, pay less than that.
So what has helped our workforce? Two major programs
brought targeted relief, including Unemployment Insurance and
Medicaid expansion. When the pandemic hit, Oklahoma saw more
unemployment claims in March 2020 than it did in 2009 at the
Great Recession's peak.
While some fraudulent unemployment claims were made,
including some to us, those claims were investigated and
determined ineligible for payment. The State's Unemployment
Insurance did what it was created to do in that unprecedented
time: Assist Oklahomans in their time of need.
And in the summer of 2020, Oklahomans passed Medicaid
expansion through a ballot initiative. It has been an
unequivocal success. In January, 358,155 working age adults
were enrolled in Medicaid expansion. Because of Medicaid
expansion, Oklahomans exiting incarceration will get insurance
before returning to their communities. Tribal health systems
are more solvent and record levels of children are insured.
I know if we prioritize our communal why, improving the
lives of all Oklahomans, we can find compromise across
political divides. Thank you for the time to be here, and I
look forward to your questions.
[The statement of Ms. Kantz follows:]
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Chairman SMITH. Thank you, Ms. Kantz.
And I want to thank all of our witnesses for your excellent
testimony and for--once again, thank you for taking time out of
your busy schedule, for being here.
We will now proceed to the question and answer session, and
I will begin first. I know that my colleagues are eager for the
opportunity to ask a number of more specific questions as we
hear from you all about how the policies coming out of
Washington have impacted your lives here in the heartland. So I
will keep my questions to just one, but I will ask each of you
all to respond to it.
Under President Trump, one of the key changes this
committee made for working American families was to double the
amount folks can deduct from their income each year and to
lower their Federal tax bill. Those who are benefiting the most
from that change are median-income households, which is about
$60,000 per year right here in Oklahoma.
As life has become more expensive for all Americans over
the last 2 years, we are seeing why deducting more from income
makes sense, because more and more family budgets is having to
be used for so many basic needs just to get by. And when
President Biden releases his budget on Thursday, we will again
see that he wants this relief from Federal taxes for American
families to expire.
I want you each to answer this question through the
perspective of your customers, your suppliers, your neighbors
and friends. In the midst of a 40-year high spike in the cost
of living, what would it mean for them if this committee
further reduced their yearly tax burden to give American
families an extra couple hundred dollars in their pocket each
year right now?
Mr. Jackson, why don't we start with you and go down the
line.
Mr. JACKSON. Chairman Smith, I can tell you that reducing
the taxes for a small business would greatly help us. Was that
your question as far as--could you repeat that, please?
Chairman SMITH. So in the taxes that were cut in 2017, it
was doubling of the standard deduction for folks who don't
itemize, and so this affected over 80 percent of Americans. So
most of your customers would probably be in the standard
deduction. That will expire; in fact, in the President's budget
on Thursday, he will outline for it to expire. Do you think
that it will help your customers, your suppliers, if we would
actually increase the deduction so that they would save more on
their taxes?
Mr. JACKSON. I think further reducing taxes would
definitely be a great thing. And as a small business owner, I
can tell you that any money saved is reinvested in our
business. And how early on we are, it is a struggle to make
sure, like I mentioned in my testimony, to have the cash flow
to make sure that we can meet payroll, and then beyond that,
offer benefits for people who have been with for an extended
period of time, paid time off, and healthcare, things like
that. So the more we can receive in terms of help in making our
life easier and paying less taxes, the more we can do for our
employees.
Chairman SMITH. From a business perspective, a small
business perspective, what is the tax advantage that has helped
your small company the most?
Mr. JACKSON. I would say, the number one thing was the
payroll tax credit early on that helped fund us as we cycle
through so many employees early on. We have retained about 25
percent of those folks that started with us in the beginning,
and so that was the greatest benefit for us to help us meet our
obligations early on as we had to operate with cash as an early
business.
Chairman SMITH. Perfect.
Mr. Mills.
Mr. MILLS. I would concur with really pretty much
everything he said. You know, I think more about my employees
than myself because they are really the ones that do the work.
I just kind of guide them. So, you know, they are definitely
impacted everyday by, you know, the taxes they have to pay. We
are burdened, of course, with having to continually pay more
and more and more just to keep our employees. And as a small
company, we compete against most of the big companies and
especially in the oil field. I mean, I make drilling tools and
bits, but it is not for oil. It is just shallow drilling, like
water and things.
And so--but we have to compete. We have to pay those same
benefits, healthcare, you know, so there is a huge burden on
myself as a small business. But I think it would be a mistake
to take away those taxes, you know, breaks for especially just
the average worker. With inflation today, you know, it is
accelerated so much that it is a huge benefit.
And I agree with the--I have to tell you, I have never
taken any Federal funds ever in my--none of our generations
have. We have always just been on our own. You know, there was
no bailouts or--we are just not in that industry. And that
payroll protection program was a huge shot in the arm at the
right time, and it allowed us to retain all of our employees
and continue to prosper and grow with a good base.
So that is one of the few really bailouts that we have had
the opportunity to work with, and I thank Congress for that at
the perfect time. So it did work. But I would think this would
be a very bad time to take away anymore tax breaks for
especially the average worker.
Chairman SMITH. Thanks, Mr. Mills.
Ms. Payne.
Ms. PAYNE. I think you will see the panel mirror the
responses all the way down the line here. I guess, from my
perspective though, anytime that hardworking Americans can keep
more money in their pocket we should give them that
opportunity, especially in these uncertain times that we are
in. A lot of my neighbors are not only farmers and ranchers,
but they have an off farm job because they have to.
But as things get tighter from in the ag sector and all of
us, the more money--Grandpa always said, if you want to double
your money, you know, fold it in half and put it in your
pocket. I think those days are over. But that would be where I
am coming from with it.
Chairman SMITH. Thank you, Ms. Payne.
Mr. Brevetti.
Mr. BREVETTI. Well, Chairman Smith, I am having a hard time
thinking of any country that tax their way to prosperity, so
lower taxes are certainly better for all. That rising tide
would lift all boats.
Specifically to your comment about the removal of the
standard deduction, I think of all of the workers in the field,
the dozens and dozens of people who work on our wells and
whether they are driving saltwater trucks, whether they are
building a fence or working on a drilling rig or a frat crew,
they are not itemizing deductions. They depend upon that
standard deduction. I think that is very critical for working-
class Americans, and I would certainly hate to see that lapse.
Chairman SMITH. Thank you, Mr. Brevetti.
Ms. Kantz.
Ms. KANTZ. Thank you, Chairman.
I do believe that targeted relief is the way to go. I
think, we firmly believe--we hear a lot of working Americans,
working Oklahomans. We truly feel that sweeping--and I truly
feel that sweeping--maybe the Tax Code isn't the place unless
it is targeted tax credits like we spoke about, about the child
tax credit and child dependent care tax credit. The income tax,
I think, from my history, has less impact immediately on the
people who need it the most.
Chairman SMITH. Thank you.
Mr. Neal, you are now recognized for questions.
Mr. NEAL. Thank you, Mr. Chairman.
And thanks to our witnesses for your superb testimony.
I was reminded as a supporter, even though I come from a
highly urbanized State, I have been a consistent supporter of
the farm bill. And part of the reason for that is it is what
the farmlands of the country produce for urban America. But it
is also a reminder of how Congress once cooperated on many of
those issues. Two champions of that substantial initiative were
Bob Dole and George McGovern, who both had shared a common
World War II experience with heroism, the two of them. And I
think that these conversations that we have about these sorts
of initiatives could be a lot less hostile than they have
become. And trying to find this common purpose and common
ground is really important.
So let me go to Ms. Kantz for a moment. The Affordable Care
Act has really been a success. 20 million more Americans have
health insurance, and insurance is based on risk and the
sharing of risk. One of the issues that has always troubled
many of us has been those States that did not expand Medicaid.
And I want to congratulate Oklahoma for expanding Medicaid, to
make sure that those at the lower end of the economic spectrum
have an opportunity to receive healthcare in an earlier stage
of life. It is a good investment in good healthcare.
So the results that you've had, Ms. Kantz, here in Oklahoma
have really been positive. Could you briefly talk about how
important this step was in benefiting families across Oklahoma?
Ms. KANTZ. Absolutely. Thank you, Ranking Member Neal. We
estimated in July 2022 that Oklahoma's uninsured rate had
dropped below 10 percent due to the combination of Medicaid
expansion and the public health emergency's continuous coverage
requirement. In addition to reaching Oklahomans who were in
what we called the coverage crater, formally unable to access
either Medicaid or subsidized marketplace coverage, expansion
has reached kids who were formally eligible but whose parents
likely didn't know it.
In 2022, Oklahoma's child uninsured rate reached its lowest
rate ever. Because of Medicaid expansion, Oklahomans can expect
stronger hospitals moving forward as hospitals in States that
have expanded Medicaid are 84 percent less likely to close than
hospitals in non-expansion States. Based on other States'
experiences, Oklahoma's hospitals can expect to see less,
uncompensated care, increased Medicaid revenue, and better
financial margins.
Roger Knak is the CEO of Fairview Regional Hospital and a
member of my board. Medicaid expansion has allowed his hospital
to expand. And a few years ago, his hospital nearly went out of
business because it couldn't afford to keep the lights on.
We anticipate that Medicaid expansion will have helped our
workers keep working. It is hard to tease that information out
right now given noise of the pandemic and the data, but other
expansion States have found that expansion helped people
without a job get one and helped people with a job stay in that
job. We are no longer tying healthcare to an employer. We are
all better able to show up at work and at home when we can see
a doctor and fill a prescription.
In terms of our state budget, we have every expectation the
expansion will at least break even or save Oklahoma money,
because that is the experience every other expansion State has
had. Medicaid on the chopping block means people's lives on the
chopping block. It is whether a parent can see a doctor and
fill a prescription. It is whether the kids with disabilities
can see a specialist. My own daughter sees a specialist. We
have to drive an hour and a half to see a specialist because
there is no other specialist in Oklahoma providing care that
she needs.
So for us, before Oklahoma was known for having the most
successful Medicaid expansion coming out of State question,
before we were known for leading the country in criminal
justice reform, we were the State with the chronic budget
shortfalls. We had nine revenue failures between 2000 and 2020.
So we need Medicaid. We want Medicaid in Oklahoma, and our
families need Medicaid. We shouldn't have to decide between
going to the doctor and paying rent.
Mr. NEAL. Thank you. And I would just make a quick comment
as my time is running low. Not knowing a lot about healthcare
in Oklahoma, I can say this with some accuracy, that those
hospitals are heavily dependent upon Medicare and Medicaid.
Private insurance pays a very small amount now in our
healthcare system. And the truth is that, I think you could
say, a rule of thumb, it is close to 65 percent of the money
that is allocated from Medicare and Medicaid.
And the other point that I want to make about Medicaid is--
I assume we are going to be discussing it in the next few weeks
as we see the Republican budget as well--that a reminder,
almost $0.70 on the dollar now goes to nursing home care from
Medicaid. It has become a middle-class entitlement which was
not its original intention.
So, thank you, Mr. Chairman.
Chairman SMITH. Thank you, Mr. Neal.
I would like to recognize the gentleman from Oklahoma, Mr.
Hern.
Mr. HERN. Thank you, Mr. Chairman.
For far too long, unelected bureaucrats and D.C.
politicians have attacked the family run farms, energy
producers, and manufacturing companies across the heartland,
what some in Washington would consider to be the flyover
country. These same politicians have never set foot in a place
like Oklahoma, so, again, I appreciate everybody being here.
But to see what has happened with you all, you have
invested your lives in what you are doing, your stories,
fourth, fifth generation, for your time in Iraq and defending
the freedom of this country, it is great for everybody to hear
in D.C. of what America looks like. Since many of us represent
800,000 in our districts across America, it is great to see
everybody, what they are doing.
Many Oklahomans ask me, having spent 35 years in business,
when I first started running, what surprised me the most about
being in Washington, D.C. And my response was then the same as
it is now, is how many people talk about things they know
absolutely nothing about. And what you all do and our witnesses
do when we come to these hearings is to tell us what is really
going on with the policies that are being produced by the
Federal government.
You know, as we see what is happening in the last 2 years,
as we have seen a border crisis, we see on TV every single day,
regardless if we want--anybody wants to admit it or not, it is
a crisis. Economic crisis, you all feel the experience of
inflation; a labor shortage crisis, you all explain that; a
supply chain crisis, we talk about what we want to do with
China, but policies coming out of the administration right now
are completely contradictory to that; energy crisis, you all
are experiencing this every single day.
So despite the last 2 years of what we have seen in this
economy, this administration has chosen to stand by their tax
and spend agenda that leaves everyday American taxpayers with
less money in their pockets. When the Federal government spends
more--here is a fact--the American taxpayer has less.
Before Joe Biden took office, Oklahoma's economy was
thriving. We saw significant sectors of our economy, from
agricultural to manufacturing to energy, create new job
opportunities. Now restrictive trade policies, as was
mentioned, and unnecessary tax increases are limiting the
ability for farmers, energy producers, and manufacturers to
compete in the global marketplace.
I really want to--I had a question here, but I really just
want to say something. You know, really, as you all listen to
what we say, and what I have experienced now being in Congress
for 4 years, really at the heart of the whole conversation is
with us in Washington, D.C. versus everyday Americans that we
are out in the heartland is really trying to ascertain who does
it better, you as the individuals creating the jobs, the
workers trying to take care of themselves and their family, or
Washington, D.C. that wants all of your taxpayer dollars and
for us to decide who should get what in a targeted environment.
And that is really the--that is the decision process at the
highest level that is going on right now: Who can do it better,
Washington, D.C. or everyday Americans?
So my question is something very simple: Which is better?
