[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                  PRICES ON THE RISE: EXAMINING OF INFLATION 
                              ON SMALL BUSINESSES

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              JUNE 7, 2023

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                             
                               
            Small Business Committee Document Number 118-017
             Available via the GPO Website: www.govinfo.gov
             
                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
52-423                       WASHINGTON : 2023                    
          
-----------------------------------------------------------------------------------     
                    HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                      BLAINE LUETKEMEYER, Missouri
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                         MARIA SALAZAR, Florida
                          TRACEY MANN, Kansas
                           JAKE ELLZEY, Texas
                        MARC MOLINARO, New York
                         MARK ALFORD, Missouri
                           ELI CRANE, Arizona
                          AARON BEAN, Florida
                           WESLEY HUNT, Texas
                         NICK LALOTA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                       MORGAN MCGARVEY, Kentucky
                  MARIE GLUESENKAMP PEREZ, Washington
                       HILLARY SCHOLTEN, Michigan
                        SHRI THANEDAR, Michigan
                          JUDY CHU, California
                         SHARICE DAVIDS, Kansas
                      CHRIS PAPPAS, New Hampshire

                  Ben Johnson, Majority Staff Director
                 Melissa Jung, Minority Staff Director
                           
                           C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Roger Williams..............................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Gordon Gray, Vice President for Economic Policy, American 
  Action Forum, Washington, DC...................................     5
Ms. Silvia Saldana Lee, Executive Vice President and Chief 
  Lending Officer, First Community Bank, Corpus Christi, TX......     6
Mr. Dave Zittel, President, Amos Zittel & Sons, Inc., Eden, NY...     8
Mr. Lyle J. Bivens, Chief Economist and Research Director, Policy 
  Institute (EPI), Washington, DC................................     9

                                APPENDIX

Prepared Statements:
    Mr. Gordon Gray, Vice President for Economic Policy, American 
      Action Forum, Washington, DC...............................    35
    Ms. Silvia Saldana Lee, Executive Vice President and Chief 
      Lending Officer, First Community Bank, Corpus Christi, TX..    43
    Mr. Dave Zittel, President, Amos Zittel & Sons, Inc., Eden, 
      NY.........................................................    48
    Mr. Lyle J. Bivens, Chief Economist and Research Director, 
      Policy Institute (EPI), Washington, DC.....................    52
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
                   PRICES ON THE RISE: EXAMINING THE 
                     EFFECTS OF INFLATION ON SMALL 
                               BUSINESSES

                              ----------                              


                        WEDNESDAY, JUNE 7, 2023

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 2:01 p.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Luetkemeyer, Stauber, 
Meuser, Mann, Ellzey, Molinaro, Alford, Bean, Hunt, LaLota, 
Velazquez, Golden, Mfume, Phillips, Landsman, McGarvey, 
Gluesenkamp, Perez, Scholten, Thanedar, Davids, and Pappas.
    Chairman WILLIAMS. Good afternoon to everybody. And before 
we begin, we're going to take a moment and ask Congressman 
Meuser of the great state of Pennsylvania to lead us in our 
opening prayer in the Pledge of Allegiance.
    Mr. MEUSER. Please stand for the Pledge of Allegiance.
    Chairman WILLIAMS. I now call the Committee on Small 
Business to order without objection. The Chair is authorized to 
declare recess of the committee at any time. I now recognize 
myself for my opening statement. I'd like to welcome everyone 
to today's hearing, where we will be examining the detrimental 
effects inflation has had on main street America. I also want 
to thank our witnesses for joining us today. Your time is 
greatly valuable and we appreciate you being with us.
    According to almost every small business economic survey, 
inflation has been ranked as the owner's biggest concern going
    back to 2021. They have been seen utility payments increase 
because of skyrocketing energy prices, distributors charging 
more to source materials because of supply chain disruptions, 
and labor costs rising because of not being able to find 
qualified workers. In all these instances, small businesses are 
left with 2 options pass along these price increases to the 
consumer, or absorb the cost and watch your operating profit 
margins shrink.
    The COVID-19 pandemic started this inflationary cycle that 
we are still experiencing, but we have seen it prolonged by 
reckless levels of government spending. The Federal Reserve 
Bank of San Francisco did a study after the passage of the 
partisan American Rescue Plan that showed government spending 
made inflation in the United States spike more than other 
developed economies. This should not come as a surprise to 
anyone. There are going to be consequences when the Government 
continues to stimulate the economy further than what is 
necessary. This has led to a prolonged period of high prices 
that has forced the Federal Reserve to raise interest rates to 
tamper demand.
    High interest rates have led to many additional problems 
that are being faced by small businesses. The cost of getting a 
loan has greatly increased, and now even the average SBA loan 
is approaching 10 percent interest. This is forcing banks to 
tighten their lending standards as they evaluate if it will 
make sense to even extend the loan, and is forcing many 
business owners to delay expansion plans because it simply is 
too expensive in this environment.
    There are a few things that I think will stop the runaway 
inflation problem. First, we must stop reckless government 
spending, as we say. We all know this was not a transitory 
issue like so many people claimed when this started in 2021. 
And we must get the Government's fiscal house in order. Second, 
we must stop passing burdensome regulations when businesses are 
forced to hire compliance officers, it is nothing but a drag on 
a company's bottom line. And a third, we must find ways to 
secure our supply chains and expand our domestic manufacturing 
base, whether it be energy or food supply. We must reduce our 
reliance on foreign influences.
    In this hearing, I hope we will explore how each of your 
businesses and industries have been dealing with this pressing 
issue that has been affecting every American for the last few 
years. As the voice for main street here in Washington, the 
House Committee on Small Business will be working to create an 
environment where businesses can thrive and where businesses 
can grow. We are eager to find solutions that will help pave 
the path towards success for both now and in the future. So, I 
want to thank all of you again for being here with us today, 
and I'm looking forward to today's conversation. With that, I 
want to yield to our distinguished Ranking Member from New 
York, Ms. Velazquez.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. The effect of 
inflation on small businesses is no secret. It can dig into 
margins and contribute to tighter monetary conditions, limiting 
access to capital and the ability to grow and expand. However, 
inflation is not a single threaded issue. It is a complex 
dynamic of global events. The COVID-19 pandemic, supply chain 
disruptions, labor shortages, monopolistic price gouging, and 
geopolitical tensions have created a perfect storm of 
inflationary pressures that are impacting main street. It is a 
disservice to our nation's small firms to oversimplify this 
issue, as a mere consequence of federal spending. We stand in 
the middle of the global pack in terms of inflation rates.
    Yet our recovery from the pandemic has been unparalleled. 
Fiscal stimulus, like the Cares Act and the American Rescue 
Plan, turned the deepest post World War II recession into the 
shortest. Projections from Moody's Analytics predict that 
without this relief U.S. GDP would have fallen 3 times its 
actual rate, and we would have experienced a double dip 
recession in early 2021. Today, we now enjoy unemployment rates 
at 50 year lows, with GDP recovering to its prerecession trend, 
something not seen in decades. According to the Federal 
Reserve, the entire $5 trillion worth of fiscal stimulus 
deployed in response to the pandemic contributed to only about 
a third of total inflation. Therefore, we must consider the 
many other drivers of inflation to create a comprehensive 
policy response, not play political games.
    First, our country has a history of outsourcing and supply 
chain consolidation. While this made a few shareholders a lot 
of money in good times, it made us increasingly vulnerable to 
disruptions. Additionally, the increasing concentration of 
industries over the past 30 years enabled corporate monopolies 
to exploit their market power and dramatically increase 
margins. Democrats focused on enhancing our domestic productive 
capacity by passing the Infrastructure Investment and Jobs Act 
to revitalize and bolster our supply chains. We passed the 
Chips and Science Act to invest in innovation and create 
resilient domestic supply chains. Finally, the Inflation 
Reduction Act was enacted to lower health care and energy costs 
for small businesses while making the U.S. a world leader in 
clean energy and reducing our dependence on volatile global 
energy markets. Clearly, there is more to be done, but we are 
seeing encouraging signs of lower inflation, nearly cut in half 
from last summer's peak.
    While the only Republican plan to fight inflation is 
draconian cut to our social safety net, democrats have 
recognized the need to invest in the future to bring long term 
stability to our small businesses. I thank all the witnesses 
for their participation and look forward to hearing your 
testimony. Mr. Chairman, I yield back.
    Chairman WILLIAMS. Thank you very much, and I will now 
introduce our witnesses. Our first witness this afternoon is 
Mr. Gordon Gray. Mr. Gray is the Vice President for Economic 
Policy at the American Action Forum, located in Washington, DC. 
Prior to joining the American Action Forum, he was a 
Professional Staff Member for the Senate Budget Committee 
before working for Senator Rob Portman as a Senior Policy 
Advisor.
    Mr. Gray's portfolio includes the federal budget, taxes, 
the macronomic outlook, and general economic policy. He has 
testified as an expert witness before the multiple committees 
in Congress on domestic and economic issues. Mr. Gray is a 
graduate of Tufts University and has a degree in Political 
Science. Mr. Gray, thank you for being here today, and we look 
forward to hearing from you.
    Our next witness here with us today is Silvia Saldana Lee. 
Ms. Lee is the Executive Vice President and Chief Lending 
Officer of the First Community Bank in Corpus Christi, Texas, 
and she previously served a 3 year term on the Texas Bankers 
Association board of Directors. Ms. Lee has worked in the 
banking for over 31 years and has been with First Community 
Bank since 2000.
    In her current position, she manages all aspects of First 
Community Bank's lending portfolio, including risk selection, 
underwriting, and loan production, making her uniquely 
qualified to discuss the important topic at hand today. Ms. Lee 
is a graduate of Texas A and M University in Kingsville, Texas, 
where she received her Bachelor of Business Administration 
Finance. So, Ms. Lee, thank you for being with us today, and we 
also look forward to your testimony.
    I now recognize my colleague, Mr. Molinaro from New York, 
the great state of New York, to briefly introduce our third 
witness who is appearing before us today.
    Mr. MOLINARO. Thank you, Mr. Chairman. The great state of 
New York is happy to welcome Mr. David Zittel. A graduate of 
Cornell University. Mr. Zittel is president of Ammo. Zittel and 
Sons, inc. In Eden, New York. The Zittels have been farming in 
Eden Valley for six generations, since 1897. Producing 
vegetables on about 400 acres.
    The farm primarily focuses on vegetable production. To 
sustain operations, the farm heavily relies on a labor force 
comprising over 100 seasonal workers, some of whom have 
dedicated more than 2 decades to working at the farm. However, 
rising inflation rates have driven up prices and wages, which 
cut into profit margins, making today's hearing all the more 
relevant and pressing.
    Given Mr. Zittel's extensive experience and long-standing 
ties to the community, his testimony provides invaluable 
insight into how the current economic conditions are affecting 
the economic mainstays of local communities like his and his 
business. Mr. Zittel, thank you for being here today, and we 
look forward to hearing from you, and I yield back.
    Chairman WILLIAMS. Thank you. I now recognize the Ranking 
Member, Ms. Velazquez, to introduce the minorities witness for 
today's hearing.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. Our final witness 
today is Dr. Josh Bivens. Dr. Bivens is the Chief Economist at 
the Economic Policy Institute. His areas of research include 
macroeconomics inequality, social insurance, public investment, 
and the economics of globalization. He has been published in 
both peer reviewed journals, like the Journal of Economic 
Perspective, as well as in popular print outlets like The New 
York Times and Wall Street Journal. He is the author of the 
books Failure by Design: The Story of America's Broken Economy 
and Everybody Wins Except Most of Us: What Economics Really 
Teaches Us About Globalization. He holds a PhD in Economics 
from the New School of Social Research and a BA in Economics 
from the University of Maryland. Thank you, Mr. Bivens, for 
joining us on such short notice. Your attendance is greatly 
appreciated. Thank you and welcome.
    Chairman WILLIAMS. Thank you again to all of you for being 
here today. So before recognizing the witnesses, I'd like to 
remind them that their oral testimony is restricted to 5 
minutes in length. So if you hear this and you're still 
talking, that means you're talking too long, okay? And if you 
see the light turn red in front of you, it means your 5 minutes 
have concluded, and you should wrap up your testimony. So with 
that, I now recognize Mr. Gray for his 5 minute opening 
remarks.

