[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]











                    RESTORING THE TRUST FOR FAMILIES
                       AND WORKING-AGE AMERICANS

=======================================================================

                                HEARING

                               before the
                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, SEPTEMBER 21, 2016

                               __________

                           Serial No. 114-22

                               __________

           Printed for the use of the Committee on the Budget



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                        COMMITTEE ON THE BUDGET

                   TOM PRICE, M.D., Georgia, Chairman
TODD ROKITA, Indiana                 CHRIS VAN HOLLEN, Maryland,
SCOTT GARRETT, New Jersey              Ranking Minority Member
MARIO DIAZ-BALART, Florida           JOHN A. YARMUTH, Kentucky
TOM COLE, Oklahoma                   BILL PASCRELL, Jr., New Jersey
TOM McCLINTOCK, California           TIM RYAN, Ohio
DIANE BLACK, Tennessee               GWEN MOORE, Wisconsin
ROB WOODALL, Georgia                 KATHY CASTOR, Florida
VICKY HARTZLER, Missouri             JIM McDERMOTT, Washington
MARLIN STUTZMAN, Indiana             BARBARA LEE, California
FRANK GUINTA, New Hampshire          MARK POCAN, Wisconsin
MARK SANFORD, South Carolina         MICHELLE LUJAN GRISHAM, New Mexico
STEVE WOMACK, Arkansas               DEBBIE DINGELL, Michigan
DAVE BRAT, Virginia                  TED LIEU, California
ROD BLUM, Iowa                       DONALD NORCROSS, New Jersey
ALEX MOONEY, West Virginia           SETH MOULTON, Massachusetts
GLENN GROTHMAN, Wisconsin
GARY PALMER, Alabama
JOHN MOOLENAAR, Michigan
BRUCE WESTERMAN, Arkansas
JIM RENACCI, Ohio
BILL JOHNSON, Ohio

                          Professional Stafff

                      Richard May, Staff Director
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held in Washington, D.C., September 21, 2016.............     1
    Hon. Tom Price, M.D., Chairman, Committee on the Budget......     1
        Prepared statement of....................................     4
    Hon. John A. Yarmuth, a Representative in Congress from the 
      State of Kentucky..........................................     6
        Prepared statement of....................................     8
    Edward J. Pinto, J.D., Resident Fellow/Codirector, 
      International Center on Housing Risk.......................    10
        Prepared statement of....................................    12
    G. Keith Smith, M.D., Managing Partner/Co-Founder, Surgery 
      Center of Oklahoma.........................................    24
        Prepared statement of....................................    26
    William Spriggs, Ph.D., Chief Economist, AFL CIO.............    28
        Prepared statement of....................................    30
    Thomas Lindsay, Ph.D., Director of the Center for Higher 
      Education, Texas Public Policy Foundation..................    37
        Prepared statement of....................................    39
        Submissions for the record...............................    47
    Hon. Tom Price, M.D., Chairman, Committee on the Budget, 
      Submission for the record..................................   106
 
       RESTORING THE TRUST FOR FAMILIES AND WORKING-AGE AMERICANS

                              ----------                              


                     WEDNESDAY, SEPTEMBER 21, 2016

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:00 a.m., in Room 
210, Cannon House Office Building, Hon. Tom Price, [chairman of 
the committee] presiding.
    Present: Representatives Price, Rokita, Cole, Woodall, 
Sanford, Brat, Grothman, Yarmuth, Pascrell, Ryan, Moore, 
Castor, McDermott, Pocan, and Norcross.
    Chairman Price. This hearing will come to order. We want to 
welcome everybody to the Budget Committee and our hearing 
entitled Restoring the Trust for Families and Working-Age 
Americans. For over a year, the House Budget Committee has been 
engaged in an initiative called Restoring the Trust for All 
Generations. Today's hearing is the fourth in this series of 
hearings this committee has held to advance this initiative.
    Restoring the Trust is an effort to raise awareness among 
both our colleagues in Congress and probably, most importantly, 
the American people that we represent about the serious fiscal 
and policy challenges facing our Nation's health, retirement, 
and economic security programs.
    These are programs that are funded automatically without 
any annual appropriation or necessarily any congressional 
oversight. They are what is known in this town as ``mandatory 
spending.'' It means that the money continues to be spent and 
is increasing and will continue to increase until Congress and 
the President agree to reform the programs.
    The unchecked growth and spending in this area, whether it 
is Medicare or Medicaid, or Social Security, or numerous 
Federal housing, education, and safety net programs is eating 
up a larger and larger portion of the Federal budget. It is 
crowding out other government functions, other national 
priorities, and contributing substantially to the budgetary 
imbalance that has our national debt over $19 trillion and 
climbing. As we have discussed in this committee previously, in 
addition to the fiscal challenges, we know that these programs 
are not necessarily serving the beneficiaries all that well.
    At the same time, and perhaps less appreciated, is the fact 
that many of these programs create substantial distortions and 
foster perverse incentives in the private market in areas like 
education, health care, and housing. Those distortions drive up 
the cost of goods and services for all Americans.
    For many working age Americans and their families, they may 
have no direct interaction with these automatic spending 
programs, but these programs and government policies generally 
are increasing demand for services while simultaneously 
limiting supply, and results in prices that are outpacing 
wages, and that hits the middle class particularly hard.
    In today's housing market, affordability is the missing 
element. The fundamental problem is a supply/demand imbalance 
that works against families struggling to afford the mortgage 
or rent as home values appreciate faster than wages and 
inflation. The average family's housing cost rose 63.3 percent 
between 1997 and 2015. According to the U.S. Census Bureau, 
home ownership rates are at their lowest level in 50 years and 
currently equal the same level of 62.9 percent that was 
achieved in 1965.
    In higher education, evidence points to Federal student aid 
distorting demand, and it has been linked to rapid rises and 
increases in tuition. A 2015 study conducted by the Federal 
Reserve Bank of New York reports a passthrough effect on 
college tuition from increased Federal student aid. For every 
additional dollar in subsidized loans, tuition increases by an 
estimated $0.65, and for every additional dollar in Pell 
Grants, tuition increases by $0.55.
    More generally, our current education system contributes to 
higher costs by stifling innovation; innovation that could 
offer flexible, customized, and more affordable education 
experiences catered to the lives of working students with 
families who are seeking to realize their full academic 
potential.
    Washington's current approach to health care clearly has, 
under the assumption of knowing what is best for patients 
across America, has restricted them to health programs that are 
an unsustainable path while driving up costs. According to the 
Kaiser Family Foundation, the average premium in America has 
increased 61 percent in the last decade. Similarly, deductibles 
have increased more than 250 percent, meaning increased out-of-
pocket expenses for individuals and families. Thanks to heavy-
handed governmental intervention in the Nation's health care, 
costs for families continue to rise without gains in quality or 
value.
    Furthermore, competition and innovation are stifled, and 
providers spend nearly as twice as much time completing 
paperwork as they do caring for patients, lending itself to a 
paper-centered system as opposed to patient-centered healthcare 
delivery system. In short, the status quo is not working. 
However, positive solutions can be discovered in the private 
sector and successful government programs. We should work to 
advance free market policies that will foster competition. In 
order to have a well-functioning marketplace, it is necessary 
to allow entrepreneurs to meet the demands of consumers, 
creating better products for lower prices through innovation. 
In short, allowing America to work.
    To provide views on these issues of critical importance to 
so many Americans, we have a wonderful panel of witnesses with 
us today. We want to welcome each and every one of you. Edward 
Pinto, the resident fellow and co-director of the International 
Center on Housing Risk at the American Enterprise Institute; 
Dr. Keith Smith, managing partner and co-founder of the Surgery 
Center of Oklahoma; Dr. William Spriggs, chief economist at the 
AFL-CIO; and Dr. Thomas Lindsay, co-director of the Center for 
Higher Education at the Texas Public Policy Foundation.
    I want to thank you all for being here and for being 
willing to share your insights and your firsthand knowledge 
about how our Nation's automatic spending programs are 
impacting the lives and livelihoods of families and working age 
Americans. We look forward to your testimony, and I am pleased 
to recognize the gentleman from Kentucky, Mr. Yarmuth.
    [The statement of Chairman Price follows:]
    
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    Mr. Yarmuth. Thank you very much, Mr. Chairman. Good timing 
on your part. Welcome to all the witnesses. We look forward to 
hearing from you. Two weeks ago, we had a discussion on the 
future of Medicaid and Medicare. There was widespread agreement 
on the problem that we have to find long-term solutions to 
providing quality care while reducing unnecessary spending. We 
had very different views on how to solve that problem, but at 
least we started from the same place.
    Today, we start from very different places. This is not a 
hearing on improving the way the Federal Government helps most 
American families obtain quality housing, health care, and 
education for American families while reducing unnecessary 
spending. This is about a hearing about whether the Federal 
Government can have any productive role, or make any sound 
investment, in these areas.
    Some of the suggested solutions are extreme even for this 
Congress, and I would guess even too extreme for some of my 
colleagues on the other side of the aisle. We will have this 
debate today and discuss think tank theories about the economy 
and free market principles. As an exercise, that is fine, but 
we already know what works in the real world. We know the 
investments in housing, health care, and education help 
American families build better futures while spurring economic 
growth for our Nation. It is not academic theory. It is the 
reality of the last 7 years. Just look at the facts.
    President Obama inherited the weakest economy since the 
Great Depression. Hundreds of thousands of jobs were being lost 
each month, and millions of American families rightly feared 
for their economic future, but through swift action and smart 
investment, we have turned that around. We are now in the 
fourth longest economic expansion in American history, with 15 
million new private sector jobs and an unemployment rate that 
has been cut in half.
    Last week, new Census Bureau data proved that we are still 
on the right path. In 2015, median real household incomes rose 
by the fastest rate on record with the highest growth for those 
lower on the income scale. The poverty rate dropped 
significantly and the percentage of Americans with healthcare 
coverage is now at its highest rate ever. This is great 
progress, but there is so much more work to be done. Our 
economy still largely benefits the wealthy few at the expense 
of the middle class and those struggling to get by.
    I would suggest that we attack these problems by building 
on the successes of the last 7 years and continue providing 
better opportunities to American families and workers. Let's 
invest in infrastructure, education, and R&D to create good, 
high paying jobs and boost the productive capacity of American 
workers for years to come. Let's give American families help 
now by raising the minimum wage, increasing access to 
affordable childcare, providing paid sick leave, and family and 
medical leave, and guaranteeing a secure retirement.
    Let's make their worries our priorities. That is what the 
American people want. They do not expect us to agree on 
everything, but on minimum, they want us to try and find common 
ground on ways the Federal Government can make their lives 
better. History proves the Federal Government has an enormous 
potential to make lives better. I hope going forward we can 
agree to start from there. Thank you, and I yield back.
    [The statement of Mr. Yarmuth follows:]
    
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    Chairman Price. Thank you, Mr. Yarmuth. We appreciate your 
opening statement. I want to, once again, welcome all of the 
witnesses. Mr. Pinto, Dr. Smith, Dr. Spriggs, and Dr. Lindsay, 
thank you for appearing before us today. The committee has 
received your written statements, and without objection they 
will be made a part of the formal hearing record. You each will 
have 5 minutes to deliver your oral remarks, and Mr. Pinto, you 
may begin when you are ready.

     STATEMENTS OF EDWARD J. PINTO, J.D., RESIDENT FELLOW/
  CODIRECTOR, INTERNATIONAL CENTER ON HOUSING RISK, AMERICAN 
 ENTERPRISE INSTITUTE; G. KEITH SMITH, M.D., MANAGING PARTNER/
CO-FOUNDER, SURGERY CENTER OF OKLAHOMA; THOMAS LINDSAY, PH.D., 
   DIRECTOR OF THE CENTER FOR HIGHER EDUCATION, TEXAS PUBLIC 
  POLICY FOUNDATION; WILLIAM SPRIGGS, PH.D., CHIEF ECONOMIST, 
                            AFL-CIO.