Leaving the taxpayer dollars--we have a baseline we have to
meet. National defense, secure our Nation, as our founders
describe, leave as much money in the--certainly in the lower
middle-class income pockets so that they can do the basic
needs, like supply childcare and healthcare and go find their
right job and not depend on the Federal government.
Our success should be measured by how many people we get
out of poverty not how many people are on Medicaid expansion or
other programs in the Federal government. And as a person who
grew up on food stamps, and, you know, whether people want to
hear this or not that may be sitting at this table, I have
experienced it. I have experienced the way out. And my success
story was not that I am still on welfare, is that I got off of
welfare, and I experienced the American Dream.
And that is what we will hear all about today is to try to
ascertain--I do believe in the heart of heart of everybody here
it is about my members that are here, my friends that are here,
is that we all have the same goal in mind, is everybody become
successful of the American Dream. It is the pathway of getting
there that we can't agree on.
So with that, I would love to start, Ms. Payne, you
actually alluded to this, and I would like to hear your
thoughts on this as well.
Ms. PAYNE. Representative, very well said. I was about
moved to tears over here, and this farm girl doesn't cry very
often, but--in thinking back, whenever I was running the
Oklahoma National Stockyards and the employees that we had
there, it was a very diverse group. And some of the challenge--
some of it is because it is very--well, as Bryan mentioned
earlier, it is a dirty job, so not everybody wants to do it.
But the diversity within our staff was everything from
obviously the red-headed female, we had Army veterans that
worked on staff, and we also utilize a lot of justice involved.
And seeing, especially with the justice involved, being
able to offer them an opportunity to break their cycle, to have
a job that meant something at the end of the day, and to be
treated fairly, was one of the most rewarding things I have
ever seen in my life. And that is part of this American Dream.
It doesn't matter where you are from, it doesn't matter if
you are a farmer, rancher, steel, oil and gas, or if you have
ran into trouble in your past, it doesn't define who you are,
but America gives that opportunity and that is incredible.
Within that, you make difficult choices of what--on taxing us,
but we need to be thinking about as we move forward how to--
everybody deserves a chance to make it. So thank you all.
Mr. HERN. Thank you. I yield back.
Chairman SMITH. Thank you.
I would like to recognize the gentleman from California,
Mr. Thompson.
Mr. THOMPSON. Mr. Chairman, thank you very much for having
this hearing. And thank you all for being here, the witnesses,
and for a very gracious host.
I just want to make a couple of comments on the opening
statements that were made by our witnesses. The issue of
skilled labor and the shortage of skilled labor was brought up.
And I just want to say, you know, you are not alone. I hear
about that every day in my District.
Big contributors are the age of the workforce. People are
retiring. And a big contributor to that is the lack of
childcare, which is a huge, huge problem. So, there is
tremendous competition for available workers, and the pay kind
of dictates where folks are going. And I think that is an
important thing to remember.
And I am sorry about your herd size. I am a farmer myself.
And I have--in California, up until just recently, we have
been--experienced tremendous drought. So, I get it. And I have
colleagues who have had to sell their herds because they can't
afford the food. There is no water. And there is not a lot--as
Mr. Lucas mentioned, this is the premier committee in Congress,
but there is little we can do about the drought.
In Ukraine, the war in Ukraine--Russia's illegal invasion
of Ukraine has really hurt us as well. We are hurting for
fertilizer. In my District, one of the crops grown are
sunflower seeds, and we sell 50 percent of the seeds to Ukraine
for their seeds. And that market has just gone away.
The good news is, this is the one thing that Congress was
able to do--and I know Oklahoma was a big recipient of this.
You received a lot of help in regard to disaster relief. And I
think that is important. And with the farm bill reauthorization
coming along, you ought to be really plugged into that lane. It
is important.
And tariffs--you are right. Tariffs are terrible. They
should be the last resort. We are experiencing problems from
the last administration's imposition of tariffs. Everything
from raw materials to nails. And it has been crippling.
And Mr. Jackson, thank you for your service. And thanks for
being in the best branch of the military. And thank you for
raising the issue of mental health. It is a huge, huge issue.
And I think it is important to note that the Democrats on this
committee supported strongly the increase in veterans' benefits
that are entitled--veterans are entitled to. It has helped them
a lot. But we still have a long way to go. And I am a believer
that we need to make a major investment in brain research so we
can get ahead of the mental health problems rather than
applying expensive Band-Aids along the way.
Ms. Kantz, I would like to start--I have a couple questions
for you. You mentioned in your testimony that one in five
Oklahoma kids in 2019 were living in poverty. When the
Democrats on this committee expanded the Child Tax Credit, the
child poverty rate in Oklahoma fell from 13.1 percent to 6.9
percent. Can you tell me what Oklahomans use their Child Tax
Credit for? What types of things did they buy?
Ms. KANTZ. I absolutely can. Thank you, Representative.
Data shows that more than 90 percent of the families with
lower incomes use their monthly payments in five major
categories: Putting food on the table, paying utility bills,
covering rent or mortgage payments, buying clothing, and
covering education costs, which during the pandemic, was a new
piece for a lot of families to overcome. And they also bought
schoolbooks, paid credit cards. Very few, under 20 percent, put
it into savings. And then several put it into childcare. The
money went into Oklahomans' pockets and helped ease the burden
of their monthly bills.
Mr. THOMPSON. So that money is spent out across the economy
in every city, town, and county in Oklahoma. Thank you very
much.
There was a lot of talk about the tax policies that the
Republicans passed and what we should do about that. I think it
is important to note that the centerpiece of that tax bill was
the cut in corporate tax rates that went from 35 to 21 percent,
a much bigger cut than the proponents even wanted.
And so, Ms. Kantz, I was interested to know, for families
in Oklahoma, what is more compelling, the Child Tax Credit or
extending the corporate tax cuts?
Ms. KANTZ. Well, I think from the testimony that we have
heard here, that anything we can do to help our workforce is
where we need to be investing. And that will fuel up through
the corporate sector. So, any investment into our families,
into our homes, into our children, to help with the trauma, to
help with getting out of poverty. I agree with Representative
Hern's statement that our measure of success should be how many
people we are getting out of poverty. Every Oklahoman deserves
the opportunity to thrive, and how are we providing that?
Mr. THOMPSON. Thank you very much. Thank you, Mr. Chairman,
for your generosity with the clock.
Chairman SMITH. Thank you, Mr. Thompson.
I would like to recognize the gentleman from Oklahoma.
Mr. LUCAS. Mr. Chairman, before I begin, I would like to
submit for the record the statement by Austin Puckett, the
owner of Benjamin Lee Bison, a family-owned and operated bison
range from Sayre, Oklahoma describing how soaring fertilizer,
energy, repair, and shipping costs as well as labor shortages
have harmed his operations.
Chairman SMITH. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. LUCAS. Thank you, Mr. Chairman.
Kelli, you are a constituent, so I think I can call you by
first name. Thank you for your participation today in the
hearing and all the work you do on behalf of cattlemen and
women of the great state of Oklahoma.
I have often said that the role--that I view the role of
Congress to do things for people, not to people. In your
written testimony, you speak about the positive impact that the
farm bill programs have had on the cattle industry, and you
touched on WOTUS and a number of other regulations that
potentially harm the industry.
Could you speak to the importance of collaboration with
producers on the ground when it comes to crafting policy?
Should we be asking the people who have to live with what we
are doing?
Ms. PAYNE. Thank you, Congressman. As a long time
Oklahoman, I have got to brag on our delegation. I have always
felt like we have--we can get ahold of them and we can talk to
our elected officials on the Federal level. And whenever I ran
the stockyards, I had an opportunity to host many of our
federally elected officials there. They came to us. They
understand boots on the ground. Collaboration is key.
It is nice to be able to--it is not just talking directly
to you all, but to have access to your staff and to understand.
And I would encourage every member in here to spend that time.
This is an incredible honor for us to have you all here today
and to be able to talk to you face-to-face, but it is just
critically important to get this kind of feedback so that you
are not picking winners and losers.
We are all--in reference to Representative Hern's statement
earlier, this is the American dream. We are all in this still
together. Let's collaborate and talk one-on-one. Let's show
you. I am sure you didn't expect today to come in here and
stand next to great, big Clydesdales downstairs. But this is
what we do. And I would be happy to put any of you in the
tractor with me.
Mr. LUCAS. I have got one more question for you, but before
I go to that, I want to turn to Bryan for just a moment. I
think it was about a year and a half ago, maybe almost 2 years
ago, you gave me a tour of the facility in Sayre. We are
getting ready to fire up.
For the benefit of the crowd, you and I both know State-
inspected meat in Oklahoma and federally-inspected meat, same
safety, same quality, same everything. Explain to us why the
Federal stamp matters. Even though it costs more, why does it
matter?
Mr. JACKSON. That is a great question, Congressman. The
benefit of being USDA-inspected is there is no restrictions on
any quantity where it can go to. It can ship between States, so
there is no limitation. It could even be exported if we chose
to and were licensed for that.
Mr. LUCAS. And that matters greatly when you are moving
your product, especially in a State where we produce so much
beef in particular. Thank you.
Kelly, back to you. Oklahomans--Okies, as some of us like
to call ourselves--are very resilient people, and we have got a
long history of responding to tough things: The Dust Bowl, the
Great Depression, the droughts of the 1950s, the hideous
drought of 10 years ago, that oil bust of the 1980s that turned
much of the State upside down.
What have producers--through all of these challenging
times, what have producers done voluntarily to preserve and
improve their land in order to better meet the challenges with
weather and prolonged drought? We are not just sitting on our
hands, right?
Ms. PAYNE. That is correct, Congressman. And you referenced
the Dust Bowl. We have obviously learned a lot. We learn more
every day. We have technology in place. We just know more now
than we ever have. So whether it was the shelter belts that
were planted in the 1930s all the way up to current.
My operation itself is in a river bottom. It is very sandy
soil. We call it blow sand. And if you had been standing out
there on Sunday, you would have had two pounds of it in your
eyes. But we have to protect that. We, on our outfit, can run
about 250 mama cows. I have one cow with a calf at her side as
of this morning, and the three bulls were loaded in the
trailer. And then I have seven fat steers to be able to put in
the freezer here in about a year. There is nothing there. But
we had to pull those cattle off to protect that grass. If I
don't have grass, I can't put cattle on it.
So we had to make that decision versus--and we can't afford
hay. There is all kinds of sad, sad things going on. But to be
able to put in place conservation-type practices so that we can
be sustainable when it finally does start raining, Congressman.
Mr. LUCAS. Bottom line, comprehensive farm bills where we
make sure we have the ability to produce and consume are
critically important. And in this farm bill, we have got to
address how to make the Federal inspection available to more
packers.
Fair statement, Brian?
Mr. JACKSON. Yes, sir.
Mr. LUCAS. I yield back, Mr. Chairman.
Chairman SMITH. Thank you, Mr. Chairman.
I would like to recognize the gentlelady from California,
Ms. Sanchez.
Ms. SANCHEZ. Thank you, Mr. Chairman. And I want to thank
all of our witnesses for sharing your perspectives with us this
morning.
Not every issue raised here is under our committee's
jurisdiction, but it is important for us to understand the
unique challenges facing each State. And there are certainly
differences between the communities that I represent in
Southern California and the native rural and urban communities
here in Oklahoma. But there is also a lot of common ground in
terms of the challenges that our small businesses are facing,
both in Oklahoma and in California.
Supply chain challenges have made life difficult for
businesses in both our States, and thankfully, in the last
Congress, Democrats were able to work with some of our
Republican colleagues to pass the CHIPS and the Science Act. We
have been talking for years about the loss of supply chains and
good-paying jobs overseas, and under the leadership of
Congressional Democrats, we didn't mindlessly hand
multinational corporations a massive tax cut that they didn't
need and that they didn't ask us for. Instead, we actually
delivered real incentives and the largest infrastructure
investment in generations to bring those supply chains back to
the U.S.
I would note that all five of my Oklahoma colleagues voted
against these critical investments in our Nation's
infrastructure. And I guarantee working families in both our
States share some of the same challenges trying to juggle
childcare and eldercare, medical expenses, and the paid time
off to deal with unexpected emergencies.
Once again, Democrats acted to take the pressure off of
working families. Under the American Rescue Plan, we expanded
the Child Tax Credit and the Child and Dependent Care Tax
Credit. I heard from countless constituents that the advanced
monthly Child Tax Credit payments finally gave them the
breathing room that they needed. And we didn't stop there.
Under the Inflation Reduction Act, Democrats delivered reform
to control the cost of prescription drugs, like capping the
cost of insulin at $35 a month. And in my State, most workers
can count on guaranteed paid leave. Of course, there are still
gaps in paid leave, and the expansion of the Child Tax Credit
sadly was only temporary.
But we know that these are policies that make a meaningful
difference for working families. These social programs are not
designed to avoid work. They just mean that workers don't have
to make those impossible choices between putting food on the
table and caring for their loved ones. Democrats delivered
critical steps to supporting working families, and we can't
stop now.
Ms. Kantz, could you please explain the economic impact
that a lack of affordable childcare has on families throughout
the State? And I am particularly interested in that because I
am a working mother, and I have had those struggles. They are
very real.
Ms. KANTZ. Yes. Thank you, Representative. And I also am a
working mother of three and was actually pregnant with my third
child when I started this position. And if it had not been for
my former boss, David Blatt, saying bring your kid to work with
you, I would not still be sitting in this seat. So I can
definitely speak to it.
I think the most immediate impact is the lack of affordable
childcare that--the most immediate impact the lack of
affordable childcare has is the access to the workforce. It is
going to keep parents home. The HHS guideline is 7 percent of
your income should be paid towards childcare. I think, right
now, it is about 16 percent for Oklahoman families. That is
huge if you have got two minimum wage earners working to head
up a household.
Then you get into a situation where you have to decide
between work and safety for your kid. Do I have affordable
childcare, or do I have cheap childcare that might not be as
safe for my child?