STATEMENTS OF GORDON GRAY, VICE PRESIDENT FOR ECONOMIC POLICY, 
   AMERICAN ACTION FORUM; SILVIA SALDANA LEE, EXECUTIVE VICE 
PRESIDENT AND CHIEL LENDING OFFICER, FIRST COMMUNITY BANK; DAVE 
ZITTEL, PRESIDENT, AMOS ZITTEL & SONS, INC.; JOSH BIVENS, CHIEF 
              ECONOMIST, ECONOMIC POLICY INSTITUTE

                    STATEMENT OF GORDON GRAY

    Mr. GRAY. Chairman Rogers, Ranking Member Velazquez, and 
Members of the Committee. It is a privilege to be before this 
committee again, to join my fellow witnesses and to discuss a 
matter of National significance: inflation and its effects on 
the beating heart of American commerce, Small Businesses. In my 
testimony, I wish to make 3 basic observations: The United 
States is experiencing persistent inflation that is taxing 
America's families and businesses.
    Policy choices have contributed to the recent rapid 
acceleration in price levels. Federal policies should be 
oriented around reducing inflationary pressures, and the record 
has been mixed at best. I'll briefly discuss these observations 
in turn. According to the U.S. Census Bureau, the median age of 
the United States is about 39, which means a little bit more 
than half the United States population has never experienced 
inflation like what we've seen over the last couple of years. 
Not since 1980 has the consumer price index grown as rapidly as 
was observed in June of 2022, when yearly inflation topped 8.9 
percent. Stripping out more volatile food and energy price 
components to isolate core price growth reveals a similar story 
of rapid, historically aberrant inflation.
    Notably, one can observe a significant divergence between 
the 2 indices around the time of the Russian invasion of 
Ukraine that significantly disrupted energy markets. It is 
clear that event moved food and energy prices, but the 
fundamental story of U.S. price growth is not about the Russian 
invasion, but the laws of supply and demand. These laws are in 
force, and they are taxing small businesses and the households 
that support them.
    Over the last 2 years, yearly price inflation has averaged 
about 2 percentage points higher than yearly wage growth. Wage 
growth has been substantially elevated over the same period but 
has nevertheless failed to keep pace with price growth. Put 
another way, small business and households are falling behind. 
While inflation is down off of the recent peak, it remains 
stubbornly elevated at well above the average of recent decades 
and more than twice the target rate set by the Federal Reserve. 
Thus, even though the U.S. inflation outlook has improved, 
enduring inflation is nevertheless a significant tax on 
household finance that will diminish the US standard of living. 
At the current rate of 5 percent, a family with a median income 
of about $71,000 is paying over $3,500 in price growth.
    Food, energy and shelter inflation, which tends to be more 
volatile but nevertheless represents about half the average 
household budget, has been more elevated and serves as a 
uniquely regressive tax. It is worth acknowledging the rocky 
road that led us here. In March of 2020, the COVID-19 Pandemic 
precipitated a historic shuttering of the economy. The public 
policy response was robust, with combined monetary, fiscal and 
administrative actions estimated to be on the order of $11 
trillion. Most notable was the series of bipartisan measures 
that were enacted in 2020. Through a combination of public 
policy, effective vaccines and more than a fair amount of grit 
from the American public, the nation and the economy recovered 
rapidly. Subsequent policy changes marked a break from the 
bipartisan tradition that largely characterized the 
Congressional response to the Pandemic.
    One conspicuous example, though not the only one, is the 
$1.9 trillion American Rescue Plan Act. Despite a chorus of 
warnings from a diverse range of economists that the act would 
give a massive injection of fiscal stimulus at a time when it 
needed, at least the law was passed and sure enough, within 2 
months, inflation had nearly doubled before doubling again in 
the subsequent months. It is important to note that while other 
global economies faced rapid inflation, the United States was a 
conspicuous frontrunner, subsequent to the enactment of the 
American Rescue Plan. To be sure, there are economic forces at 
work that can and eventually do swamp the effects of temporary 
legislation. Many of these challenges are beyond the direct 
control of policymakers.
    Accordingly, while I want to emphasize that no single 
policy change is responsible for the current inflation 
challenge, to the extent legislation is within the direct 
control of policymakers, American Rescue Plan stands out as a 
significant policy error. The Federal Reserve's rapid 
tightening of monetary policy and eventually improved public 
comments on the likely course of monetary policy have done and 
will continue to do most of the work in bringing stubborn 
inflation under control. But as any household or business 
relying on credit markets knows this is not costless. Congress 
should therefore help the Fed by pulling in the same direction. 
Congress has a somewhat uneven record since the enactment of 
the American Rescue Plan. The Inflation Reduction Act, for 
instance, was found to have no effect on inflation by CBO and 
Penn Wharton. Policies such as the Chips Act and the 
infrastructure bill must be balanced against the risk of 
additional inflationary measures. Most recently, the Fiscal 
Responsibility Act could modestly reduce inflationary pressures 
through deficit reduction largely deriving from the Act's 
spending caps. Thank you very much and I look forward to 
addressing your questions.
    Chairman WILLIAMS. Thank you, Ms. Saldana Lee, for her 5 
minute opening remarks.

                STATEMENT OF SILVIA SALDANA LEE

    Ms. SALDANA LEE. Thank you, Chairman Williams, Ranking 
Member Velazquez, and the Committee Members. I appreciate the 
invite of being here and I pray that my testimony will be 
beneficial to the objective of this meeting. As Chairman 
Williams mentioned, my name is Sylvia Lee. I'm a graduate of 
Texas A and M University Kingsville with a Bachelor's in 
Finance.
    I have been a Texas banker for 32 years with the last 23 
years at First Committee Bank in Corpus Christi where I am the 
Chief Lending Officer. Our bank has 175 employees and is a 
somewhat unique factor about First Community Bank is that 73 
percent of our employees are shareholders via our Employee 
Stock Ownership Program. Our Community Bank was founded in 1983 
and now has eleven branches with 657,000,000 in assets and 
growing daily. We have a loan portfolio of 458,000,000 
consisting of residential and commercial real estate and of 
course, small business loans, which are the subject of today's 
hearing.
    As a preparatory point, I do want to mention that almost 
all our Paycheck Protection Program loans that we funded have 
been paid out at our institution. They consisted of 845 loans 
in an aggregate amount of 107,000,000. And I can tell you 
personally that these loans contribute immensely to the ability 
of our local customers to continue as growing concerns during 
the pandemic. In my view, lending to small businesses and 
thereby allowing them to add new customers, purchase property, 
buy equipment and hire more employees is frankly the most 
important community service we provide. Federal Reserve data 
confirmed that small businesses in search of a loan look first 
to their Community Bank.
    With respect to today's hearing topic, namely the impact of 
inflation on small businesses, the answer is simple and is 
applicable to small and large businesses and individuals. It is 
hardship for all, but for small businesses it can often be 
worse in that they start with smaller margins to absorb adverse 
outside factors. Everyone is familiar with the severe decline 
in mortgage origination volume as the Fed's anti-inflation 
strategy has driven up interest rates nearing the 8 percent 
range. What is not widely appreciated, however, is that the 
housing industry is composed almost exclusively of small 
business contractors.
    At our bank, for example, we developed a great market niche 
in the home construction business, but new credit applications 
have slowed significantly due to less buyer demand. Recently, a 
longtime bank customer who owns a small business had an 
increase in his monthly loan payment of approximately $1,000 
due to increased interest rate. The loan has an annual 
adjustment and repriced. In May 2023, the business owner 
commented that he would price his goods out of the market to 
absorb the increased cost of his inventory and increase rates. 
He mentioned he has increased his prices 10 percent, but would 
have to raise them 40 percent in order to absorb all those 
costs. He mentioned that he feels our government does not want 
small businesses to succeed and wants only large companies in 
business. It is an unfortunate perspective.
    Underwriting small business loans relies primarily on debt 
coverage ratio, which is monthly debt service in relation to 
historical net income. With what has been a doubling of 
interest rates in just the last twelve months, the equation is 
fairly straightforward in that we are now seeing the cash flow 
available for debt service drop dramatically for every type of 
business. This would be especially true for a small startup 
business, which is probably the most critical local component 
for a growth economy.
    As a bank with a very strong earnings and capital, we are 
prepared to work with any of our small business borrowers 
encountering temporary difficulties, and all of us, whether 
borrowers or lenders, hope that this unprecedented combination 
of excess fiscal and monetary policy, followed by rapidly 
rising interest rates will soon come to a pause.
    The current market pressure is notwithstanding. Texas is 
blessed to have a strong economy and very strong banking 
system. Nevertheless, Texas has not been immune from industry 
consolidation trends, where the number of FDIC insured banks 
headquartered in our state has declined from 556 to 387 over 
the last ten years. An even sadder part of this is that even 
among the remaining local bank, so many have been forced to 
abandon important parts of the consumer market, such as home 
mortgage lending to the larger banks or nonbanks, as the case 
may be. Fortunately, that has not been the case at First 
Community Bank. We remain committed to home mortgage, to the 
home mortgage market, the small business market and as many of 
the full service banking products as make economic sense. On 
behalf of the banking industry, I thank you for your time and 
the opportunity to appear before you this afternoon.
    Chairman WILLIAMS. Thank you very much. And next, I 
recognize Mr. Zittel for his 5 minute opening remarks.

                    STATEMENT OF DAVE ZITTEL

    Mr. ZITTEL. Thank you to the Committee on Small Business 
and Chairman Roger Williams for inviting me to testify to you 
today on the impact of inflation on small business like my 
family farm. My name is David Zittel and my family is owned and 
operated Amos Zittel and Sons, a fresh market, vegetable and 
greenhouse farm based in Eden, New York. My brother and cousin 
and I are currently 4th generation and my son, the fifth 
generation is now back on the farm. I'm also representing the 
farming and agricultural community across New York and the 
country that works hard to produce food and fiber for consumers 
across the country and globe.
    At Amosinol and Suns, we produce a wide variety of fresh 
vegetables 350 acres in western New York, including lettuce, 
strawberries, peppers, cabbage, corn, tomatoes, broccoli, 
eggplant, Brussels sprouts, grape, tomatoes, et cetera. 
Approximately 95 percent of our produce is sold through our 
marketing cooperative Eden Valley Growers, which our farm is a 
proud founding Member of from 1956. This co-op is created to 
bring growers in the area together to market and sell our 
produce. In addition, the farm is also consists of greenhouse 
operations that produce approximately 4 million rooted liner, 
geraniums and other spring annuals that are marketed through 
brokers Nationally and retail ready container crops sold to 
local garden centers. In addition, we grow over 2 million 
transplants for our field grown vegetables.
    The farm employs 40 to 50 individuals year round and 
approximately 135 employees during the peak season. Because we 
produce fresh market produce, all the crops must be hand 
harvested and can be very labor intensive. It also means that 
our business is directly impacted by market forces and we 
cannot wait to sell the crop until prices increase. Farmers are 
price takers, not price makers. As a small family owned 
business, we feel the direct effects of inflationary pressure 
to have seen the overall increase in the cost of operating the 
farm.
    While farmers have become more efficient over time and 
helps overcome the lower commodity pricing, like increasing 
production per acre, inflation can quickly take away the 
efficiency gains through the pandemic and even to this day, we 
continue to feel the impact of inflation. Examples of inflation 
and rising costs have seen on the farm include tractor 
equipment parts have increased 15 percent to 30 percent. A 
delay in timely delivery of these things are also adding to the 
supply chain issue. The consolidation of agricultural industry, 
which has decreased available vendors to source, also lends 
itself to increased prices. The cost of boxes and 
transportation of our vegetables is up 30 percent, with the 
cost of the farm of $100,000 this year. Fertilizers and most 
other inputs are up 30 percent to 50 percent. Cost of feed for 
dairy farmers is up 25 percent to 40 percent.
    All of these things, unfortunately for us, are prices that 
we receive for our product do not cover and the cost increases 
since our markets are no longer local but global, resulting in 
a reduce in profits. Inflation has created a price instability 
and uncertainty for our farm economy and has made many 
investment decisions riskier than they would be if inflation 
remained low or stable. We have an impacted in the last 2 
recent historical snowfalls in 2014 and again last November, 
which resulted in rebuilding greenhouse shops, storage 
buildings. In both situations we had decent insurance 
recoveries, but the cost was 3 times. We will be financing 
another million dollars and the rebuild for the loss from the 
72-inch snowfall in November. Held off as long as we could in 
hopes that interest rates would stabilize or begin to go back 
down. As we look to the future of our operation, young farmers 
are so discouraged by challenges that they face in making 
career in agriculture the expense of land, labor, fuel, energy, 
machinery, taxes, rules and regulations the list goes on and 
on.
    It is no secret that in New York is a high cost state in 
the difficult regulations and environment for our family, 
business and farms. But despite all this, we are so proud that 
the next generation has decided to carry on the farming 
tradition. We know that there will remain challenges and need 
to overcome, including inflation, regulatory requirements and 
labor challenges. Like to finish with a quote from John F. 
Kennedy the farmer is the only man in our economy who buys 
everything at retail, sells everything at wholesale, and pays 
freight both ways. Thank you.
    Chairman WILLIAMS. I now recognize Mr. Bivens for his 5 
minute opening remarks.

