<DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:87418.wais]
MID-TERM REPORT CARD: IS THE BUSH ADMINISTRATION DOING ENOUGH ON
PAPERWORK REDUCTION?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY POLICY, NATURAL
RESOURCES AND REGULATORY AFFAIRS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
APRIL 11, 2003
__________
Serial No. 108-16
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
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WASHINGTON : 2003
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri
CHRIS CANNON, Utah DIANE E. WATSON, California
ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma C.A. ``DUTCH'' RUPPERSBERGER,
NATHAN DEAL, Georgia Maryland
CANDICE S. MILLER, Michigan ELEANOR HOLMES NORTON, District of
TIM MURPHY, Pennsylvania Columbia
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN R. CARTER, Texas ------
WILLIAM J. JANKLOW, South Dakota BERNARD SANDERS, Vermont
MARSHA BLACKBURN, Tennessee (Independent)
Peter Sirh, Staff Director
Melissa Wojciak, Deputy Staff Director
Randy Kaplan, Senior Counsel/Parliamentarian
Teresa Austin, Chief Clerk
Philip M. Schiliro, Minority Staff Director
Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs
DOUG OSE, California, Chairman
WILLIAM J. JANKLOW, South Dakota JOHN F. TIERNEY, Massachusetts
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania
CHRIS CANNON, Utah DENNIS J. KUCINICH, Ohio
JOHN SULLIVAN, Oklahoma CHRIS VAN HOLLEN, Maryland
NATHAN DEAL, Georgia JIM COOPER, Tennessee
CANDICE S. MILLER, Michigan
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Dan Skopec, Staff Director
Barbara F. Kahlow, Deputy Staff Director
Melanie Tory, Clerk
Alexandra Teitz, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on April 11, 2003................................... 1
Statement of:
Graham, John D., Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget; Robert
E. Wenzel, Acting Commissioner, Internal Revenue Service,
Department of the Treasury; John D. Henshaw, Assistant
Secretary of Labor for Occupational Safety and Health,
Deparment of Labor; and Victor S. Rezendes, Managing
Director, Strategic Issues, General Accounting Office...... 13
Peterson, JoAnne E., president and CEO, Abator, Pittsburgh,
PA; Victor Schantz, president, Schantz Organ Co., Orrville,
OH; and Frank C. Fillmore, Jr., president, the Fillmore
Group, Inc., Ellicott City, MD............................. 107
Letters, statements, etc., submitted for the record by:
Fillmore, Frank C., Jr., president, the Fillmore Group, Inc.,
Ellicott City, MD, prepared statement of................... 124
Graham, John D., Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget,
prepared statement of...................................... 16
Henshaw, John D., Assistant Secretary of Labor for
Occupational Safety and Health, Deparment of Labor,
prepared statement of...................................... 52
Ose, Hon. Doug, a Representative in Congress from the State
of California, prepared statement of....................... 4
Peterson, JoAnne E., president and CEO, Abator, Pittsburgh,
PA, prepared statement of.................................. 109
Rezendes, Victor S., Managing Director, Strategic Issues,
General Accounting Office:
Information concerning violations........................ 90
Prepared statement of.................................... 66
Schantz, Victor, president, Schantz Organ Co., Orrville, OH,
prepared statement of...................................... 118
Wenzel, Robert E., Acting Commissioner, Internal Revenue
Service, Department of the Treasury, prepared statement of. 35
MID-TERM REPORT CARD: IS THE BUSH ADMINISTRATION DOING ENOUGH ON
PAPERWORK REDUCTION?
----------
FRIDAY, APRIL 11, 2003
House of Representatives,
Subcommittee on Energy Policy, Natural Resources
and Regulatory Affairs,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154 Rayburn House Office Building, Hon. Doug Ose
(chairman of the subcommittee) presiding.
Present: Representatives Ose and Janklow.
Staff present: Dan Skopec, staff director; Barbara Kahlow,
deputy staff director; Danielle Hallcom, professional staff
member; Melanie Tory, clerk; Yier Shi, press secretary;
Alexandra Teitz, minority counsel; and Cecelia Morton, minority
office manager.