Ms. SANCHEZ. I am sorry. I don't mean to interrupt you. But
there is a statistic that six million women left the workforce
during the pandemic because they were primary caregivers either
to young children, aging parents, disabled children. We are not
seeing that number of women reenter the workforce. And what do
you think that that is due to?
Ms. KANTZ. I think it is that the majority of the people
who stay home and are choosing to stay home in the workforce
don't have a choice. They can't--they might not have a parent
at home who can help. They might not have a boss who says,
bring your kid to work. And I really do feel that it negatively
impacts women. The majority is women, of caregivers. They are
even impacted on their future employment opportunities because
there is a gap in their resume now.
Ms. SANCHEZ. So what steps should Congress be taking to
ensure that all working class families in Oklahoma have access
to quality and affordable childcare?
Ms. KANTZ. One of the things I think that was key to the
Child Tax Credit was the ability to receive the timing of the
payments. They were spread out. They were better able to manage
their money. They were better able to plan. There was some
consistency. It wasn't a one-time windfall to their income.
Ms. SANCHEZ. Thank you. I appreciate it.
My time is running short, but I just wanted to make one
last comment, which is, an earlier colleague mentioned real
Americans in the heartland. And I want to assure people that
the people I represent in my District are no less real
Americans. They are no less resilient. They are no less
hardworking towards trying to achieve that American dream. And
with that, I will yield back.
Chairman SMITH. Thank you, Ms. Sanchez. We are all great
Americans. Hardworking, great Americans.
Mr. LUCAS. And there is a lot of descendants of Okies in
California, too.
Chairman SMITH. Consistent with committee practice, we will
now recognize members on a two-to-one ratio.
I recognize the gentleman from Nebraska, Mr. Smith.
Mr. SMITH of Nebraska. Thank you, Mr. Chairman. Certainly,
thank you to our witnesses. I think a great perspective, a
varying perspective shared among our witnesses.
As a representative of Nebraska and a huge agriculture
District, it has been great to be here in an ag area of our
country where we get to help feed the world. I think that is a
task that sometimes we take for granted ourselves with the
production here in America. But with the fact that the world is
relying on us in so many ways, I think it is important that we
get it right.
If we look at the employee shortage, the worker shortage,
how that triggers the supply chain disruptions crisis, the
housing crisis, there are so many things we really need to talk
about, and obviously there is a diverse perspective here on
this at this table.
And I hope that we, as the American people and the
representatives, those of us more specifically, can have the
discussions that we need to have, where we can discuss the
economic needs of a country where the--the Broad Base Tax
Relief of 2017 was great for our economy, great for wages,
great for productivity, so that individual workers could
produce more because the world needs more. The growing
population around the world needs to eat, certainly, and we
need to be prepared for that.
I grow concerned that government payments are discussed in
a context without talking about inflation. And if you look at
2020, as painful as it was, I think it is important that we
look at that data because, in the spring of 2020, with the
onset of COVID, the economy tanked. Unemployment spiked.
Congress got involved on a bipartisan basis. Not in a perfect
way. It would be very interesting to litigate all of that. We
don't have the time to do that today. But Congress got involved
twice, basically, in 2020, in a bipartisan fashion.
By the end of 2020, the GDP was back to about even from
before the thriving economy that we had heading into COVID. So
a new administration came into the White House and insisted on
increasing and extending government payments. The President was
warned that it would trigger inflation. He dismissed that. He
pushed it anyway.
And so, you know--and other comments that have been made
across our economy, across our country, based on the type of
industry that you are involved in. I think the President thinks
less of people who are involved in the oil and gas industry,
and perhaps some other industries as well. And I hope that,
again, we can have the discussions we need to have, the debates
that we need to have. We shouldn't shy away from disagreement
either. Our country is founded on disagreement. But when you
look at the policies that need the discussion, I hope that we
can do that moving forward.
Mr. Jackson, my colleague--I believe your congressman--he
stole some of my questions relating to inspection. But I know
that it is important, especially as it relates to the Federal
Government, what you do. I would like anyone on the panel here
to discuss what you have done most recently to address the
worker shortage that is so acute.
Maybe, Mr. Jackson, if you want to start with that. What
you have done most recently to attract more employees.
Mr. JACKSON. One of our biggest challenges is just, being
in a small community having a small population, it is very hard
to find people with those skill sets. Most people that walk in
the door, we have to train them from the ground up. And so any
way we can incentivize people looking under a rock, wherever we
found people to work, the people who want to show up every day,
that is what it has taken.
So we have hired the whole gambit of different types of
people that you could imagine. Some of my best employees have
been former felons. And so they have had challenges, as
veterans do sometimes, in readjusting to society. But we have
had challenges with just keeping those people. But the number
one thing we have done is just searching for them and providing
the best opportunity that we can, a healthy environment that is
positive, and then not focusing on just the retaining, but also
on the growth aspect. How to help them in their work-life
balance and help them improve their lives for themselves and
their families.
Mr. SMITH of Nebraska. Anyone else? Briefly. I apologize.
My time is expired, and I know time is short.
Chairman SMITH. Go ahead, Mr.----
Mr. SMITH of Nebraska. I will defer to the chairman.
Chairman SMITH. Yeah. You were going to say something, Mr.
Mills?
Mr. MILLS. Well, you know, to me, the workforce--like I
said, I have been involved about 22 years. And, you know, we
have got two fronts that we have got to work on the hardest.
One is preparing our youth for a successful career. That is our
future. For now, it is getting people to come back to work. And
I know healthcare--I mean--I am sorry. Childcare has been an
issue for a lot of people. And, you know, they experience
workforce issues as well. That is why there is so many, you
know, less daycare facilities open because they can't find
workers.
You know, so we all are experiencing this. It is a huge
issue. And so, you know, what is it going to take to
incentivize people to come back to work and not stay at home?
You know, everything changed with COVID. People got used to
staying home. They were like, hey, I kind of like this. You
know, I got my office here, and I can take care of my kids, and
I can, you know, have all this free time, and I can work at
night or whatever. And there are a lot of people that don't
want to come back just because of that.
My business won't allow that to happen. I have to have
people in my shop every day to work. And it is harder and
harder to find those skilled workers. But, you know, a lot of
it is encouraging kids to actually seek a career and preparing
them for a career. And we do a lot of great things at
Workforce. We have got the individualized career and academic
plan here in Oklahoma and many other States that is actually
helping kids kind of develop a future for deciding what they
want to do after graduation. But those are issues that we deal
with. So I will stop.
Chairman SMITH. Thank you, Mr. Mills.
I would like to recognize the gentleman from Pennsylvania,
Mr. Kelly.
Mr. KELLY. Thank you, Mr. Chairman. And thank you for
holding this hearing. I think it is really great that we get
out of Washington, D.C. and actually get out into the country.
And look, I realize we are all Americans. It doesn't matter
where you live or where you work or where you raise your
children or anything else. Yes. That is true. That is true. We
are all Americans. I get it. But until you come here, you come
to a place where things actually have to take place as opposed
to creating a policy that may or may not work with one
exception that it will cost you a lot of money.
I want to hear more from all of you because the challenges
you are facing--I am in the automobile business. The number one
challenge we face now is finding talent. Not finding customers,
but finding talent. How do you take care of those people who
buy an automobile from you and bring it back because they need
it serviced? Well, you better have a tech. Right?
And where I live, people make a habit of hitting deer. And
only because, during the season, when they are riding, a buck
will go across any highway to get to a doe no matter what is
coming. But we can't find people to fix cars anymore. We can't
find people to do almost anything anymore.
So when I talk to businesspeople and businessowners--and I
want to tell you, the number one thing that I worry about in my
business is debt. Unserviceable debt is especially scary. I do
believe that, at some point in this current economy, this wave
is going to crest, and it is going to fall. And when it falls,
there are a lot of people that are going to fall with it
because of unsustainable debt.
Just to give you an example, last year, we brought in $5.0
trillion in tax revenue. Incredible. Incredible revenue. But we
went on to spend $6.5 trillion. So if we talk kitchen table
economics, that means a family making $50,000 goes out and
spends $65,000 and feels pretty good about itself until the
bill comes due.
Now, I don't know how you all handle what you have coming.
I don't know how we are going to handle what the 250 people we
pay every two weeks when we reach that point where the revenue
doesn't match the outgo. Reckless, reckless spending in
Washington, D.C. At the time, people thought this was great. It
was a windfall for a lot. It wasn't. It was just a deepening
tax burden.
So each of you, because there is 2 and a half minutes left,
the number one challenge you face other than talent. I don't
know where you are on the debt side of this and how much of it
worries you. I spend most of my nights waking up trying to
figure out what is going to happen next.
So, Mr. Jackson, starting with you. And you have done an
incredible job. You hired somebody to go out and figure out how
to hire other people. Where is the talent, and how do we get
it?
Mr. JACKSON. So I guess the best way to answer that
question is just, it has taken us just doing whatever it took
to try to stay ahead of the lagging accounts receivable that we
face as a small business. And so our biggest challenge is the
cash flow and being able to meet those obligations.
So having access to operating lines and things like that is
tough for a small business. But we are experiencing that no
matter what small business that you are. So I would say that
cash flow is our number one concern as a small business and how
to meet those obligations.
Mr. KELLY. Mr. Mills.
Mr. MILLS. I agree with that. You know, in this economy,
cash is key. And my dad taught me that. It is true. Having good
credit and having cash flow. That is how we have survived
through all these 115 years in business, is taking care of
business like that, and providing good customer service and a
quality product.
But right now, my greatest concern is that cash flow.
Again, with the supply chain, in order for me to control the
escalating prices that still continue today is I have to go out
and buy more inventory, outlay more cash. That money is just
sitting there on the shelf in the yard. And, you know, you have
got to pay for that. That gives you less money to go out and
develop new product, buy equipment, hire more people. It is a
negative impact on us.
And so we are just like everyone else. We see this possible
recession coming. Myself and my customers, we are all kind of
holding back, being a little conservative, not buying quite as
much, because when this thing does crash at some point--it has
got to crash a little bit--we don't get caught. We want to stay
in business. And so that is our greatest concern right now.
Cash flow probably will be the same for everyone.
Mr. KELLY. Ms. Payne.
Ms. PAYNE. Thank you. Something that I think needs to be
considered from the farming and ranching perspective is
whenever you are--during calving season, say your cows are
calving out in the spring, you are planning. You are looking
way, way down the line for your next paycheck.
In the cattle industry specifically, that calf crop is one
time. So it is great that those calves may bring 70,000,
100,000. That is your paycheck for the year, and it is way on
down the line. So it is a little bit different thought process
from my perspective.
Mr. KELLY. Yeah. That is future inventory.
Ms. PAYNE. Yes.
Mr. KELLY. Mr. Brevetti.
Mr. BREVETTI. Well, you mentioned about the lack of skilled
workers, and that affects all of us. And it is--it is probably
worth pointing out that you can get a loan to go achieve a
degree that you may not be able to find a job in, yet how do
you fund someone to become a welder? A truck driver? We have a
part ownership in a service company, and crane operators are
very difficult to find. And we are willing to put them through
a training class.
At the OERB, the Oklahoma Energy Resources Board that I am
on the board, we have programs that we believe address this by
starting with elementary education through middle school, high
school, college. We try to get out volunteers in the classrooms
to encourage people what we do in our industry so that they
will want to work in it.
And then on a college level, we provide scholarships along
with other groups here in the State such as the local Society
of Petroleum Engineers chapter and the API. We feel that, this
way, we can bring more people in. But we still do need to do
more.
Chairman SMITH. I am sorry.
Mr. KELLY. We have run out of time. Thank you, Mr.
Chairman. Also, Express Clydesdales, this is a great place for
us to come today. Thank you so much. It is a beautiful
location. And it is really good to get out of Washington and
get around real people who really have to produce every single
penny that they spend in addition to the taxes that they pay.
So thank you all so much, and God bless.
Chairman SMITH. Thank you, Mr. Kelly.
I do want to remind our friends in the audience as well, we
have clipboards right here for you to submit anything to the
record of information that you think we should know about,
issues that we are facing in the state of the current economy,
and also solutions that you think we should look at.
I would love to recognize the gentlelady from Alabama, Ms.
Sewell.
Ms. SEWELL. Thank you, Mr. Chairman. I want to thank our
witnesses for being here today and sharing your stories and
your perspectives.
I represent Alabama, and I can close my eyes and listen to
all of you speak and know that the folks that I represent share
many of your concerns. This hearing is about the state of the
American economy. Not the Democratic economy. Not the
Republican economy. It is the American economy. And you all
have reinforced that. It is about making sure that all of us
are vested. All of us are vested in the success of this great
country that we live in.
And that irrespective of your wealth, your race, your
gender, we all want to achieve the American dream. We may
differ on how we get there, but I think all of us want to
achieve the American dream.
You know, this month marks the third anniversary of the
COVID-19 break out. I think all of us know that it was a global
pandemic. It was not a hoax. A million people died. Folks in my
District that were of color who had chronic diseases died
disproportionately more often than others. But a million
Americans died.
And I think that no committee had a bigger impact on trying
to mitigate the downturn in the economy than the Ways and Means
Committee. And I am very proud of the fact that we were able,
if only for 1 year, to give a fully refundable Child Tax
Credit.
And, Ms. Kantz, I want you to talk a little bit about that.
I can tell you from the perspective of my constituents, I had
lots and lots of fathers, not just mommies, telling me how
important it was for that income support, especially during
that vital time. And it did lift people out of poverty. In my
District alone, it lifted 30 percent of the children out of
poverty for that 1 year. All because it was an increase in the
amount that was given. And as you rightly pointed out, it was
given on a monthly basis, not a one-time basis.