                  STATEMENT OF EDWARD J. PINTO

    Mr. Pinto. Thank you, Chairman Price and Ranking Member 
Yarmuth. Thank you for the opportunity to testify today. The 
committee's goal of restoring trust for all generations is to 
be applauded; however, as the committee has observed, it is 
regrettable that government programs developed over 8 decades 
to meet worthy aims are now failing the very people they were 
intended to serve.
    My research has found that the same is to be true with 
respect to decades of ill-conceived housing programs. In most 
cases, these policies increase housing demand, but do little or 
nothing about supply. When supply is increased, it drives up 
prices, layers the subsidies that are used, and a host of 
unintended consequences result.
    First and foremost, it yields higher prices and higher 
rents particularly for low income or minority households, the 
very ones these programs were designed to assist. Today's 
subsidy laden, government-centric, finance system is something 
I called an ``economics-free zone.'' I call it that because it 
is indifferent to supply and demand. As a result, housing has 
become less, not more, affordable and less, not more, 
accessible.
    Turning to the home loan market, 60 years of affordable 
housing policies have failed to achieve its two primary goals: 
increasing home ownership and achieving wealth accumulation for 
low and middle income borrowers. The chairman has already noted 
that today's home ownership rate of 62.9 percent is the precise 
same as 1965, and not much higher than 1960 or 1957.
    Further, we have not been successful at building wealth for 
the very groups these policies were aimed to help. This is 
primarily due to excessive leverage, namely low down payments, 
30-year mortgages that have a lot of debt leverage in terms of 
income. Home buyers have become addicted to debt very much like 
the Federal Government.
    Federal lending policies rely on higher level debt to 
finance home buying by households with limited financial means. 
The debt is used to finance a single asset, one that is highly 
illiquid and has volatile prices and large transaction costs. 
This means they start with little equity and build more equity 
very slowly.
    It gives them little protection against life's vicissitudes 
and volatile home prices, and the debt-inflated prices 
themselves create price volatility, and we just went through a 
cycle of that--I would only point out that in 1954, interest 
rates and financing costs were about the same as today, 4.5 
percent including the mortgage insurance premium, yet the size 
of homes have doubled, house prices have gone up much faster 
than incomes. The only way that happens is to increase 
leverage, and FHA has done that with a vengeance.
    The government policies create debt and fuel wealth, not 
wealth supported by real income growth. The result, we saw, was 
catastrophic, and it was due to these low down payment loans 
that are prone to default. Before this expansion leverage, 
FHA's foreclosure rate just about rounded to zero, and yet the 
home ownership rate was, as I said, about the same as today. 
Over the period of 1975 to 2013, this is after the leverage 
started getting added to the housing finance system, FHA 
borrowers would suffer 3.4 million foreclosures.
    There were 3.4 million claims to FHA. Before that, these 
numbers literally were very low. One in eight such buyers 
suffered that result, and it is even higher in low income and 
minority households. The entire market since 1975 has 
experienced eleven to twelve million foreclosures. As 
troubling, the reliance of government loan policy on excessive 
household debt crowds out the ability to save for one's 
retirement and pay for one's children's post-secondary 
education.
    As I said, total debt to income ratios have risen. Today, 1 
in 6 FHA buyers have a total debt income ration, pre-tax, of 50 
percent or more. We all know how this works. You are buying a 
home. You are told you can get approved for a loan of this 
amount based on your income. They are all calculated on a pre-
tax basis.
    The focus is not on how much you need to put forward on 
retirement. Not what your children are going to need to go to 
post-secondary education 20 years from now. It is focused on 
what is the maximum amount of house you can buy today. No 
consideration is given to these other items, and I have two 
charts included that describe that.
    As you craft solutions, please keep these facts in mind. 
Wealth is the antidote for poverty. We have focused on 
redistribution, not wealth. Wealth equals one's accumulated 
savings for 50 years. Government policies have ignored wealth, 
focusing on income transfers. The racial wealth gap is 3 times 
larger than the racial income gap, and middle income and 
working class families need a straight broad highway to wealth 
building. I have laid out alternatives in my written testimony, 
and I submit those to your consideration. Thank you.
    [The statement of Mr. Pinto follows:]
    
    
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    Chairman Price. Thank you very much. Dr. Smith, you are 
recognized for 5 minutes.
    Mr. Smith. Thank you. Thanks for having me. While everyone 
agrees there is something terribly wrong with the healthcare 
delivery system----
    Chairman Price. Do you want to turn on your mike, please?
    Mr. Smith. Oh sorry. Is that better?
    Chairman Price. Perfect.

                  STATEMENT OF G. KEITH SMITH

    Mr. Smith. While everyone agrees there is something 
terribly wrong with the healthcare delivery system in this 
country, it is becoming increasingly clear the problem 
represents not the failure of the free market but the absence 
of the free market. This is highlighted not only by burdensome 
regulations, but also by the difficulty in obtaining pricing 
information prior to receiving a healthcare service. In 
contrast, the plastic surgery and Lasik markets, neither of 
which is distorted by third-party payment government or 
private, have traditionally displayed pricing and have shown 
lower prices and higher quality over time.
    It is my opinion, the focus on the lack of insurance 
coverage rather than the cost of care represents a significant 
distortion by governments at all levels and is a distraction 
from the powerful, but simple solutions to high cost, spot 
equality, and poor access that the free market can provide. I 
believe the transparent pricing of healthcare services will 
eliminate most of the distortion and fog attached to this 
industry, government-generated or otherwise. As Dr. Jane Orient 
has remarked, ``It turns out that coverage is not care.'' 
Indeed, the first patients to respond to our putting prices 
online at Surgery Center of Oklahoma were Canadians.
    Canadians have coverage after all, just poor to no access 
to the care that many of them require. The most common Canadian 
patient story we hear remains the woman tired of receiving 
blood transfusions, waiting interminably for a curative 
hysterectomy. It is instructive that one of the fastest growing 
parts of our business is the patient with an ACH exchange plan. 
Their plight is similar to the Canadians after all, for they 
have coverage, but they have poor access to care. Shockingly, 
they have a better out-of-pocket experience paying our full 
website fee than meeting their deductible and co-pay using 
their insurance. Like many Canadians, they have discovered the 
only single payer upon which they can truly rely is themselves.
    While the Surgery Center of Oklahoma was the first to 
publish online pricing for surgical care, we have been joined 
by many others, almost all of whom coordinate and share 
insights through the Free Market Medical Association, a group 
which seeks to connect buyers and sellers of healthcare 
services without the distorting influences typically involved. 
This price transparent, and therefore market-based approach, 
has led many otherwise price gougers to match our pricing 
rather than risk patients traveling, for instance, to Oklahoma 
City for their care and lose the business. Our price is 
typically \1/6\ to \1/10\ of what traditional hospitals charge 
represent what we believe it costs to render care without the 
fluff to build an empire and provide fat administrative 
salaries.
    Patients from all over the country have saved tens of 
thousands of dollars by coming to the Surgery Center of 
Oklahoma and by not coming to the Surgery Center of Oklahoma, 
but leveraging a deal in their home town using our pricing. I 
have changed the pricing at the Surgery Center of Oklahoma 
twice in the 8 years that our prices have been posted online, 
and in both instances, have lowered the prices, both times as a 
result of the action of my competitors. This highlights my firm 
belief that market pricing cannot be the result of top-down, 
central planning but rather emerges from competitive activity.
    Our prices, it should be noted, are bundled, including all 
aspects of care, and are less than Medicaid currently pays the 
not-for-profit facilities in our area. Imposed, top-down 
pricing is always too high or low it seems, predictably leading 
to a surplus of unneeded services or shortages of needed 
services. Electronic medical records, coding and reporting 
mandates, combined with low, formulaic pricing have had an 
intense, and combined have had a distorting effect on 
healthcare markets and access to care in certain specialists.
    As you can imagine, our model has proven attractive to the 
poor, the uninsured, those with high deductibles, foreigners 
unable to access care, cost-sharing ministries and charities, 
who found that they can purchase 3 cochlear implant procedures 
at our facility for the price of one at the not-for-profit 
hospital across town and by the same surgeon, I would note.
    Our model has been widely popular with self-funded ERISA 
health plans who are seeing their actual yearly costs fall 
while achieving steerage to facilities like mine by waiving all 
employee out-of-pocket expense including travel expenses. The 
health plan of the employees of the State of Oklahoma is the 
latest ERISA plan to sign up and actuaries anticipate a $200-
million savings for the State in its first full year of 
implementation.
    Keep in mind that without this arrangement, the deductibles 
and co-pays would have made access to these life-changing 
surgeries prohibitive for many of these families. In December, 
we often have the privilege of hearing patients say that they 
are going to have Christmas this year at the result of waiving 
their out-of-pocket expense. This arrangement has preserved the 
budget priorities of these families that would otherwise have 
been usurped by price gougers in the industry.
    Finally, I would like to comment about the relationship of 
price and quality. High healthcare prices are simply an 
indication of the absence of market competition where quality 
is likely stunted due to a lack of fear of competition. Lower 
and falling prices are an indication that newcomers are 
entering a healthcare marketplace.
    Additionally, attaching a reasonable price to surgical 
procedure indicates the caregivers at that facility have 
predictable results and know what they are doing. In the 
absence of a vibrant market, you get what you pay for simply 
does not apply.
    [The statement of Mr. Smith follows:]
    
    
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    Chairman Price. Thank you, Dr. Smith.
    Mr. Smith. Thank you.
    Chairman Price. Dr. Spriggs, you are recognized for 5 
minutes.

                STATEMENT OF DR. WILLIAM SPRIGGS

    Mr. Spriggs. Thank you, Chairman Price, and thank you, 
Ranking Member Yarmuth for this opportunity. To restore the 
trust of the American people, we must restore what the 
government does. From 1946 to 1979, the wages of Americans grew 
with their productivity. Income gains were roughly equally 
shared by each quintile of the income distribution.
    That was the result of deliberate Federal policies to 
invest in the American people, to invest in America, and to aim 
those policies at shared prosperity. The American people want 
you to invest in them. The best investment anyone can make is 
in the American people and in American children in particular. 
It will always, always pay to bet on American children. There 
are lots of key programs that the government put in place that 
made this happen.
    We invested in our GIs returning from WWII. We gave them 
opportunity for higher education and for home ownership. That 
transformed America. It gave us the middle class. We learned, 
when they were puny like my dad when he volunteered before 
WWII, they were underweight, young men, that we needed to 
invest in feeding our children, and the national student lunch 
program is a huge investment in making sure that our children 
are healthy. That changed everything.
    We invested in making sure that the labor market was fair 
by having hands-off and keeping the National Labor Relations 
Board apolitical so that our unions could grow and our workers 
could fairly bargain over the increase in productivity, and 
each administration up to 1979 fought to raise the minimum 
wage, and it was a bipartisan vote. The majority of Republicans 
and Democrats voted to raise the minimum wage. It was not a 
partisan issue.
    Under Republican President Dwight Eisenhower, in response 
to Sputnik, he got the Democratic Senate, in less than one year 
in response to Sputnik, to put in place the National Student 
Loan Program, and that launched not only the scientists who got 
us the Internet, got us personal computers, but it also meant 
that we had teachers to train those people, and President 
Eisenhower invested in America.
    He built the Interstate Highway System, which transformed 
America and gave us higher productivity. President Johnson 
added by adding Head Start, a program which pays for itself in 
the gains of the earnings of children who go through that 
program. Medicare and Medicaid. Young women who have had access 
to Medicaid when they were young have higher earnings, have 
more education, and the young people who have had access to it 
end up with higher earnings paying back and higher taxes, the 
way that we get to afford these programs.
    Now, what economists are finding out is that the reason 
these programs worked is that inequality hurts growth. 
Inequality hurts growth for a number of reasons, but one of 
them, the IMF found, was that if income growth goes to the top 
20 percent, you really slow growth. In the United States the 
top 20 percent control over half the income. They spend over, 
well over, a half of the money on education, well over a half 
of the money spent on housing. That distorts prices. In a free 
market, it is $1, one vote, not one person, one vote, and 
suppliers will always chase the dollars. That makes tuitions go 
up. That makes housing prices go up. Umbrellas do not cause 
rain.
    We have the government having to chase these price tilts in 
order to make sure that everyone can benefit from them. The one 
sure way we have learned from the OECD studies for why 
inequality hurts growth, is because it hurts human capital 
formation. At high levels of inequality, the bottom 40 percent 
simply do not get enough education. Invest in Americans. That 
is how you make the economy grow and get their trust back.
    [The statement of Mr. Spriggs follows:]
    
    
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    Chairman Price. Thank you, Dr. Spriggs. Dr. Lindsay, you 
are recognized for 5 minutes.

                STATEMENT OF DR. THOMAS LINDSAY

    Mr. Lindsay. Thank you, Mr. Chairman, members of the 
committee. I appreciate your extending me the opportunity to 
present my research on the question of how we might increase 
opportunity for everyday Americans through higher education. I 
am encouraged by the growing bipartisan consensus on the need 
for higher education reform, and my research conducted on this 
question, points to the need to promote greater innovation and 
higher education delivery through fostering greater competition 
among higher education providers.
    This country embarked long ago on a very well-intentioned 
set of Federal policies aimed at increasing college access for 
which all are to be commended for their earnestness. 
Nevertheless, as with all policies, there have been unintended 
consequences. The work ahead of us must consist in no small 
part in moderating some of these policies in order to better 
align higher education demand with supply as well as to better 
balance student access with success. The need to improve our 
Federal policies is seen by the following facts.
    Over the past quarter century, average college tuition 
nationwide has jumped 440 percent, nearly 4 times the rate of 
the CPI over the same period. To attempt to pay for these 
historic increases, students and their parents have amassed 
historic debt. At roughly $1.3 trillion, student loan debt now 
exceeds even national credit card debt for the first time in 
our history, and this in a country fairly addicted to credit 
cards. The problem here is not a lack of government spending. 
The Federal Government has been very generous. In fact, the 
United States spends twice as much on higher education as the 
average OECD nation. This is not a money problem. Rather, when 
we look at the students today who graduate, and as I said, only 
half the students who enter college today graduate.
    Of those who do graduate, 36 percent we know from studies, 
show little to no increase in critical thinking and writing 
skills, those skills that a degree is meant to signify. 
Moreover, when it comes to student loan debt and defaults, 70 
percent of student loan defaults come from those who do not 
finish college. Low graduation rates increase defaults. Even 
sadder today, a smaller percentage of recent college graduates 
comes from the bottom 25 percent of income distribution than 
was the case in 1970, when these generous Federal programs 
began.
    So, from these points, what we see is this, half the 
students who attend college never graduate. Of the half who do, 
only 64 percent attain any significant learning. What that 
means is that today, only 32 percent of students who enter 
college both graduate and do so with the learning that a 
college degree is meant to signify, meaning the odds are 2 to 1 
that you will not get both. That is a scandal, but there is 
good news. There are solutions available to us.
    In Texas, in 2014, we launched the Affordable Baccalaureate 
Degree Program. It can cost half as much as a traditional 
degree. You can finish it sometimes twice as quickly even if 
you come into college with no credit. You can get a degree in 3 
years for between $13,000 and $15,000. Clearly, you cannot do 
this with all degrees. You cannot do this with a biology degree 
or a philosophy degree or engineering, but you can do it with 
applied degrees, and that is what these programs aim at. And 
there is something that we all need to take account of.
    When we talk about college today and what we can do to help 
college students, we think of the four-year residential campus 
where students are attending full time. That is no longer the 
case. Only 1 in 5 college students fits that description. The 
new majority of students seeking some sort of education after 
high school, be it a two-year degree, a four-year degree, or a 
certificate, are non-traditional students, meaning they are 
over twenty-five, and/or working full time, and/or with 
families of their own to support.
    The traditional models that have worked for us in the past 
simply cannot address their needs. There are other 
recommendations I would like to make, and I would be happy to 
offer them during Q&A. They are contained in my written 
statement. Thank you very much.
    [The statement of Mr. Lindsay follows:]
    