Mr. Ose. Good morning.
Welcome to today's hearing before the Subcommittee on
Energy Policy, Natural Resources and Regulatory Affairs.
Today's subject matter is, ``A Mid-Term Report Card: Is the
Bush Administration Doing Enough on Paperwork Reduction?''
Every April the subcommittee holds a hearing to assess
progress in paperwork reduction. This week, as Americans
prepare and file their Federal tax returns and their State
returns, they will again get to experience firsthand the kind
of paperwork that the government imposes. Today our
subcommittee will examine if, after 2 years in office, the Bush
administration is doing enough on paperwork reduction.
The Office of Management and Budget, which we are going to
refer to as OMB hereafter, estimates the Federal paperwork
burden on the public at over 8 billion hours. The IRS accounts
for 81 percent of that total. Five additional agencies each
levy over 140 million paperwork hours annually on the public
and those agencies are: The Department of Health and Human
Services, including Medicare and Medicaid, the Department of
Transportation, Department of Labor, Environmental Protection
Agency, and the Securities and Exchange Commission. In its
March 2002 draft Regulatory Accounting Report, OMB estimated
that the price tag for all paperwork imposed on the public is
$230 billion a year. Let me just repeat that, $230 billion a
year.
Much of the information that is gathered in this paperwork
is important, sometimes even crucial, for the government to
function. However, much is duplicative and unnecessarily
burdensome.
In 1980, Congress passed the Paperwork Reduction Act,
established an Office of Information and Regulatory Affairs
[OIRA] in OMB. By law OIRA's principal responsibility is
paperwork reduction. It is responsible for guarding the
public's interest in minimizing costly, time-consuming and
intrusive paperwork burden.
In 1995, Congress passed amendments to the Paperwork
Reduction Act and set governmentwide paperwork reduction goals
of 10 or 5 percent per year from fiscal year 1996 to fiscal
year 2001. After annual increases in paperwork, instead of the
decreases, in 1998, Congress required OMB to identify specific,
expected reductions in fiscal years 1999 and 2000. OMB's
resulting report was unacceptable. In response, in 2000,
Congress required OMB to evaluate major regulatory paperwork
and identify specific expected reductions in regulatory
paperwork in fiscal years 2001 and 2002. Again, OMB's resulting
report proved unacceptable.
Finally, last June, Congress passed the Small Business
Paperwork Relief Act of 2002, as Public Law 107-198. This law
required OMB to take certain actions by June 28, 2003. Also
last July, Congress directed OMB to identify and review
proposed and existing IRS paperwork. I look forward to the
status report today from OMB on its implementation of this new
law and on the changes it has made to specifically focus OMB's
resources on IRS paperwork.
In last year's annual paperwork hearing, witnesses
criticized the unnecessary complexity and burden of the
Department of Labor's paperwork. After the hearing, I wrote
Labor Secretary Chao to review this testimony and asked her to
focus on the 38 Department of Labor paperwork requirements
which each impose over 500,000 hours of burden on the public.
Half of these, 19, are imposed by a single agency, the
Occupational Safety and Health Administration. I look forward
to Department of Labor's status report.
Congress' actions were taken to reduce red tape each year.
However, paperwork burden has increased, not decreased, in each
of the last 7 years. Today, the General Accounting Office [GAO]
will report that last year saw the largest 1-year increase in
paperwork since the 1995 law was enacted. Curiously, in
November 2002, OMB told the agencies, ``While we encourage you
to identify additional paperwork reduction initiatives, it is
not required.'' That is disturbing, to say the least.
Under the Paperwork Reduction Act, OMB is the watchdog for
paperwork. However, the evidence seems to point to OMB's
continued failure to focus on paperwork reduction. OMB has not
pushed the IRS and other Federal agencies to cut existing
paperwork in a satisfactory manner. Additionally, agencies
continue to levy unauthorized paperwork burdens on the American
people. Let me repeat that. Agencies continue to levy
unauthorized paperwork burdens on the American people.