And so, can you talk to me a little bit about how that
affected your community? And if you could also talk to us about
how it affected the members of the Cherokee Nation and how
income support was vitally important during that time. And tell
us--because we came out of this pandemic stronger. This
economy--you know, 12 million jobs were created in the last 2
years. But, I mean, we obviously have things to do. But it is
about balance to approach and making sure that employer and
employee alike are prospering in this economy.
Ms. KANTZ. Thank you, Representative Sewell. As a member of
the--as a citizen of the Cherokee Nation, I definitely applaud
all the work that the Tribes have done. There are 38 federally-
recognized Tribes in Oklahoma. And they have truly been a
beacon of how to care for your citizens. They have definitely
stepped up and used the resources. And Cherokee Nation alone
has a 3 billion-dollar economic impact on Oklahoma. So a very
proud citizen here.
But I definitely think that the Federal Government would do
well to honor the sovereignty of those Nations and speak with
them and have the table equal for the Nations to speak to their
citizens needs individually and not as a whole.
And as far as the Child Tax Credit, not everybody has a
parent who can watch their kid. Not everyone can afford to work
fewer hours. Not everyone works 9:00 to 5:00 hours. How many
childcare systems do you know that are set up to support night
shifts? Our hospital workers, our doctors, where are they
finding their childcare?
If they don't have a community--you know, we talk about
having boots and pulling ourselves up by our bootstraps. I
wasn't born into a family that had boots. We got hand-me-down
boots. And we had a community in a village around us that
helped with those boots. What are we doing in Oklahoma? What
are we doing in America to ensure that we are sharing boots?
Right?
We really need to show up for the working class, our middle
class. We have heard about the wealth gap. It is real. It is
real. It is greater than it has ever been in the history of the
United States. And we really do need to show up for our working
class families.
Ms. SEWELL. You know, the other thing that you mentioned
that I thought was really poignant, is that my State did not
expand Medicaid. And frankly, we have seen lots of rural
hospitals close because we didn't expand Medicaid. And I think
that when you are going through a global health crisis, to not
have health insurance, to not be able to provide for yourself
and your family, just further undergirds what you were saying.
Mr. Chairman, I just want to conclude by just making a
comment and observation. We on the Ways and Means Committee,
because we have tax and trade and healthcare in our
jurisdiction, can use our tax code to really help working
families and entrepreneurs in small businesses alike--we would
do well to remember that we are all interdependent. What
happens to one of us definitely does affect all of us. And so
thank you. With that, I want to, again, thank our witnesses for
their testimony.
Chairman SMITH. I want to thank the gentlelady.
I recognize the gentleman from Arizona, Mr. Schweikert.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
Look, we have a country where we are borrowing, what,
$48,000 every second. And you will actually hear both sides
care. One side believes in subsidization. One side believes in
incentives. But we are all, in many ways, trying to get to the
same goal.
And forgive me, but in listening, did anyone actually hear
the obvious--at least one of the key obvious problems? I have,
you know, four over here saying you are desperate to find
labor. You know, people that will show up and work. And someone
that is concerned about poverty. I was just looking up some of
the data for your state, but it is true in my State of Arizona.
And it is uncomfortable to talk about, but we got to--we are
going to have to deal with it. Young males are dramatically
underperforming showing up in the economy. Something is going
on out there where they are entering universities in similar
numbers and graduating in many universities at half the rate,
or they are just not showing up to work. What is honestly going
on in our society?
And for those of you in the oil patch, you know, and the
meat processing, let's be honest. You don't need someone with a
university degree. You just need someone who shows up. If I
have millions and millions of young males who somehow
disappeared in our economy in the last couple years, what is
going on?
Mr. Jackson, your observation--I know you are in a smaller
community. And I represent an urban-suburban District. We have
fentanyl out of control. We have other things. What is
happening in your communities? Why this disparity of, we have
jobs, I don't have labor, but I also have data that says I have
a substantial number of these young males not showing up. What
is going on?
Mr. Jackson. From my perspective, I think a lot of it has
to do with people today thinking more about what they can get
instead of what they can give. And I think we, as Americans,
need to be reminded of--what built this country was people's
desire to be free from tyranny. And so we have to show up to
work. We have to roll up our sleeves and put the work in.
Mr. SCHWEIKERT. Okay. So you see a societal issue?
Mr. JACKSON. Yes.
Mr. SCHWEIKERT. Mr. Mills.
Mr. MILLS. I agree. And I think it all started with
participation trophies. You know, everybody----
Mr. SCHWEIKERT. Sometimes that was the only way I got a
trophy.
Mr. MILLS. Everybody is a winner. We don't want to hurt
anybody's feelings. I am sorry. There are winners and losers.
And it is okay to lose. I have lost. In business, you lose all
the time. I don't get every quarter that I quote, you know? Oh,
okay. We move onto the next one. And, you know, you just don't
take it personal. But that is where it started. It is a society
change. And it all starts from home.
And some of this, like I said, could actually work through
the school system for us, again, if we can get, I think,
business engaged in helping these kids, you know, really find
their purpose.
Mr. SCHWEIKERT. It is--look, we were in West Virginia a
couple weeks ago. And we have also been digging into some of
the data in my Phoenix area. And we have a genuine problem with
a number of young people, substance abuse, other things going
on. I don't know if that is permeated through this part of the
country. I mean, this is a moral imperative. You have a society
that needs people, but then people aren't showing up.
Ms. Payne, any theories?
Ms. PAYNE. Representative, I think more kids ought to be
forced to haul hay during the hot summer.
Mr. SCHWEIKERT. Yeah, yeah. When we walked through the
stables back there--I spent my childhood shoveling horse
stalls. I can smell that ammonia a mile away. And I am still
doing it.
How about in the oil patch, what do you see?
Mr. BREVETTI. We see a lot of the same thing. It is
difficult to find workers. You know, we have essentially what
we call the great crew change or the great retirement. So a lot
of our workers got to ages where, when the oil patch slowed
during the pandemic, they were out of work and said, well, we
are just taking early retirement or they were forced to take
early retirement. In the past, those workers were replaced by
the new crop. We don't have that number----
Mr. SCHWEIKERT. Well, we have--the baby boomers are
retiring.
Mr. BREVETTI. Yeah. Baby boomers are retiring. We don't
have as many coming up. But in the past history of our country,
we brought in immigrants on a legal basis and gave them a work
visa. We built this country with immigrants. My grandparents
were immigrants from Italy. We need to do more of this. Let's
not bring fentanyl across the border. Let's bring in people
legally who want to work.
Mr. SCHWEIKERT. Mr. Chairman, thank you for tolerating me.
Chairman SMITH. Thank you, gentleman.
As someone who hauled a lot of hay growing up, I love that
comment.
The gentleman from Kansas is recognized.
Mr. ESTES. Thank you, Mr. Chairman, for holding this
hearing outside of the D.C. Beltway. And thank you to all our
witnesses for being here today.
We are just a few short hours south of my home in Wichita,
Kansas. And it is great to have my colleagues here in the
heartland. You know, some of the folks and the D.C. bureaucrats
and inside on the East and West Coast call this flyover
country. But what we have seen here today, and many of us
already knew, is that folks in Oklahoma and Kansas and other
States here in the middle of the country are a more vibrant,
hardworking, dedicated, and patriotic people in America.
Agriculture is a major industry, and it is these men and
women who feed, fuel, and clothe our country and the world. We
are also home to a lot of manufacturers. In fact, just up I-35
in South Central Kansas, we call it the air capital of the
world. Here in Oklahoma City and throughout the Midwest,
organizations of all sizes are building planes, earth-drilling
equipment, ag products, and more.
In 2017, Republicans overhauled our outdated tax code to
benefit families, small businesses, and entrepreneurs. Our goal
was to make sure we got the economy going. And in fact, it
worked. What we have seen as well is that we have actually
collected more taxes.
So in 2022, just last year, we collected over 700 billion
more dollars in taxes than the Congressional Budget Office said
we would have done if we had not done the Tax Cuts and Jobs
Act. And businesses actually paid 12 percent more in 2022 than
they would have without the Tax Cuts and Jobs Act. It lowered
the rates and ultimately got the economy going, which meant we
collected more in taxes. And we have got the lowest
unemployment rates, both pre-COVID as well as post-COVID, just
because of having the economy going.
Unfortunately, some of those provisions that were put in
temporary place--in place temporarily are starting to expire.
And one of those that really has had an impact on a lot of
businesses is the median expensing of research and development
cost. It expired last year.
And I am working to reintroduce legislation that would help
restore this crucial tax program so that small businesses here
in the Midwest can continue expanding the research and
development, creating more good-paying jobs in the United
States. And this will help assure we have a strong economy and
a strong America.
Mr. Mills, can you tell us a little bit about the impacts
you have seen of some good tax policies on your business?
Mr. MILLS. They are absolutely critical. You know, I have
said a long time just about to every elected official I can
that, you know, just get out of our way and let us grow. Let us
develop new product. We want to be a leader in the world like
we used to be. Innovative. And here in Oklahoma, we are some of
the most innovative people because we are resilient. And, you
know, we know what it takes.
But having the benefits of some tax, especially R&D, I
mean, let's go make some new things. Let's develop. Let's be
leaders again in expanding our economy. And get out of the way.
Don't tax us. We are going to go out and create more jobs,
create more taxes, to help fund and help people that need the
help.
You know, being just even an elected official on the local
level, I saw where the tax dollars were going. I probably
became a little bit more moderate when I became the mayor
because I understood the poverty level in our communities and
the people that really needed the help because I saw those
agencies helping those people. So I know the need is there. But
at the same time, you can't choke business down in order to get
there. They are the people that are generating the jobs and the
opportunity and the taxes.
So let's look at this cycle. It is not very complicated.
But those definitely have helped us. And R&D is huge. So I
appreciate you doing that.
Mr. ESTES. Thank you. And, you know, with a decent tax
policy, we need to make sure we have good energy policy. I
mean, we are suffering now from rising prices. Not just gas
prices, but also heating a home and the impacts on businesses
and families. And a lot of us do the bad policies coming out of
the Biden administration to attack American energy policy.
And in fact limiting or selling off our strategic reserve
to countries like China. And then putting policies in place
like marginal wells and some of those restrictions on oil
production.
Mr. Brevetti, I know I am running short on time here, but I
did want to ask just a quick question about, what are the
policies you think would be useful in the United States to
implement to help restore and lower energy prices for American
consumers?
Mr. BREVETTI. Well, basically, we really need less
regulation instead of more. Between the EPA that was mentioned
earlier, we also have policies that have come down through
WOTUS, the Waters of the U.S., the fish and wildlife, where,
you know, the lesser prairie chicken and other endangered
species--they became deaths by a thousand cuts. And this has
become very difficult for many of us small energy producers to
work. The more oil and natural gas we can produce, supply and
demand, then the less it is going to be to the consumer.
Mr. ESTES. Look, thank you.
And thank you, Mr. Chairman. I yield back.
Chairman SMITH. Thank you, sir.
I would like to recognize the gentlelady from Wisconsin,
Ms. Moore.
Ms. MOORE of Wisconsin. Thank you so much. I don't think my
mic is on. Is it on?
Chairman SMITH. I don't think it is on.
Ms. MOORE of Wisconsin. Can I reclaim my seconds?
I just want to thank all of you. And, Mr. Chairman, thank
you for inviting us to this field hearing. I am from Wisconsin,
and so I share many of the experiences and concerns that you
Oklahomans have.
I just want to respond briefly to something that the
chairman said in his opening statement with regard to the
expiration of the standard deduction. I just want the panel to
understand that the reason that that is happening is because of
the construction of the tax cuts through the JOBS Act. The then
Republican majority decided to prioritize cutting taxes for
corporations, and they put in a provision that would make it
expire for the people. And so we'll see what happens with that.
I wanted to know from Mr. Mills and Mr. Jackson. I really
do respect the fact that you have kept this business going for
115 years, Mr. Mills. That is very impressive. I am wondering,
did you benefit from the corporate tax cuts from 35 percent to
21 percent in trying to meet some of your needs? You waxed on
about the inflation and the numbers of other problems that
you--I am wondering, did you benefit from that tremendous tax
cut?
Mr. MILLS. You know, I saw that question coming. And I
actually asked my bookkeeper, and he said, well, that would
have been beneficial if we were profitable.
Ms. MOORE of Wisconsin. If what?
Mr. MILLS. If we were profitable. So we were just really
getting by because of the cost. So we were really operating at
virtually a break even or slight loss. And so, unfortunately,
we didn't get to see the benefits of that.
Ms. MOORE of Wisconsin. Okay. So thank you for that. That
is just good to know.
You said that you hired some roustabouts. I looked that up.
I didn't know what that was. I thought you were talking about
my great-grandchildren. And that seems to be a very difficult
job. I mean, to physically--having to workforce division. And
that doesn't seem to be a job that, even 50 years ago, I
personally would have been able to do. Just heavy lifting,
digging ditches, holes.
So, when you--you know, so fortunately, we haven't raised
the--the minimum wage has not been raised around here. It is
still $7.25--offering $18 an hour, which is, you know, only
about 63 percent of the median income here in Oklahoma. How did
you arrive at that?
I was riding around yesterday with Uber drivers, and they
said, you cannot live here without a car and get to your job,
for example. The housing prices are high. We are talking about
men working now, I think. So, I am not even going to get into
childcare with you.
Did you think about some sort of transportation program or
housing assistance or anything, paid medical leave, any of
these supports for your employees to offset that $18 an hour
salary? Because after all, they can go work for Walmart as a
packer and make $29 an hour.
Mr. MILLS. We don't see much of that here in Oklahoma. I
don't know about what the Walmart people are--I mean, everybody
I talk to at Walmart are working part time with no benefits and
things like that.
Ms. MOORE of Wisconsin. Right. There is just sort of this
notion that people are just lazy and they don't want to come to
work. And I am just wondering, I mean, it costs money to go to
work. And if you don't have a car, how do you get to your job?