                    STATEMENT OF JOSH BIVENS

    Mr. BIVENS. Chair Williams, Ranking Member of Velazquez and 
Members of the Committee, thank you for inviting me to testify 
today. My name is Josh Bivens. I'm the Chief Economist and 
Research Director of the Economic Policy Institute. EPI is a 
nonprofit, nonpartisan think tank that uses the tools of 
economics to identify policies that will boost living standards 
of low and moderate income families, particularly through their 
role as workers.
    I'd like to make the following points about the subject of 
this hearing inflation and its effect on small businesses. 
First, inflation has been a key economic challenge for workers 
and small businesses over the past 2 years. But inflation is 
not the only notable economic trend that is emerged in this 
time. We've also seen by far the best labor market in a 
generation, particularly for low wage workers. We've also seen 
extraordinarily fast growth in employment at small businesses 
and in the aggregate, and extraordinarily fast growth in small 
business applications. Small business income growth has 
actually performed better relative to corporate profits since 
the last business cycle peak than it was doing in the 2 years 
before the COVID-19 recession. All these salutary trends are 
the direct result of the policy choice to fight the COVID-19 
recession with fiscal relief and recovery at scale.
    Second, inflation has not simply been the result of a US 
Policy mistake. Inflationary pressures have clearly been 
global, and it is essentially been the inevitable result of 
massive shocks to the economy and the long lived but steadily 
dampening ripple effects. The shocks are obvious. The Pandemic, 
the Russian invasion of Ukraine, and the ripples were mostly 
about jockeying by different economic actors corporations, 
workers, small businesses to protect their own real incomes 
from these shocks. The inflationary pressures, particularly the 
ripples, could have theoretically been reduced if the economy 
was allowed to settle into stagnation with really high rates of 
unemployment for an extended period of time, like we did after 
the 2008 recession. But inflation wouldn't have been zero even 
in that scenario and the collateral damage would have been 
absolutely immense.
    Third, the ripple effect stemming from economic actors 
seeking to insulate their own incomes from price shocks meant 
that inflation in this time around has mostly been a 
distributional challenge because one person's income is another 
person's cost. Higher cost for some has shown up as significant 
income gains for others that mostly has been the business 
income of sellers, but particularly corporate profits. A key 
question is has any small businesses been able to draft in the 
corporate pricing power wake and charge higher prices 
themselves to protect their own margins? I would say the first 
thing to know about this is that the small business sector is 
incredibly variable and lots of what we call small businesses 
are actually very rich in privileged enterprises. My guess is 
this privileged slice of the sector has done quite well to the 
degree that lots of genuine main street small businesses have 
been squeezed on the input side but have been unable to pass 
these costs on. Maybe because their primary customers are big 
corporations who refuse to pay higher prices to their 
suppliers. That is more a problem of unbalanced power in 
markets and monopoly power generating an unlevel playing field. 
We certainly should address that problem. It is carried long 
run costs. It is less a problem of inflation per se in terms of 
the most important input cost labor.
    It is important to note that there is no generalized labor 
shortage anymore relative to pre pandemic trends. Labor supply 
has essentially fully recovered. There are smart policies we 
could undertake, particularly large investments, say in 
Childcare, that would boost labor supply even well above its 
historic highs. And I think we should absolutely do that. But 
again, there is no labor shortage today relative to pre COVID 
trends. Finally, the risk to small businesses from an over 
aggressive attack on inflation that seeks to slow the economy 
with contractionary fiscal and monetary policy in the name of 
tamping down inflation will sacrifice the huge gains from the 
rapid recovery for no real need. If inflation is already 
normalizing, and my view is inflation is already normalizing, 
it is not happening fast enough for any of us.
    But I would say one example showing that we do have some 
time for some patience is if you look at nominal wage growth 
over the past year. We've seen a sharp deceleration in that 
growth even as unemployment has remained very low. We had many 
people a year ago saying that was impossible. We were going to 
need 6 percent unemployment to get nominal wage growth into a 
noninflationary place. It is in a noninflationary place today, 
even with unemployment remaining very low. In short, as 
challenging as the inflation of the past 2 years has been, it 
remains the case that many proposed cures could do a lot more 
damage than normality itself. I look forward to talking more 
about this issue with the committee. Thank you so much for your 
time.
    Chairman WILLIAMS. Thank you. And we'll now move to the 
Member questions. Under the 5 minute rule, I recognize myself 
for 5 minutes. There were many factors that have contributed to 
inflation. The Pandemic destroyed supply chains, reckless 
government spending overheated the economy, and businesses are 
having trouble finding qualified workers to fill open 
positions. While some of these issues are long, will take some 
time to get resolved, there are certain things that can be done 
in the short term that could make an immediate impact on this 
upward price pressure. And one of these things that the Biden 
Administration could do to help small business deal with this 
economic headwind is to end the regulatory assault on the 
private sector. When businesses are forced to spend more time 
and resources on compliance, these costs get passed along to 
the consumer in the form of higher prices or increased fees. 
So, Mr. Gray, my question to you. Can you discuss the 
regulatory impact the Biden Administration has had on main 
street, America, as has inflation, and do you have any 
suggestions on how Congress could begin to rein in some of the 
most damaging regulations?
    Mr. GRAY. Yes, sir. So I am lucky in that I work with one 
of the, I think, finer regulatory shops, policy shops in DC. My 
colleague Dan Gobeck tracks the self reported costs of the 
accumulation of regulation, and he and his team has been doing 
this over the years, and we have seen hundreds of billions of 
dollars in additional regulation. And in the present 
environment, when a number of the policy approaches that this 
Congress and policymakers in general have been attempting to 
expand supply, we later see regulations tacked on that are 
somewhat in conflict to the notion of supply because they 
restrict the businesses and workers that may or may not 
participate in that given activity, and that makes the activity 
more expensive, thus restricting supply. And so that is a very 
real challenge at the moment.
    Chairman WILLIAMS. Thank you. One of the most harmful 
aspects of inflation is what the Federal Reserve is being 
forced to do to get it under control. Interest rates are rising 
at the fastest pace in decades, and it is making it much more 
expensive for small business to get loans or service and their 
debt. We've heard that already today. I have come across my 
small businesses that have variable term loans we talked about 
that who are not having to pay a few hundred dollars more each 
month in interest payments, but it is changing their entire 
business, even the smallest amount it is eating to their 
margins and making them unable to remain profitable. So, Ms. 
Saldana Lee, can you tell us what you're doing on the ground as 
it relates to small businesses service and their existing debt, 
as well as the overall loan volume coming through your bank?
    Ms. SALDANA LEE. First, the loan volume is not coming 
through the bank. Our production is very low right now, and 
most investors have postponed any projects that they had at any 
one time. And what we're doing is we're actually doing 
outreach. Our loan officers are reaching out to our borrowers, 
making sure that they are in a good position, and if they're 
not, if they're being stressed, if there is anything that we 
can do to assist them with those stress factors. What we have 
seen, because we do have a large portfolio of construction 
loans, our contractors and builders and developers as well, 
they have limited the amount of inventory that they have on the 
ground, which is not normal because they just want the 
inventory to keep rolling because they're selling one house. 
And they need to have been building a house that would be 40 to 
50 percent to 60 percent complete at the time of a sell of a 
subject house. So that has slowed tremendously. And that end 
user, the consumer, who is stressing their income as well, 
their debt to income ratios have increased, making it extremely 
difficult for them to qualify for a loan.
    Chairman WILLIAMS. I've been a car dealer for over 50 years 
and but also run a calf cow operation. We talked about that at 
my family ranch, and you've talked about Mr. Zittel, you talked 
about the cost of fertilizer, inability to find workers, et 
cetera. So, I've got a little bit of time left. Let me ask you 
this. Can you tell us how you've been dealing with the 
persistently high inflation and some of the other economic 
headwinds that you mentioned and that you're feeling in the 
economy today?
    Mr. ZITTEL. Yes, so 2 specific examples. The winter storm 
that we went through that knocked down our greenhouses. I think 
the first round that happened in 2014, we were able to rebuild 
and take loan money out and be able to handle the inflationary 
effect with the last November storm. Perfect example of where 
we're not doing what we should be doing, and that is where 
we're building infrastructure, but we're not doing the 
technology tied with the infrastructure that we should be doing 
right now. So we're basically going at it at a limited fashion, 
knowing that there are things that are there that we'd like to 
do but aren't doing.
    Chairman WILLIAMS. My time is up. I now recognize the 
Ranking Member for 5 minutes of questions, Ms. Velazquez.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. Mr. Bivens, 
inflation is a complex global phenomenon, and you stated that 
in your remarks. Can you give us an overview of where America 
stands compared to our peers in terms of inflation rates and 
recovery?
    Mr. BIVENS. Yeah, I would say it is definitely the case 
that the inflation acceleration of the past 2 years was global. 
Every single advanced economy in the world experienced an 
inflation of core inflation relative to pre COVID trends. And I 
say that acceleration is actually important. Sometimes people 
just look at the rate of inflation in, like, the US. Versus the 
EU, and it is higher in the US.
    But we went into COVID with higher inflation rates in many 
of these cases. So you have to look at that acceleration. The 
US was first in seeing some of those outbreaks of core 
inflation, but we also have peaked first and we are clearly 
coming down at, again, too slow a pace, but coming down, 
whereas other countries are not seeing the retreat in core 
inflation. I think the really important thing here is the 
inflation experience has been very common. The policy decisions 
made immediately after the COVID Pandemic recession were very 
different. And so that is why I think there is such a weak 
linkage between any specific piece of policy we did in the 
inflation exchange.
    Ms. VELAZQUEZ. How can you explain how policies like the 
ones that we passed last Congress contributed to that recovery?
    Mr. BIVENS. So the US recovery is clearly there is many 
other countries in the world. It is clearly at the top end in 
terms of fast recoveries being experienced in the world. We've 
been much better on that front than many countries. And I think 
that is just directly the result of we were also on the leading 
edge of how big we went with fiscal relief and recovery 
efforts, which I think were correct, given the scale of the 
problem.
    Ms. VELAZQUEZ. What does that recovery mean for small 
business in particular?
    Mr. BIVENS. By the measures I track, small business has 
participated fully in this recovery. If you look at their share 
of net employment gains, their share of sort of total income, 
they look right on track with what they were pre COVID. So it 
has been a broad based recovery that has not left small 
business behind in any way.
    Ms. VELAZQUEZ. Thank you. Mr Zittel, you mentioned that 
consolidation in your industry has led to fewer vendors to 
source goods from in your lifetime of farming. Has this been an 
ongoing trend?
    Mr. ZITTEL. No, I'd say when I got out of college back in 
the late 80s, there was expansion, more people were getting in, 
we had more tractor dealerships, we had more fertilizer plants, 
we had more seed companies. The consolidation has certainly 
happened over the last 20 or 30 years and I'm not seeing it 
getting any better going the other way. It seems like it is 
getting worse.
    Ms. VELAZQUEZ. Can you explain how competition in this area 
can lead to lower prices?
    Mr. ZITTEL. So a perfect example would be we've had upwards 
of 5 or six seed companies and now we're down to 2 or 3 seed 