IRS also has a dismal record in paperwork reduction. Today
GAO will report that, ``IRS has some discretion that can affect
paperwork burden,'' and some IRS burden increases were ``at the
agency initiative, not because of new statutes.'' Former IRS
Commissioner Rossotti, who testified before this subcommittee
in April 1999, 2000, 2001, and 2002, promised more initiatives
each year, especially for small-business taxpayers. I hope IRS
has initiatives planned to make a substantial dent in this
burden.
OMB and the IRS are not doing an acceptable job in
paperwork reduction. The subcommittee's Mid-Term Report Card,
grading each agency's effort is on display. In sum, the
administration is clearly not doing enough on paperwork
reduction.
I do want to welcome our witnesses today. Again, we are
joined by the Office of Management and Budget's Director of the
Office of Information and Regulatory Affairs, OIRA's
Administrator, John Graham. We have Acting IRS Commissioner
Robert Wenzel; and the Assistant Secretary of Labor for
Occupational Safety and Health, Department of Labor, John
Henshaw. We have Victor Rezendes, who is the Managing Director
of Strategic Issues at the GAO.
On our second panel we have Joanne Peterson, president and
CEO of Abator in Pittsburgh, PA. We have Victor Schantz, who is
the president of the Schantz Organ Co. in Orrville, OH, and
Frank Fillmore, Jr., the president of the Fillmore Group in
Ellicott City, MD.
[The prepared statement of Hon. Doug Ose follows:]
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Mr. Ose. The manner in which this committee proceeds is
that the members on the dais have opening statements. They make
those. Then, we are going to swear in all of our witnesses. We
have your testimony. We have received it. We have reviewed it
to the extent that, when we get to your testimony, if you could
summarize within the 5 minutes we will allot, that would be
great, so then we can go directly to questions.
We are going to have some votes here shortly. So, we are
going to have to work around that. I know my good friend, Mr.
Janklow, has an opening statement, and I recognize him for 5
minutes.
Mr. Janklow. Thank you very much, Mr. Chairman.
I appreciate your comments, and I truly appreciate your
setting this hearing.
You know, the reality of the situation is, this is a war,
another war we're going to lose. Congress passes laws.
Everybody says he is for paperwork reduction, and nothing
happens. The reality of the situation is, it's like the old
Shakespearean play, full of sound and fury, signifying nothing.
That's really what it comes down to. We live in a society where
the government forms, they ask for information that's
unnecessary, absolutely unnecessary, and they will argue with
you about whether or not the information is necessary.
I personally have dealt, as a chief executive in my State,
on many occasions dealt with getting forms from the Federal
agencies, the various Federal agencies, not all of them, but
various Federal agencies that are using old forms competing
with new forms. And, they don't get rid of the old forms, and
God knows why they need the new forms.
We deal with a situation where you can't even deal with a
lot of these agencies electronically. You can't even download
their forms off the electronic media. Some of them you can.
Some of them have done a good job of it. But, there shouldn't
be a single form in this government that a citizen needs to go
out of their home to collect, if they have technology at home.
They ought to be able to download 100 percent of the forms in
this country. They ought to be able to fill out 100 percent of
the forms in this country at home and transmit them
electronically.
Our National Government has to be one of the few places
left that still has both legal-sized paper and letter-sized
paper. We haven't figured out that you can get by with letter-
sized paper, and they will give you an argument of how much
more information they can get on a legal-sized document, as
opposed to doing something about getting rid of those types of
things.
The only way for the citizens in this country to be able to
access the information they have to access, the only way the
citizens of this country can be in the position where they can
provide the information the government needs and get the
information from the government that they need to conduct their
affairs as we continuously, increasingly regulate their lives,
is to do it on some type of electronic means. And, I don't
blame OMB for this. There is no way they can handle this
problem. No one listens to them, either.
And so, we live in a society where every agency of every
government thinks it is sovereign. They do everything they can
to sabotage everything that anyone from the outside wants to
do, and the reality of the situation is this is another war we
are going to lose, but we are going to have a lot of fun
fighting it.