And then I heard that the jobs are, like, 12-hour long days. So
I don't know who picks up the kids from school. How does any of
that happen?
Let me ask Ms. Kantz some questions here. I'm talking about
the female employment. And you have already discussed the fact
that there is a very high 20 percent child poverty rate, which
concerns me. A very high incarceration rate among women here as
well. So, I specifically want you to talk about how the Earned
Income Tax Credit maybe does or does not void the plight of
workers, particularly single workers? I want you to answer
that, and then I want you to also talk about child poverty in
the State.
Ms. KANTZ. Thank you, Representative. For working families
with children, the EITC or Earned Income Tax Credit is a
powerful wage subsidy. It and the Child Tax Credit can offset
their payroll tax liabilities and additionally supplement their
earnings. The standard deduction, EITC, and Child Tax Credit
are set at levels that ensure that families with children don't
have net Federal tax liability if they earn poverty-level
wages.
Ms. MOORE of Wisconsin. Reclaiming my time. We have five
seconds left.
I just want to say that I was fact-checked once, and I want
to put it in the record, Mr. Chairman. People are--low-wage
workers are taxed into poverty because of the way the Earned
Income Tax Credit is structured.
Would you agree with that, Ms. Kantz.
Ms. KANTZ. I would.
Ms. MOORE of Wisconsin. All right. So I don't have much
time, but I do want to make sure that, you know--that this
committee revisits the Earned Income Tax Credit because it is a
great program for helping people get out of poverty if it would
actually do that.
So I would like, Mr. Chairman, to enter into the record
that fact check. And I also want to enter into the record
something very disturbing to me about the incarceration rate of
women in Oklahoma for child abuse. I mean, that includes not
having enough money for food, rent. And I am very concerned
that we are imprisoning women for being poor.
Mr. Chairman----
Chairman SMITH. Without objection----
Ms. MOORE of Wisconsin. I yield back.
Chairman SMITH. So ordered to put in the record.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The gentleman from Pennsylvania, you are recognized.
Mr. SMUCKER. Thank you. Thank you, Mr. Chairman. Thanks for
holding this hearing here.
My District in Pennsylvania is an ag district as well. We
have a lot more dairy cows than we have beef cattle, and a lot
of egg-laying hens, but agriculture nonetheless. And then
manufacturing as well. We like to call ourselves the snack
capital of the world, both salty and sweet. We are close to
Hershey's and Mars and many others.
But I was a small business owner myself from the time I was
17 years old out hanging drywall, and then I built a small
business that still exists today with several hundred
employees, a regional leader in commercial contracting. So I
see the power of an economy that provides opportunity for
people, and the power of jobs to provide opportunity for
people.
And in fact, I ran first for the State Senate and then for
Congress to really work--I had seen the growth of government
that really intruded in all aspects of our lives and made it
much harder for a 17-year-old to run a business. And I really
ran to kind of fight back against that, both at the State level
and then at the Federal level. So I hear what you are saying
and can relate to what you are saying.
And I think the ranking member made a statement this
morning that I think was important. And that is, we should be
able to have discussions about what really works best to lift
people out of poverty to help individuals achieve their own
American dream. And we have differences of opinion in how--what
is the best path forward. But we ought to be able to have these
discussions. So I appreciate everyone being here in the room
talking about this.
But it is pretty clear there is a difference in how we as
Republicans and how Democrats approach these issues. I think we
can agree that, you know, we are all thankful that we live in a
country--and to your point, Mr. Mills--that does help those who
really need help. And you saw that as mayor. And I have seen
that in my community, and I am grateful for that.
And then beyond that, we talk about, what is the best way
to lift people out of poverty? And I think, in general--and I
am very much overgeneralizing some of the things you are
hearing from the Democrat side today--rely more on government
than what we prefer to. We believe that--in the power and the
ingenuity of the American people.
Wouldn't you all agree, and I am just curious, the best way
to help people, lift people out of poverty, is to provide them
with a job and to connect them to the job? Do you all agree
with that? I see heads nodding.
Mr. MILLS. I agree. And, you know, I was just thinking that
same thing, when this question came out, that the path out of
poverty is a job.
Mr. SMUCKER. So how do we do that? Does the government
create jobs or do businesses?
Mr. MILLS. Well, you know, we have jobs. We need to help
them with skills. And they need to have some basic skills.
Mr. SMUCKER. Yeah.
Mr. MILLS. But just like, you know, what has been mentioned
here, a lot of times, we have someone with basic skills, and we
can train them to do--because every company is different. We
all do things a little differently. But we can help train them.
We also send some of our workers into CareerTech to upscale
their abilities. We have one of the best CareerTech systems in
the world, really. People come here just to study our
CareerTech system.
Mr. SMUCKER. I agree. And I am going to run out of time. I
want to make one additional point. And I appreciate your
commitment. Because it is a really important function to find
ways to ensure that individuals are prepared for the jobs that
are available today. Nothing better than lifting people out of
poverty than that.
The ranking member also mentioned the success of the
American Rescue Plan. And some of us believe that that created
the inflation that has hurt everyday Americans in a degree that
has been very, very harmful to families. And nowhere, I think,
than during the discussion of that bill was our difference in
approach more evident where the bill incentivized people to
stay home, which I thought was terrible to put people in a
position of earning more if they stay home. They had to make
that tough decision. I am going to stay home so I can provide
for my family.
Our idea was to provide a $1,500 incentive to have people
go back to work. What is your reaction to that? Do you think
that would have worked better than what we have now?
Mr. MILLS. I think that is a good start. I mean, you know,
we have got to get something to get them moving. And I think
we--I am trying to think if that happened here in Oklahoma. I
know we talked about it. I know our governor talked about that,
providing that incentive. I can't remember if it happened or
not.
But I think it worked because things have gotten a little
bit better since then. We still are struggling to find those
skilled workers. But, again, any incentive we can to get people
back to work, it would be welcome.
Mr. SMUCKER. Thank you. I am out of time.
Chairman SMITH. I thank the Representative.
I recognize the gentlelady from West Virginia, Mrs. Miller.
Mrs. MILLER. Thank you, Mr. Chairman, and Ranking Member as
well.
Thank you all for being here today.
I feel that policymakers don't always respect or truly
understand what job creators, business people go through and
the risk they take every single day when they open their door,
whether it is a glass door, a fancy wooden door, or a truck
door. You take risks every single day, and you care about your
employees, because without them you can't do a good business.
So I am looking forward to hearing more from you on your ideas.
Mr. Brevetti, thank you for being here. You know, the
independent oil and gas producers are so essential to securing
our American energy and our way of life. Without producers like
you, it would be much more costly for Americans to keep their
lights on and our cars powered.
The Democrats in Congress have consistently used the Tax
Code to discriminate against American energy producers, from
attacking deductions for intangible drilling costs to propping
up unreliable green energy through billions of dollars of
subsidies. Democrats have shown that they are more willing to
pick winners and losers.
Can you explain how higher taxes on America's most abundant
energy resources, like coal, oil and gas, impact the price for
our consumers?
Mr. BREVETTI. Yes, I can. Thank you, Representative Miller.
Every dollar that you pay in taxes is $1 less you are
investing into your business, and in our case, our business is
very risky. All ventures don't work. You are at the vagaries of
mother nature in the sense that when you--you put a dollar in
the ground you get $2 back, $3 back or you get none back.
So punitive tax codes do no good. We should be encouraged
to take these risks and invest the money, and the benefits are
twofold: There is benefits to the consumer, you know, the more
hydrocarbons we can produce in this country, the lower the
costs are going to be to the consumer; and the other benefit is
the tax revenues that are going to come from that.
And those tax revenues are going to come not just from the
production of the oil and natural gas and our business but from
the taxes that all of the workers pay that go into the hundreds
that are needed for every well that is drilled and completed.
Mrs. MILLER. Well, you know, President Biden, when he
decided to release millions of gallons of oil from the
strategic petroleum reserve in a failed attempt to artificially
lower our prices, how can small producers, like Charter Oak,
compete against the Federal government in pricing oil?
Mr. BREVETTI. That is on outstanding point and a great
question, because I believe the amount of oil released
initially was 180 million barrels, and then I think it was
followed up with another 23 million barrels this year. That is
over 1 million barrels a day. To put that in perspective, that
is about just almost 10 percent of U.S. production.
So it would have been--it was not for any sort of national
emergency. It merely affected the economy. It did temporarily
drive the prices down, but even if the strategic petroleum
reserves are never replaced, that million barrels a day of
production is off of the U.S. market. So now, the demand hasn't
changed, so us producers have to now come up with that extra
million barrels a day. That is probably going to raise the
price of oil to all consumers in the U.S.
Mrs. MILLER. And it will continue to do so.
Mr. Jackson, when you spoke, I am sitting here going, boom.
I enjoyed hearing everything that you had to say. I have a very
small farm near Milton, West Virginia, and I raise grass-fed
bison. At one time, I had as many as 100 animals, which is
pretty tiny to a lot of you, and we are down to about 30 now,
since I have been in Congress for the last 4 plus years,
because we just can't, you know, handle what we do. I still
warm the animals three times a year, and it is a three
generational thing. It is really cool to see my 13- and 15-
year-old grandsons finally strong enough to pull those gates
when those animals are, you know, trying to get through.
So you built your business during one of the most
challenging economic times our country has faced. Have things
gotten better or worse for you since you started your business,
and what is your biggest challenge?
Mr. JACKSON. I would say, our number one challenge is
definitely labor, and it was challenging. And speaking of
bison, that is why we had to reinforce our facility more just
so we could handle those bigger animals. It gets your
adrenaline going, working those, but they are definitely
majestic creatures.
I would say, if I could offer one idea though for how to
entice people to come to work though, it would be to offer them
hope. That is what we need as a Nation is for people to hope
that things can get better. And I think we owe it to each other
to share that knowledge of what we have learned so people can
walk in the door with zero experience. They can learn some
tangible, vocational skills, things that we had to learn on the
fly that we couldn't go to a school for and walk away with some
real skills they can use somewhere else.
And that is empowering for people to have that, to know
they have hope that they can make their life better for their
family. And then with that, we have to coach and mentor. We
have to have people grow in their jobs. And we look at it more
as not transactional, but it has to be relational. And we
benefit from that as a small business to see firsthand people's
lives, what they struggle with, and then help as best we can
from our vantage point to make their life better.
Mrs. MILLER. Thank you.
Ms. Payne, I do have to tell you that I processed all of
our animals. I was always in there when we did it. Thank you.
Chairman SMITH. I want to thank the gentlelady, and
recognize the representative from Michigan, Mr. Kildee.
Mr. KILDEE. Thank you, Mr. Chairman. Can you hear me? Okay.
And thanks to the witnesses for your testimony, to all of
you for your service to our country, Mr. Jackson, you in
particular. One of the great experiences all of us get to have
is to travel to West Point or to any of the academies and meet
the young people that we nominate to those institutions. And I
just want to say to you how much I enjoy that and appreciate
it, particularly appreciate your willingness to serve our
country in the fashion that you have.
You know, driving out here or riding out here on the bus,
it looked like I was in any part of my district. A lot of
folks, you know, have an impression about the district I
represent because of my hometown getting some of the attention
that it does. I am from Flint, Gwen. But most of the people and
most of the district that I represent looks just like the
country that we drove through. I have conversations just like
this one in my district every single week. I represent a lot of
growers, a lot of folks in agriculture, and I appreciate the
perspective that you bring, and it is an important one.
I also think, you know, the institution of Congress can do
better in terms of having civil dialogue. I wax nostalgic
thinking about Mr. Lucas when he was the chair of the
Agriculture Committee and how during that period of time,
despite the fact that we had differences, we were able to come
together on a farm bill that was good for Americans, good for
the American economy.
And I just hope that as we go into another year writing a
farm bill that we are going to be able to draw on that example
that you set, along with our friend from Minnesota, who is no
longer in Congress. That is an important statement.
And I just want to say that out loud, because listening to
the dialogue here one might get the impression that there is
two distinct un-overlapped philosophies of government. That is
just not true. We all have different perspectives, we come from
different life paths, but we have a lot in common, and we ought
to not allow our differences, as significant as they may be,
cancel our areas of agreement. And as I said, Mr. Lucas showed
that when he was the chair of the Ag Committee. I hope we can
find a path forward in that same light.
I would like to emphasize and ask Ms. Kantz a question. You
know, one of the challenges that we face, and I know this is
true here in Oklahoma, is that our Tribal Nations, sometimes it
is going to operate in two distinct spheres. There is an
impression over the last few decades that Tribal Nations have
done extraordinarily well. Well, that is not true entirely.
Some of the highest poverty rates, some of the most difficult
challenges around health, around income, around economic
disparity is found in Indian country.
One of the things that Congress has failed to do is to
create parity for our Tribal Nations when it comes to the use
of those tools of the Tax Code that do--I am sorry. I guess you
couldn't hear me. I won't start over, although I could. The
tools of the Tax Code, which is the mechanism for incentives
for private investment are not equally available in Indian
country.
Something as simple, for example, is the ability to issue
tax-exempt bonds the way every government pretty much finances
large infrastructure improvements, which is a key to economic
development, is locked away from those Tribal governments.
Other uses of the code regarding housing policy are not readily
available. And I wonder if you just might comment on how that
impacts the economy and what difference it would make if this
committee and Congress could get together, as Republicans and
Democrats now have expressed, and share those tax benefits with
Indian country.
Ms. KANTZ. Well, thank you, Representative, and I agree
with you. I think in any chance we get that we can put our
people over politics we should be doing that, so thank you for
those words.