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    Chairman Price. Thank you, Dr. Lindsay, and thank you to 
all of you for your testimony. I think it was really helpful in 
framing the discussion, and let me put up the first slide, 
please. I want to talk very briefly about the goals that we 
have, because I think that one of my goals is to make certain 
that we recognize that we are all trying to push in the same 
direction. We all want housing that is appropriate and 
affordable for folks. We want health care that is of the 
highest quality and available for individuals who want 
education that allows each and every American to realize their 
dreams.
    So, the question is not what the goals are. The question 
is, are we doing, as a Federal Government, the right thing that 
allows those goals to be accomplished, and if you look at this 
slide. This is the last 30 years and the increases in family 
spending on housing and health care and education compared to 
inflation, so the average increase for those items ought to 
basically track inflation unless there is something else going 
on.
    Housing and health care and education obviously are 
increasing significantly greater than inflation, so there is 
something else going on, and that is what I would hope that we 
concentrate on, so let me drill down a little bit on this.
    Mr. Pinto, you talked about the area of housing right now, 
government-centric housing finance system that creates economic 
free zone, and you talked specifically about the challenges in 
the area of the home loan market, in the area of the rental 
market. Take a few minutes and expand on what the solutions 
that we could look at here to make it so that that kind of 
economic-free zone does not exist.
    Mr. Pinto. Okay. Thank you, Mr. Chairman, for that 
question. The problem is we have a debt-centric approach, so 
the income tax deduction subsidizes debt. The government, 
through all of the housing finance agencies and the guarantee 
agencies, subsidize debt, and this drives up the prices. Of the 
things you have up there, the thing they all have in common is 
an excess of government involvement, and in the case of housing 
and education, it is debt-driven, so the solution is to rely on 
less leverage, so you have to start with the income tax code 
and reduce the incentive to take out debt and have an interest 
deduction for that, and replace it with paying down the debt so 
that you are building equity in the home. You cannot rely on 
the price appreciation. We saw what happened there.
    The second thing would be for low-income individuals. What 
we have done is a whole host of programs that funnel the money 
through a lot of third parties, either private sector or 
adversary groups. That is where the money groups and various 
government entities. We need to have the money go, as a rifle 
shot, directly to the consumer, so one of the things that we 
have proposed is a wealth building home loan, which would 
replace the 30-year loan with a small down payment, which 
virtually everybody has today, with a 15- or 20-year loan with 
actually no down payment.
    Then, use that money that would have gone for the down 
payment to lower the interest rate along with other things to 
increase the buying power to be almost equivalent to what the 
30-year loan is. And then for a low income person, for a 
household, you can add what we call the LIFT home, low-income 
first time home buyer tax credit, so instead of having these 
tax deductions that run for 30 years, and the more debt you 
take out, the more benefit that you get, and if you are low 
income, you do not actually get any benefit from that, you can 
target that to a low income individual and say, ``We will give 
you an amount. 3 percent. Say $6,000. It is one time. You have 
to take out a shorter term loan.'' You now have the wealth 
building. You put them on a path to wealth building.
    The next house they buy 5 or 6 years down the road, they do 
not need any assistance, and if you couple that with savings 
for retirement, if you couple that with you pay off the loan by 
the time your children are 18 years old, all of a sudden, you 
have solved the education problem and other things.
    Chairman Price. Oh wow. Yeah. Exactly. I was really struck 
by your comment that the wealth gap is three times greater than 
the income gap. So Dr. Smith, let me switch. My pension is to 
talk about medical care and health care itself, but I want to 
talk about the finances, and you were so low key in your 
presentation, it was wonderfully stimulating and, I think, a 
very striking story.
    Let me read a couple of the sentences from your testimony, 
``Our prices. Your prices. Typically, \1/6\ to \1/10\ of what 
traditionally hospitals charge what we believe to be the cost 
to render care, and then once again, our prices, it should be 
noted, are bundled including all aspects of care and are less 
than Medicaid currently pays to not-for-profit facilities in 
your area.'' How on earth can you do this? Where are your costs 
being saved? Where are you margins being cut?
    Mr. Smith. Well, fortunately the question I am asked with 
less frequency is that question, how can we be so inexpensive? 
Increasingly, the question is being asked of the price gougers, 
you know, why can you claim to not make a profit and charge 10 
times what those guys do across town? The answer is, the prices 
that we have online are what we believe that cost to take care 
of patients, and we are making money, so what is not included 
is, you know, buying expensive advertising.
    It is not buying billboards, buying out physician 
practices, buying out competitors, buying all of the practices 
of rural physicians so that the, you know, local/rural hospital 
can be brought to their knees and purchased cheaply by the big, 
corporate hospitals. We do not do any of that. We just take 
care of patients, and that is what we believe it costs to do 
that.
    Chairman Price. If you could put up the slide on healthcare 
inflation, please, because I think it is really striking. Here 
is the healthcare inflation since 1965 compared to regular 
inflation CPI: 668 percent for regular, and 2100 for health 
care. What are the hurdles that are preventing the regular doc 
out there taking care of patients to do what you are doing?
    Mr. Smith. You know, many of the hurdles are local and 
State hurdles at the government level. There are Federal 
hurdles in that there are so many strings attached to accepting 
Federal money, and the electronic medical record mandates. 
Those sort of things just drive up the cost of a practice to 
insane levels, but certificate of need laws are a real problem. 
The Federal Government, I think, has backed out of that, but 
some States keep these certificate of need laws so that 
entrepreneurs and newcomers cannot enter the marketplace.
    There is also the Federal prohibition on physicians owning 
and controlling facilities like mine, and that has always been 
a problem that Washington has addressed with prohibiting 
physician ownership of facilities, but traditionally, 
physicians have a hard time participating in the bankruptcy of 
their patients with institutional charges from facilities they 
own, so there is an accountability there that is lost with the 
prohibition on physician ownership. I think that ought to be at 
least looked at.
    Chairman Price. Right. Remarkable story, and I would urge 
my colleagues to take a peek at it, because \1/6\ to \1/10\ of 
the prices that are being charged by competitors in your area 
with as high quality or higher quality. Great, great story. 
Thank you.
    Mr. Smith. Thank you.
    Chairman Price. Dr. Lindsay, I have just a few minutes 
left, but I want to touch on your notation in the area of 
education. Talk about tuition hyperinflation and the burdensome 
student loan debt, and we have got a slide on the level of 
student loan debt that is now exceeding $1.2 trillion, higher 
than credit card debt in this country, higher than loans for 
automobiles. And you talked a lot about the problem, but I want 
to give you a couple of minutes--a minute and a half--to talk 
about what are the solutions to reverse that.
    Mr. Lindsay. Sure. The problem has been, in part, a 
consequence of our very good intentions, and about 45 years 
ago, it became a part of a natural mantra that virtually all 
high school students should go to a four-year college. Now, we 
know that as today, as we have moved from an industrial economy 
to an information economy, that indeed, at least 60 percent of 
high school students are going to need to get some sort of 
education after high school, be it 2 year, 4 year----
    Chairman Price. Talk about the hyperinflation of tuition, 
because I am intrigued.
    Mr. Lindsay. Yeah, well, you know, looking at your graph on 
healthcare costs. As bad as the healthcare cost increase, 
student loan debt and tuition have increased at twice the rate 
of healthcare costs during that same period. As you mentioned 
earlier, the Federal Reserve Bank has found that Federally 
subsidized student loans are a big part of the driver of 
tuition hyperinflation. Every time this body increases Pell 
Grants by $1, universities charge $0.55 in tuition.
    Every time this body increases Federally subsidized loans 
by $1, universities raise tuition $0.65. So, again, the problem 
is we have very good intentions, but we need to inject some 
economic reality into what we are doing, because while our 
intention has been to help students, in fact, and as I said, 
the odds today under the current system are two to one against 
a student both graduating and getting the learning that a 
degree is meant to signify. We can do better.
    Chairman Price. Yeah. Thank you. I appreciate that, and I 
would draw folks' attention to your entire written testimony, 
because it really is remarkable. Mr. Yarmuth, you are 
recognized. Mr. McDermott, you are up.
    Mr. McDermott. Thank you, Mr. Chairman, Mr. Yarmuth. Dr. 
Smith, I am fascinated by your testimony, as like Dr. Price, I 
am also a physician. How big an emergency room do you have at 
your surgical center?
    Mr. Smith. We do not have one.
    Mr. McDermott. So everything is done electively?
    Mr. Smith. For the most part.
    Mr. McDermott. I went online with your name. Keith Smith, 
and I looked for your prices. I was trying to see where the 
transparency was, and I could not find it. So explain to me, if 
I am a patient, and I am in Oklahoma City, and I need a gall 
bladder done, how do I find out what you charge for gall 
bladders?
    Mr. Smith. All of our prices are at SurgeryCenterOK.com. 
Laparoscopic cholecystectomy is $5,865 for surgery, anesthesia, 
and facilities. All supplies.
    Mr. McDermott. I am just a plumber. I work for the school 
district, and I want to find out this. Where do I go when I get 
online?
    Mr. Smith. On a search engine.
    Mr. McDermott. I am just an ordinary Joe.
    Mr. Smith. I think some of the Google search. For instance, 
terms, affordable surgery, you know, upfront pricing for health 
care, those kinds of things. We treat patients from all 50 
States. Except for Hawaii.
    Chairman Price. But you gave your website, did you not?
    Mr. Smith. Yeah. SurgerycenterOK.com.
    Mr. McDermott. I got to go on Google, and I just say----
    Mr. Smith. Affordable surgery, yeah.
    Mr. McDermott. And I will find it?
    Mr. Smith. Surgical pricing. That is how patients most of 
the time--they find us. Yes. The two States that send us more 
patients than any other States outside of Oklahoma are Alaska 
and Wisconsin. It is amazing just even the small procedure like 
a carpal tunnel release. Someone will come see us from 
Anchorage or Boise, Idaho and travel because their travel cost 
added to our price is still far less, multiples less, than they 
would have paid----
    Mr. McDermott. But you are saying that is if everybody in 
the country would go to Affordablehealthcare.com and pick out 
their surgery, we could reduce all the problems in health care 
or most of the problems, or?
    Mr. Smith. Yeah, it is increasing that one of the problems 
is there is not a consumer market, and the ACA has changed that 
in some ways because the deductibles are so high. As I said in 
my remarks, many of the procedures on our website are less than 
patient's deductibles, so they can actually buy their surgery 
out-of-pocket for a better price than having used their benefit 
paying deductible.
    Mr. McDermott. Let me ask you a personal question.
    Mr. Smith. Yes, sir.
    Mr. McDermott. You do not have to answer. Have you ever had 
an emergency surgery or had any emergency medical problems?
    Mr. Smith. I have not.
    Mr. McDermott. You have not? So you are saying to somebody 
who has a kidney stone, they should go online when they have a 
kidney stone and ask, ``Where is the affordable place? The best 
place to get that done in Oklahoma City?'' The answer that you 
provide or that you are presenting here----
    Mr. Smith. The plan that I am presenting is the beginning, 
and that is 90 percent of health care, which is purchased, 
which is elective, one of the most exciting developments is 
that a full-service hospital is now working with us to price 
exactly what you have described, and that is tiered visits in 
the emergency department. They also are pricing maternity care 
where almost any imaginable maternity visit and care can be 
priced. There are some that cannot, and for that uncertainty, 
that is why we have insurance. That is why we should have 
insurance, is for the uncertainty.
    Mr. McDermott. So you believe in insurance?
    Mr. Smith. Not the way it is currently. Currently, it just 
represents pre-paid care.
    Mr. McDermott. I will give you a case. My son had a second 
child, and the child stopped moving around inside his mother, 
and so the doctor said, ``Come on down to the emergency room, 
and we will take a look.'' Now, they are driving down this 
highway in California. They are not going to be sitting on 
their computer figuring out which is the cheapest place to get 
a C-section or whatever is going to be necessary when they get 
to the emergency room.
    They do not know what is necessary. They are not doctors or 
anything, so they are just driving down there, because the 
doctor said, ``Come on in.'' How does this work for that kind 
of thing? What should my son have in your system? He is going 
to have all the prices on his computer for elective stuff, but 
what about the emergency stuff? How is he going to know that?
    Mr. Smith. And, again, this is a new concept, and I really 
should not be here. All I do is say, ``Here is what I do, and 
here is how much it is.'' That is what every other industry in 
this country does, so it is new, and there are more and more 
full-service hospitals that are becoming intrigued and 
interested with the idea of telling people up front, you know, 
``Here is what I do, and here is how much it is.''
    For an example, an emergency C-section at a hospital that 
we work with in Oklahoma City, they have given me prices for 
that, and that includes the ER, that includes the C-section, 
that includes the pediatrician, and it is probably about 
$12,000, by the way.
    Mr. McDermott. So everybody would be able to--I mean, what 
you are talking about is a system where we are all online, 
and----
    Chairman Price. Gentleman's time has expired. Mr. Cole, you 
are recognized for 5 minutes.
    Mr. Cole. Thank you, Mr. Chairman. I want to thank you very 
much for the hearing. This is very fascinating stuff, and I 
want to thank our witnesses for their presentation. Dr. Smith, 
as a fellow Oklahoman, I am very impressed and very pleased 
with your business model. If I am correct, you do not take any 
Federal payment for any of the services. Is that correct?
    Mr. Smith. Correct. We see Medicare patients, but we do not 
accept any money from the government.
    Mr. Cole. Can you quickly tell us what were the reasons 
that you came to that decision that it was really better from 
your standpoint not to be involved directly involved in 
something like Medicare?
    Mr. Smith. There are just too many strings attached going 
way back to how the stark laws affect physician-owned 
facilities, all of which have very unintended consequences and 
all of which would prevent this successful model like ours. I 
also am a firm believer in that rational pricing emerges from 
competitive activity, and the idea that prices can be dictated 
from on high is just wrong.
    I mean, the prices are either too high or too low. They are 
always wrong. If they are too low, then there is rationing. 
Either soft or hard rationing results. And if the prices are 
too high, then you wind up with a bunch of stuff going on that 
perhaps is unnecessary.
    So, to accept Federal money is to legitimize that pricing, 