And so, I think it is very timely that you have called this
meeting, Mr. Chairman. And, I look forward to the testimony of
the witnesses and the opportunity to ask them questions. The
tragedy is that the citizens of this country, they hold out no
hope for any real change. They hold out no hope at all for any
real change in the reduction of paperwork and the reduction
of--and the increased ability to deal with productivity in
their lives, vis-a-vis on how they deal with their government
and for an ever increasing amount of rules and regulations,
most of which are not going to be able to be dealt with
electronically, but they will be dealt with in the paper world.
The truth of the matter is, we are dealing with a
revolution that has been started by the grade schoolers. They
understand technologies. The grade schoolers know how to
utilize technology. It's the adult community that hasn't
figured it out. So, we need to go to the 8th graders and ask
them how would you do it, what's an efficient, effective way to
do it, and then maybe they can give us some advice on how we
can transmit it electronically.
So, these are very timely hearings, and I really look
forward to the testimony of the witnesses and seeing if there's
something we can do. Although I know there probably won't be.
Thank you.
Mr. Ose. On that happy note, I do appreciate your making it
this morning. I know it can't be easy to be here given last
night's schedule. So, we're grateful. Gentlemen, if you'd all
rise please.
[Witnesses sworn.]
Mr. Ose. Let the record show that the witnesses answered in
the affirmative.
Our first witness who joins us, as he has many times in the
past, is John Graham, the Administrator of the Office of
Information Regulatory Affairs, the Office of Management and
Budget.
And, Dr. Graham, you are recognized for 5 minutes and
welcome.
STATEMENTS OF JOHN D. GRAHAM, ADMINISTRATOR, OFFICE OF
INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND
BUDGET; ROBERT E. WENZEL, ACTING COMMISSIONER, INTERNAL REVENUE
SERVICE, DEPARTMENT OF THE TREASURY; JOHN D. HENSHAW, ASSISTANT
SECRETARY OF LABOR FOR OCCUPATIONAL SAFETY AND HEALTH,
DEPARMENT OF LABOR; AND VICTOR S. REZENDES, MANAGING DIRECTOR,
STRATEGIC ISSUES, GENERAL ACCOUNTING OFFICE
Dr. Graham. Thank you, Mr. Chairman, and good morning to
you and members of the subcommittee.
In my exercise class this morning--Friday morning is my
exercise day--I was laboring on the Stairmaster, and then doing
those beloved crunches. To get myself going, I said to myself,
this is not so bad. It's nothing compared to the delightful
experience of Chairman Ose's annual paperwork hearing.
For OMB officials, we live to get through this day, and I
already see the light at the end of the tunnel. But in
seriousness, Mr. Ose, thank you for your leadership on this
issue, the challenge of reining in government paperwork. It
isn't fancy policy analysis. It isn't the most enjoyable
exercise, but it's hard work that needs to be done. We are
working on it, and we need your encouragement and your
leadership.
A few reminders before I get to a few of the good pieces of
news that we have to offer this morning, and that is the
Paperwork Reduction Act, while its first goal is to reduce
burdens of paperwork on the public, it has as a second goal the
promotion of utility of the information that agencies use in
their various programs. And, the Paperwork Reduction Act has
embodied in it, an understanding that there is a need for the
government to have information to do its work and the
challenges to make sure that we don't have unnecessary
paperwork burdens.
We at the Office of Information and Regulatory Affairs
realize that we are a cause of some paperwork burdens. For
example, we require agencies to do Regulatory Impact Analyses,
to support their regulatory proposals. In order for these
analyses to be quality analyses, agencies must collect data
from the public and this is burdensome.
So, as a starting point, understand we have a conflict of
interest. We supposedly are part of the solution of the
paperwork problem, but we also, to some extent, require
agencies and the public to provide information to the
government.
Now, you've already mentioned some of the bad news in the
report that we have submitted prior to this hearing. This
year's Information Collection Budget. I'd like to take a few
moments to highlight some of the good news.