But I think, just to be very blunt, we need to be talking
to our Tribal Nations. We need to talk to the 38 federally
recognized Tribes that are in Oklahoma and listen to them and
hear what the challenges are. Similar to, why is our workforce
not coming to work? Are we talking to them? Are we asking them
what is keeping you from work? So how would that participation
look for the Tribes.
This is a space where the United States should honor the
sovereignty of the Tribal Nations and have good-faith
negotiations to ensure that all parties can agree on equitable
approaches to strengthening economic conditions for not just
Oklahoma citizens and U.S. citizens but Tribal Nation citizens.
I have got dual citizenship as I sit here, as a Cherokee Nation
citizen and as an American citizen. And the Tribes do have a
huge impact on our economy, and it really has proven that when
we work together we are better.
The Tribes have very much--I can speak from personal
experience from the help with school supplies, the help with
housing, the help with healthcare that we have received, as for
my family for Tribes, it matters and it makes a difference in
Oklahoma.
And there is so much impact that these Tribes are having in
rural Oklahoma especially. I know the Chickasaw Nation, the
Cherokee Nation, they are really working to reach those folks
who are outside the metros that are struggling.
So I do think that we have to work together. We are all so
wonderful, smart, innovative folks in this room, and if we put
our politics aside and do what is best for just working-class
Americans that don't maybe have the privilege or the advantage
that we were born with or that we were provided, then we are
all going to do better.
Mr. KILDEE. Thank you.
Thank you, Mr. Chairman.
Chairman SMITH. Thank you, Representative.
I recognize the gentleman from Tennessee, Mr. Kustoff.
Mr. KUSTOFF. Thank you, Mr. Chairman, for convening us
here, and to all members who have appeared, and certainly to
the witnesses who are here with us today. I think we have
learned a lot so far from your testimony.
If I could, Mr. Mills and maybe Mr. Jackson, you have
talked about the challenges with labor. Mr. Mills, I think you
talked about the incentivizing or maybe the decentivizing, from
the hiring and retaining of employees, which are two distinctly
different things. If I could, Mr. Mills, maybe anecdotally, can
you tell the committee what you have heard from potential
employees when you tried to hire them and had trouble and maybe
also what you have heard when you have had challenges retaining
those employees?
Mr. MILLS. You know, one of the problems is getting them to
come to an interview, just showing up. I mean, you know, you go
out there and advertise or work with Indeed or whatever and
they make an appointment to come and they just don't show up.
Mr. KUSTOFF. Do you have an opinion why?
Mr. MILLS. No. I wish I knew, because, you know, you have
this--the job is clear, the pay is clear, and they just don't
show up. And then, you know, you try to get ahold of them, and
they just don't answer. So I wish I knew. I don't have the
answer for that, but, you know--so you just continue to--we
just keep going until you find someone that does show up, and I
don't have the benefit of that knowledge.
Mr. KUSTOFF. You had those challenges before COVID. Those
challenges have been exasperated after COVID. Is that fair?
Mr. MILLS. That is fair to say. We had some of that problem
before, but it has gotten way worse, and I don't know why. I
wish I knew the answer if we need to do something different. I
don't know what it is personally. So I don't have an answer. I
am sorry.
Mr. KUSTOFF. Thank you, Mr. Mills.
Mr. Jackson, what are some of the things you have heard as
either you have tried to hire employees and maybe they don't
take the job or they won't show to work and also about
retaining some of those employees?
Mr. JACKSON. The hardest thing I think, and I share in that
same frustration, is people sometimes have someone else come
pick up an application for them. They don't return the
application. If they do come to the interview, they don't show
up on their first day of work. So there is a series of
challenges that we have leading up to someone starting on their
first day, and I think that is attributed to just a lack of
desire on the part of people to put the work in that is needed
to actually show up to work.
And we have even had some employees that they have left on
their own accord, they have quit, and then a week later I
receive a call from the organization asking about SNAP, EBT
benefits, because the person says they were terminated instead
of quitting. So I deal with that often, in addition to issues
with child support of delayed payment because of a lag, and
those agencies knowing where people are. And so I handle a lot
of paperwork in terms of helping them try to play catchup with
that, so there is a lot of different things that we deal with
that are outside of the actual production of work.
Mr. KUSTOFF. Thank you, Mr. Jackson, and thank you for your
service to our Nation.
Ms. Payne, if I could with you, I would like to follow up
maybe in a different way from what Mr. Lucas asked you, and
that is about waters of the U.S. You testified about that in
your testimony. You are speaking to the Nation. This hearing is
being broadcast. You are obviously speaking to people who live
outside of rural America. Can you talk about, from your
standpoint as a rancher, as a grower, what the practical,
pragmatic effects of the waters of the U.S. would be if
implemented, how that affects you and other ranchers and
growers?
Ms. PAYNE. Thank you for the question. I can speak
specifically to our operation. Our southern border of our farm
ranch is a river, the South Canadian River, easiest place in
the world to find. Most people drive by it on a regular basis.
I am in Oklahoma City limits. We have a ditch in the front of
our--in our yard. Now, it is dry. When we flooded, which is
what brought us out of the last drought over 10 years ago,
water, water everywhere.
It will affect everything that we do from a sprain, which
we haven't been able to do, low lying areas. Our soil has
changed during this drought. It changes every time. Water will
stand where it wouldn't have stood before. There is nothing
good that comes of this, in my opinion.
Mr. KUSTOFF. Thank you. My time is expired. I will yield
back. Thank you.
Chairman SMITH. Thank you, Representative.
I would like to recognize the gentlelady from New York, Ms.
Tenney.
Ms. TENNEY. Thank you, Mr. Chairman, and thank you to the
witnesses. This has been tremendous.
And I just want to follow up on something that Mr. Hern
said. He said that--how many people talk about things they
don't know about, and I want to add that as a small business
owner, how many of these people don't even try to find out the
answers.
And so I thank the chairman for doing this and hearing
directly from you about what your issues are as small business
owners and the struggles that you face. And my business was
started 77 years ago by my grandfather.
And we have similar issues in New York, but I will tell
you, if you want to know about killing prosperity, this story
of New York is how one party, Democrats, socialists rule,
destroyed the State of New York. And I say that for a reason,
because this isn't the days of Reagan-O'Neill that we once
enjoyed as a country. There is a certain element in New York
State particularly that is hurting our country and hurting our
State in terms of regulations.
And I agree that there is a middle ground. We do need--and
the mayor, thank you for saying this. We do have to care for
the truly needy people in our communities. That is an
obligation we have, and it is something that we all have a
mission to do. But there is a middle ground between are we
helping, hurting, and are we hurting our small business owners
and our taxpayers.
And so I like when you said, when you were asked the
question, how are your profits. That is a huge question in New
York. Most of us don't have any profits. Boy, would I love to
have profits. The only problem is when you get profits you
issue dividends and you get taxed twice, so that is something
that I haven't had the joy of experiencing.
But I wanted to just go back and just ask you a little bit
about dealing with some of the issues as an employer, and I
wanted to actually start with Mr. Jackson and go down the line.
We really appreciate your service. West Point is wonderful in
New York. My son is a Naval Academy graduate, so I appreciate
the rivalry, but wonderful institution as well. So thank you so
much for your service and honorable service.
But, you know, in terms of small business, you mentioned
something, and this is something that when I go back to whether
it is entitlements, one of the issues we face as an employer is
many of our employees, our boomers who are coming back to work
and many of them are already getting some kind of public
assistance, so they are asking us to actually pay them less or
to get less hours so that they can continue to work. Is that
something that you are facing in your business, Mr. Jackson?
Mr. JACKSON. I am sorry, could you phrase the question
differently so I can understand what you are asking?
Ms. TENNEY. Yeah. Are you having employees come in that
don't want to work as many hours and are reaching a limit where
they would not be eligible for some of the entitlements they
may be getting, maybe in the case of seniors who are collecting
Social Security don't want to, you know, impede or impinge on
their Social Security or other people are receiving other types
of benefits because they don't want to get to that level?
Mr. JACKSON. Absolutely, we have seen that.
Ms. TENNEY. Okay. How about Mr. Mills, with your
organization?
Mr. MILLS. Yeah, we have seen the same thing. And, you
know, my greatest--I have people ask me all the time--I am at
retirement age, and they say, well, when are you going to
retire? And I said, and do what? I like what I do. I am not
just going to sit at home and die. I have to be doing something
constructive.
My greatest fear is the employees that I have that have
been with me 30 years, and I have many of those, 25 and 30
years, I am really more worried about them retiring. So I am
doing all I can to work with them to keep them. They are my
brain trust. And so these are concerns, because you have to--
you know, I am on--you know, I have had to already apply,
because I am 66, I will just tell you. But----
Ms. TENNEY. You don't look it.
Mr. MILLS. Thank you. I am concerned about my employees
really facing those same things of not being able to make as
much money in order to draw their Social Security. And so it is
a concern, and it should be a concern for a lot of people in
the workforce because these are people we depend on. They have
so much experience.
Ms. TENNEY. Thank you.
I.am going to reclaim my time because I want to save a
question for Mr. Brevetti. All great witnesses. But, you know,
Joe Biden said in his State of the Union address that we only
have about 10 years left of fossil fuels. I would like you to
address what that would do to the economy since there are a lot
of taxes on gas and other things that fuel our economy, run our
infrastructure, our transportation. But also, would your
community benefit most from a tax credit to help buy an $80,000
luxury electric vehicle or from policies that reduce gas
prices? Can you kind of hit those two--two-sided question
there.
Mr. BREVETTI. Well, I will address the first question about
Biden's 10-year comment. Even the most liberal energy policy
group, which I believe personally is the International Energy
Agency, okay, the IEA, I think they show us using almost the
same amount of oil in 2050 as we are using today. It kind of
continues to rise little beaks and drops.
So oil is not going away. Its products are used in so many
things besides for transportation, you know, tires on vehicles.
Natural gas, of course, has so many other products. Fertilizer
for our farms. I don't see us running tractors out of anything
other than diesel, and if you are going to mine lithium and
strategic metals, that is all going to be done with equipment
that is going to be using diesel most likely. So I don't see
that going away.
In the aspect of renewables, when the wind quits blowing,
which it occasionally does in Oklahoma, you have to immediately
come on with a backup power supply. So for every megawatt of
wind you have got about an equivalent megawatt of natural gas
combined cycle turbines that spool up. So that is not going
away.
To the aspect of your second point on the electrification--
--
Ms. TENNEY. Tax credit for an $80,000----
Chairman SMITH. We need to wrap it up.
Mr. BREVETTI. Yeah, tax credits for $85 dollar bills, yeah,
the people who buy those are wealthy. They don't need a tax
credit. And, you know, in much of the country the world will
electrify and is, but in much of the country it is not there
yet. You know, you couldn't drive across the State of Oklahoma
and not even to mention----
Chairman SMITH. Thank you all very much.
Ms. TENNEY. Thank you so much. I yield.
Chairman SMITH. Mr. Schneider, you are recognized.
Mr. SCHNEIDER. Thank you, Chairman Smith. I thank you and
Ranking Member Neal for this opportunity to talk about the
state of the American economy and how we are trying to help
American businesses flourish and the American economy continue
its strong growth.
I also want to thank the witnesses for offering your
testimony on what workers and business owners need to thrive in
this modern economy. Many of the things we have talked about
today are echoed with what I hear from my home district in
Illinois. And personally, I am excited to be here in Oklahoma.
Much of my father's family traced their roots to this State.
Having worked on a horse ranch in Colorado 40 years ago, it
feels like coming home to be in this building.
I only wish we could have been here longer, had time to
explore and learn and understand both the challenges and
opportunities that the hardworking people of Oklahoma are
pursuing and do much. That said, we all talk about government
spending, and I wonder if spending a few hours in a rather cold
room without time to actually tour the area or to meet and
speak directly with the people is our best use of public
precious resources of taxpayer funds.
Mr. Chairman, I would like to submit for the record an
article from the New York Times talking about the impact of
these road shows on committee budgets.
Chairman SMITH. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. SCHNEIDER. Thank you.
And, Mr. Mills, I started my career in the oil and gas
industry back in the mid-1980s, early 1980s doing accounting
software. I very well understand the boom/bust cycle. I
remember the bust of 1986. I wouldn't want to ever experience
that again. And that was, I would argue, one of the toughest
times this industry ever faced.
But I later spent much of the last 30 years afterwards
working with private businesses advising mostly family
businesses. I know that only one in three family businesses
make it to a second generation, one in ten to a third. The fact
that you are still in business after 108 years is really
extraordinary and to be celebrated, and I wish you--or 115
years, since 1908--a lot there.
I also know from my experience that there are four key
factors that businesses depend on for growth. One is a business
model. Government has no role in that. That is up to each of
you to decide the best model. But beyond that, it is access to
talent, it is access to capital, and it is a stable business
and political environment. Businesses thrive when they can make
long-term decisions to make decisions into the future,
confident that they are not going to see the pendulum swing, in
particular in government, whether it is at the State house or
in Washington.
That said, we also hear, and everywhere we go I am hearing
about the challenges with labor. You all have touched on that.
Every company I talk to, small, medium, large size, high-tech,
the service industry says we are having a hard time finding
people. And this is something we have seen over the last--more
than 2 decades, a decline in workforce participation and people
coming there.
There are things we can do. We need to educate our
workforce. We need to make sure we have workers coming up. And
I think the government does have a role in that. In particular,
I applaud in my district the community colleges, College of
Lake County is one example that is working very hard to do
that, but we can promote that training.
In the coming days, one of the bills that I have been
working on and will reintroduce is the Veterans
Entrepreneurship Training Act.
And, Mr. Jackson, thank you for your service. My son is a
Navy veteran. I represent Naval Station Great Lakes, so every
recruit going into the Navy comes through my district, so I am
in every way possible a Navy dad.
Our bill codifies and expands the successful Boots to
Business program offered by the Small Business Administration.
