The Burden of Compliance

January 13, 2014

By: Kelly Diamond, Publisher

The CBO forecasted approximately $123 Billion in costs tied to regulations for 2013. 

There’s good news and bad news tied to this… and let me warn you, the good news ain’t that great.

Compliance and RegulationThe “good news” is, despite the forecast, the United States actually came in at only a paltry $112 Billion in regulatory cost burdens!  After all, there were some measures passed that helped alleviate some of the burden.

The bad news is, despite dodging the CBO estimations in 2013 by nearly $11 Billion, this year’s forecast is a grim $143 Billion… leaving us what?  Appreciative of the $123 Billion mark?

The sad part is, all this regulatory nonsense is part of the black hole into which money is thrown.  It doesn’t make your business necessarily better.  It doesn’t fill a market demand.  It doesn’t improve the quality of service or products delivered.  It doesn’t contribute to innovations.  In fact, many regulations are quite arcane and often times irrelevant.

For example, there is a process known as eyebrow weaving.  It is a way in which people have their brows shaped and an alternative to the harsh process of waxing.  In the state of Texas, they insist if you are going to practice brow weaving that you get a cosmetology license.  Cosmetology doesn’t even teach brow weaving or anything to do with it!

It seems fairly obvious why $112 Billion is not really good news except when juxtaposed with a higher number, but to shed a little more light on what $112 Billion in regulations looks like in terms of time, it is approximately 157.9 MILLION paperwork hours.  OR 6.6 MILLION paperwork days.  OR 18,025 paperwork years.  Or over 180 paperwork centuries. 

This is, of course, combined hours of several individuals (78,000 full-time employees to be exact)… but in ONE year to rob an entire nation of 180 centuries of time in just regulation is horrific!  They waste our time as much as they waste our money and with even greater impunity!

This only denotes by HOW MUCH the burden has increased.  We didn’t start from zero.  This increase brings the grand total of regulatory compliance man-hours to a mind-blowing 10.38 BILLION HOURS per year.  Meaning there are people whose only job it is to ensure that business are compliant with the new rules.  So in Bob’s Widget Shop, he has a certain number of employees or contractors who don’t have anything to do with widget manufacturing, and are in no way crucial to the production of widgets.  They are there to ensure that the paperwork is filed properly, the fees and licenses are up to date, and labels are attached at the right size and in the right locations of each package.  The fate of widgets do not rest in these people’s hands.  But the fate of Bob’s business does, if he expects to stay in business at all.

“In 2013, 80,224 pages of regulations were added to the Federal Register, a 3.8-percent increase over 2012. The number of ‘economically significant’ regulations increased by 25 percent, and the number of rules imposing ‘unfunded mandates on states or private entities’ grew by 38 percent,” Sam Batkins American Action Forum’s Director of Regulatory Policy says (

There are some hefty regulations out there that might very well bring the economy… and by economy I mean its backbone, Small Businesses… to its knees.  In the end, small businesses are being held ransom: if they don’t shell out to comply, they die.  If they do shell out to comply… they might still die.

The Environmental Protection Agency (EPA) had to delay some regulations on the emissions standards on fuel.  As it turned out, reducing 2/3 of the sulfur emissions in fuel would cost $3.4 billion and 160,000 paperwork hours annually, with a total tab of $35 billion.

The Institute for Energy Research found that “would impose upfront compliance costs of almost $10 billion on the refinery industry, resulting in a permanent increase in refining costs of 6 to 9 cents per gallon of gasoline. It will also increase the cost of vehicles. Thus, the proposed … standard would increase both the price of gasoline and the cost of buying a new car.”

The Department of Energy is its own regulatory beast.  Someone got it in their heads to impose new standards on commercial and industrial electric motors.  That little brain child would not only cost $462 million dollars annually, but would compel some of the smaller manufacturers “to spend 188 percent of their annual capital expenditures on compliance”.  And which of you would still be in business if such a burden was laid upon your business?  Which of you would take that as a cosmic sign that it’s time to take your ball and bat and go home?  Well, this is going to much more than just a casual poll of rhetorical questions… we will absolutely see how many can tread water and for how long.

And the DOE didn’t stop at electric motors either.  They also wanted better standards for microwaves.  I mean, are people dropping dead from the lack of regulations on microwaves?  I was brought up in a generation where microwaves were a standard household kitchen appliance, and I never imagined that there would still be $1.3 Billion in tweaks needed by 2013!  Well, the DOE is here to tell you that there are.  Matter of fact there’s $34.5 Billion in various tweaks needed just in energy related matters alone!

Their intrusion on the market is justified by Global Warming.  That’s the ecological trump card.  Just like Terrorism is the civil liberties trump card for the DHS, NSA, and IRS. 

Do these numbers sound outrageous to you?  They should, because they are!  But those were only tiny notches on “the machine”.  (Pardon the Princess Bride reference here, but sometimes it just fits… and sometimes it’s how where my brain goes.)

Here comes ObamaCare!  (Throwing “the machine” up several notches.)

Last year, in the course of implementing the healthcare law, the Department of Health and Human Services (HHS) piled $2 billion in compliance costs and over 16.7 million paperwork burden hours onto the U.S. economy. HHS’s two largest regulations, a Medicare and Medicaid transparency rule and a final insurance exchange rule, added more than $3.2 billion in new costs and tens of thousands of hours in paperwork (55,000 hours for the exchange rule alone). The paperwork burden imposed by HHS is today 26 percent higher than it was in fiscal year 2011, Batkins notes, with much of that increase directly tied to ObamaCare.”

By now, we all know that the IRS is the enforcement arm for this law.  IRS enforcement alone is expected to cost 7.5 million in paperwork hours.  Seems to pale in comparison to the DOE right?  But ObamaCare is just getting started.  Wait until the whole thing rolls out.  It’ll make a change in microwave ovens sound like chump change.

I’m convinced that government deals in such large numbers, so when it’s time to deliver statistics on a given program, they can either offer a percentage or a hard number to suit their needs.  “We SAVED $10 BILLION!”  Okay, but that’s 8%.  So basically you didn’t pay sales tax on your spending.  Woop-tee-frickin-doo.

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