companies. You're forced to go to those houses, there is less 
competition. Some of them don't even carry the varieties you 
want. So if you want that variety, you've only got a sole house 
to go to. They name the price, pretty much.
    Ms. VELAZQUEZ. Thank you. Mr Bivens, you mentioned housing 
as a key factor of inflation. Can you discuss what Congress can 
do to increase housing development, to alleviate our housing 
shortage and bring prices back down to earth?
    Mr. BIVENS. Yeah, I think that is an incredibly important 
question. I would say to me, the key to getting house prices in 
check, which is just a huge challenge for household budgets is 
building more quality housing. We just have underbuilt housing 
for a generation. We need to build more lots of the blockages 
to that building actually happen at the state and local level. 
So the federal has to do policies that complement that. I think 
some of the big things the Biden administration has done that 
will help a lot is they sort of plus up federal grants to state 
and localities that change their zoning and regulatory laws to 
allow more housing to be built. I think that is a really good 
thing to do. This could be even supercharged with legislation 
that allocated actual money to go to states and localities that 
do more building or do good things on the regulatory and zoning 
side.
    Ms. VELAZQUEZ. Thank you. Mr. Gray, recently we learned 
that the producer price index has dropped to only 2.3 percent. 
Do you think this is a positive development for small 
businesses and may be able to give them more hope for economic 
conditions to stabilize?
    Mr. GRAY. I think to the extent that we can observe 
improvements in the inflationary environment in general is a 
good thing for households, businesses, small business in 
particular, and that may be an indication of that. So I would 
view that favorably.
    Ms. VELAZQUEZ. Thank you. I yield back.
    Chairman WILLIAMS. Thank you. Ms. Valezquez. I now 
recognize Mr. Luektkemeyer from the great state of Missouri for 
5 minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman. In this committee 
last year, we had a number of economists come in and we talked 
about the causes of inflation, and they all agreed on 4 
different chart costs or reasons energy costs, rules and 
regulations, supply chain, employee problems, and our immense 
money supply that was poured in the amount of money was poured 
in the system.
    So let's start with Mr. Gray. The Fiscal Responsibility Act 
cut the NEPA requirements down from what would be an average of 
seven years to approve a project, down to either one for small 
projects, 2 for larger projects. Can you give us just a quick 
recap on the importance of that with regards to the cost of the 
projects and effects on inflation?
    Mr. GRAY. Absolutely. I haven't studied the degree to which 
that particular policy change would move development costs, 
because I haven't seen the estimate of that but directionally, 
that is entirely the right way to go if the goal is to expand 
the supply of energy production and thus lower the price for 
households and consumers.
    Mr. LUETKEMEYER. Ms. Lee, having been in the banking 
business myself for a few years, I know that the banking 
business is extremely regulated, and you've been inundated with 
even more regulations. So I know that when we were my brother 
and I had a bank and forever loan officer, we had a higher 
compliance officer. Is that kind of your experience as well?
    Ms. SALDANA LEE. Well, our compliance department has grown, 
and it continues to grow.
    Mr. LUETKEMEYER. Does it make you any money? No, that is a 
dead investment, a dead cost for you that you've got to 
overcome.
    Ms. SALDANA LEE. That is correct.
    Mr. LUETKEMEYER. And it is all due to more rules, more 
regulations?
    Ms. SALDANA LEE. That is correct.
    Mr. LUETKEMEYER. And you haven't any fewer rules and 
regulations over the last few years? You've had more, probably, 
have you not?
    Ms. SALDANA LEE. That is correct.
    Mr. LUETKEMEYER. Thank you. Just kind of curious, too. You 
mentioned the PPP program. I thank you for those comments. I 
mean, this committee was one of the key folks that oversaw I 
was served on Financial Service Committee, and our subcommittee 
there oversaw the PPP program, helped originate it, and then we 
provide the oversight here. Thank you for your comments on that 
because it was a very successful program due to the banks 
getting involved and using your customer law to be able to 
protect the integrity of that program. So we thank you for that 
and for thanking your clients.
    With regards to inflation, how is it affecting your small 
businesses that you're financing right now? Are they struggling 
as a result of that? And you're seeing increased past dues 
losses, businesses go out of business. What do you see as the 
effect of inflation on small businesses?
    Ms. SALDANA LEE. There is a variety of things. What we're 
really watching right now is any small loans that have a fixed 
rate. At this point, we originate 5 one Arms or 3 one. So that 
means they're fixed for 5 years or 3 years. So they're in that 
time frame. As they start to readjust those rates, that is 
where the stress comes in. We had one business owner that 
absolutely cannot afford the increase in rates and other costs 
associated with his business, and he is put his business up for 
sale. And so it is just a timing aspect of what is going to 
happen in the future with our loan portfolio and past dues and 
any kind of restructuring. But that is something that we've 
talked about already in our bank, is that if there is 
restructuring which don't want to get into banking too deep, 
but you start restructuring, that means problem loans and then 
regulatory burdens and a lot of other work that comes along 
with that.
    Mr. LUETKEMEYER. Thank you for that. Mr. Zittel, you are in 
a very difficult business. As you said a minute ago with your 
Kennedy quote, you're the only group that can you have no 
control over your cost, no control over sale your product, and 
you hope the weather works. I always tell people that farmers 
are the ultimate gamblers. Las Vegas folks are nothing compared 
to what farmers are because you truly roll the dice every day. 
And I thank you for what you do because you feed our country in 
the world. But you've had a roller coaster effect with your 
revenues that you're talking about here with regards to the 
inflation and the Pandemic. And now the roller coaster of all 
is can you talk a little bit about that, how that is all 
affected you and what kind of changes you've made to your 
organization with regards to inflation?
    Mr. ZITTEL. Very briefly, the pandemic did not affect us 
much because we went to work every day. Didn't know a damn bit 
of difference beyond that. The inflation rate, like we said, 
we're not doing the things we should be doing because we don't 
want to leverage our business. And I think regulation wise, our 
state has been very difficult to work with as far as passing 
things like overtime rate, mandatory days off and things like 
that.
    Mr. LUETKEMEYER. Your labor costs have gone
    Mr. ZITTEL. Our labor costs, which 50 percent of cost of 
doing business for a farmer is.
    Mr. LUETKEMEYER. Labor, and you have no control over that 
cost. And you have no control on being able to pass that cost 
on like most businesses.
    Mr. ZITTEL. Exactly.
    Mr. LUETKEMEYER. Thank you very much.I yield back now.
    Chairman WILLIAMS. I recognize Mr. McGarvey from the great 
state of Kentucky for 5 minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman. Very much appreciate 
it. Really glad we're having this conversation today. 
Obviously, we are all concerned about the root causes of 
inflation and how we prevent a recession in this country. I 
think it is important to understand and identify those causes 
of inflation so that we can best deal with it. Because, again, 
we can all, I think, agree that reigning in inflation is vital 
to protecting consumers and small businesses. And it is 
appropriate to look at those. I think it is appropriate for 
this committee to understand how the COVID stimulus programs 
contributed to inflation. But it is easy to Monday morning 
quarterback this a little bit as well and just reminding 
everybody how important these programs were during the 
Pandemic.
    As the Ranking Member noted, found that the US GDP would 
have fallen by 11 percent in 2020 without fiscal stimulus, and 
that is equivalent to 3 times the actual decline we saw. We did 
much better here than other places in the world during this 
kind of difficult time between COVID and what was going on in 
Russia and Ukraine. So in talking about how we combat a 
recession, how we help these small businesses, looking at these 
stimulus programs I think is helpful too, in understanding how 
they were helpful. Mr. Zittel, you're talking about your 
experience during the Pandemic. And like so many of the great 
business people in my state of Kentucky, you're one of the 
millions of small business owners who participated in and 
benefited from the PPP program. And so just tell us your 
experience with that and how you used that funding to help your 
business and the employees in your area.
    Mr. ZITTEL. So I would say probably the best example of it 
is you are correct. It was well needed and a perfect timing. 
And not just because of the Pandemic, because like I said 
before, the Pandemic really didn't change our lives a whole 
lot. We weren't moving any place anyhow. But I think one of the 
biggest effects is we've been falling behind. Our margins have 
been dwindling. Our rate of trying to stay ahead of technology 
and move with that curve to try and make money has fallen 
behind because we haven't had money to work with. That was a 
great stimulus package, whether it was pandemic or non 
pandemic, it was a breath of fresh air. But we continue to see 
those regulations that keep pushing us down and pushing us 
down.
    I don't know if I'll have an opportunity, but I just want 
to say it one time I did a calculation logbook 1935. If you do 
the calculation on labor, it is 50 times higher. If you do the 
calculation on a couple of the vegetables that I did that take 
exact the same amount of space as it did in 1935, you're only 
talking about 15 to 18 times. So labor costs that cost us 50 
percent are rampant. So that was a breath of fresh air. But 
will it be enough for the future? We don't know.
    Mr. MCGARVEY. I appreciate that insight and talking more 
you're speaking more regulatory pressure than the stimulus 
funding and the impacts there. Going back again to some of the 
things that were going on during COVID My home state of 
Kentucky is using $500 million in American Rescue Plan funding 
for the Cleaner Water Program to invest in water and sewer 
projects across the state. I can tell you I was in the state 
legislature at the time. There are Kentuckians who now have 
clean drinking water for the first time because of this 
investment in a state like ours, sewer access for homes, this 
has been a game changer for us in Kentucky. So Mr. Bivens, 
looking at how this infrastructure has or Dr. Bivens, I should 
say, looking at how access to clean drinking water we have 89 
million in my state that got people Internet for the first 
time. We remember people going to McDonald's parking lots 
during the pandemic so that they could go to school or go to 
work. Can you explain how this investment in infrastructure and 
local economies will benefit small businesses and the National 
economy in the long term?
    Mr. BIVENS. Yeah, I think it is a lot of the mechanisms you 
just talked about, like small businesses, like kind of every 
other actor in the economy, they need good roads to transport 
their product on. They need good schools to make sure the 
workers coming out of those schools are productive and provide 
good value. And then I think one maybe underrated thing that is 
in the infrastructure bill that was passed in 2022. A very big 
investment in broadband and especially in a world if we're 
going to see more remote work to actually expand the pool of 
people actually available to work in areas that have been 
underserved by broadband before, I think that could be a huge 
boon to small businesses. But basically all the mechanisms you 
talked.
    Mr. MCGARVEY. About, the hardest question I'll ask you with 
25 seconds left, given what we're all trying to do, help small 
businesses, help consumers bring down inflation, you're in our 
shoes. What would you do to help small businesses and consumers 
and bring down inflation?
    Mr. BIVENS. I think the inflation bit is going to be really 
hard. It is just going to require a little bit of patience and 
to make sure we don't make any mistakes going forward to help 
small business generally, to me, that the biggest arrow in the 
quiver is antitrust policy that levels the playing field 
between them and the very large corporations.
    Mr. MCGARVEY. So well done. I yield back.
    Chairman WILLIAMS. Thank you. I now recognize from 
Pennsylvania Mr. Meuser for 5 minutes.
    Mr. MEUSER. Well, thank you very much, Mr. Chairman. 
Certainly, thank you to our witnesses. It is appreciated. I 
spent about 25 years in small business. I talk with small 
businesses every day, visit them regularly, as I should, being 
on this committee as well as just being a Member of Congress. 
Since 70 percent of those employed are in my district are 
employed through small business, you've been dealing with high 
inflation supply issues, wage disruptions costs, regular costs 