The first is, and I hope my staff has brought our nice
little visual for you to take a peek at. That is, we have made
some progress in slashing violations under the Paperwork
Reduction Act. As you know, Mr. Chairman, this has been a theme
of your efforts. I want to come out of this hearing today to
say there is one little light of progress in the world. And,
that is, we have been reducing, continuously, and in the last
year, quite substantially, the number of unresolved violations
under the Paperwork Reduction Act.
You might ask what is a violation under the Paperwork
Reduction Act. Quite simply, this is a case where an agency
actually places a burden on the public, a business, a farmer,
or whatever, and they require that person to fill out
information and send it to the public without any authorization
from the Office of Management and Budget.
Each time the government collects information from the
public, there should be an OMB review and clearance and an OMB
control number put on that particular piece of paperwork. And,
the typical paperwork violation is when an agency doesn't
bother to get OMB approval in the first place, or more
commonly, has their approval expire and doesn't make the effort
to seek reapproval from the Office of Management and Budget.
Not surprisingly, we at OMB view this as unacceptable. We have
adopted a zero-tolerance policy for these Paperwork Reduction
Act violations, and in the last year we have done a series of
communications that you're aware of, Mr. Chairman, with the
CIOs of the agencies, the General Counsels of the agencies, and
in the case of several agencies, we have had to go to the
Deputy Secretaries of those agencies to get paperwork
violations on their radar screens as a problem.
The chart before you shows, in the last year, over 50
percent decline in the continued decline in the number of these
violations. We realize we have more work to do, we haven't
reached elimination of these violations, but I would like to
add that two agencies that have been a persistent problem in
this area, USDA and Department of Housing and Urban
Development, have both made substantial progress in the last
year in eliminating their paperwork violations. There are 62 of
them remaining on that chart, and we are happy to report that
all those are on the way to being corrected, and we can provide
the subcommittee details on where they are in the process of
being corrected.
The second piece of good news is in the reductions of
discretionary paperwork burdens. While overall paperwork burden
is up, the burdens that are within the control of the agencies
are actually going down. They are going down by roughly 2
million hours, particularly at Treasury, at Education and at
HHS.
And, I might say on millions of hours of reduction is that
it is trivial compared to the billions of hours in total. And,
I would suggest to you, that's not a constructive perspective
to have on this problem. These burdens are real for the people
who experience them. When agencies within their control can
take out millions of hours of burden, we should say, ``That's
good work agencies, thank you. Please do more.'' We should also
credit the agencies when they make this kind of progress, as
well as criticize them when they do not make this progress.
And, we should also remember that the billions of hours
that we have not been able to remove, they're partly OMB's
responsibility. They are partly the agencies' responsibility.
But they are also partly the responsibility of the U.S.
Congress.
Thank you very much, Mr. Chairman. Keep the heat on us. We
need it.
Mr. Ose. Thank you, Dr. Graham.
[Note.--The Office of Management and Budget's report
entitled, ``Managing Information Collection and Dissemination
Fiscal Year 2003,'' can be found in subcommittee files.]
[The prepared statement of Dr. Graham follows:]
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Mr. Ose. Our next witness is Mr. Wenzel.
You're recognized for 5 minutes. We welcome you to our
committee.
Mr. Wenzel. Thank you, Mr. Chairman. Thank you for this
opportunity to testify on the IRS's continuing efforts to
reduce unnecessary taxpayer burden, and, in particular,
unnecessary paperwork burden.
Accompanying me today is Mr. Michael Chesman, Director of
the Office of Taxpayer Burden Reduction. Michael's right behind
me.
Mr. Chairman, our goal is to create the least amount of
burden for taxpayers to meet their responsibilities under the
law. Since last year's hearing, we've made progress on a number
of fronts. For example, by raising the threshold for interest
and dividend income an estimated $15 million, taxpayers no
longer have to file a Form 1040 Schedule B, and, because of our
Industry Issue Resolution Program, family day care providers no
longer have to keep detailed records and receipts of food
purchased for use in their business. They may now choose,
instead, to use a standardized rate to claim the deduction for
meals provided to children in their care.