and we just do not do that. I have talked to patients directly, 
eye to eye, and if they are having trouble that month, I do not 
charge them at all. It is just the way my great uncle practiced 
in Chickasha, Oklahoma. You just deal with people as 
individuals, and if they are able to pay our website fee or 
some portion of it, then we deal with them on an individual 
basis.
    Mr. Cole. Do you think that the model that you have would 
be transferable to something like primary care or other 
branches of medicine as opposed to just elective surgery?
    Mr. Smith. Yeah. Primary care is probably the area where it 
applies most perfectly, and the direct primary care movement 
here in the United States is one of the most exciting parts of 
this free market movement led by Dr. Lee Gross from Sarasota, 
Florida and also by Dr. Josh Umbehr from Wichita, Kansas. His 
model is called Atlas MD, and it is the perfect solution for 
patients that have chronic disease management issues. Patients 
will pay a subscription price of $50 to $70 a month, and they 
have unlimited access to primary care, so for the diabetic, 
hypertensive with a foot ulcer that needs to be seen every 7 to 
10 days, that is perfect for them.
    Mr. Cole. That is amazing. Do you find that the model that 
you have is being replicated other places? Do you get a lot of 
contact from other physicians or physician-owned facilities 
about what you do, and are you seeing this spread at all?
    Mr. Smith. Yes. We have started an association, the Free 
Market Medical Association, because it has become so widely 
popular. People are interested in our model because it feels 
like the right thing to do, and then there are other people who 
are interested in the model because it scares them, and they 
have lost a lot of business to us in Oklahoma City. So, the 
Free Market Medical Association is a very vibrant and growing 
organization, and we had our last annual conference in Oklahoma 
City at the Historic Skirvin Hotel, and sold it out. I do not 
think we will be able to have it there again. It is a very 
vibrant movement.
    Mr. Cole. Well, I would love to contact you some time and 
just come by and see your facility.
    Mr. Smith. I look forward to it.
    Mr. Cole. Very impressed. In the limited time I have left, 
Dr. Lindsay, if I could move to you. I actually chair the 
subcommittee where we do Pell Grants, so your testimony was 
wonderful to me, and let me ask you this. One of the things we 
see is a problem sometimes is that a lot of States really have 
pulled back in the degree to which they support students, and a 
lot of that cost has shifted to the Federal Government. Does 
your experience suggest that is the case?
    Mr. Lindsay. Yes, sir. When you look at the numbers as the 
role of the Federal Government is increased, the contribution 
that States can make is decreased not only because the Federal 
Government has taken it over, but also because the States have 
big items in their budgets such as Medicaid. So, here you have 
two Federal policies dueling with each other.
    Mr. Yarmouth. Excuse me, member, but the causation runs the 
other way. It is the state----
    Mr. Cole. Well, if I could ask my questions, I am about out 
of time here so I would prefer to choose the witnesses I would 
like to question. Thank you very much. I am out of time so I 
will yield back, but thank you, Mr. Chairman.
    Chairman Price. Gentleman yields back. Mr. Pascrell, you 
are recognized for 5 minutes.
    Mr. Pascrell. Thank you, Mr. Chairman. We have heard our 
witnesses and some of our colleagues that government is the 
problem most of the time. That the solution to best aid working 
families is to tear it down. The government that is. Well, what 
happens when we leave private industries to set the rules of 
the road? Are they really better at investing in the economy 
and in the working men and women of our society? Do they, left 
to their own profit-seeking motives, protect the vulnerable? 
And there are many vulnerables here. Not just people who are 
incapacitated. Vulnerable means a lot of things, a lot of 
groups.
    We used to have less regulated capitalism in the early part 
of the 20th century and we saw children working in factories 
and men, women, and children alike losing limbs and lives in 
hazardous workplaces. And let me interrupt what I am saying 
here to say that the comments to me about higher education are 
something to be considered. And housing, something to be 
considered. All of you, I believe--I have read your 
documentation--all of you make good, good suggestions and some 
of them are debatable. That is what democracy is when we, you 
know, practice it. But you will have to admit that the 
progressive movement ushered in child labor laws.
    And somebody did not wake up one morning and say, ``Let's 
have child labor laws.'' There was a reason for them and it 
built up, and it built up. And the best changes came when there 
was bipartisan support. The best changes. Labor unions 
advocated for an 8 hour workday. So, I do not know if it is a 
good idea if we leave everything to the private sector to 
decide what is good and what is bad.
    And this thing about regulations is the most mythical part 
of the center of destroying the American government. It is 
mythical when you look back at even the number of pages that 
are set aside for human regulation 20 years ago and this 
President of the United States who has been accused of 
everything but the plague. That is probably coming. We created 
government agencies like the FDA to regulate our food and meat 
production. Food safety is a major issue. When we talk about 
trade deals it is a big, big issue.
    Today, we have workplace safety laws and agencies like OSHA 
to inspect for hazards on the job. You do not have to go any 
further than look at the regulations that we have been--oh my 
god, at the banking industry. When the guy that is getting a 
bonus of $120 million is standing up and saying, ``Well, we got 
rid of those 5200 clerks in that bank and that is going to 
solve everything.''
    I put money into that bank. I got money in that bank. I am 
going to take it out. You want citizen advocacy, we will have 
it. I do not care what area you are talking about. Health care, 
financial, workplace. Prior to Medicare, about half of seniors 
did not have health insurance. In my district, now with 
Affordable Care Act we are down fairly low, 9 to 10 percent. I 
am sure it is the same with many people around here.
    So, the government has no part in anything. The government 
has no part in helping the police and fire. That is a local 
issue. Without social security, 44 percent of our seniors would 
be living in poverty. And yet, we want to now privatize. We 
want to distort what social security was all about. Thankfully, 
today because of that program only nine percent do live in 
poverty. Seniors. That is too many. Government--the people's 
representatives did that. Not a corporation, not an economic 
theory, an honest to goodness government.
    Chairman Price. Gentleman's time has expired.
    Mr. Pascrell. And I hope we have a second round.
    Chairman Price. Mr. Blum, you are recognized for 5 minutes.
    Mr. Blum. I would like to yield my time back to the 
chairman.
    Chairman Price. Mr. Brat, you are recognized for 5 minutes.
    Mr. Brat. Yeah, I was a professor for the last 18 years 
before I got this new job and so I would just kind of like to 
go down the line. I was very interested in some of the 
education comments and what the kids are actually getting when 
they are done at the end of the road from everybody. There is a 
lot of talk on the money. Our chairman showed some of the 
inflation statistics, et cetera. We are investing $12,000, 
$13,000, $14,000 per kid for 13 years right now, currently.
    I was just in a jail 2 days ago with heroin addicts, 40, 
and they were all telling me what they want in terms of 
education and it was shocking. They want a moral component. 
They said, ``No counselor ever spent any time with me as a 
person.'' They said, ``Everybody is talking about tests and 
isosceles triangles and whatever, and no one gave me any hope 
as a human being. What am I aiming at? What is my career? What 
is morally good? What is a good life?'' And, so I am just 
curious on your comments.
    I follow--Deirdre McCloskey is one of my economists here. 
She has got a six-volume set that shows that modern economic 
growth began in about 1700. Why then, when all human history 
made $500 bucks a year? She said that, ``That is when moral 
language changed such that we started calling the businessman 
and businesswoman morally good.''
    And so, I am just curious on if you have got any comments. 
Just real quickly going down at the end of K through 12, kids 
do not know what a business is, right? I mean, I taught 
freshman in college. They do not know what a revenue is from a 
cost from a price from a whatever. And a lot of them will not 
go to college and they are stuck.
    So, first of all, the business aspect, are we teaching is 
business morally good or morally bad? Are we aiming our kids at 
something they think is morally bad? And then the moral 
component. Any comments you have? Just 30 seconds each or a 
minute each would be great. Yes, Dr. Pinto.
    Mr. Pinto. Thank you for that question. For me I have to 
bring it back to housing and you mentioned, Dr. Smith, 
Sarasota. There is a free market movement going on there in 
multifamily housing that has been going on for about 10 or 12 
years. We have been studying it for about 6 months. We have a 
conference on it in about two weeks and it is called Economical 
Housing by Design. The subsidy programs are affordable housing 
buy subsidy. Spend $200,000 a unit for a rental unit and then 
subsidize it for the next 15 to 20 years. Incredibly expensive.
    The alternative is to put higher density, put lower cost 
housing, smaller units, that is what the people, our service 
workers, need. And then, the management runs it and you can 
have rents that they can afford and you put it near where they 
are working. That is going on in Sarasota. We want to make that 
a model for the rest of the country. People start out and then 
they can move from an efficiency to a one bedroom, two bedroom, 
and buy a house. We used to do that 50 years ago. We got away 
from it. We locked people away in subsidized housing and that 
is the end of it.
    Mr. Brat. Good. Dr. Smith.
    Mr. Smith. Yeah, the leader in teaching medical students 
about free enterprise, about mutually beneficial exchange 
without distorting third parties is the Benjamin Rush 
Institute, and they are almost heroic in their efforts to bring 
this message to medical students. The other leader, I would 
say, in education of physicians who many times have no business 
or economic training at all, is the Association of American 
Physicians and Surgeons. And they have been the leaders in that 
area for quite some time to preserving the sanctity of the 
relationship between the doctor and the patient, but also to 
hammer home the idea that an exchange between two individuals, 
if it is mutually beneficial, is moral by nature.
    Mr. Brat. Right, and thank you. And doctor, 30 seconds and 
30 seconds. Sorry to be so quick.
    Mr. Spriggs. So, what happened is because States cut back 
on their support for education and turned it into a free 
market. Colleges of course will chase the dollars, as is the 
way you do it in the free market. That increased tuitions 
because I want students who will pay and they all have 
Harvard's model. Harvard follows the top one percent. What 
happens to their incomes? Their incomes have been going up much 
faster than inflation, much faster than the average American.
    Mr. Brat. Thank you.
    Mr. Spriggs. The Federal Government then has to catch up to 
help out the other students.
    Mr. Brat. You believe in equity. Let's do it. Here we do, 
doctor.
    Mr. Lindsay. Sir, with regard to the moral component of 
education, it is sad. Over the last 50 years, universities have 
largely abdicated their prior responsibility for civic 
education. According to the U.S. Department of Education 
statistics today only one in three college students graduates 
having even taken one course in American government so they do 
not get a serious treatment of why equality? Why inalienable 
rights? Why government by consent?
    Chairman Price. Gentleman's time has expired.
    Mr. Brat. Sorry for the 30 seconders.
    Chairman Price. Mr. Pocan, you are recognized for 5 
minutes.
    Mr. Pocan. Sure, thank you, Mr. Chairman. So, I have some 
questions for Dr. Lindsay, but I have to admit I am going to go 
real quick first too, if I can, Dr. Smith. Your concept 
intrigued me and I did find your website right away, by the 
way. The prices, it took one simple search. So, let me go back 
to--Mr. McDermott was talking about examples.
    So, I worked at an auto parts manufacturer and my job got 
sent to Mexico. I have been out of work for a little while. I 
have got a torn rotator cuff. I call you guys up. But if I 
understand right from the other question, you do not take 
Medicaid or Medicare? So how does that individual access, if 
they do not have the savings to do that, how do they access 
your model?
    Mr. Smith. The patients that come see us usually with the 
help of their family and friends can afford our prices because 
they are low and in some cases there have been surgeries 
financed at our facility by church bake sales, so.
    Mr. Pocan. Okay, so, I do not mean these words wrong, but 
kind of survival of the fittest as opposed to someone who might 
actually need the service. They are going to have to go to 
other models then at that point. How about the example of the 
school teacher that Mr. McDermott started talking about? If 
they come in, now they have got insurance and the one thing I 
did see also on your site is this little asterisk after every 
price and there is a disclaimer. It says, ``Note if you are 
scheduled for surgery at our facility and we are filing 
insurance for you, the prices listed on this website do not 
apply to you.'' So what does that mean?
    Mr. Smith. That means we take a lot of risk dealing with 
the insurers who on the front end will say, ``Yes, we will pay 
for this cochlear implant surgery.'' And we will have all the 
documentation. We will do that surgery; buy a $25,000 implant 
and place in a child. And then the insurance company will say, 
``Sorry, we are not paying.''
    Mr. Pocan. What happens to the price for that individual? 
Because it says, ``Those prices do not apply to you.'' What do 
you do to the price?
    Mr. Smith. The prices you see on our website are what we 
extend to anyone who is paying us.
    Mr. Pocan. So if you have insurance it says, ``These prices 
do not apply to you,'' what does that mean for that individual?
    Mr. Smith. We do not file very many insurance claims.
    Mr. Pocan. Okay, I think that answers my question. Thank 
you very much.
    Mr. Smith. I am sorry.
    Mr. Pocan. No, no problem. So, Dr. Lindsay, so one of the 
questions that came from Mr. Cole about the State support and I 
agree, I have seen that happen in Wisconsin and across the 
country, in 2008 in the crash. There was an article in the New 
York Times a couple of years back. Most States have started 
putting some money in. States like Wisconsin have unfortunately 
not yet. But that has made tuition go up and that is one of the 
bigger drivers.
    You said you thought it was financial aid, but I am looking 
at a report from the Institute for College Access and Success 
and they say specifically, if I could just read this, ``A 
number of the Nation's most respected experts in higher 
education public policy have reviewed the research and found no 
convincing causal relationship between Federal aid and college 
prices.'' What are you referencing that is different?
    Mr. Lindsay. Yes, sir. Thank you for the question. More 
than 30 years ago, then Secretary of Education William Bennett 
said that growing subsidies would allow colleges, ``Blithely to 
increase tuitions without fear of repercussions.''
    Mr. Pocan. Okay, so I think I got it, this study versus a 
30-year-old comment from Dr. Bennett.
    Mr. Lindsay. For 30 years, academics did studies of that 
and said, ``Oh no, no correlation.'' Now I am an academic, we 
had an interest in saying no correlation. But nevertheless, the 
Federal Reserve Bank of New York, last summer really settled 
this issue. There should not be any more debate about this. Nor 
should there be this false charge out there which we hear every 
day.
    Mr. Pocan. So there is no academic organization or 
institution that has information that says there is a link to 
tuition and financial aid. Just a yes or no.
    Mr. Lindsay. Sir, if you see the Federal----