going up, regulations. So I'd like to start with the regulation 
costs, which aren't really factored into well, they're factored 
into the inflation, but they're not factored into necessarily 
your added bottom line costs on your balance sheet.
    Mr. Gray, the Biden Administration, according to your 
colleague Dan Goldbeck, American Action Forum, found that the 
Biden administration accumulated approximately $367,000,000,000 
$367,000,000,000 in less than 30 months in regulatory costs. 
Can you share with us the impact that these costs have on small 
businesses in what is a very fragile economic climate?
    Mr. GRAY. Absolutely. So I should stipulate that those 
costs come from the administration. So those aren't our 
estimates. Those are the self reported costs and they are 
significant. And they are significant to small businesses 
because whereas a one key difference between a large firm and a 
small firm is just as has been referenced elsewhere is just the 
capacity to absorb compliance costs. And I know from the small 
business in my family, there isn't the capacity to go hire 
compliance officers. And so each time one of these comes down, 
all it does is come out of out of their pocket.
    Mr. MCGARVEY. Sure. All right. Thank you. I have in my 
district, we have one of the largest reserves for natural gas. 
Natural gas, of course, half the carbon emissions of other 
fossil fuels, and yet we see a regular regulatory.
    Russian assault on natural gas pipeline distribution and 
such. Lately, we're seeing where prohibitions on gas stoves, 
which boggles the mind, right? I mean, gas stoves, you need 
electricity for other stoves. Where does that electricity come 
from? Some don't think a little bit past what is right in front 
of us. But that being said, would more natural gas be 
beneficial? Mr. Zettel, first of all, where you are in upstate 
New York, you'd like to mine or gather some of that natural 
gas? And I know that is hopefully down the road for you, but 
what would
    Mr. ZITTEL. We actually started in 1973 and started with 
our first well, which was an abandoned well, and we've got nine 
wells. But we can only go down to the Medina region, which 
supplies about 30 percent of the gas for our greenhouses and 
our greenhouse operation. If we were allowed to deep well, 
probably one well would do that in all of our houses and 
probably half the neighbourhood. But we are limited, but we do 
have gas wells. And yes, we are very short sighted, at least in 
our state, to say, let's get rid of gas. Let's go all electric. 
There has been comments on what would have happened in that 
November storm, and it would have been a lot more than 40 
people die in Buffalo from freezing to death if we would have 
had all electric instead of gas.
    Mr. MCGARVEY. Yeah, and I'm just south of you in 
Pennsylvania, fortunately, where we have been fracking, and it 
is been a real benefit and godsend to many of our farmers and 
businesses, and it is bringing in many new competitive, adding 
competitive advantages for businesses because of the low cost 
of energy. Let me move on, Ms. Lee. The CFPB Small Business 
Data Collection Rulemaking, where they're asking for, frankly, 
a bizarre list of personal data on your clients. How are you 
doing with that?
    Ms. SALDANA LEE. Well, I'm very grateful that I don't have 
to manage that part of the bank. And so, I'm not in compliance. 
And we have a compliance officer in his department, and they're 
working through all the details. It is extremely burdensome, 
and we're going to have to develop programs and systems. And it 
is a project committee that has been meeting for months now, 
and they continue to meet until everything gets finalized.
    Mr. MCGARVEY. Thank you. I appreciate all of your work for 
small businesses. Mr. Bevins, how many years' experience do you 
have in the small business sector?
    Mr. BIVENS. My employer is fewer than 50 people, so I work 
for a small business.
    Mr. MCGARVEY. Okay. I yield back.
    Chairman WILLIAMS. I now recognize Ms. Gluesenkamp. Camp 
Perez from Washington, the great state of Washington, for 5 
minutes.
    Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman. Mr. Bevins, 
in your testimony, you noted that one avenue for looking at 
inflation is actually as a distributional issue, because what 
is a cost to one person is profit to another person. In this 
case, higher costs for consumers have often shown up as higher 
profits for some corporations. You note that in normal times, 
corporate profits contribute about 13 percent to prices. But 
since the second quarter of 2020, they have instead contributed 
more than a third to the growth or more than twice as much as 
they normally do. Inflation has given corporations a lot of 
room to pad profits and increase margins. But that is not all 
corporations, right? There is a difference between my 
corporation with eight employees and some of the big guys. So 
why is there such a difference? Why are our profits diminishing 
and some others are getting so much higher? Why is there such a 
difference in gouging and then the rest of us who are just 
trying to get by? One thing that I hear about all the time when 
I'm back at home is the impact of consolidation, particularly 
in AG and in our food supply chain. I hear about the 
concentration of power in the hands of a few of these 
distributors. Transporters has resulted in unfair practices and 
higher prices for us at the grocery store. So what efforts 
should be made to improve or better enforce some of these 
antitrust issues? How can you discuss, can you discuss the 
benefits of enforcing those laws on small businesses, on 
competition overall?
    Mr. BIVENS. Yeah, I'd say a couple of things. Your question 
about what explains why some firms have really been able to 
just pass on all costs and then some, whereas other firms have 
been more constrained. I think there is 2 answers. One is just 
partly luck. The supply chain snarls meant that some people who 
had supply on hand as supply chain shut down were just in a 
great position to charge whatever they needed to. The more sort 
of profound answer is just there is lots of market power in the 
corporate sector and very big corporations exert a lot of that 
power. What is different this time is they have normally 
exerted it mostly not against their own customers. They've kept 
inflation has been low for like 25 years. Instead, a lot of 
that power has been thrown backward against their own workers 
and against small businesses. This time the shortest route to 
profitability was by raising prices and lots of them took it. 
And that is why you saw such a sort of huge contribution of 
corporate profits to inflation over those past couple of years. 
And so I think whether we're talking about the long run problem 
or the short run problem, the answer is we need a more level 
playing field between various economic actors and the economy, 
between workers, between corporations and small businesses. And 
a key policy lever is the one you talked about, which is more 
robust antitrust enforcement that doesn't only look at product 
market competition, but also looks at what is happening in the 
labor market and to suppliers.
    Ms. GLUESENKAMP PEREZ. Yeah, like on a very small frame. 
Remember when everyone was getting their catalytic converters 
stolen rampant everywhere? There was one point where there was 
one catalytic converter on the entire West Coast for a year. 
Make and model of a vehicle, one on the entire West Coast. And 
I bought it and I paid for it and it never showed up. And turns 
out the dealerships get to pull first order off of it. And so 
prices went up for everyone. And what could have been a simple 
fix instead was a bill because of these inflationary issues 
that eviscerated people's savings accounts. So appreciate the 
seriousness and the perspective with which you all are all 
taking this issue. Thank you to all of our witnesses for being 
here and thanks for this hearing today. I yield back.
    Chairman WILLIAMS. Yields back and now recognize Mr. 
Stauber from the great state of Minnesota for 5 minutes.
    Mr. STAUBER. Thank you, Mr. Chair. And I've said it in this 
committee before, small businesses are not only the engine of 
our economy, but they're the innovators. And we're hearing it 
here today. During the COVID-19 Pandemic, our small businesses 
were hit incredibly hard. Yet it was small businesses that held 
this economy and the entire country together. Our small 
businesses, just like everyday American consumers, are being 
hit with inflation the hardest, which are being worsened by the 
Biden administration's policies. Mr. Bevin, my colleague from 
Pennsylvania. Maybe I'll ask the question just bluntly. Have 
you ever owned a small business?
    Mr. BIVENS. No.
    Mr. STAUBER. No? It sounds like it. Mrs. Lee, I have a few 
questions about the small business loan activity at First 
Community Bank. What is the current rate on business loan that 
most small businesses working with your bank would receive 
today?
    Ms. SALDANA LEE. Approximately 10 percent.
    Mr. STAUBER. And what ballpark estimate of the interest 
rate that a small business would have received in January of 
2020?
    Ms. SALDANA LEE. Oh, goodness. Probably 5 and a quarter.
    Mr. STAUBER. Almost double?
    Ms. SALDANA LEE. Yes, sir.
    Mr. STAUBER. What kind of trends have you seen over the 
past year or so in small business loan activity? Have you seen 
an increase in the number of businesses that are unable to keep 
up with their loans or small businesses?
    Ms. SALDANA LEE. Actually, what we've seen is just a 
decline in applications because they're in a very difficult 
situation in which their profits are suffering. And as much as 
they would like to come to the bank to borrow money, they know 
that that is going to further their problems. And a lot of 
things are just services in the moment where you don't want to 
do some short term lending and borrowing for long term capital. 
And that is really what they're needing.
    Mr. STAUBER. You had said to, I think, Mr. Luke Byer about 
some of the regulators or specialized workers that follow help 
with your regulations in the bank. How many of those do you 
employ right now?
    Ms. SALDANA LEE. Oh, goodness. When I look around the bank, 
it is going to be I'm going to say at least 30 are looking at 
one piece of compliance and that is more in an in depth level. 
Every person in the bank has to deal with compliance.
    Mr. STAUBER. So you have 30 that you've hired specifically 
for compliance?
    Ms. SALDANA LEE. Not specifically for compliance, but it is 
throughout the bank where among their responsibilities is 
looking at something, reviewing something, monitoring 
something. And in my opinion, that is the compliance piece.
    Mr. STAUBER. Thank you. Mr. Ziedel, the farming industry is 
an incredibly labor intensive industry, as you described. Can 
you once again share some of the challenges you are facing with 
recruiting and retaining your employees?
    Mr. ZITTEL. So recruiting during the Pandemic was difficult 
just because of the process in applications, because it is 
Chicago, California, and the consulate in Mexico. So 
logistically, during the Pandemic, it was tough. Other than 
that, the federal H 2 A program is the only program to go with, 
again, the regulations of our state. Because the H 2 A rate, 
the AW rate that they call it, is based off of your minimum 
wage rate. That is one of the driving forces. So the higher the 
minimum wage rate, the higher the AW rate. But as far as 
retention wise, we've got a great track record. And I'd like to 
say because we're good employers.
    Mr. STAUBER. I just known you and heard you comment here. 
You're somebody I could work for. I think you're a straight 
shooter and common sense and a good business owner.
    Mr. ZITTEL. Thank you.
    Mr. STAUBER. Mr. Gray, as you noted in your testimony, the 
federal government has poured an excessive amount of money into 
our economy over the past few years. Do you believe we would be 
seeing the same level of inflation we are today if Congress and 
our president did not pass excessive spending packages like the 
American Rescue Plan and the so-called Inflation Reduction Act?
    Mr. GRAY. I do not.
    Mr. STAUBER. Where do you think it would be at?
    Mr. GRAY. I don't want to overstate the effect, 
particularly a couple of years later, and I have not done a 
backwards looking analysis, but I believe we've seen other 
research that suggested it was a positive contributor to the 
inflation rate.
    Mr. STAUBER. My next question, and I don't have much time 
how would lowering regulatory burdens and cutting red tape help 
tame inflation? You got 2 seconds.
    Mr. GRAY. Increase supply. Increase.
    Mr. STAUBER. There you go. Thank you. Mr. Chair back.
    Chairman WILLIAMS. Thank you. I now recognize Ms. Davidson, 
the great state of Kansas for 5 minutes.
    Ms. DAVIDS. Thank you, Chairman. And thank you to the 
Ranking Member to both of you for holding this hearing today, 3 
years after the start of the COVID-19 Pandemic, Kansas 
families, small businesses and workers are still dealing with 
high costs. Inflation makes it harder for our small businesses 
to keep their doors open, for our workers to put food on their 
tables. And I've been particularly focused on making sure that 
our domestic supply chains meet our country's demand to move 
goods efficiently. I've been proud to introduce legislation to 
support our small manufacturers and vote for critical 
legislation like the bipartisan infrastructure law and the 
