The 2014 Federal Paperwork and Red Tape Roundup, Part 1: Big Bucks for Pencil Pushers

The more restrictions and prohibitions are in the Empire, the poorer grow the people. —Lao-Tzu

When it comes to red tape and federal paperwork, the costs of tax compliance for individuals and businesses are said to account for most of the federal paperwork burden.

And according to federal data, the Treasury Department does indeed account for the bulk of federal paperwork. But increasingly, paperwork-heavy compliance in other areas like health (Obamacare), finance (Dodd-Frank), and labor asserts itself.

In any event, paperwork costs associated with non-Treasury federal executive branch regulation are presumably accounted for in the Regulatory Impact Analyses for executive agency rules.

Thus such paperwork should already be reflected in the annual Office of Management and Budget Report to Congress on the Benefits and Costs of Federal Regulations. Whether in actual fact paperwork is adequately accounted for there is another matter.

Unfortunately, these OMB reports only address a handful of major or economically significant executive branch rules, and those having a notable impact on small business. These reports ignore independent agencies like those administering Dodd-Frank altogether, even though that’s where fertile paperwork burdens multiply. The Information Collection Budget, another OMB document, is where one must look for partial answers on these. Regrettably even the paperwork we do know about is duplicative to the tune of tens of billions of dollars annually.

A managerial accounting journal referenced the complex issues involved in simply determining, as an accounting matter, how to even allocate the many varieties of costs in areas like environmental compliance:

As companies feel pressure from consumers and competitors to lower cost while maintaining profits they have found a greater need to accurately allocate environmental cost. There also has been a growing need to trace compliance cost that governmental regulations have caused. These costs, including such items as permit fees, compliance and filing cost, training of personal, and others has been so large in recent years that they can make up a significant cost in some industries. As these environmental and compliance cost rise comparative to other cost, accurate assignment of them will become even more important.

It is doubtful that such costs get accurately reflected in agency Regulatory Impact Analyses, which are prepared worlds away from those actually grappling with the real world effects of regulation and day-to-day business.

Meanwhile, compliance regulation and paperwork have altered the very nature of the American workforce, swelling the number of compliance officers that firms must hire to keep up with it all. An ominous 2014 Wall Street Journal called “Compliance Officer: Dream Career?” pointed to the $162,000 to $232,000 salaries for large firms’ compliance officers, and rising employment in the category overall compared to the actual productive economy, driven by complicated new laws, regulations and fines, particularly in financial services. No decrease in paperwork seems to be on the horizon. 

Today, in a sense, the bureaucrats have set up shop under the firm’s own roof, with one observer lamenting that “The West has killed its entrepreneurs and replaced them with bureaucrats.”

Naturally some disagree; a representative of liberal group Public Citizen declared such complaints with respect to banking regulation “just hype of the banking industry that doesn’t like the law. And frankly it’s not even the law; they don’t like the law being enforced.” 

The above noted, sometimes-annual report called the Information Collection Budget surveys paperwork costs generated by executive and independent agencies. It does show taxes accounting for most paperwork as would be expected; but we’ll take a look at it next time and see where things stand, and how red tape has changed recently. 

Next Time- Part 2: Federal Paperwork Hours and Costs