    Mr. Pocan. I have a few more questions.
    Mr. Lindsay. Take a look at the Federal Reserve Bank.
    Mr. Pocan. I will take that as a no. So let me ask you a 
question again about the lack of support. So when you look at 
public versus private institutions, especially you have seen 
all the stuff we have had with some of these private colleges 
for profit that 90 percent of their money is coming from the 
Federal Government or more. Is there a difference in 
distinction you see in that model versus the public institution 
model and other private college models?
    Mr. Lindsay. All of us are sad to see that some private for 
profits have engaged in fraudulent practices. Nevertheless, 
only 10 percent of students get postsecondary education from 
for profits. The real problem that we have to address if we are 
going to help the majority is to address public higher 
education.
    Mr. Pocan. Got it. In the last 42 seconds I think I have 
left, so one of the things that we have been looking at is 
trying to make it less expensive for students. They do not have 
to have so much in debt. You know, one of the things we have 
said is refinancing student loans. You know, you have these 
weird rates that are out there. But upfront, an idea that if 
you increase financial aid through work studies the average 
student might work 10 or 15 hours a week relive the university 
of some of those costs of that work and then do the university, 
and then get that as the financial aid. So they essentially can 
leave with no debt out of a 4 year program. What is your quick 
opinion on that?
    Mr. Lindsay. Certainly, I have no objections to that, but I 
think that is nibbling at the edges. There are netter 
solutions.
    Chairman Price. Gentleman yields back. Mr. Stanford, you 
are recognized for 5 minutes.
    Mr. Stanford. Thank you, Chairman. Okay. I guess first 
question would be on housing so I am going to come to you. 
Andres Duany is a land planner/architect. He has done some 
interesting thing in this movement called new urbanism, and its 
basic premise is, ``Much of our zoning is based on the 
industrial age and revolution. We are going to put the factory 
over here and the houses over here and we separate 
everything.'' And yet that is not how our country developed, 
right? If you look at places like Charleston or Savannah, it 
was all sort of thrown in there together and oftentimes you 
lived above where you worked.
    And why do we not go a bit more back to that? You had a 
granny flat in the back. Grandmom came to live in the back. 
When grandmom died you could rent the house, the little unit 
out. And this idea of mixed use. Are there two municipalities 
out there that from the standpoint of code, because much of it 
is driven by zoning, the government dictates in essence higher 
pricing on housing? Are there two municipalities that you would 
recommend for me to do further study on places that have got it 
right in your view?
    Mr. Pinto. Thank you for that question. So, new urbanism 
has now been replaced by sort of the founder of it, with lean 
urbanism. And that is because the founder of new urbanism said 
it became too over burdened with excessive regulations and 
driving the costs up. And so now it is lean urbanism. We have 
looked at it, so Bradenton, which is just north of Sarasota, 
this developer that I mentioned.
    After Bradenton heard about this in the newspaper, 
approached--it was actually Manatee County where Bradenton is 
located, approached the developer and said, ``We have this 
Knight's Inn that has 240 units and there is five acres or four 
acres next to it. Could you come in and do something?'' And so 
within less than a year he purchased that building, it got 
rezoned, converted.
    He is in the process of converting 240 units to 
efficiencies. He has already converted 120 that rent for $625 
furnished with utilities and then he is going to build about 
130 units new, two bedrooms on the four acres. It is located 
downtown Bradenton close to service jobs and----
    Mr. Stanford. The bottom line is Bradenton is----
    Mr. Pinto. Bradenton is one example. We are working with 
other localities. I did meet with a city in South Carolina.
    Mr. Stanford. Okay. How about the micro homes? You know, it 
is an RV, it is a trailer, but no, it is a home. I love the 
concept. I love, you know, the idea of smaller is better. Is 
there a municipality that has it right with regard to micro 
homes and----
    Mr. Pinto. I have looked a little bit at that. Again, the 
other answer, it is a little bit of nibbling around the edge. I 
think you are better off looking at efficiencies at 300 to 400 
square feet and one bedrooms at 400 to 500. Those sound small 
today, but those were the norm back 56 years ago before the 
Federal Government pumped everything up.
    Mr. Stanford. Okay. Going over to the world of education. 
When I wore a different hat in South Carolina, I dealt with the 
happy index extensively and the point, the phenomenon that you 
have pointed out, which is the proportionate raise in tuition 
based on the amount of new money we seem to put in at State 
level. Is there a State in your view that has it most right 
with regards to terms trying to correlate inflation with the 
pricing of their higher education system?
    Mr. Lindsay. Well, sir, I do not want to--just because I am 
from Texas, talk about Texas, but we have been trying to 
address this problem and I hope that what we are doing can be 
instructive. The problem is that we are expecting too many 
students to go to four-year traditional colleges. That is not 
helping them. That is why you have two to one odds of failing 
today if you start college. We are looking at, and have begun 
to expand across the State, what we call the affordable 
baccalaureate program, which as I mentioned in my opening 
remarks, can cost half as much as a traditional degree and can 
be completed quicker.
    Now, these are not degrees in biology or philosophy as I 
mentioned, but we have to bear in mind the new majority of 
students out there today seeking our help are non-traditional 
students. And for them, these affordable baccalaureates which 
use online learning, competency-based criteria; that is their 
only ticket to the American dream.
    Mr. Stanford. I see I have 6 seconds. I would love to ask a 
question but I do not think that is permitted. Thank you, Mr. 
Chairman.
    Chairman Price. Thank you, gentleman. Time is expired. Ms. 
Castor, you are recognized for 5 minutes.
    Ms. Castor. Well, thank you Mr. Chairman and thanks 
everyone for being here today to talk about how we lift the 
American workers and American families. I think it is important 
to reflect that this country has made it through a very 
remarkable time. We have bounced back from the worst recession 
in our lifetimes thanks to American workers and a lot of the 
recovery act policies that invested in American families and 
small businesses. Just think about this, it was less than 10 
years ago that people were losing their homes. They were losing 
their jobs.
    The unemployment rate in Florida topped out at a little 
over 11 percent. We are already down at 4.7 percent in our 
unemployment rate in Florida where we have a real boom and bust 
cycle. It hit us particularly hard, but here all across the 
country the unemployment rate is down to 4.9 percent. We have 
more than cut the unemployment rate in half. We have created 
over 15 million private sector jobs just since 2010.
    Then think about, did you ever think you would see gas 
prices at $2 a gallon for so long? I mean, in the Tampa Bay 
area I represent, we have been hovering at a little over $2 per 
gallon now for many months at the same time that we have been 
able to double our clean energy production.
    The Affordable Care Act has been a godsend for working 
families, and in Florida we have a very competitive marketplace 
now with healthcare.gov. 1.7 million Floridians now have access 
to the health insurance that they did not have before because 
for too long a time we allowed companies to discriminate 
against people who had preexisting conditions like asthma or 
diabetes or a cancer diagnosis; 1.7 million Floridians. So, the 
uninsured rate now, we know is at its lowest level in the 
history of the country. And most people still have private 
insurance through their employer.
    In Florida, 60 percent do, and their premiums and co-pays 
and cost increases are now at the lowest level that they have 
been in many years so that is good news. And, if you have been 
fortunate enough to have money in the stock market over the 
past decade you have done very well. The stock market has 
practically tripled.
    But, we still have this problem with how we increase wages 
and income for families. The good news was the Census Bureau 
said last week real median household incomes grew by 5.2 
percent over the last year. The number of people in poverty 
fell by 3.5 million. That was the largest one-year drop since 
1968. But we have got to do so much more. We have got to build 
on this success.
    And Dr. Spriggs, I love it that you say we have got to 
invest in the American people. We have got to invest in this 
country. And there are a couple of things that just really 
stick out. We have got to improve our infrastructure in this 
country. And I wonder if you could comment on that, Dr. 
Spriggs. I look back at home we have so many needs in our 
roadways, our water systems, our waste water systems. Interest 
rates are low. Would not this be a good time to invest in our 
communities back home and create jobs?
    Mr. Spriggs. Absolutely, Congresswoman. Right now we are 
running a deficit in our infrastructure because it is 
deteriorating. So, if you look at it from a net perspective, 
you are running negative. We are leaving to our children the 
debt of repairing infrastructure that our parents and 
grandparents paid for. So, we are not leaving them the legacy 
that we were left with. We are leaving them the debt of trying 
to fix it.
    That is not right. And at the moment, there is a consensus 
among economists that the one thing missing from this recovery 
was further fiscal stimulus whether you look at the father of 
expectations or someone on the other side of economists like 
Krugman. Nobel laureates all agree that we need this stimulus. 
The IMF has been urging the United States at these low interest 
rates, invest. Make the investment in your infrastructure. The 
OECD is telling us, invest. And we are not responding. The 
Budget Committee has a responsibility for the full employment 
of Americans through the Humphrey Hawkins Act and that is a 
responsibility we should take seriously.
    Ms. Castor. Well, my neighbors back home see this and they 
see those low interest rates and they understand this would be 
a great time to invest in our communities. And then the other 
thing I hear is that people are clamoring for more modern 
workplace policies. Family Medical Leave has been very popular, 
and it has sustained a lot of folks. But we have got to do more 
on sick leave, paid family and medical leave, and good 
childcare. How would that improve our----
    Chairman Price. Gentlelady's time has expired.
    Ms. Castor. Well, maybe you can reply back to the committee 
on that topic for workforce.
    Chairman Price. There will be questions for the record that 
you are welcome to offer. Mr. Palmer, you are recognized for 5 
minutes.
    Mr. Palmer. Thank you, Mr. Chairman. Got a couple of 
questions then I want to make some comments. It has been 
mentioned how well the economy has been doing. I would just 
like to point out that under this administration the economy 
will have averaged 1.55 percent growth through two terms and it 
will be the first administration, I believe, in the history of 
the United States which there was never even one quarter in 
which the economy grew at least three percent. One out of every 
six working age males are unemployed. And in terms of the 
unemployment rate, I do not think they count people who simply 
quit looking for work. And we could go on.
    Mr. Spriggs mentioned infrastructure. We passed an $860-
something billion stimulus bill back early in the first term of 
this administration. And various reports have indicated just 
over 3 percent of that actually went to infrastructure when it 
was supposed to be shovel-ready jobs. So we had an opportunity 
to do something about infrastructure but chose to spend the 
money elsewhere. So, I take some exception to that. And then we 
were talking about Head Start.
    The government's own studies indicated that Head Start, by 
the time kids reach the fourth grade show no impact. And regard 
overall to education, one of the issues, Dr. Lindsay, that I 
have with what is going on in higher education is the amount of 
money that States and parents and students are having to spend 
on remedial education. I think it is about 30 percent of the 
students who enter college today are having to take remedial 
courses and that is basically taking a high school course but 
paying for it at college cost. You want to comment on that?
    Mr. Lindsay. Yes, sir. This is a consequence of our notion 
that virtually all high school students should attend a 4 year 
college and that is just not the case. We are not serving them. 
So it seems to me the question is not whether to invest in the 
American people. The question is, what policies by which we 
invest in them help them?
    And with the best of intentions over the last 40 years the 
growth of Federal involvement in higher education has now 
helped them. I mean, think about the fact that today a smaller 
percentage of college graduates come from the bottom 25 percent 
of income than in 1970 when these programs started. So no one 
here is talking about whether we should invest or not invest in 
the American people. Let's do it in a way that actually helps 
because when 68 percent of students either do not graduate or 
graduate not having attained the learning that a college degree 
is meant to signify that constitutes a scandal.
    Mr. Palmer. In my district we have a couple, two or three 
centers, technology-related, vocational related for high school 
students in Blount County in particular. You have got young 
people graduating from high school that know how to weld and 
their first jobs are earning $50,000 to $60,000 a year. And the 
thing that I have tried to emphasize is that those students can 
go into those jobs but they could still go to a 2 year college 
or they could go to college later. It gives them a chance to 
earn money and save up, pay for their education. Because, as I 
found out, the more mature you are the better student you 
become. But these are people that are starting businesses.
    Mr. Lindsay. No, that is right. With the exception fields 
like law, medicine, engineering----
    Mr. Palmer. Well, we need more lawyers.
    Mr. Lindsay. With the exception of those fields, most 
students--I mean, 4 years is much too long. Much of this can be 
done at the community college level. And we have been hearing 
things about free community college. Let me tell you, in 2014, 
the average Pell Grant was $3,300. The average community 
college cost was $3,300 so we have got that already. As I said, 
the problem has not been a lack of generosity. Quite the 
contrary. We spend twice as much per student investing in their 
higher education than the average OECD nation.
    Mr. Palmer. Well, I am the first person in my family on 
either side to do to college. My dad was a logger. He had about 
an eighth grade education. That is what I spent my summers 
doing and it was a lot of motivation to go to college. Dr. 
Smith, quickly, opting out of government funding with health 
care has greatly improved your practice and pricing structure. 
You mentioned the electronic medical records coding, reporting 
mandates combined with low and formulistic pricing that had a 
distorting effect on healthcare markets and access to care and 
certain specialists. Can you speak to that? And I would like 
for you also to speak to ICD10 and the prospects of ICD11.
    Mr. Smith. Well, any mandate where, you know, physicians 
have to spend money that they do not think they ought to spend 
is a problem. It increases the cost of practicing medicine.
    Chairman Price. Dr. Smith, I am going to have to have you 
answer that question for the record afterward. Mr. Yarmuth, you 
are recognized for 10 minutes.
    Mr. Yarmuth. Thank you, Mr. Chairman. It has been a very 
interesting conversation. I am not sure that we have figured 
out a way to restore the trust for families and working age 
Americans yet in the hearing. But maybe there is some ideas 
that can work. You know, we debate all the time in this 
committee essentially what the priorities of government should 
be. That is basically what this committee is about.