major manufacturing domestic manufacturing bill that we passed 
in the last session. These things are helping us get our 
economy back on track. They're helping to create good paying 
jobs and lowering prices for folks back home in Kansas. But 
there is clearly a ton of work still left to be done. Mr. 
Bivens, I'm curious if you could answer my first question here. 
I know there are some indicators that inflation is slowing, but 
that it is not declining fast enough to provide real relief to 
our small businesses. I'm curious if you could share your 
insights on how the current supply chain disruptions that we're 
looking at are impacting the elevated prices that people are 
still seeing.
    Mr. BIVENS. So my sense is that the supply chain 
disruptions, which were a major cause of the initial surge in 
inflation, are substantially better than they were years ago. 
The New York Federal Reserve Bank tracks something called the 
global supply chain pressure index. It was historically high 
pressure earlier. Now it is getting much more normalized. And 
so my expectation is that that along with hopefully some 
reduction in profit margins over the next year, will start to 
bring down overall inflation a little faster than what we've 
seen. But yeah, I think it is headed in the right direction. 
But I agree it is agonizingly slow.
    Ms. DAVIDS. Yeah. And I appreciate the insights on supply 
chain disruptions. Can you talk a little bit about the other 
factors that are playing into the elevated prices that we're 
seeing?
    Mr. BIVENS. Yeah, so I think profit margins are a big part 
of it. So basically, you had this enormous rise in profit 
margins in corporations that drove at one point about 60 
percent of the price increases. Since then, they have been 
coming down, but they've not anywhere near normal. And so 
normally at this point in a recovery, you'd see quite a dip in 
profit margin. They would actually provide some really nice 
disinflation that has not really happened yet. I think it will 
happen. I think supply chain unsnarling will increase some 
competition. People will let go some of those very high profit 
margins because they'll be forced to. I think the other thing 
that is keeping inflation too high is just a lot of lagged 
effects that are taking some time to get through the economy. 
One obvious one, there is a range of service sector industries 
that are very labor intensive and inflation is mostly driven by 
wage increases and very early in the recovery there are some 
sectors like leisure and hospitality that is all real scramble 
for workers. And you actually really had a labor shortage. I 
think those are gone. I think the lagged effect of those wage 
normalization is going to show up in inflation. And then the 
last one, everyone knows housing costs only hit official 
measures of inflation with very long lag. We know in the 
private sector housing costs really have gone down quite a bit 
in the past year. It has really not shown up much at all in the 
CPI. It will show up in the next six to eight months. So, I 
think there is a lot of disinflations in the pipeline coming.
    Ms. DAVIDS. That is really helpful. And I might follow up 
with you about the housing cost lag that you were mentioning. I 
did want to touch on really quickly that I have been working 
specifically on trying to figure out ways to help restore some 
of our manufacturing capacity and of course I want to do more 
manufacturing in the Kansas Third. But I am curious, speaking 
of Lags and what the timing might look like on the commitment 
to reshoring manufacturing, can you share some insights on how 
you think that might stabilize or impact the price inflections 
and that sort of thing?
    Mr. BIVENS. My hope is we're going to see enough 
disinflation over just the next six to twelve months, that all 
that extra capacity that is coming online from things like the 
bipartisan infrastructure law won't have a huge effect on this 
episode, but it will have an enormous effect in the future. It 
basically means we're not going to be in this situation again. 
If we're hit by a big shock 3 years from now, it is not going 
to cause anywhere near the inflationary blow up it did this 
time because our supply chains will be so much more diversified 
and strong. So, it really is an investment in the future. Even 
if it is not going to come online quick enough this time to 
really shove down inflation over the next 3 months. I think it 
is absolutely worth doing because of the resilience it builds 
into the economy.
    Ms. DAVIDS. Thank you and I'll follow up with some of the 
other questions I had. Thank you so much. I yield back.
    Chairman WILLIAMS. Thank you. And now recognize Mr. Hunt 
from the great' state of Texas for 5 minutes.
    Mr. HUNT. Thank you Mr. Chairman. Really appreciate it. 
Also want to thank the witnesses for being here as well. Really 
appreciate your time and efforts today. Yesterday we observed 
our greatest generation's greatest moment. D-Day brave men 
risked their lives to free the world from tyranny to ensure 
that we don't speak German. Today, they waited through waste 
deep water in the face of machine gunfire into a barrage of 
machine gunfire in order to free the world from fascism. And 
more than 57,000 of these men gave their lives 79 years ago. 
Yesterday, those fearless and courageous soldiers, sailors, 
marines and airmen wanted those closest to them to prosper in a 
free society. Not just then, but now and of course for the 
future. Today, because of many of the policies from this 
administration, we can hardly say that we've kept our promise 
to America, the promise of freedom that our greatest generation 
sacrificed for us, that we observed yesterday. The American 
people are suffering under this administration. Small 
businesses, as you have articulated, are feeling the sting of 
this administration's actions. Inflation has remained at a 
record high for going on 2 years now. Groceries and essential 
items have been at all time highs for American families. Bread, 
eggs and the most basic staples of life are now exorbitantly 
expensive for American families.
    We are feeling this everyday. Fuel costs are at a halt or 
at all time high heating. Our homes are at an all time high. 
American films are struggling right now because this 
administration has waged war on our oil and gas industry. As 
you have just articulated, sir, your state is sitting on the 
Marcel Shale and you can't even get the natural resources 
needed to fill your home and to fuel your farm. These are not 
real solutions that are being proposed right now. Solutions 
like we must demand that everybody buys an EV or we have to use 
solar panels. And by the way, I'm not an anti green guy. I'm 
just an all hands on debt kind of guy. And we are a country 
that must have redundancies. The economic and energy priorities 
of this administration are flat out not sustainable. We passed 
the so called Inflation Reduction Act, and we know 2 things 
about this bill. According to our former Vice President Al 
Gore, the IRA is a quote is a quote climate bill. He said these 
words and it will cost the US at least $1.2 trillion in green 
subsidies instead of cutting the continued wasteful spending, 
this administration is on track as of last week to spend an 
additional $4 trillion over the course of the next 18 months 
instead of curbing our spending to pre COVID levels. Because 
last I checked, COVID is over. And for you, sir, COVID never 
started. Thank you for all you've done for our country. Small 
businesses will continue to feel this and so will the consumer.
    Under this administration has become harder to start a 
business and very costly to do so. President Reagan famously 
said the nine most terrifying words in the English language 
are, I'm from the government and I'm here to help. We don't 
want that. We want you to be able to make your own decisions. 
We want to empower you. The individual the individual small 
business owner is the very backbone of this country. We must 
unleash American energy. We must unleash your spirit fire and 
reign in the influence that we have seen destroy this country 
for the past 2 years. Now, ma'am, before I did this job, I was 
actually in the mortgage business. And also, I worked for a 
home builder in the greater Houston area. One thing that I 
found to be very interesting is for every $1,000 increase in a 
home, you basically price out 2900 potential home buyers. When 
we have inflation, the input goes into the slab, it goes into 
the frame, it goes into the brick, it goes into the roof, it 
goes into the doors, it goes into everything of the home. And 
that then gets pushed down to the consumer.
    So, ma'am, my question is for you. What have you seen in 
this industry and how damaging has inflation been to the 
industry that I work in and that you work in every single day? 
And in spite of the strength of the Texas economy, how has this 
hurt the home builder and the homeowner?
    Ms. SALDANA LEE. I'm going to start with the homeowner we 
have seen our custom home built. They have decreased by half 
from about a year ago. And we track that because, again, we're 
very heavy in construction lending. We have the data to support 
that. And I see it as because of the home mortgage interest 
rates, families are not being able to build their dream homes. 
And the other thing that I'd like to add really quickly, we had 
some builders that were building custom homes and eight 
households in particular, homeowners in particular. Those 2 
builders went out of business during construction. I was able 
to talk to one of the owners who was extremely disappointed, 
distraught, because they were going to have to go out and find 
another builder to finish her house. And this was like a 2 year 
period.
    Mr. HUNT. Okay, time is up. Thank you very much, ma'am, for 
your time. And thank you, sir, for feeding our country. I yield 
back.
    Chairman WILLIAMS. I now recognize Mr. Mfume from the great 
state of Maryland for 5 minutes.
    Mr. MFUME. Thank you very much, Mr. Chairman. I want to 
thank you and in her absence, I want to thank the Ranking 
Member also, and I want to thank our witnesses. One of the 
interesting things about this committee and all committees is 
that we don't always agree. And fortunately, we ultimately 
found our way out of disagreement, back to the facts and back 
to the reality and back to the science. And I know it has been 
oftentimes convenient because President Biden is in the White 
House, to sort of paint him as the great culprit, the great 
conspirator that has created a situation that we're all 
definitely trying to survive under. But the fact of the matter 
is Joe Biden did not create this inflation. And if we really 
want to talk about inflation and administrations, the inflation 
last year got up to what, over 6 percent?
    Well, in the 1970s, following 2 back to back Republican 
administrations, Ronald Reagan and his successor, inflation hit 
12.6 percent. Now, can you imagine what that would be like 
today? 12.6 percent? And small businesses were screaming for 
help. It was so interesting that in 1974, Gerald Ford addressed 
the joint session of the Congress, and he gave this long, 
detailed speech about what we as Americans can do to drive down 
inflation. And people listened politely. And then at the end of 
the speech, he pulled out a great big button that said W-I-N. 
And he hung it on his lapel, and it said it stood for Whip 
Inflation Now. And that he and the First Lady and his family 
was going to find a way to spend less, and the government 
probably needed to find a way to spend less. But all Americans 
have the responsibility to, quote, Whip inflation. Now, Bob 
Hope, who was a dear friend of the President at the time, went 
on stage a few weeks later and gave a joke, or told a joke, 
saying that since that great speech about whipping inflation at 
12 percent, whips have gone up by $0.50 in the last week. So if 
you live long enough, you'll see everything at least twice. I 
believe that Greenspan, Alan Greenspan, who was his economic 
advisor at the time, said it was the most unbelievable 
demonstration of stupidity that he had ever seen or heard.
    So there is enough blame to go around to everybody. And I 
know someone mentioned, I think it was the gentleman from the 
great state of Texas earlier, Ronald Reagan. Well, I knew 
Ronald Reagan. I served with Ronald Reagan. And Ronald Reagan 
said about inflation that it is not the fault of any particular 
administration. It is the fault of policies that can carry over 
from administration to administration. So I just want us all to 
take a little bit of a deep breath and remember that we're 
seeing now what we saw then only twice as devastating without 
as we saw then a Democrat in the White House. So it is really 
not about parties. It is more about policies, practices, 
principles. Trying to figure out what works doesn't work and 
throwing stuff up against the wall and realizing that none of 
us really have an answer.
    But there is a good idea here, there is a good idea they're 
there, and then we try to find a way to make it all work. So I 
just have one question of you, Mr. Bivens. I want to go back to 
the fact that inflation is slowing, but it is not reversing. 
However, I think that there are some other things that are 
keeping prices elevated that maybe we should talk about for a 
moment. You'd mentioned price margins in respect to the 
gentlewoman's question a moment ago, but wouldn't labor market 
have something to do with that? Wouldn't employment levels have 
something to do with that? And wouldn't the monopoly power and 
