Biden admin wants to sweep independent agency regulation costs under the rug. Congress should say no.

Photo Credit: Getty

When Congress gets around to streamlining federal regulations and forcing disclosure of their costs, exposés of the paperwork inflicted on the economy by independent agencies like the Securities and Exchange Commission (SEC), Federal Trade Commission and the Federal Communications Commission (FCC) will prove important.  

Federal paperwork burdens are a big component of regulatory costs. According to the latest Information Collection Budget of the US Government (ICB), 40 executive and independent agencies inflicted 10.34 billion hours of paperwork during fiscal year 2022. That exhausts the equivalent of nearly 15,000 human lifetimes of work, sleep, play, and everything in between.

Predictably, the bulk—6.6 billion hours—come courtesy of the Treasury Department and income tax compliance. Health-care is paperwork-laden, as the 1.6 billion hours attributed to the Department of Health and Human Services attest. In a separate tabulation without detail, the Office of Management and Budged (OMB) pegs the “total annual cost” of paperwork at $163.2 billion.  

The costs of raw regulatory compliance as such—like emissions restrictions, vehicle miles-per-gallon fuel efficiency, or fleet transformation to coal-powered electric cars—are separate from paperwork.  

A subset of government paperwork costs associated with normal executive agency major rules (but not independent agency ones) are ostensibly accounted for in the annual OMB Report to Congress. This relative handful of major rules with paperwork-and-compliance inclusive costs annualized have clocked in at a lowball few billion dollars annually over the past couple decades. But this report has not been seen since fiscal year 2019.

A fraction of independent agencies’ costs do get tabulated, but these are not reviewed by OMB as we collectively pretend executive agency rules are in the Report to Congress.

Therefore, we need any and all footholds we can get with respect to independent agency disclosures and review, especially as these assume greater prominence given a regulatory state intensifying under the malign policies of “Bidenomics.” For example, one SEC Commissioner claimed new reporting requirements on climate and ESG will inflate reporting costs, lately around $2 billion, to over $8 billion.

Since neither compliance nor paperwork associated with ambitious independent agencies appear in the OMB annual Report to Congress, we take a bit of a dive into the paperwork component here, and compare that to the overall paperwork load of 10.34 billion hours.

As the table just below shows, (Independent Agency Paperwork Hours and Costs []), the SEC (294 million hours), the Social Security Administration (145m hours), federal contracting rules (FAR’s 114m hours), the Federal Communications Commission (26m hours) and the Consumer Financial Protection Bureau (21m hours) dominate the scene.

Photo Credit: Crews

Granted, the total for independent agencies of 853 million hours for 2022 amounts to less than 10 percent of the overall paperwork-hours burden. But again, tax compliance is always going to be the 800-pound gorilla.

Setting the IRS aside, we are likely to increasingly see independent agencies punching above their relative weight. As the SEC commissioner’s prediction suggests, we should ready for an invigorated regulatory and paperwork surge likely coming our way in the wake of the CARES Act, American Rescue Plan, CHIPS and Science Act, and the infrastructure and inflation laws.  

Payrolls necessary for businesses to keep up with paperwork are interesting to ponder. Salary ranges for compliance and paper shuffling according to surveys like those from the Bureau of Economic Analysis and the National Federation of Independent Business exceed the roughly $15 per hours one might impute from OMB’s $163 billion for 10 billion hours.

So, as the above table nearby also shows, assuming $35 per hour as a reasonable possibility, those 853 million hours of independent agency paperwork would cost the private sector around $29.9 billion. In 2016, we were looking at 640 million hours with a cost of $22.4 billion.

That’s a one-third increase in paperwork costs in less than a decade, with much more likely to come as the past three years’ legislative-regulatory chickens come home to roost.

But wait, there’s more awful. Our aim has been to simply bring clarity about the influence of independent agencies whose burdens get left out of the current cost-benefit analysis regime that was intended to govern rulemaking. Yet a Biden executive order called “Modernizing Regulatory Review” is transforming OMB’s stance on regulatory analysis from watchdog to cheerleader.  

Thus, the little known about independent agency burdens will deteriorate still further since the overarching effect of Modernizing Regulatory Review will be to have far less regulatory review. Is there a light at the end of this tunnel? Maybe. By instructing agencies, OMB, GAO, the Congressional Research Service and the like to spotlight sneaky independent agencies, important and actionable information can be brought to bear with relative ease. Congress can and should force disclosure that the Biden administration is seeking to sweep under the rug.