    We debate it through a budgetary process and then we debate 
it in hearings such as this. And, over the last few years there 
has been a substantial difference in the attitudes of 
Republicans and Democrats as to what the thrust of our spending 
should be. And, as we have mentioned many times before--Dr. 
Spriggs, as you mentioned in your testimony, we Democrats are 
pushing for investment in infrastructure and investment in 
education, research and development and so forth. Things that 
traditionally have provided stimulus for the economy and I 
think have improved people's lives.
    On the other hand, we have proposals from the Republican 
side, first, I guess, formulated when Paul Ryan was chairman of 
this committee and he proposed budgets that took a very 
different path.
    And now we have the better way. His plan as Speaker, which 
among other things would reduce the amount of non-discretionary 
spending in this country to its lowest level as a percentage of 
the economy and the budget in modern history. So, Dr. Spriggs, 
I ask you, I know a lot of the times we get the argument from 
the other side, that, ``Yeah, we would like to do a lot of 
these things, but we have a lot of debt and we cannot afford 
it.'' Would you discuss the downside of not investing in 
infrastructure and education and research and development?
    Mr. Spriggs. Well, the growth of the United States was so 
phenomenal because we did make the investment in our people. 
So, you look at our public land grant colleges. One of the 
things we have left out in discussing what education does is 
that our education system included providing the research for 
our growth. Those land grant colleges insured that American 
farmers would be the most productive and when you look at the 
results they have continued to be the most productive because 
of the research that takes place. Unfunded research. And that 
is the difference between a high education and a low cost 
education.
    It is an investment that gave us Hewlett-Packard, that gave 
us Google. All of those things were possible because of the way 
we run in the United States our higher education. It is not a 
glorified high school. So, that investment pays off. Whether it 
is Medicare and what happens to extending the work life of 
seniors or Medicaid and giving young people the entry to have a 
healthy life and to have more education, to seek more 
education, to inspire them to be doctors.
    All of this plays a role and it has paid off. The research 
on Head Start has new findings against what the government 
initially found because we have done better research as 
economists. And that is what happens when you have researchers 
who get supported.
    So, our better research has indicated that Head Start, in 
fact, does have lasting effects because the earlier study did 
not consider that Head Start has spawned lots of preschool 
programs. And that earlier research looked at Head Start 
ignoring that people were also getting other program and 
support. So when you actually looked at it more carefully, we 
have found that Head Start pays off through the life of the 
person and most importantly when it comes to State costs, it 
reduces the criminal justice system costs because we know that 
Head Start and investments at a younger age does reduce 
criminal activity. So, all of this points to the success of 
these investments.
    Mr. Yarmuth. Thank you. I want to talk about the union 
situation in the country. You work for the AFL-CIO and it seems 
to me you can pretty much track the growth and income disparity 
in this country not necessarily by race or gender but just by 
income, rich and the poor, with a decline in union 
representation in the country. Could you discuss the impact of 
unionization and the declining unionization on kind of the 
general welfare and income levels of the country?
    Mr. Spriggs. Yes, and the International Monetary Fund, 
which is not union-supported at all or union friendly has 
looked at this in a comparative way, so we can see what has 
happened for countries that have seen declines in union 
density. And they found the most strong relationship between 
declining union density and growth and inequality particularly 
for people who are the top one percent.
    So, in other words, what happens is when you do not have 
workers at the table being able to negotiate with their boss 
about what happens to this productivity increase it goes to the 
boss.
    It does not get shared by the workers. When you look at it 
in the United States, as you mentioned, the graph just pops 
out. That is the way the graph looks--declining unionization, 
growth of income at the top 1 percent. There is a perfect 
correlation. Non-union workers hurt because of that. The wages 
of non-union workers are seven dollars off from what they would 
be per hour depending upon their education level and even 
greater for those with less education. So, the wages of non-
union workers are hurt when workers are not organized. So, it 
increases inequality and it hurts non-union workers as well. 
So, it is very important that we maintain our commitment to 
Americans having the right to organize.
    Mr. Yarmuth. I thank you for your answer. A couple of 
things I wanted to follow up on the statements that have been 
made by the various witnesses. Dr. Lindsay, you compared twice 
what we spend in the United States to what is spent on higher 
education in OECD countries. Could you point to any one of the 
OECD countries that you would prefer be the system we use 
versus theirs?
    Mr. Lindsay. Sir, my point in drawing out attention to that 
fact is this--this is not a money problem, right? And so I was 
not saying that--that was not an invidious comparison. My point 
is this--we are, the Federal Government has been very generous 
in investing in Americans' education. My point is we can do it 
better because I do not think any of us--sir, I am sure you are 
not happy. When these Federal programs began in the early 70s, 
as I said, today fewer students graduate from the bottom 25 
percent of income than in 1970 when these programs began. I do 
not question the intentions.
    Mr. Yarmuth. I understand that. Because in most of the OECD 
countries higher education is free, correct?
    Mr. Lindsay. You know, I am glad you raised that point 
because we hear that all the time. We think, ``My goodness, I 
want to move there.'' But you know what? No more than 20 
percent of those students go to college. In Europe they track. 
Meaning, at a very young age you are told, ``You are not going 
to a liberal arts college. You are going into the trades.'' So, 
when we say it is free it is not free for everybody. It is free 
for the 10 to 20 percent that qualify through the tests. So, 
thank you for giving me that opportunity.
    Mr. Yarmuth. You are welcome. No, I do not think it makes 
any point one way or the other, but glad that you cleared that 
up. Because I do not think there is much value in a comparison 
to OECD countries because they are very different systems.
    Mr. Lindsay. No, the value of the comparison is this: We do 
not have a money problem. What we have is a priorities problem.
    Mr. Yarmuth. Thank you for that. Dr. Smith, just one 
question. I will be a little bit snarky here, but, you know, 
oftentimes we hear about the sanctity of the patient-doctor 
relationship and from what you are telling me is that the 
patient-doctor relationship is irrelevant to the patient 
getting care in your situation. They go online; they have no 
relationship with you. They decide basically on price to come 
to your service and they do not have any idea who you are, so I 
just want to throw that out there. But that is not the question 
that I want to ask.
    Just in terms of solutions to our healthcare challenges--
and everybody agrees we have tons of them. And I actually have 
raised points before in hearings about the fact that you can 
get a colonoscopy for $600 or $700 in a freestanding clinic and 
the same thing is $4,000 in a hospital and what sense does that 
make? It makes no sense.
    Particularly, if the government is paying for it. But, is 
it not true that the vast majority of costs in the system writ 
large are treating cancer, diabetes, heart disease, 
Alzheimer's? These are hundreds of billions of dollars a year 
that the system is trying to deal with. And those are diagnoses 
that would have no relevance to the type of system you are 
talking about?
    Mr. Smith. I am not an economist so I do not have any idea 
whether those figures are right or not. I do not know.
    Mr. Yarmuth. Yeah, well, generally speaking they are right. 
I will yield back, thank you.
    Chairman Price. Gentleman yields back. Mr. McClintock, you 
are recognized for 5 minutes.
    Mr. McClintock. Thank you, Mr. Chairman. I thought Mr. 
Pascrell made the best point of the day in defense of the free 
market when he said, ``I have got money in that bank. I am 
going to take it out.'' I mean, is that not the ultimate 
consumer protection? The ability to say, ``No, your prices are 
too high. No, your service is not adequate. No, I will take my 
business down the street to somebody who can provide me a 
better service at a lower cost.''
    Is that not how we punish bad actors in a free market? And 
is that not the ultimate punishment that they go out of 
business? And we reward good actors by giving them our 
business. Now, Dr. Smith, your patients choose you. They do not 
have to go to you for services, correct?
    Mr. Smith. That is correct.
    Mr. McClintock. Why do they choose you?
    Mr. Smith. People that search online are many times 
initially attracted to the price because otherwise they find 
their care unaffordable in their local market.
    Mr. McClintock. So, better service at a lower price they 
come to you. Is that not a good thing?
    Mr. Smith. It is the market at work, we believe.
    Mr. McClintock. Will and Ariel Durant in their history of 
civilization asked the question, ``What makes Ford a good 
car?'' Chevrolet. Competition. The fact that there is somebody 
down the street doing the same thing and is competing for 
people's free choice for where to go. But, I saw that the 
Kaiser Foundation has just estimated that in some 30 percent of 
American counties, people will have no choice over their 
Obamacare policy.
    They have to choose only one plan. That is not a choice at 
all. In 60 percent of markets they will have a choice between 
two plans and that is all. That is not much of a choice at all 
and I wonder what will happen to quality if people cannot move 
their business from people who are doing lousy service to 
people who are doing good service.
    Mr. Smith. And just as powerful as competition's effect on 
the marketplace, which drives quality up and prices down in 
every industry--just as powerful is the lack of fear of 
competition. And that is----
    Mr. McClintock. Now, the price you cited to Mr. McDermott 
was around $5,000 for a procedure. His question is, ``Well, 
what if you cannot afford that?'' I am wondering what is the 
difference between paying you $5,000 for the procedure and 
having Obamacare policy with a $5,000 deductible? Aren't I out 
of pocket $5,000 in either case?
    Mr. Smith. Yeah, and many of the procedures on our website 
are less than the deductibles for many of the ACA exchange 
plans. So, people's out of pocket experience is actually 
superior paying for the entire procedure at our place.
    Mr. McClintock. And would it not also make more sense to 
put health care back within the financial reach of Americans? I 
mean, we give these huge tax breaks to companies so they will 
go out and make a choice for their employees that their 
employees are stuck with. Their employees lose if they lose 
their jobs. Why do we not give those same tax breaks to the 
employees themselves so they can afford to go out and make 
their own choices for the best services at the lowest price? 
Does that make more sense to you?
    Mr. Smith. Yes. And a consumer market is full of people who 
actually care what things cost, but if they do not know what it 
costs then there is a lack of price transparency then they are 
at a real disadvantage. That is why I think that we need to 
focus more on what does this cost not does everyone have 
coverage.
    Mr. McClintock. I want to go to Dr. Lindsay for a second. 
The two areas when the government has been helping people the 
most has been helping them to afford their health care and 
helping them to afford and education. And it strikes me those 
are the two areas of the economy where prices are growing much 
faster than inflation.
    Last time I checked, health care was growing at twice the 
rate of inflation. Tuition is growing at four times the rate of 
inflation. And from your testimony, I seem to take from this 
the fact that as we throw more money into the system the 
universities accept that by raising their tuitions.
    And the more they raise their tuitions, the more we have to 
help students try to afford those tuitions by doubling Pell 
Grants, by dangling all you can borrow loans in front of 
students. And the more we do that the higher the tuitions go 
and we are in a negative feedback loop.
    Mr. Lindsay. Yes, sir. Exactly. It is just simply an 
economic fact.
    Mr. McClintock. What is the biggest cost driver in 
education?
    Mr. Lindsay. Federally subsidized student loans.
    Mr. McClintock. Those student loans, and I think I have the 
distinction of having one of the highest parent plus loan 
balances in the entire Congress. This is a cause near and dear 
to me. Does this not make it virtually impossible for students 
to qualify for consumer loans or for mortgages? Is that why we 
are seeing young people start families later? No longer able to 
afford to buy. They are now renting. And consumer spending 
being extremely sluggish because they cannot qualify for 
consumer loans in an economy where two thirds of economic 
growth depends upon it.
    Mr. Lindsay. Exactly.
    Chairman Price. Gentleman's time as expired. We will take 
that as a statement instead of a question.
    Mr. McClintock. One with which I agree.
    Chairman Price. Exactly.
    Mr. McClintock. The answer was exactly.
    Chairman Price. There you go. Mr. Norcross, you are 
recognized for 5 minutes.
    Mr. Norcross. Thank you, Mr. Chairman. I got to say, this 
is probably the most entertaining committee hearing I have been 
since sitting on Budget Committee. Sort of remarkable. And I 
would like to thank all of those testifying today. But I hear, 
live where you work. We are talking about Potterville here 
again. I think the only place you get to live where you work 
for free is in Congress when you live in your office. But that 
is a different story. I guess we will not go into that.
    I have to disagree with my colleague who we got sworn in 
together, Congressman Brat, when he says, ``If you do not go to 
college you are stuck.'' No you are not.
    You have choices. Those who go to serve our military, 
service to our country, is of great value. Those who go to the 
other four-year college called an apprenticeship, that is great 
value. You know, in this country versus Europe and many others 
it is somehow if you do not go to college you are less than. No 
they are not. They are great people living a great dream 
whether they were coal miners or truck drivers. That is exactly 
quality, accessible, affordable, flexible college.
    What I want to talk about what we are seeing here and 
hearing here today. It literally is a tale of two countries. I 
think the data speaks for itself. We can interpret it very 
differently and I agree with my colleagues on this side of the 
aisle that the facts are irrefutable and you are not changing 
those. You heard it mentioned where we were a half a dozen 
years ago and where we are today.
    There is a recovery. It is who is enjoying it or who can 
enjoy it? The disparity in wages has grown exponentially from 
those who are working with their hands and those who are 
running the companies. Fifteen million jobs, that is pretty 
good. But those are jobs that are much less than when they 
started, and that tends to be one of the concerns that I am 
dealing with middle class.
    So, when they make a choice to do to college can they 
afford to send their kids there or are they saddled with a 
quarter of a million dollars of debt? I think we get back to a 
much more flexible system that addresses the real core issues 
of what is going on is probably the most important thing that 
we can do. But, when it comes to the comments, Dr. Smith, it is 
an interesting model. I just wanted to ask one quick question. 
You post the prices. Do you have specials like twins today get 
half price off? Do you do things like that?
    Mr. Smith. Let me write that down. That is a----
    Mr. Norcross. Okay, we would be interested in that. You do 