pressure downward on really small businesses that operate on 
the real main street, wouldn't those also be things that sort 
of drive this uncontrollable beast that we call inflation?
    Mr. BIVENS. Yeah, I think all those influences go into the 
mix of what generates the inflation rate. And so one of the 
reasons why I'm relatively encouraged by what I'm seeing in 
very recent data and inflation and think like we some patients 
will will help us a lot is that we have not seen inflation lock 
in and become embedded across every sector of the economy like 
you brought up the 1970s.
    One reason why that inflation was so incredibly tough to 
fight was like every sector, workers, rank and file workers, 
small businesses, corporate profits all saw really rapid gains 
in their income growth year after year as they all tried to 
pass on price increases to each other. That dynamic really 
hasn't happened this time. There is one sector corporate 
profits that have really increased their share of the total. 
Everyone else's income is kind of lagging behind and actually 
being an anchor on inflation and trying to bring it back down.
    Mr. MFUME. Thank you very much. That is the thing we don't 
talk about that much, the corporate side of all this. Well, 
this gentleman from Maryland yields back. Mr. Speaker, thank 
you for the opportunity.
    Chairman WILLIAMS. Okay, thank you. And I recognize Mr. 
Phillips from the great state of Minnesota for 5 minutes.
    Mr. PHILLIPS. Thank you, Mr. Chairman. Let me start with 
you, Mr. Gray. You made some comments, and I concur that 
deficit spending is accretive to inflation. I think it is basic 
economics. I just looked at core inflation rates around the 
world. The most recent update I see, the US is about 5.5 
percent. Some countries doing a little bit better than us, but 
we got Germany at 5.8 percent, Italy at 6.9, Denmark, 6.1, 
Greece, 6.1, Spain, 6.1, Paraguay, 6.2. France, 6.3, Norway, 
6.3. Ireland 6.4. European Union 6.45. Australia, 6.6. 
Netherlands, 6.6. Honduras, 6.6. Peru, 6.7. United Kingdom, 
6.8, Belgium, 6.8, New Zealand, 7.3. I can keep going. Sweden, 
7.6. Chile, 8.7. Estonia, 10.8. Poland, 12.2. Pakistan, 20. 
Egypt, 38. Argentina, 105. Not so bad, comparatively. Is that a 
fair statement? Compared to developed countries around the 
world? Compared to those large numbers, our smaller numbers are 
better.
    Okay. And by the way, I'm the first to admit I'm really 
tired of both parties being very poor fiscal managers of our 
economy. One party talks about doing it a little bit more than 
the other, neither are doing it. Both deserve blame. What 
president in our country's history added more to our federal 
debt than any other in a 4 year term? I don't have that off the 
top of my head, but I have a pretty good guess. Who do you 
think? I would imagine it is probably not the current one, but 
perhaps the last one. That is correct. Donald Trump added $7 
trillion. So all I'm getting at here is I'm tired of this 
nonsense about who. But we're all responsible for it, every 
single one of us, both parties. And I simply want to focus more 
on solutions because that is what we're here for.
    So to all of your witnesses, thank you. To our Chairman and 
Ranking Member, thank you. But in terms of culture, man, I just 
am tired of this throwing stones, because we're both 
responsible. With that said, I do want to talk about solutions. 
Some of you have mentioned some before. I've been a small 
business owner my entire life. I know how darn tough it is 
during the best of times, let alone during inflationary times. 
I also, as a banker, Ms. Lee, I can imagine trying to find that 
intersection between raising rates to cool the economy and 
reduce inflation with ensuring that we have capital access to 
small businesses as a challenge. Just share with me what you 
think is the most important thing that we policymakers can do 
now in a thoughtful manner to actually make life easier for 
small business owners as it relates to inflation regulation or 
anything else. Why don't we. Start with you, Mr. Bivens.
    Mr. BIVENS. I would say for small business owners, the most 
important thing is enhanced antitrust agenda level.
    Mr. PHILLIPS. You talk about that a little bit. You 
mentioned that earlier. Be a little more specific.
    Mr. BIVENS. A couple of things. I mean, one, I think we 
often think about antitrust as a make sure big companies are 
not charging their own customers really high prices because of 
their privileged market position. We also need to look at how 
they treat their suppliers. A lot of the stories about small 
businesses being squeezed are my input. Prices are rising. I 
have no control over that. Then when I try to sell my stuff, 
often to a big corporate retailer, they just tell me no. And 
they do not give me any sort of extra price boost at all. I 
think that is a real problem and that is an asymmetry of 
bargaining power that is going to hurt them even during non 
inflationary times. But it is becoming really acute now.
    Mr. PHILLIPS. I appreciate that. Okay. Antitrust. Got that. 
All right. Ms. Lee, what can we do expeditiously to help small 
businesses?
    Ms. SALDANA LEE. In my opinion, every Congresswoman, every 
congressman needs to sit and just be in that small business 
owner's shoes. Get educated, get in depth into the real cost of 
each particular different type of industry, different type of 
business. Because that is one of the best things about banking. 
We call them deals. No deal is the same, every deal is 
different and every customer is different. And that is what I 
feel would be beneficial because it would come back to getting 
educated and then forming the policies that need to be formed.
    Mr. PHILLIPS. Thank you. In fact, I do a series called on 
the Job with Dean. I spend 2 to 3 hours a shift at small 
businesses. I've done about 30 of them in my district. Most 
educational, insightful, enlightening thing. I wish every 
Member of our Committee would do the same in his or her 
districts. Why don't we move to you, Mr. Zittle? I'm sorry. I'm 
sorry, Mr. Gray. Yeah, sorry. Just trying to throw you off a 
little bit.
    Mr. GRAY. I would just say do no harm. And this Congress 
has paid good attention and discussed opportunities to increase 
supply across a number of industries, and I would continue 
those.
    Mr. PHILLIPS. Okay. And Mr. Zittel?
    Mr. ZITTEL. Consistency and policy making, it doesn't 
matter whether it is state line or country or in the world. You 
can't sell coal to China. We live under the same sky and then 
want to be all electric. Same thing with state to state. Policy 
making has to have a concept and they got to know what they're 
talking about.
    Mr. PHILLIPS. Any specific policy relative to your business 
that would be most helpful? You mentioned natural gas, under--
--
    Mr. ZITTEL. Anything labor for US.
    Mr. PHILLIPS. Labor----
    Mr. ZITTEL. Our state and labor.
    Mr. PHILLIPS. Maybe immigration reform to help increase the 
supply of labor. What do you think of that?
    Mr. ZITTEL. No, we're good.
    Mr. PHILLIPS. Oh, you're good?
    Mr. ZITTEL. Yeah, they work out just fine. It is our state 
labor.
    Mr. PHILLIPS. Okay, thank you. I yield back.
    Chairman WILLIAMS. Next, I recognize Mr. Alford from the 
great state of Missouri for 5 minutes.
    Mr. ALFORD. Thank you, Mr. Chairman. I appreciate that. 
Ranking Member small businesses contribute greatly to the 
American economy, the fabric of our society, our way of life. 
But rampant inflation is contributing to the downfall of a lot 
of small businesses. It is a matter really important to me in 
our district. Our district is very rural, 24 counties. We have 
95,000 farms in the state of Missouri. A lot of these are 
family owned. We're losing a lot of farms. 1000 a month in 
America. This is serious business. Farmers are small business 
owners as well. And everyday small business owners have to deal 
with the crushing effects of inflation, higher input costs, 
increased labor costs.
    65 percent of small businesses say they are likely or very 
likely that they will permanently close if inflation continues 
at its current pace. Economist Larry Summers, who served in the 
Obama administration, said the risk of this inflation is 
sizable and that he believes we will tip into a recession. 
Biden Harris administration has decided to focus on woke 
policies. Instead of tackling inflation, they've also decided 
to increase, not decrease, regulations, adding to the cost of 
doing business. Well, folks, it is time that we and the Small 
Business Committee and the House of Representatives get down to 
the business, to once again allowing the greatness of our small 
businesses to be unleashed and tame the Biden inflation.
    My constituents are focused on 3 big things food, fuel and 
fertilizer. The F 150 is a model of a truck. It shouldn't be 
what it costs to fill it up. But unfortunately, our farmers are 
dealing with these higher input costs, driving them some out of 
business. President Biden has targeted the fossil fuel 
industry, but he has squarely put the crosshairs on the backs 
of the American people. And it is time for this to end. Andrew 
bettering chairs. The Missouri Farm Bureau young farmers and 
ranchers program. He is very concerned about these input costs. 
He says, I think we're just in a situation where you have to 
hold tight and hope for the best. Hopefully there is light at 
the end of the tunnel. Well, hopefully there is. And Mr. 
Zittel, I want to start with you. Do you see light at the end 
of the tunnel? And what can we tell young farmers like Andrew?
    Mr. ZITTEL. Same thing I tell my son, be patient. Same 
thing Andrew is saying. We've weathered the test of time. We've 
been around 100 plus years. You get creative. It will never be 
easy, I don't believe I always had the dream that it would 
happen in my lifetime, but I don't think I'm going to last that 
long. I believe the American farmer will become more 
appreciated and better compensated in the future because we're 
going to lose enough of them where they're going to become a 
rare enough commodity that people will start to understand what 
they're putting in their mouth.
    Mr. ALFORD. We better start realizing that quickly. Our 
food security is our National security, as you well know. Mr. 
Zittel, Mr. Gray, inflation is a burden for all Americans. It 
is a tax on all Americans. I don't care how much money you 
make, what your skin color is or what pronoun you go by. It is 
a tax. The negative effects of inflation are really hard felt 
in rural communities. As we've talked about, incomes grew 
slower there while expenses grew faster. It has put rural small 
businesses in a tough spot. Mr. Gray, how are currently 
administration policies making it more challenging for rural 
small businesses to navigate the impacts of inflation?
    Mr. GRAY. I would first speak to the current inflationary 
environment as I think we would all agree is complex. I would 
identify, however, some policy errors that were made recently 
that exacerbated it. It certainly not the only cause and as the 
Members of the Committee have already addressed, the regulatory 
environment is a challenge for commerce. And I think the 
combination of those 2 elements are antithetical to our 
understanding of price discovery which is the intersection of 
supply and demand. And these policies sort of push in the wrong 
direction.
    Mr. ALFORD. I can't help but think have we had a different 
president and a different administration? This would not be 
happening. The war on fossil fuels would not be happening. We 
would be energy dominant and not energy dependent as we are 
going on our hands and knees and begging other countries, 
taking oil out of our strategic oil supply, putting it at risk 
on a National security level. And I can't help but think that 
fertilizer prices which are dependent upon natural gas prices, 
that's what makes fertilizer. We only have 7 percent of the 
world's fertilizer is made in the United States of America 
because the overregulation of EPA and other government agencies 
that see fit to try to shut down businesses so we can't have an 
active, growing economy, I think that is reprehensible. And I 
think we here on the Small Business Committee are going to make 
every step we can to get people back into the business of doing 
business. Thank you, Mr. Chairman. I yield.
    Chairman WILLIAMS. Thank you. I now recognize Ms. Scholten 
from the great state of Michigan for 5 minutes.
    Ms. SCHOLTEN. Thank you so much Mr. Chair and thank you so 
much to the witnesses for taking time out of your busy lives 
here today. I want to start by saying that inflation has been a 
deeply concerning issue for individuals in my district and I am 
so grateful that we're having this hearing today.
    As my colleague Representative Phillips said, this is an 
issue that has been blown up by both parties. We need to put 
the politics aside and focus on solutions which is what I hope 
we can do here today. I know that I came to Congress because I 
was concerned about working families like mine and the rising 
costs. So many families in West Michigan work hard, pay their 
bills and still struggle to make ends meet. Prices across the 
board are too high and wages are too low. Inflation is slowing 
which is encouraging.
    However, it isn't reversing. American families and small 
businesses are still suffering. Mr. Bivens, in your testimony 
you spoke about how inflation is the inevitable result of 
massive shocks to the economy and the long lived but steadily 