These small businesses will see a reduction of an estimated
10 million burden hours a year. Other innovative programs, such
as our Fast Track Mediation, Fast Track Settlement, and Limited
Focus Examinations, are providing concrete burden reduction for
taxpayers and the IRS. Each are saving us time and resources.
We're also simplifying forms and notices to make them
clearer and more easily understood, and we're tackling the
major redesign of those schedules and forms with a huge impact
on individual and business taxpayers, such as the Schedule K-1
and Form 941.
New technology and access to the technology have also
proved to be important tools in the fight to reduce burden.
This year, over 2 million taxpayers are enjoying the benefits
of the innovative Free File Program.
Businesses are also finding that they can unburden
themselves of even more paper and perform more of their
reporting and payment transactions on-line. Soon, they will
even be able to apply for an Employer Identification Number by
going to our Web site.
Clearly, we've made some progress. But, clearly, too,
reducing unnecessary taxpayer burden, in all its many shapes
and forms, is an enormous challenge. It is especially difficult
when seen within the context of an extremely complex and ever-
changing Tax Code.
On the one hand, we seek to cut lines, simplify or
eliminate forms altogether and reduce the number of taxpayers
having to file forms and schedules. On the other hand, we often
must add lines to other tax forms to reflect new changes in the
Tax Code that may benefit millions of taxpayers. For example,
we added three lines to the Form 1040 for tax year 2002 to
accommodate statutory changes. Frequent changes to the Tax Code
and tax-law complexity are perhaps the greatest hurdle to
overcome as we work to reduce unnecessary taxpayer burden.
There is even anecdotal evidence that tax law complexity may be
a source of noncompliance and even nonfiling.
Mr. Chairman, in conclusion, our many efforts to reduce
unnecessary taxpayer burden are producing tangible results and
benefits for taxpayers. We will continue to seek administrative
and other solutions to reduce taxpayer burden.
However, we must still address tax law complexity in a
meaningful way. If we fail to, we will have failed in our
mission to reduce taxpayer burden. Most importantly, we will
have failed America's taxpayers.
Thank you.
Mr. Ose. Thank you Mr. Wenzel.
[The prepared statement of Mr. Wenzel follows:]
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Mr. Ose. Our next witness is John Henshaw, who is the
Assistant Secretary of Labor for Occupational Safety and Health
at the Department of Labor. Welcome.
You're recognized for 5 minutes.
Mr. Henshaw. Good morning Mr. Chairman, members of the
subcommittee. Thank you for this opportunity to report on the
Department of Labor's implementation of the Paperwork Reduction
Act.
I am pleased to report that the Department of Labor has
made great progress in reducing paperwork and will still strive
to further reduce the burdens to employers. OSHA and DOL
agencies have worked hard with the Department's Chief
Information Officer and the Office of Management and Budget to
fulfill the Department's commitment to reducing paperwork
burdens for collection of information. Our efforts to date show
that we are moving in the right direction. In fiscal year 2002,
DOL reported no unresolved or new violations to the Paperwork
Reduction and between fiscal year 1995 and fiscal year 2002,
the Department reduced paperwork burdens by approximately 29
percent. During the same period, OSHA reduced its burden by 32
percent.
As part of the review of approximately one-third of OSHA's
information collection requests each year, the public is
invited to comment on both the usefulness of the information
and on the accuracy of the estimated burden. As a result, the
estimated burden that individual regulations impose may change
substantially. It's important that we achieve accuracy.
For example, during the most recent 3-year review, the
estimated burden of OSHA's Lockout/Tagout Standard was
increased by approximately 1 million hours, while the estimated
burden of OSHA's Process Safety Management Standard was
decreased by approximately 28 million hours.
The subcommittee has expressed interest in DOL's
Information Collection Requests that each require over 500,000
burden hours annually of the Nation's employers. In my written
statement is a report listing the status of OSHA ICRs. All of
the 19 OSHA ICRs on this list, either have been recently
reviewed by the agency, or will be reviewed in the next year,
to determine their burden hours usefulness and related cost.
In the past 3 years, OSHA has reviewed and refined a total
burden associated with these paperwork requirements, which has
led to a reduction of 22.3 million burden hours. This is
approximately a 17 percent reduction for OSHA for OSHA's most
burdensome collections.