not have to answer that. Dr. Spriggs, minimum wage. There is a 
number of bills. I have one to increase that to $15 an hour by 
2024, gradual increase and then to incentivize it with tax 
credits. My colleague Congressman Pocan, Senator Sanders joined 
together in a second bill called the Workplace Democracy giving 
the NLRB the ability to have essentially a check off, and 
certify those who are willing to come together to try to make 
it easier to form unions. There is a concern that the recovery 
is not felt by all. How do you think these two bills if they 
were to be enacted and signed into law would impact the 
economy?
    Mr. Spriggs. Well, they would help to restore fairness to 
the economy to make sure that rises in productivity by workers 
show up in their paycheck. You know, the market is a wonderful 
way to allocate resources, but it only means something if you 
have the resources to respond to the market. Having lower 
health care does not mean anything if I cannot afford $5,000. 
Having affordable housing that is dictated by prices from the 
top does not mean anything if I cannot afford housing.
    So, we have to address what happens to the wages of 
workers. So, pushing wages up from the bottom to ensure that 
even those at the bottom enjoy productivity growth is 
necessary. That is one of the keys we learned from the period 
from 1946 to 1979. And then, making sure that those in the 
middle can negotiate fairly with their boss.
    I am more productive. Do I not get to share in this 
productivity? That makes all the difference in the path and 
study after study is pointing this out by economist. That the 
economy becomes more stable because higher minimum wages mean 
that those workers are more resilient and can respond to market 
pressures. And the ability to negotiate wages mean that wages 
can be more flexible so we can have a more efficient labor 
market. So, we see that as more efficient.
    Mr. Norcross. Thank you. I yield back.
    Chairman Price. Gentleman's time is expired. Mr. Woodall, 
you are recognized for 5 minutes.
    Mr. Woodall. Thank you, Mr. Chairman. Thank you for holding 
the hearing. Mr. Yarmuth mentioned in passing that he was not 
sure we reestablished any trust here today. I came in late, and 
so I may have missed a more cynical part of this panel. But I 
have got to tell you, when you, Dr. Lindsay, are focused on 
trying to get folks not just with access to education, but 
access to education that benefits them long term. When you, Dr. 
Spriggs are trying to tie workers' wages to their productivity 
and life folks up out of poverty.
    When Dr. Smith has taken something that is impossible to 
understand and impossible to afford and trying to deal with 
both of those issues at the same time. And when Mr. Pinto is 
telling folks that maybe we have been complicit in turning 
something that was supposed to be a wonderful opportunity into 
a terrible burden, that is exactly what folks back home want us 
to be talking about and I cannot believe that there is not just 
a little bit of agreement here, but a lot of agreement. That is 
what I want to focus my question on. Dr. Lindsay, I agree with 
you about the Stafford loan program. My question is, who on the 
left would work with us?
    When I go into a high school today and say, ``Who wants all 
the free money you can borrow and a degree in art history? Or 
who wants a co-op program, a work-study program, you want to 
graduate with employer experience and no debt?'' Who on the 
left would work with us to redirect these Federal incentives to 
putting real people in real jobs?
    Mr. Lindsay. Well, sir, I think there is a growing 
bipartisan consensus. I mean, you have seen candidates on the 
left and the right. President Obama, former Texas governor Rick 
Perry, could not be as different in politics, but they all 
agree that we have to reform our policies to better serve 
college students. Meaning, to help them find gainful employment 
after their degree.
    And so; therefore, I think the time really could not be 
better than right now to start to go back and recognize that 
with the best of intentions we have produced some consequences 
that do not help the intended beneficiaries. I mean, there was 
an AEI study by Jorge Klor de Alva. He found that under the 
current system average working people pay more to support elite 
institutions of higher education than they do for the schools 
to which they are likely to send their own kids. I mean, the 
average school gets $2,000-$3000 in support. The elite 
institutions get $12,000 to $13,000 per student.
    Again, in another well-intentioned income based repayment 
and loan forgiveness you probably saw the Washington Post 
report last year. They now counsel their students at Georgetown 
Law School on how to game the income based repayment and loan 
forgiveness plan so that, says the Post, ``Tax payers are 
transferring $160,000.''
    Mr. Woodall. I will not say that you are not dealing with 
reality. We are slipping back into cynicism. Because that is 
what folks worry is happening. The same thing is true with Mr. 
Pinto's topic. I live in one of the densest Congressional 
districts in the State of Georgia. You cannot find an 
efficiency in my district. It is not for sale, and if I call my 
bank they are going to say, ``Rob, we stopped doing loans for 
houses under 600 square feet. We do not do those any longer.'' 
Who on the left, Mr. Pinto is going to help me? Instead of 
having, as I do in my district, a 2000 square foot house with 
14 people living in it. A 3000 square foot efficiency with two 
people living in it? Who on the left will partner with me to 
make that happen?
    Mr. Pinto. I cannot name anyone offhand. But I can think 
about it but I cannot name anyone offhand.
    Mr. Woodall. Because the whole discussion we are having is 
how do we love people? How do we support people? How do we 
advantage our neighbor? And I believe that is a unifying 
statement, and I struggle with that in the housing industry as 
much as anywhere. Dr. Smith, I love what you are doing. I love 
my medical savings account. My Obamacare plan keeps getting 
canceled, and I sign up for a new one and it get canceled, and 
I sign up for a new one, but I am trying to say in the medical 
savings account space, yes.
    Telling someone they have a card that gets them care with a 
$9,000 deductible is not valuable in my district and I know 
that we can bring costs down if we understood it more. What is 
going to drive more of your peers to adopt that model? How do 
we get more folks to do what you are doing, which is to give me 
access to information as a consumer?
    Mr. Smith. What is driving more people to do it now is 
losing patients to facilities like mine that are not price 
gouging. In answer to your other question, there was not a 
single vote in the Oklahoma legislature, Democrat or Republican 
against this initiative with this new no out of pocket for the 
teachers and State employees in Oklahoma plan. So, there is 
bipartisan support and there should be for cheaper and better.
    Mr. Woodall. There is a lot here today for us to work on, 
Mr. Chairman, thank you for holding the hearing.
    Chairman Price. I thank the gentleman. His time is expired. 
Mr. Ryan, you are recognized for 5 minutes.
    Mr. Ryan. Thank you, Mr. Chairman. Several of the issues 
you talked about I would be happy to work with you on. I think 
that would be great and I will even come to your district and 
spend time with you because I am sure that would benefit you 
politically as well for you to be with me in your district. Mr. 
Smith, before we get into the deep policy, as a member from 
Ohio and an Ohio State football fan, I want to say I am sorry 
about your loss on Saturday. I am sorry Mr. Cole is not here to 
share with him the Ohio State-Oklahoma game.
    Several questions I have because I really think that there 
are some issues here that we should be able to hammer out. I 
think that every member--and when I was not here I was watching 
in the back--has made some really good points on college costs, 
making sure the Pell grants that we send down to the schools 
actually hit home and actually reverberate in the household and 
increase or lessen the dependence that families are spending on 
some of these programs. The student loan issue is a huge one. 
And I think there does need to be some controls on our colleges 
with us just sending them money and tuition keeps going up, and 
I will say it as a Democrat, the bureaucracy of the 
universities growing in a way that is not as focused.
    And maybe we do need to look at how schools in States can 
focus on specialties. I want to give Dr. Spriggs a minute to 
talk about the higher education costs because I know that it 
has been brought up and I want to give you a minute to just 
kind of express your opinion about what has been stated with 
the panel so far.
    Mr. Spriggs. So, previously our model was that we wanted as 
much education as possible and our States made heavy 
investments to make that possible, and make it affordable. So 
not only did we get affordable, but high-quality colleges. One 
of the big trade surpluses for the United States comes from our 
universities because of the research that takes place there 
that we have all benefited from, and given us the innovation 
that has led our Nation.
    We have de-invested, we have taken them from being public 
to private, and that market competition, more than anything 
else, has lowered the access to low income students because, if 
I am the university, and you are going to tell me, ``I am not 
supporting you anymore,'' we had a drop from 1975 of 63 percent 
State support to today where it is under 33 percent.
    I am going to want students who can pay. I am going to want 
out-of-state students. I am going to want foreign students. I 
am going to want to teach classes with teaching assistants. I 
am going to want to have as many classes as I can, done in some 
inexpensive way. I am going to have adjunct professors 
everywhere, right? I will lower my cost, and I will cut access 
because I do not want low income students, and I will raise the 
price because I am chasing dollars, and those in the top 20 
percent spend much more on education than everybody else.
    So that distorts the market. That is the distortion that we 
have allowed to take place. We went from a public commitment 
to, ``It is free-market, and that means I am a business now. I 
am not into caring about whether or not----''
    Mr. Ryan. Right, and I appreciate that and I think that is 
a great point, Mr. Chairman. This is a great hearing, and I 
think that is a great point. So we need to sit down and figure 
out how, because only 20 percent of the people are using it. It 
is the high 20 percent end. People have got some money--is 
distorting the market, and we send money that is distorting in 
its own way. We are trying to help kids, but it is not getting 
to exactly where we want it to get. So I appreciate that and I 
agree with you with 1,000 percent.
    Because I only have 40 seconds left, I think this model in 
Europe is a good one. I think what Germany does is great. I 
think we need to get kids on a track, starting as early as 
possible, and that means stem education. That means home 
economics 2.0. That means workshop 2.0 in our high schools that 
are gone, to get kids on a track to go into the trades; to get 
a skill, so when they are 18 years old, they are not living in 
our basements because they do not know what to do or they end 
up, worst-case scenario, like you said, Dr. Lindsay, both in 
debt, and not with a college degree.
    But that is going to take us sitting down. They are doing 
it in South Carolina because they have so many German companies 
that have moved into South Carolina. They are starting to 
implement this model. This is something that is not heavy 
lifting for us to create some incentives, Mr. Chairman.
    Chairman Price. I appreciate that.
    Mr. Ryan. And I hope, because I know you are an open-minded 
guy.
    Chairman Price. I appreciate you coming. Thank you.
    Mr. Ryan. Let's do this.
    Chairman Price. Gentleman, your time has expired.
    Mr. Ryan. Let's do this, even though I am complimenting 
you, I cannot get more time? No?
    Chairman Price. I have tried that and that would set a bad 
precedent.
    Mr. Ryan. I want a change of the rules here.
    Chairman Price. Mr. Grothman, you are recognized for 5 
minutes.
    Mr. Grothman. Okay, first, Dr. Smith, before I got here, 
you apparently said the two States that flow into your clinic 
from other places are Alaska and Wisconsin. I was just 
wondering why Wisconsin? What do you attribute that to?
    Mr. Smith. There is a large group of farmers there, I 
understand, who do not believe in insurance or participating in 
insurance schemes is moral, and, for whatever reason, they 
found us and I believe the market there has some of the highest 
prices in the country.
    Mr. Grothman. Okay, so that is what you are getting. You 
asked these people what they were doing before you and they 
said, ``I do not have any insurance or I am part of this--'' I 
know there are some Christian groups out there that have their 
own kind of pools that they go. That is where you are getting 
people from, okay, interesting.
    Next question I have: with regard to making it more 
difficult to realize the American dream, part of that is 
unquestionably education costs. We have gone out of control 
and, by the way, Dr. Spriggs, I will say: when I tour the 
places where they have apprentices or pretty much the 
construction trades, I would talk that up more.
    I mean, a lot of the people in the trades in Wisconsin are 
making a lot more money than these people who are going to 
college, and I would not emphasize college as much. We need 
more people in the trades so I think they are, quite frankly, 
more productive in our society, and doing better than a lot of 
these people who went to college. It just seems to me obvious: 
We have too many people going to college.
    But I am going to ask you guys a question on two things 
that I think is, in part, contributing to the stagnation in 
wages. In America, first of all, we have embarked on a policy 
of discouraging work. The most recent policy there was 
Obamacare, in which, talking to a CPA a couple of weeks ago, in 
which we have these steps at which you lose your Obamacare 
subsidy as you work harder, and, you know, the CPA tells me 
nothing surprising.
    Obviously, the people who voted for Obamacare want to 
discourage people from making more money. Okay, they wanted to 
stunt their economic growth because when you get to these 
steps, maybe you lose a $5,000 subsidy and, of course, who 
wants to go above that, and I do not know if that was 
intentional. It seems so obvious. I would think it was 
intentional, but it is true that other income transfer 
payments, earned income tax credit, food stamps, low income 
housing: all were designed by people who want to discourage 
people from working. I would like some of you guys to comment 
on that in the degree to which, to a certain extent, are lower 
incomes because we are discouraging people from getting past 
first base by setting up----
    Mr. Spriggs. Well, Congressman, no, and in a short answer. 
What workers are confronting is, in the trades as you 
mentioned, that Congress is quite willing to have H2B visas for 
skilled workers to come into this country, and undercut the 
wages of skilled Americans who need the jobs. So we have H1B 
visa workers who will come and undercut Americans who borrowed 
money to get degrees in stem. So if Congress wants to be on the 
side of American workers, let's be on the side of making 
investment and letting the price of work go up.
    It is not the workers who do not want higher wages or the 
workers who do not want to work up to the higher wages. It is 
these kind of policies that put wage caps in the competition 
that Americans face, and you are right. Apprenticeship programs 
work. Unionized apprenticeship programs are the best, and we 
are the, the AFL-CIO, the largest producer and provider of job 
training in the United States, other than the United States 
Army. So you are absolutely right. That is a path that 
Americans can take. But we have to protect them by not having 
H2B visas----
    Mr. Grothman. Well, I will agree with you there. That was 
my question, Dr. Spriggs, but I will agree with you that when 
we decide who we are going to vote for the next election, we 
should make sure we do not have another President who goes 
overboard in allowing too many people in the country.
    Mr. Pinto. So, to specifically answer your question, a 
colleague of mine, Maura Corrigan, who was the head of the 
Department of Social Services in Michigan for 4 years, up until 
a couple of years ago, added up all the means tested programs, 