This is a program that provides entrepreneurship courses to
people coming out of service, transitioning back into civilian
life. And I am proud to be working across the aisle with the
Small Business Committee Chairman Roger Williams in introducing
this, and across the Capitol with Senators Durbin and Ernst in
the Senate.
So, Mr. Jackson, I will turn to you. You served our country
heroically. You came back. You are working in your community.
You are making a difference. You have talked about the ups and
downs, both personal and business. And you are working as a
career coach with Federadi.
Can you share a little bit about your experience, what you
have learned and what you wish lessons you could have been
provided along the way, and how some of the challenges the
veterans you are working with, what they face and how we can
better export them.
Mr. JACKSON. I appreciate that question. I know we are
short on time, but there are three things that I would want to
highlight there. One is, I wish I had known when I was
transitioning that there were more things available for people
who wanted to start a small business. Most of what we were told
about was vocational type training that was available.
So I would recommend maybe in partnership with the VA
maybe--in partnership with the VA, maybe working with different
ways to allow veterans to know what is out there, either
vocational training to be a good employee or to start a
business, so they know what tools are able to help them succeed
outside the military.
Another way might be to have small business loans that
would help with operating capital through SBA. That would be
another helpful way.
And then we also have existing organizations that do a
great job, Veterans of Foreign Wars, American Legion, things
like that that are in place right now at no cost to veterans
that are very helpful.
Mr. SCHNEIDER. Great. Thank you. And, again, thank you for
your service.
Chairman SMITH. I want to thank the representative.
I recognize the gentleman from Utah, Mr. Moore.
Mr. MOORE of Utah. Thank you, Chairman.
Mr. Mills, as a father of four boys, 10 and under, I want
to say how much I appreciate your comments about participation
trophies, and wondering if you would be interested in a little
league coaching job in northern Utah by any chance. I
appreciate that, and I like that sentiment about labor.
I commend my colleague from Wisconsin for asking a very
skilled and somewhat risky question to one of the majority
witnesses. I am going to do the same risk by asking a question
to the minority witness here, Ms. Kantz, and hope to see--I
appreciated Mr. Mills' candor and hope the same from you as
well. Would you say that you are at least, you know, supportive
of the 2017 provision that doubled the child tax credit?
Ms. KANTZ. I would, yes.
Mr. MOORE of Utah. Thanks. So my point with that is, 2017
Tax Cut and Jobs Act, I was way on the sidelines, nowhere near
Congress at the time. And I saw it, and I didn't know all of
what to think about it. I wasn't dug into the details on it. It
didn't fix a lot of our spending issues, but what it did was
grow our economy. And is any bill in Congress perfect? No. But
that bill grew our economy, and it strengthened, I believe, the
American workforce.
And what we have seen since then--and I remember saying
this when I was on the campaign trail in 2020, which was not a
fun time to run for Congress. Hopefully it is the only time I
ever have to first run for Congress. But as COVID was starting
and ramping up, I remember saying to folks, we have the bones
of a strong economy and will recover quickly from this. And I
firmly believe that the 2017 Tax Cut and Jobs Act was a strong
reason why we were able to bounce back, right.
We had Republican majorities with the White House in 2017;
Democrats had the same in 2021. We do our priorities, right,
and we try to get things done. We have a sincere effort, right.
I will obviously, you know, lean towards a conservative point
of view, and when those majorities existed that is what my
focus is on.
But we right now as a committee have an opportunity to do
something that I appreciate Chairman Smith's focus on and that
is small business. And many of these tax provisions are set to
expire, you know, have already expired, and we are working on
figuring out what is the most important thing to do and what do
we need to do to make sure that you all, many of you small
business owners, have what you need to thrive.
So I would like to submit for the record, Mr. Chairman, a
statement by Darrell Wilkerson, the owner of Wilkie
Manufacturing, LLC, in Oklahoma City, Oklahoma, describing how
soaring costs, supply chain issues, and labor shortages have
severely hurt small businesses' ability to operate in today's
economy.
Chairman SMITH. Without objection, so ordered.
Mr. MOORE of Utah. Thank you.
I have one simple question, and I am going to ask all of
you to respond to it: What would you have us focus on with
respect to making sure that your small business could thrive?
What is one, maybe two things, just topically, and we will dig
into the minutia of the tax provisions and all that, but what
would you have us focus on?
Mr. JACKSON. I would say, being a new business, the biggest
help we could have is probably better access to operating lines
of credit for our cash flow situation. And then beyond that,
just help us feel more empowered so that we can focus on
helping our employees grow and bringing in and retaining that
top talent, not worrying about how to pay our bills and things
like that, but instead focusing on how we can make other
people's lives better, the people we bring in the door, and
help them then impact the community.
Mr. MOORE of Utah. Coach.
Mr. MILLS. You know, I raised two girls, so I didn't have
to worry too much about little league stuff, so it might be
kind of new for me. Although, I had my first grandson, so I may
be getting involved in that. Thank you.
You know, everything, again, for me focuses back on
workforce, because that is kind of what I have been involved in
for a long time. And, you know, anything that you guys can do
to continue to support the Workforce Act, you know, that is
good Federal dollars that come down to the States and actually
go help people, up-skill, you know, and relocate, you know. If
they are dislocated workers, they are able to be relocated into
jobs. But that is one of the great programs, I think, that
continues to work here. So I would encourage you to continue to
develop those programs and workforce.
Mr. MOORE of Utah. Thank you.
Ms. Payne.
Ms. PAYNE. Yeah. Just watching the time, I would mirror
their comments but also just minimal regulation. Let us work,
let us create, let us prosper.
Mr. MOORE of Utah. Mr. Brevetti.
Mr. BREVETTI. Agree with the other comments, and, you know,
please let us deduct our expenses when we spend them. You know,
let's preserve the EIDC.
Mr. MOORE of Utah. Ms. Kantz.
Ms. KANTZ. I would dig into the barriers keeping people
from work. What are we doing to get them to the job, and are
they jobs that are going to be able to pay the bills?
Mr. MOORE of Utah. Thank you.
Thank you, all. Mr. Chairman.
Chairman SMITH. Thank you, Representative.
I recognize the gentlelady from California, Ms. Steel.
Mrs. STEEL. Thank you, Chairman Smith, for this important
field hearing to learn more about the state of the American
economy. Thank you for our guests for taking time away from
their busy jobs to discuss how they have been dealing with the
economic downturn for the last 2 years.
I represent southern California. California farmers and
other small businesses have been facing supply chain issues and
port delays raising production costs, including higher expenses
for fertilizer and fuel, mega drought, and now unusual weather
events. My congressional district has a front row seat to the
port backlogs, which at its peak witnessed more than 174 idling
and anchored ships off the southern California coast. I
introduced the Supply Chain Task Force Act that would create an
interagency task force to immediately work on addressing the
backlog, and this was included in the NDAA.
I want to ask Mr. Mills and Ms. Payne, many families that
run businesses in my district have shared the concerns with the
future of their businesses. California progressive regulations
have made it difficult for them to succeed. I always tell
everybody, whatever you do exactly opposite of what California
does, you are going to be successful. What obstacles are you
currently facing and expect to face if we stay on the current
track?
Mr. MILLS. If we stay on this current track, we are going
to survive but we are going to be impaired, and it is going to
be difficult to grow. You know, I just can't explain how
painful the price increases have been and how hard it is to
sell product, and especially worldwide to sell that product,
you know. And, again, all this, to me, still goes back to
workforce, because everyone down the supply chain has the same
problem.
So to me it is really simple about supply and demand. You
know, we have still great demand but less supply, so the prices
are going to continue to go up. And despite the feds continuing
to raise the interest rates, the pain has evidently, pain
threshold has not been reached yet, I suppose.
But we are going to see continued problems here because of
these escalating prices. At some point, we are going to hit
that tipping point where my customers are going to say, I am
not paying that and, you know, then things are going to stop,
things are going to crash. And that is where I see us going.
Mrs. STEEL. Ms. Payne.
Ms. PAYNE. Thank you. The farm that we are so proud of,
that has been in our family for 5 generations, is not good for
anything but what it is being used for, and that is growing
grass for cattle. The portion of the farm that is certified for
agritourism is on a bluff, and we could actually grow something
there, fruits and vegetables.
What we are seeing though and what concerns me, we provided
a food source by growing crops for fruits and vegetables with
this agritourism venue so that there is fresh, wholesome food
in our community. If people can't afford to buy that, it
doesn't matter if we grow 70,000 acres of it. And that is a
real concern for me with the cost of everything--I mean, my
input costs are going up. We all shop at a grocery store. And
what happens when we can't afford to put food on our tables? It
doesn't matter what I grow, I can't give it away.
Mrs. STEEL. Thank you. Related to that, I hear a lot about
workforce shortages from my constituents. How can we, the
future generation, develop skills and succeed in the workforce,
and how are you going to bring them back? Because, you know,
right now they are always asking for flexible hours, more
money, and they are not ready to work. I am not talking about
everybody. I am talking about those people that we try to
interview and try to bring them in.
You know what, I am a first-generation Korean American, I
used to work 18 hours a day, and I still work 7 days a week and
more than 12 hours a week--I mean a day. So what challenges are
we seeing and then how to fix it?
Mr. JACKSON. I appreciate you mentioning being Korean
American. I had many classmates from West Point who were first-
generation immigrants from Korea who were representing their
family well with a lot of dignity and honor.
Mrs. STEEL. Thank you for your service.
Mr. JACKSON. Thank you. I would say, there is two things as
a veteran that I learned that would help people be better
empowered to be better employees: One would be discipline, and
the other would be extreme ownership. So with discipline, it is
seeing the job through with quality and consistency. And as far
as ownership goes, whatever you see you own. And as a business
owner, I have learned that everything that goes wrong is my
fault, either failure to communicate or to train my people.
Anything that goes well is the result of them doing a great job
as a team.
Chairman SMITH. I want to thank the gentlelady.
Mrs. STEEL. Thank you. I yield back.
Chairman SMITH. Thank you.
I recognize the gentleman from California, Mr. Panetta.
Mr. PANETTA. Thank you, Mr. Chairman.
Appreciate that, Ranking Member.
Mr. Hern, Mr. Lucas, thank you for this opportunity to be
here in Oklahoma, in your State. I appreciate that.
Again, my name is Jimmy Panetta. I come from the central
coast of California, where we do have a lot of beauty as you
can imagine, but we have also got a lot of bounty. Agriculture
is my number one industry in that area. In fact, with
redistricting I actually gained the largest cattlemen's
association in California, in northern San Luis Obispo County.
And then of course, we have our specialty crops. So I am
hearing a lot of the same concerns today that I hear in my
district, obviously especially when it comes to water and
workers.
Now, I have got to say, we don't hear much about oil and
gas in my district. And when it comes to regulations, let me
just tell you, the people in agriculture in my State would
think of Oklahoma as Disneyland, okay. Let me just make that
clear, all right, so take that for what it is worth.
Now, obviously when it comes to the two issues that I hear
most about from my ag people, water and workers, you know,
technology is playing a big part in that. Obviously with water,
we are seeing that when it comes to recycling and recharge and
even diesel to a certain extent.
And when it comes to workers, it is obviously trying to
replace not labor but the lack of labor. Now, be it COVID or
preCOVID, that has always been the number one issue, especially
with my specialty crops, and how difficult it is to replace the
human discernment when it comes to actually bending over,
looking at a strawberry plant, and deciding what is an
aesthetically pleasing, safe, ripe, and clean strawberry and
actually taking the time and technology to pack it in a clam
shell. Technology is just not there, so you need humans to do
that type of work, especially right now. Maybe 1 day we will
get there, but not right now.
Now, fortunately we have people who are willing to come to
this country and do that type of work. Let me tell you, no
American is doing that type of work. They are just not doing
it. And therefore, we need the same people that have come
throughout the history of this country to come here to
contribute here, to work here, and to ensure that basically we
continue to go forward and be that number one agriculture, not
just State of California but number one agriculture producing
nation in the world.
And so obviously, it is this reliance on foreign workers to
do that type of tough work is what it has come down to. And so
I was wondering, I hadn't heard much talk about that in your
lines of work. I mean, do you have foreign workers who are
coming in and filling those tough jobs that no Americans are
willing to do?
Mr. Mills.
Mr. MILLS. You know, we do, and of course, I see more of it
in the construction industry around me. And I actually have a
friend that runs a--he is construction and he does lawn care
and things like that, and he has mainly Mexican workers. But
they all come in legally and, you know, send money home and
whatever. But, you know, personally I think that we need to
bring more immigrant workers in, legally is the key though. I
welcome, you know, hey, if you will come in and be productive
citizens of our society, pay your share, welcome, open the
doors.
Mr. PANETTA. Right. Mr. Mills, are you familiar with the H-
2A system?
Mr. MILLS. I am.
Mr. PANETTA. Okay. And would you encourage an increasing of
that system?
Mr. MILLS. I would. I think it is a good program.
Mr. PANETTA. All right. Thank you.
And then, Mr. Jackson, obviously in your line of work you
rely on foreign workers?
Mr. JACKSON. We do not. And most of our work is done by
hand, so I would be in favor of anything that would help
increase automation to better train those employees, but also
to help us be more efficient as the large packers are able to
do.
Mr. PANETTA. Understood. Thank you.
Let me just pivot over to Ms. Kantz. Obviously, Mr.
Schweikert alluded to this in his questioning in regards to
some of the issues keeping people out of work, and that being
opioids. It is, you know, what I has caused, I think, what now,
80,000 lives in 2021. So, Ms. Kantz, you know, when it comes to
opioids, I know that in my district they want to increase
access to medication-assisted treatment, specifically,
Buprenorphine, also known as Suboxone. I know a lot of my
doctors have asked for that. How does access to that
medication-assisted treatment impact communities in Oklahoma,
including the workforce?
