The Magic Power Of Vagueness

Pictures will follow, as well as (hopefully) the audio of my testimony. It went well - I got some nice feedback from congressional staff.

In the interim, here's what I said:

Chairman Miller –

It is an honor to once again be invited to testify before you on the subject of regulatory impacts on small business, specifically the burden that small businesses face from federal paperwork.

I have to tell you, I’ve been working in Washington, DC for over a decade now, and like most people who’ve been in DC for some time, I’ve developed a certain blasé attitude towards government reports.

But every once in a while, something comes across my desk which is patently astonishing, something that simply takes my breath away. So it was when I received the Information Collection Budget from the White House several weeks ago.

It, too, is fairly blasé. In fact, I think government reports have to be dispassionate, no matter what information they are conveying.

But one cannot be blasé about the basic facts being conveyed in this report. It starts off with a simple-enough precept: America’s paperwork burden rose an unremarkable 5.5% last year.

Unremarkable, that is, until one realizes just what that’s 5.5% of. It’s 5.5% of eight billion hours! That’s right, BILLION, with a B. 5.5%, or one-twentieth of that, is an astonishing 441 MILLION hours.

When I see a number like that, especially on a Friday afternoon, it sits with me for some time and I give it a lot of thought. In this instance, I pulled out my calculator.

Several years ago, NFIB’s Research Foundation did a study on paperwork, and after surveying small businesses, came to the conclusion that paperwork costs just under $49 per hour. Some paperwork costs far more, some paperwork costs far less – obviously, it depends on the length, the complexity, the technical skills involved, but the average is about $49 per hour.

So just looking at the average costs from a macro level, paperwork cost Americans about $410 Billion last year – that’s right, billion, with a b. The increase alone was just over $20 billion.

Now, just dealing in abstract numbers doesn’t help – without context, it’s hard to gauge their meaning. All we really can see is that these numbers are huge. It’s when we compare them to other things we spend money on that we see just how huge they are.

NFIB pulled budget numbers, and the results are startling. Let’s start with the low-end of the spectrum: medical research. AIDS, for instance, is recognized as a serious health threat, one very much worthy of public study. So worthy, that the NIH’s Office of AIDS Research had a dedicated budget of $2.9 billion.

But what about cancer, one of the greatest killers? The entire budget of the National Cancer Institute pales in comparison to what American’s spend on paperwork: a paltry 1%, or $4 billion.

Certainly, though, Americans are spending far more on our most pressing public policy issue: the War on Terror? Sure they are – just not in comparison to what must be our greater public policy issue, making sure that we fill out forms for the federal government. The Department of Homeland Security’s spending in 2005 was $40 billion – Americans spent ten times more on paperwork.

It’s Defense that costs more than paperwork – but not by much. DOD spent $475 billion in FY 2005. Sadly, this is only about 15% more than Americans spent on paperwork.

A system that hemorrhages resources on paperwork in this manner is doomed to collapse – it cannot perpetuate itself, and will eventually run out of steam. And while I know that my colleagues on the left attempt to minimize this problem, even if we were to agree that the problem is a quarter of what it is, a system that focuses $100 billion each year on paperwork is not doing much better.

All of the tools that I have discussed previously are important – fully funding OIRA and the Office of Advocacy at the SBA, putting greater emphasis on reviewing regulations and the paperwork burden they impose, sunsetting regulations that aren’t reviewed – all of these are essential tools in getting a handle on this problem.

But one of the things I’ve only touched upon in the past, is the role that Congress plays. Legislation is driven by constituent demands, and is crafted in a fashion which can exacerbate this problem. Every time Congress passes a law which is vague and overly complex, it hands federal agencies the tools with which to do much mischief. Vagueness gives us regulations wherein dry land is magically transformed into “navigable waters of the United States’. Vagueness changes a pickup truck used for local landscaping into an interstate federal motor carrier. Vagueness turns “recycling” into “toxic releases”

If Agencies are given laws with holes big enough, they will drive trucks through them – holes that they will backfill with enough paperwork that American’s simply cannot undig themselves. I’d ask that as you consider how to deal with the agencies’ propagation of paperwork that you would also take time to consider how best to address Congress’ role.

And I’d like to reiterate something I spent a great deal of time talking about in March – an area on which there is apparent agreement between myself and my colleagues on the left.

In October, we will see the next iteration of the Business Gateway, a computer system which will be of a tremendous help to small businesses, both in understanding their regulatory responsibilities, and in completing and submitting their paperwork.

NFIB continues its steadfast support of this program. Recognizing that more and better resources available via the internet is a good thing, we know that this will greatly help in reducing these burdens. We continue with our mantra “simpler is better” – plain English, easily searchable, easily readable systems are what is needed.

We do continue to caution, however, that technology is not a panacea. We cannot make technology use mandatory – we have to recognize that some businesses will not, nor will they ever tech-savvy. In fact, I recently learned that NFIB has a number of Amish members, who are incredibly concerned about federal mandates regarding the use of technology.

We know that the Business Gateway is an ongoing process, and thankfully that journey is well on its way. It takes time and effort and resources to move a paper CFR to the web. More time to make it searchable. More time to make it simpler. More time to put compliance resources together with the regulations that they address. More time to put voluntary paperwork options on the web.

We know these things, which is why we continue to support this program, and ask that you do the same.

There are no easy solutions, that much I’ve said before. This is a problem that we have let get out of hand – and it cannot be dismissed out of hand. It is too large to ignore – the immensity of it makes that impossible.

Thank you again for inviting me to testify. I look forward to any questions you might have.