and I think there were 80 something of them, and only two or 
three have a work requirement. One of them she got added for 
the Department of Agriculture food stamps with the help of a 
Democratic senator from Michigan, and so that is really at the 
base of this; is that you have all of these programs that are 
not means----
    Mr. Grothman. I am not just saying a work requirement. I 
mean, there is a work requirement: The more you work, the more 
you lose.
    Mr. Pinto. They are not even required to work in order to 
get the means tested assistance.
    Mr. Grothman. Okay, I guess we are out of time.
    Chairman Price. The gentleman yields back. Thank you. Ms. 
Moore, you are recognized for 5 minutes.
    Ms. Moore. Thank you so much Mr. Chairman. Now just let me 
say upfront that I really regret that other responsibilities 
took me away from attending the entire meeting, and so I do ask 
the distinguished panel to forgive me if my questions or 
comments seem to be a little off base from just the lack of 
opportunity to have heard you all the way through. I just want 
to be clear. I do not have my bifocals on, so it is hard to 
see, but you are Attorney Pinto, right?
    Mr. Pinto. I have a J.D., yes.
    Ms. Moore. J.D., okay, and so that is M.D. Dr. Smith, Dr. 
Spriggs, and Dr.----
    Mr. Lindsay. Lindsay.
    Ms. Moore. Dr. Lindsay, right. So, okay, I want to get into 
the whole thing about educational opportunity.
    We often hear about how only 5 percent of the world's 
population lives in the United States; 95 percent live out in 
the world, so we have lost a lot of the manufacturing; the 
kinds of jobs that uneducated, low income people can do. And 
even when we talk about technical manufacturing in my district, 
these are very high-end, new kinds of technologies that require 
education. So I am a little bit confused about this. What I 
have heard since I have been sitting here; this sort of, you 
know, denigration of higher education.
    I am one of those people, you know, the eighth of nine 
children, born poor, on the welfare. I had a baby out of 
wedlock, who benefited from getting a bachelor's degree, and so 
I guess I am just a little curious to ask the panel, so when 
you start talking about how the country will not benefit by 
increasing educational opportunity, that is confusing for me, 
since it seems to me that we are going to retain hegemony in 
the world by producing the, you know, the Apples and the 
Googles and the kinds of technologies that require higher 
education. We will start with you, Dr. Spriggs.
    Mr. Spriggs. Well, yes.
    Ms. Moore. I see none of you guys chose to go to technical 
college but, anyway, go on.
    Mr. Spriggs. Well----
    Ms. Moore. And none of you people over here either.
    Mr. Spriggs. When the United States was building up this 
record on productivity increase, we were number one for college 
education, for a college educated workforce. We have slipped to 
number 17, and that risks our position. That risks our ability 
to make the innovations, and the investment we made in those 
universities provided the innovation, not only from the 
students, but the innovation from the professors.
    So my alma mater, my graduate alma mater Wisconsin, your 
State, has made huge contributions because of the investment in 
that kind of research and so, yes, it pays off----
    Ms. Moore. Okay, thank you, Dr. Spriggs. I do not have much 
time, Dr. Lindsay. Would you just please just give me a 20 
second rebuttal why--especially when you say, you know, like I 
know black people would not get to go to college if we had to 
rely on tests and so forth. Give me your 20 second rebuttal to 
why we do not need people to go to college.
    Mr. Lindsay. I know less than you how to increase 
educational opportunity. My point is that most of the jobs 
today do not require a 4 year traditional degree.
    Ms. Moore. Okay, even though most of those jobs are in the 
emerging world. Let me ask you just a little bit about 
infrastructure. Dr. Lindsay, we are talking about housing. I 
think in your testimony you said that, basically, it was kind 
of poor people wanting housing and that is sort of the reason 
we had the housing crisis. Do you see where appraisers, credit 
agencies, subprime lenders, the toxic loan packaging; where 
these basically criminal and immoral activities had more to do 
with it than, say, the GSCs or people wanting housing, people 
who exploited poor people?
    Mr. Lindsay. Representative, I know you addressed me, but I 
do not think you intended to about housing.
    Ms. Moore. Who did I intend? Oh, Dr. Pinto. That is right.
    Mr. Pinto. Okay.
    Ms. Moore. I mean, J.D. Pinto.
    Mr. Pinto. Yes, thank you.
    Mr. Pinto. So in my view, and I have researched this 
extensively, is the housing crisis was formed and created and 
resulted from housing policies promoted and implemented by the 
Federal Government, led----
    Ms. Moore. But not by appraisers and subprime lenders?
    Mr. Pinto. Let me just finish, and led by HUD, FHA, 
national home ownership strategy, Fannie Mae, Freddie Mac, and 
the private sector followed along, and the appraisal process, I 
will say, in the United States is completely broken, but that 
is also part of Fannie Mae/Freddie Mac----
    Chairman Price. Your time has expired. Mr. Rokita, you are 
recognized for 5 minutes.
    Mr. Rokita. I thank the Chairman. Mr. Pinto, would you like 
to continue on? Anything else you want to add to that response?
    Mr. Pinto. Thank you. And this all started in the latest 
cycle, in the early 1990s when Congress passed the so-called 
Safety and Soundness Act for Fannie Mae and Freddie Mac. We 
know how that turned out, and included in that was the 
affordable housing requirements, and that built up over about a 
12- or 13-year period, including the private sector, which was 
brought into this by HUD. All of that is well-documented, and 
we ended up increasing that leverage, as I described in my 
testimony, and the result was 8,000,000 foreclosures. It was 
the result of errant housing policies.
    Mr. Rokita. Thank you, Mr. Pinto. I appreciate that. I 
apologize, as well, for not being here for the entire hearing. 
I was at an education--helping chair an education subcommittee 
hearing. So I have that on my mind, so I am going to switch 
over to Dr. Lindsay here for a little bit.
    It seems, I know. Federal policy over the last several 
decades is such that it focused on enrolling students in 
college and what is the result, and what is your reaction to 
that?
    Mr. Lindsay. The result is that half of the students who 
start college today fail, and of those who do graduate only 64 
percent of them show this substantial increase in learning that 
a college degree is meant to signify, which means that the odds 
are two to one against you if you start college today, that you 
will get both a college degree and the learning it is meant to 
signify. That is not what all of these programs intended to do.
    It is one of the sad, unintended consequences of Federal 
involvement, and the worst consequence of all, we all want to 
see those at the lowest income levels be able to rise. That, 
through education, that is the American dream, but almost 50 
years later fewer college graduates are coming from the bottom 
25 percent of income than in 1970 when these large programs 
began.
    Mr. Rokita. Say that one more time, please.
    Mr. Lindsay. Today, fewer college graduates are coming from 
the lowest 25 percent of income distribution than was the case 
in 1970 when these large, Federal programs began.
    Mr. Rokita. That is amazing. I do not think that I have 
spent a good deal of my day in education policy. I do not know 
that I have heard it stated like that.
    Mr. Lindsay. Yeah.
    Mr. Rokita. I appreciate that very much. I am going to put 
up a slide here, hopefully soon. Yes, thank you guys very much.
    Student loans themselves, $1.6 trillion, if you aggregate 
all that stuff. That is how much of the household debt student 
loans consume. It is my contention that these same policies, 
Dr. Lindsay, that you are talking about that have put ``more 
money on the education street,'' for example, have done nothing 
really but increase college and university budgets, perhaps 
professor salaries and the like, and that is what is really 
driving our debt. More access to the cash means budgets and 
everything go up. You know, that is just the layman's 
interpretation of what I see on that committee on almost a 
weekly basis. Do you agree or disagree?
    Mr. Lindsay. Yes, sir, I think you are correct. Government 
funds have increased the demand, but there has not been a 
comparable increase in the supply because of strangling 
government regulations that limit the innovations that are out 
there that are the good news, and that can make higher 
education more affordable.
    Mr. Rokita. So as a result, some have come up with some 
what others would call radical proposals for, not necessarily 
getting the government out, all of that would be the effect of 
it, but making the government loaning of money in this space 
unneeded. They are not going to work for every student or every 
discipline, but one in particular I subscribe to; there are 
others, is called ISAs or income sharing agreements and, again, 
some say that is pretty controversial. Honestly, it is not a 
setup question. I just want your opinion on concepts like that, 
and you can describe the concept or I can.
    Mr. Lindsay. Yes, income sharing agreements are contracts 
between future employers and students who get their education 
subsidized by the employer. It costs taxpayers zero dollars. I 
also think that, in addition to that, I mean, right now under 
our Federal program, the people on the hook are the students 
and their parents and the taxpayers, right? Let's put the 
universities in that mix.
    Mr. Rokita. Right, exactly, some skin in the game.
    Mr. Lindsay. Some skin in the game, and, you know, these 
ideas are getting growing bipartisan support; that for each 
student who defaults, that the universities pay a certain 
percentage for each student default in their college every 
year. That would give them that skin in the game to be more 
careful with students and also, perhaps, to focus more on 
teaching. Because we know from every study that universities 
trying to become Harvard always try to offer lower teaching 
loads to full-time faculty. I was a faculty member for 20 
years.
    Chairman Price. The gentleman's time has expired. Time for 
questions is complete, and I want to ask Mr. Yarmuth if he has 
any closing remarks?
    Mr. Yarmuth. Thank you, Mr. Chairman. I want to thank the 
witnesses. I agree with many of the comments my colleagues have 
made about how interesting this hearing has been, and while I 
joked a little bit about not restoring trust through this 
hearing, I think I did not really mean that there are not ideas 
here that I think could, if implemented, or if pursued to some 
kind of a finality at the Federal level, might not help restore 
trust. So when Mr. Woodall, for instance, asked who on the 
left, I assume he would consider me on the left, as Mr. Ryan.
    I think the idea for coming up with policies that would 
incentivize development of smaller apartments that are 
available to lower income people: I think it is a great idea. 
All of these things, I think, would work; many of the things 
that Dr. Lindsay talked about. Yeah, you know, I speak a lot 
about the fact that Harvard Business School, at least last time 
I checked, did not have an accounting professor on their 
faculty because they decided the best accounting professor in 
the country was at Brigham Young University and they use his 
work through digital means.
    So I think each one of these areas, whether it is housing 
or education or, well, we have talked a lot about health care 
in the last 6 years, and the investments that Dr. Spriggs 
talked about are all things that deserve a lot more 
conversation, and I think that if we do that and can act in a 
bipartisan way to make sense of some--,just one final comment.
    When I talked about the colonoscopy disparity in price 
between freestanding clinics and hospitals, this was in a Ways 
and Means Committee hearing years ago, the answer I got was, 
``Well, if you take that income stream away from the hospital, 
then they are going to have to find ways to charge more for 
other things.'' Well, I said, ``That is not a reason. That is 
just evidence of a broken system.''
    So I think when we go through all of these areas we can see 
Federal policies that are not performing in the way they were 
originally intended. We are not creating the right incentives 
and I think we ought to spend a lot more time, as a body, 
working on those things and, if we did, I think we would find 
opportunities for bipartisan cooperation. And that would be a 
wonderful thing. So, thank you, Mr. Chairman for the hearing, 
and I yield back.
    Chairman Price. I thank the gentleman, and I just want to 
thank the witnesses. I was a little curious that some of the 
comments took a turn toward unions, and I would be remiss if I 
did not mention the Employee Rights Act that we have offered. I 
was stunned to learn that only 6 percent of union members 
currently have ever voted to be in a union. So we talk with 
folks back home. None of us are opposed to unions. We just 
think that workers need to have consent to be in the union. So 
we think it is important to have elections. We think it is 
important to have secret ballot elections for union formation 
and an appropriate time to notice all those things. So I just 
wanted to mention that, as our friends on the other side talked 
about unions.
    I also wanted to just highlight a particular article that I 
noted from last April from the Guardian and I, without 
objection, I will insert in the record. It is titled ``L.A. 
Unions Call for Exemption from $15 Minimum Wage That They 
Fought for,'' and I was curious to read this. This is an 
article that highlights the battle that folks are having for a 
$15 minimum wage, but then members of the AFL-CIO union in L.A. 
are fighting to exempt their union from the $15 minimum wage so 
that they can undercut the folks who are going to be required 
by the State to have a $15 minimum wage. I found that curious.
    But I want to get back to this slide that I started with 
and, hopefully, the common ground. The inflation that the 
American people have seen over the last 30 years has been 128 
percent increase over that period of time. But the three things 
that have outpaced inflation--housing and health care and 
education--are the things that all Americans have to deal with, 
and I would think that there ought to be commonality in trying 
to answer the question why?
    Why is that the case, and so I am somewhat curious for my 
friends on the other side who seem to scoff at some of the 
evidence that I think has been put before us on why that is the 
case. I would think that we ought to be listening and saying, 
``Okay, cannot we make it so that the American people have a 
greater opportunity to use their disposable income in a more 
responsible way by making certain these costs are held down;'' 
that we are not gaming the system from the Federal Government's 
standpoint if, in fact, that the Federal Government involvement 
in this is pumping up prices for folks on things that they have 
to spend money on. Why would we continue to allow that from a 
public policy standpoint?
    So I think the testimony that we have heard here today has 
been extremely enlightening. I want to thank each and every one 
of you for coming today. I think you have helped us have a 
conversation and, hopefully, initiate a bipartisan conversation 
and more bipartisan activity so that we can come to some policy 
agreements on how to move forward and make it so that the 
American people are able to utilize their finite resources that 
they have in a much more responsible way, without the influence 
of the Federal Government in a way that distorts how much money 
they are going to have to spend for these three particular 
items.
    So with that, we have completed this hearing. I want to 
thank you all again; Mr. Pinto, Dr. Smith, Dr. Spriggs, and Dr. 
Lindsay for your time today. The committee has received your 
statements, and we will allow each member to notice that they 
may submit written questions to be answered later in writing. 
Those questions and your answers will be made part of the 
formal hearing record, and any member who wishes to submit 
those questions or extraneous material, for the record, may do 
so within 7 days. Thank you all so much. This hearing stands 
adjourned.
    [Whereupon, at 12:19 p.m., the committee adjourned subject 
to the call of the chair.]


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