Ms. KANTZ. I think any time we can help our workforce
access care, any type of care that they need, I don't think it
is our job to regulate what care they are getting within the
doctor's office. So I think anytime they can access that care
we are supportive of it, and I do believe that there is some
mental health pieces there that need to be lifted up, that
there is a lot of--there is a lack of care in Oklahoma
specifically around opioids and substance abuse.
Mr. PANETTA. Thank you. I yield back.
Chairman SMITH. Thank you, Representative.
I recognize the gentleman from Iowa, Mr. Feenstra.
Mr. FEENSTRA. Thank you, Chairman Smith.
And I want to also say thanks to Congressman Hern and Lucas
for having us here in Oklahoma. This is quite an amazing State.
I also want to thank our witnesses, and your testimony is
very impressive.
In 2017, we passed a significant Tax Cut and Jobs Act, and
it affected virtually everyone in the heartland. When I talk
about the heartland, I talk about Oklahoma, I talk about my
State also, Iowa. You know, we are the bread basket to the
world, and it goes somewhat unnoticed. You know, I never hear
from President Biden about, well, all the food that we are
creating and that we are exporting, and yet we do it and we
work hard, and we are very happy about doing these things.
In that Tax Cut and Jobs Act, section 199(a) allowed
farmers and small businesses to take a deduction, up to 20
percent of their qualified income. This is very significant. It
allowed small businesses and farmers to compete on the global
stage.
And so, Mr. Mills, I want to ask you a question. In your
testimony, you noted when you are able to negotiate lower
prices for materials you pass these savings along to your
customers. How about when the government helps and gives you a
tax reduction, is that the same thing? Does that apply?
Mr. MILLS. Yeah, I would think it would apply. You know,
and it is--to me, of course, my best investment is my business.
So any advantage I would get would be invested back into my
business to hire more people, develop new product, and, you
know, that is how we would, you know, use an incentive like
that.
Mr. FEENSTRA. So what you are saying is, it goes two ways.
When you lower taxes you can either pass it on to your customer
or you can grow your business as an investment. Is that a fair
statement?
Mr. MILLS. That is fair. And the statement I was making
there was, as we see--you know, it is actually interesting that
almost everything has gone up with our bar material and tube
material. Just recently we have seen a reduction in steel
plate, and so that's a big part of what we buy. So we are going
to readjust our pricing back down to be more--to make our
customers more competitive. And, you know, if things go up,
they have to share the cost; if things go down then, you know,
we go down too. We don't just say, oh, we are going to make
more money.
Mr. FEENSTRA. That is exactly right.
Mr. MILLS. We don't look at it that way.
Mr. FEENSTRA. Exactly. Thank you for those comments, Mr.
Mills.
Ms. Payne, as you know, you are a part of the farming
community, just like I am in Iowa. Nine out of every ten
farmers are small businessmen and women. We are either LLCs,
partnerships, you know, sole proprietors, S-corps. We are not
big corporations, right. We are small. So how does--when I
start talking about tax reduction 199(a), where you get a 20
percent deduction on your qualified business income, how does
that affect you? And by the way, it is going to go away. It is
shocking, but in 2025 it is going to sunset. So how does the
uncertainty affect you when you see something that you have
today, but it is going to be gone tomorrow?
Ms. PAYNE. That is a very fair question, and I think there
is more and more of that. As I mentioned earlier, a lot of
times, especially in cattle industry, we are working for one
paycheck. We will get that check once a year. And so we are
always looking further on down the line.
Like right now, I don't have anything at the house, but I
am planning for 3 years from now--hopefully we will have
pasture--about what I can stock that place with. Within that
planning is also going to require some financial management, so
we like to be able to count on certain things. I can't discount
my livestock. This is not a cash sale like that, but I want to
be able to plan to be able to buy overhead bin or any of the
tractors, any of the things that I would need.
Mr. FEENSTRA. Taking away from that, Mr. Mills, if you
could further expound on that. You know, right now we have a
thing called 139 depreciation, which you can fully depreciate
an asset in 1 year, a bonus appreciation the same way. But that
is going to go away. It is going down from 100 percent to 80
percent to 60 percent.
So when you buy capital equipment, and all of a sudden now
you can fully depreciate it, but it is going away, this year it
is gone, it is slowly going down, how does that affect you? If
I had to guess, that would also affect your future decision-
making.
Mr. MILLS. Well, you know, first of all, you have to have
some cash flow to make that happen, that is number one. And
right now, because of what we are having to expend on buying
additional materials, we are not even looking at buying
anything equipment wise. We are really just pulling back and
going, okay, let's see what happens because, again, our best
investment is to go out and invest in those materials,
controlling that cost, make it competitive for our customers.
Mr. FEENSTRA. Thank you.
And I just want to note to everybody, that is what
inflation does, by the way, people, just what he said. Thank
you, and I yield back.
Chairman SMITH. Thank you, Representative.
I would like to recognize the gentlelady from New York, Ms.
Malliotakis.
Mr. MALLIOTAKIS. Thank you, Mr. Chairman. And I will say,
as a New Yorker and Yankee fan, it is exciting to be here in
the birthplace of Mickey Mantle.
You know, when we talk about Made in America we are talking
about you, right, American manufacturers, American farmers,
food producers, American energy producers. And we have a
President that talks a lot about Made in America, but what I am
hearing today is that the policies, there is a real disconnect
between what he says and the policies that are coming from this
administration.
Because what I have heard today is that higher taxes,
burdensome regulations, permitting delays, the disincentivizing
of work have all made it more difficult for you to create jobs.
It has made it more difficult for you to create American jobs,
let's be specific, and produce more American goods forcing us
to rely on foreign countries, particularly as it pertains to
energy. And I want to focus on the energy policy because we
rely on energy for everything, to manufacture, to transport
goods and food, to have a quality of life where we can have
electricity that is reliable.
And I am from New York City, and sometimes in New York City
we don't always think about where that energy comes from,
right. We just turn on the lights, we pull up at the gas pump,
we go in the store, we buy our food. We never think about where
it is actually produced or how it is produced.
But lately my constituents are paying a lot more attention
because they are getting those higher utility bills, they are
seeing that, you know, gas prices are more today than they were
2 years ago, and they are seeing that, you know, that
transportation of food is actually driving the price of their
products up at the supermarket.
So I would love to ask, Mr. Brevetti, if you can comment on
how much more is the potential for American energy production
here in Oklahoma and America, how much more potential is there
for us to be energy independent, and as you said, not rely on
adversaries? It is important for our national security, it is
important for our independence, and it is important to reduce
prices for American families.
And my second question would be, how are Biden's policies
hindering that production and in the end increasing the cost of
energy and food for my constituents back home in New York?
Mr. BREVETTI. Both great questions. And, you know,
typically we recover about 20 percent of the oil in place. We
maybe get a little bit more an natural gas, you know, 50 to 75.
So we are leaving a lot of hydrocarbons in the ground, and
technology will help us recover though. So it is not going to
go away. We are going to be able to develop that, and that is
going to be able to help the consumer.
From the standpoint of your second question, what can be
done, I mean, you know, one of the things is pipelines, you
know. I think your home State has blocked pipelines going
through them, and we have such tremendous gas reserves that are
in the Appalachian area, and so that gas has to come here. That
gas comes through. And Oklahoma gas has to compete for space in
the pipelines, whereas that gas could go to the East Coast and
be made into LNG, sent overseas. It could be used to heat the
homes there and help people flourish.
Mr. MALLIOTAKIS. You mentioned something interesting. When
you mentioned pipeline, I automatically thought about the
Keystone Pipeline, right, which would have created thousands of
jobs, including here in Oklahoma. How is the cancellation of
the Keystone Pipeline affecting American workers here, and how
is it also sending a message that disincentivize private
investment to expand the energy industry here?
Mr. BREVETTI. Well, it did all that. It was a job killer,
as we are aware, the cancellation of the Keystone. It also kind
of slapped one of our best allies, our closest--our neighbor to
the north in the face. You know, there was so much investment
done. This was a way for Canada to be able to market their
products to a place where they have a product, we have
consumers. And I will point out that there is not a safer way
to move oil than in a pipeline. I think we have seen what has
happened with the railroads here lately. A lot of oil gets
moved by railroads, and that is not safe, so, yes.
Mr. MALLIOTAKIS. Is American energy or American oil, I
should say, is it dirtier than Russian oil or Venezuelan oil or
Saudi Arabian oil, Iranian oil?
Mr. BREVETTI. You know, that is a good question. Without
getting down into the weeds, most of American crude being
produced right now is what is called fairly light and sweet. It
is low in H2S, which makes it sour. It is also fairly light
compared to those countries you mentioned, such as Venezuela.
And when you produce crude in a foreign country, it is not
produced as clean and safely, but now you have to move it on
tankers and that has a carbon footprint for sure.
Mr. MALLIOTAKIS. So American oil is cleaner, and it costs
less to transport and it is cleaner to transport?
Mr. BREVETTI. Cleaner, safer, and nobody produces
hydrocarbons in a more environmentally and greener fashion than
U.S. producers.
Mr. MALLIOTAKIS. Thank you.
Chairman SMITH. I want to thank the gentlelady.
I recognize the gentleman from Ohio, Mr. Carey.
Mr. CAREY. Thank you, Mr. Chairman.
I want to thank the ranking member as well for having this
bipartisan hearing today.
I think it is great to be in Oklahoma. We had a great time
in West Virginia.
I want to follow up on a couple of issues as it relates to
energy, following along the questioning. But looking at
Oklahoma, and I know the Chairman Lucas and Mr. Hern has
pointed this out, as well in your testimony, but there were
$64.9 billion in the State's gross domestic product that came
from the oil and gas industry. $2.5 billion in taxes, 27
percent of Oklahoma's State GDP comes from the oil and gas
industry. 16.7 percent of the State is tied working to the oil
and gas industry.
The other thing that you mentioned briefly in your
testimony but I think it is important to note, that over $2
billion, $2 billion were returned to property owners in terms
of royalties. That is major. The other issue is that for every
one oil and gas producing job in the State of Oklahoma and for
the rest of the United States, there are roughly two other
spinoff jobs.
So why did I want to put out all those numbers? While we
were going through the testimony, I wanted to pull up the top
oil producing, oil and gas producing States. And they are not
red States. They are not blue States. They are red, white, and
blue States. Texas is number one, New Mexico is number two,
North Dakota was number three, Alaska was number four, Oklahoma
was number five.
And we saw what a big portion of Oklahoma's economy is
derived from oil and gas production. Number six was Colorado.
My dear friend across the aisle, you will be surprised,
California was actually number 7, Wyoming number 8, Utah number
9, Louisiana number 10, Kansas 11. My State of Ohio with the
Utica Shale reserves were making the charts, up to 12, and
then, of course, following with Montana. What we have seen, of
course, is that oil and gas, oil and gas spin-up jobs are
domestic, they grow the economy, and I think in your testimony
you mentioned that you had positions up to $100,000 that you
just can't fill.
The other thing I want to point out is part of oil and gas,
I am a firm believer if something is not grown it is mined. And
so if you look in terms of what does that mean for oil
production, there is a lot of moly that goes into that, borate
goes into that, phosphate mining goes for fertilizer, all of
these, and they have an average income of about $85,000 for
every one of those people that mines those products.
So saying all those things, one other thing I want to point
out to my colleague here to the left mentioned the price going
up. Some interesting numbers. In December of 2020, dollars per
thousand cubic feet of natural gas--listen to these numbers--
December of 2020, $4.11. Today--or in December of just a couple
months ago, $8.23. It has doubled. So we have a misguided
energy policy, and I am so glad that we are here talking about
the things that are really affecting the American public.
I am going to ask you a question just real quick on the oil
and gas side of things if you don't mind, because I like many
of--Mr. Hern pointed out people that don't know a lot. I come
from the energy production side of things in my private career.
Can you explain, and I think you mentioned it in your
testimony, but you explain the percent depletion and how that
relates to smaller oil and gas producers and why it is so
important.
Mr. BREVETTI. Yes. Certainly. I am not an accountant. I am
an engineer. However, we depend upon our participants who co-
invest with us. They depend upon certain things. And we
mentioned about the IDCs, which is the intangible drilling
costs. But there is also a depletion allowance. And there is
cost depletion up front. But there is also percentage
depletion. So percentage depletion--which I think has been in
question and has been on the crosshairs of some people.
Percentage depletion, if you think about it this way, when
you plant a crop one year, you can go back and replant it the
next year. But with our industry, what we pull out of the
ground this year is gone. It is like if you had a closet filled
with some type of asset. You know, make them gold bars, or make
them Bitcoins. You are pulling them out. They are not there
once you pulled them out. So that is what the depletion
allowance addressed.
Mr. CAREY. You are constantly using your asset. You are
depleting your asset.
Mr. BREVETTI. You are using up your assets. At some point,
it is gone. So the depletion allowance, I view it as not a--it
is not a handout. It is saying, hey, wait a minute. What you
had to start with, you don't have anymore. So we are going to
let you take the deduction for that. You know, you are selling
off an asset.
Mr. CAREY. Thank you.
Mr. Chairman, I yield back.
Chairman SMITH. Thank you, Representative.
I want to thank the witnesses again for your testimony and
for being here. I want to thank express ranges--Express
Clydesdales for hosting the event. I want to thank you, Ranking
Member, for your attendance. And I want to thank every member
for your attendance.
These field hearings, I believe, are a great way for us to
get closer to different areas of the country that we typically
wouldn't see when we are in Washington. And so I appreciate the
time and commitment that each and every one of these 24 members
took to be here.
Please be advised that members have two weeks to submit
written questions to be answered later in writing. Those
questions and your answers will be made part of the formal
hearing record.
With that, the committee stands adjourned.
[Whereupon, at 11:03 a.m., the committee was adjourned.]
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