dampening ripple effects. You go on to list the Pandemic and 
the Russian invasion of Ukraine as some of those shocks but 
what is keeping prices elevated now that the ripple effects of 
these shocks have subsided?
    Mr. BIVENS. So I would argue they have not fully subsided. 
I think they're really long lived and there's also big lags 
between when they actually subside and when they show up in 
lower inflation. And so I gave the example to your colleague 
earlier it is widely recognized that what is actually happening 
in housing markets is only reflected in official measures of 
inflation with up to a year lag. I think we've only seen in the 
past month or 2 a deceleration in the housing component of the 
CPI. I think that's really reliably going to continue over the 
next year because we know in the private sector the real time 
data those costs have been moderating a lot. The same story 
holds with a bunch of very labor intensive sectors in the 
service industry where prices are really a function of what's 
happening to wages. Wage growth was through the roof in the 
very beginning of the recovery. Everyone remembers the 
restaurant scrambled to rehire 12 percent wage increases. 
That's an old story and it's just taking time for those to 
filter through. And then the last thing is profit margins are 
not as high as they were at their absolute historic peak at the 
beginning of 2022 but they've only come down a little bit. I 
think if they normalize to like 2019 levels over the next year 
that puts a lot of disinflation on the table as well. So I 
would argue the ripple effects they're still out there but 
they're going to predictably dampen unless some, god forbid, 
huge shock hits again.
    Ms. SCHOLTEN. So you think it is the ripple effects that 
are still contributing?
    Mr. BIVENS. Yes.
    Ms. SCHOLTEN. I wonder if you could talk my colleague Mr. 
Phillips listed off a number of inflationary rates of other 
countries and developed nations. I wonder if you can dig into 
that a little bit and talk about how the United States compares 
to other similarly situated countries.
    Mr. BIVENS. Yeah, when I see that data the first thing I 
think is it's very clear evidence that there is just not some 
US specific policy mistake that caused our inflation. It was 
literally every single advanced economy in the world saw a 
pronounced acceleration in inflation. Ours came a little sooner 
than some others but it also peaked sooner and it's on its way 
down whereas in many other countries it is not. And if you look 
across the different policy choices those countries made, 
they're all over the table like some did very aggressive fiscal 
relief and recovery like we did, which I think was appropriate. 
Some really didn't at all, but still got the inflation. And so 
what I take from that data is that the US is kind of in the 
middle of the pack generally as to what happened with its 
inflation experience. It's better on the recovery front, and it 
really means that there is no one dumb US specific mistake that 
led to this. It was a global pandemic and global war that led 
to most of the inflation we've seen.
    Ms. SCHOLTEN. Thank you. Because I only have a minute left, 
I want to stick with you. In a little bit of a follow up, we 
talk about how inflation needs bipartisan solutions. When you 
think about the best case scenarios for recovery, can you speak 
to whether we are on track to achieve this recovery scenario 
and what specifically in terms of policies, especially those 
policies we can actually achieve in a bipartisan manner in this 
Congress we can help do as legislators.
    Mr. BIVENS. So I think at the moment we're actually on a 
pretty decent track. Everyone wishes inflation would come down 
much more quickly, but I don't wish that at the cost of having 
unemployment rise a lot. And so I don't want the Fed to 
continue super aggressive rate hikes. I think at the moment the 
soft landing is in reach. That is, we have inflation come down 
steadily. Normalize unemployment never really goes up. I think 
in terms of, like, bipartisan things that can happen, I think 
they're mostly on the sort of infrastructure spending front. 
There are still some other things we could do. And I would also 
include a big investment in childcare that boosts labor supply. 
And actually I think that's not going to take effect in the 
next six months, but it really could make us much better 
prepared for the next big shock that comes our way.
    Ms. SCHOLTEN. Thank you. Yield back the remainder of my 
seconds.
    Chairman WILLIAMS. And now recognize Mr. Bean from the 
great state of Florida for 5 minutes.
    Mr. BEAN. A very good afternoon, Mr. Chairman. Thank you so 
much. And good afternoon, panelists. I'm a rookie in more ways 
than one, Mr. Chairman, as you know, and everything happens at 
once. Running from committee to committee. Mr. Who's our 
banker? Our banker is Miss Lee. But what are we seeing out 
there? And I was a banker for 13 years. What are we seeing? Are 
we change because inflation I know it's kicking everybody's 
tail. What are we doing? Are we changing lending standards? Are 
we looking at different things? What's changed in banking now 
that inflation is just kicking everybody's tail?
    Ms. SALDANA LEE. Okay, before I answer, can I ask you a 
question?
    Mr. BEAN. Sure, go right ahead. You're recognized
    Ms. SALDANA LEE. Why are you not a banker anymore?
    Mr. BEAN. I got this Congress gig going on right now, but 
you never know. You never know if it doesn't work out.
    Ms. SALDANA LEE. I thought you were going to say 
compliance.
    Mr. BEAN. No. You never know, though. You never know. But 
it's certainly a rewarding career of helping businesses and 
putting people in houses and businesses and whatnot. I know 
there's great satisfaction. But is it hard now? Is it gotten 
difficult?
    Ms. SALDANA LEE. It's gotten extremely difficult. And I 
mentioned earlier that I think that the thing that's most 
difficult is a small business that's already suffering, and 
they are needing capital to continue to meet some of those 
increased prices. But they don't want to get into debt further 
than they might already be or just get debt if they don't have 
any already. There's a lot of short-term things that the bank 
is assisting them with, and that has helped tremendously. But 
it's almost like the paycheck to paycheck for a consumer. 
That's the way it is for business. But we're just going to 
continue to help however we can.
    Mr. BEAN. Good Deal. Are you finding this is a toss-up 
question? Is hiring people we've heard that as a recurring 
theme. Are you all seeing that as well? Getting people to work 
for you everywhere?
    Ms. SALDANA LEE. Everywhere.
    Mr. BEAN. You're seeing that, too? Anybody else? Mr. Gray. 
Jump in.
    Mr. GRAY. I don't have any direct reports myself, but I 
know elsewhere in my organization it's been a struggle to find 
folks
    Mr. BEAN. Very good.
    Mr. ZITTEL. People are always surprised when I say this not 
an issue. But we don't have Americans that want to be farmers 
either. So, we're depending on the H 2 A program. Good workers, 
reliable workers, happy to be with us, always come back. So 
far, so good.
    Mr. BEAN. And with the remaining time, does anybody have 
anything to say that wasn't asked of you? Ms. Lee?
    Ms. SALDANA LEE. I can't think of anything off the top of 
my head. Some of the points that I really wanted to make 
actually questions were posed and I was able to field those 
questions.
    Mr. BEAN. Very good. Mr. Gray. Anything? Any final 
thoughts?
    Mr. GRAY. Just the observations from the Ranking Member at 
the beginning are well taken, and I think we would all agree 
that the response to the inflation is painful and because the 
Federal Reserve, our primary institution for controlling and 
moderating price stability, has some very blunt tools. And 
unfortunately, we are in a position where they are having to 
deploy them. And the issue is a credit crunch.
    Mr. BEAN. Got you. Mr. David?
    Mr. ZITTEL. I think the American farmer does what he does 
because he loves it. It's not ever going to be a get rich 
scheme. I always tell people I passed 3 very responsible human 
beings on to the rest of the world and only one of them became 
a farmer. But I hope more of them become farmers because that's 
where you get work ethic from. So don't kill the American dream 
of being a farmer.
    Mr. BEAN. Amen. Amen. Mr. Chairman, I yield back.
    Chairman WILLIAMS. Thank you very much. I now recognize Mr. 
Thanedar from the great state of Michigan for 5 minutes.
    Mr. THANEDAR. Thank you, Mr. Chair, and I thank all of the 
witnesses here. This has been a good discussion. I'm a small 
business owner. I'm a serial entrepreneur, started many small 
businesses. And Mr. Bivens, I struggled making payroll, hiring, 
acquiring new customers. Running a small business is tough, 
even though small businesses create 70 percent of the jobs. Now 
looking back in this pandemic and in current situation, it 
somehow seems to me that larger corporations are continue to do 
well. They continue to command higher prices, but the small 
businesses continue to struggle. They are closing down. They 
have felt real pain of the current economic situation. Why is 
that? Why is the larger corporations able to be able to pad 
their profits and look robust and healthy as ever? Why is that? 
Help, help me understand if you can.
    Mr. BIVENS. Yeah, I think the simple answer to it is just 
like different degrees of market power. A lot of the stories on 
the panel, which I think are totally true, is you've got small 
businesses and they look on the input side and they see costs 
rising a lot and then somehow, they're not able to sell their 
output for much higher prices. And on the one hand that should 
be a puzzle. There's inflation. I thought all prices were 
rising. Why aren't they just getting it back on the output 
side? And it's often the case that because some of their 
customers tend to be really big corporate retailers who have 
the ability to say no, don't care about what's happening to 
your input costs. I'm holding the line on prices and I'm able 
to just because I'm a big corporation and I've got market power 
that you don't. And so that's why I think, like inflation or 
not, long run, short run, one key issue is just to relive level 
that playing field and actually do more robust antitrust 
enforcement so that the pain is actually shared more. Equitably 
across society when you've got these shocks and it just leads 
to more efficient outcomes when you've got more competition in 
markets as well.
    Mr. THANEDAR. Yeah. Thank you. Thank you so much. And Mr. 
Gray, I represent Detroit, State of Michigan. Many of the 
residents in my district average typical annual household 
income could be as low as $25,000, maybe as high as $45,000. 
So, people are struggling and they haven't seen, many of these 
families haven't seen the benefit of the wage increases 
depending on the type of work that they do. But they are 
experiencing the same inflation as everybody else, the same 
cost increases, the cost of grocery, the fuel, everything else 
going up. Now, Federal Reserve at least looks like indicating 
that they would want to pause the interest rate hikes. Now, 
given the current inflation situation, what would that do to 
the inflation? And do you think that the Fed is gone far enough 
or they need to continue to go further?
    Mr. GRAY. Thank you for the question and your observation 
is absolutely correct. And this is true of every recovery, is 
it not? Too often, those at the lowest end of the income 
distribution recover last. However, I do think in the current 
recovery, we've actually seen something of a break from that 
tradition. And we have seen, particularly in this very tight 
labor market, is unemployment rates across all demographic 
groups are really bouncing off historic lows. And I view that 
positively within the context, though, of an inflationary 
environment. However, in terms of the outlook on the Federal 
Reserve, I think there's an argument for a pause. We have seen 
rapid increase in the tightening of monetary policy. So, 
there's an argument for that at present.
    Mr. THANEDAR. Okay. With 30 seconds remaining, do you 
believe that the Fed policy has helped us avoid a recession and 
likely to end up into a soft landing?
    Mr. GRAY. I believe that's the hope. We're not there yet, 
and so I simply don't know if that's yet achievable. I am 
hopeful, and so far, we haven't landed hard.
    Mr. THANEDAR. Mr. Gray, thank you. And, Mr. Chair, I'll 
yield back.
    Chairman WILLIAMS. Thank you very much. And I would like to 
thank our witnesses today. We've had almost 2 hours of a 
hearing. It's been great for your testimony, and I hope that 
when you go back, you realize that everything in Washington is 
not one side or another. I think you see on this committee, we 
agree to a lot of things, which is important because we need to 
agree on main street, America and so forth. So, I appreciate 
you being here. I appreciate all my colleagues being here 
today. And without objection, Members have 5 legislative days 
to submit additional materials and written questions for the 
witnesses to the Chair, which will be forwarded to the 
witnesses. I ask the witnesses to please respond promptly if 
that happens. And if there's no further business, without 
objection, the committee is adjourned. Thank you.
    [Whereupon, at 3:50 p.m., the committee was adjourned.]
                            
                            
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