Through our review of Information Collection Requests, we
identified paperwork requirements in standards that need a
closer examination for possible program changes. The process of
systematically reviewing existing regulations, examining their
requirements to determine whether they are necessary and
useful, and eliminating those requirements that impose an
unnecessary burden is a long process that requires careful
analysis of the data, including public comment. Nevertheless,
this is a priority of mine.
We have several initiatives. We have three initiatives
underway to accomplish this. First, when we conduct reviews,
under Section 610 of the Regulatory Flexibility Act, to examine
the burdens and effectiveness of individual standards, we
review public comment on any paperwork requirement.
We are currently reviewing ethylene oxide evacuations and
presence sensing device initiatives on mechanical power
presses. Depending on the content of the public comments and
the subsequent analysis, paperwork burden hours could
substantially be affected. We also are looking at other
standards for review.
Our second process is under the Standards Implementation
Project, in which we are reviewing individual requirements of
standards to see what can be modified or eliminated without
diminishing worker safety and health. We are now in phase 2,
which means that we have proposed a second set of changes. We
have received comments on our proposal and will be conducting a
public hearing in July.
By updating these health standards, the agency expects this
project to reduce annual paperwork burdens by over 200,000
hours.
Finally, we are looking at reviewing various certification
records requirements of OSHA standards to determine if they are
still necessary and useful. In our crane standard for example,
certification records provide written assurance that critical
elements or items have been inspected and are in good working
condition.
In conclusion, Mr. Chairman, I believe the Department and
its agencies are working effectively to reduce unnecessary
paperwork for employers wherever possible, thereby allowing
employers to focus on what's important, ensuring safe and
healthy workplaces, creating jobs, improving productivity, and
keeping the economy strong.
I will be pleased to answer any questions after the opening
statements.
Mr. Ose. Thank you Mr. Henshaw.
[The prepared statement of Mr. Henshaw follows:]
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Mr. Ose. Our fourth witness on the first panel is Mr.
Victor Rezendes, who is the Managing Director of Strategic
Issues at the GAO, the General Accounting Office.
Sir, we welcome you to our committee and you're recognized
for 5 minutes.
Mr. Rezendes. Thank you, Mr. Chairman.
I really appreciate being here today to talk about the
implementation of the Paperwork Reduction Act. As you mentioned
earlier, the Act calls for a reduction in paperwork, but the
burden has actually been increasing. As my first chart shows,
which is also on Page 5 of my testimony for those of you who
want to reduce their eyestrain, the burden estimate has
increased 1.2 billion hours since the Act took effect in 1995.
Nearly half of that increase occurred last year alone, 70
percent occurred over the last two fiscal years. IRS and DOT
account for 90 percent of the increase last year. IRS increased
its estimate by 330 million burden hours, most of which
involved adjustments to the Form 1040. DOT's 165-billion-hour
increase almost entirely was attributable to the reintroduction
and re-estimation of one of its information collections.
Few agencies experienced decreases. Most notably the FCC
had a 13-million-hour decrease.
Because IRS constitutes such a significant portion of the
governmentwide burden, changes in the estimates that it has can
have a significant and determinative effect on the
governmentwide burden. For example, just one form, the IRS Form
1040 is estimated to impose more paperwork burden than all of
the non-IRS collections combined. Just five IRS collections
represent half of the total 8.2 billion-hour governmentwide
burden estimate. One strategy to reduce paperwork burden
governmentwide is to focus more of OIRA's resources on IRS.
Let me now turn to violations. During the past 5 years,
violations have fallen markedly, 70 percent in 5 years, 40
percent last year alone as my second chart shows, which is on
page 17 of the testimony.
The track record at individual agencies, however, varied.
At Agriculture and Justice, the violations have gone down every
year. At Commerce, they increased each year. HUD and VA
exhibited inconsistent patterns. Notably, some cabinet
departments--Treasury, Transportation, Labor and Energy--were
able to completely eliminate violations last year. OIRA
deserves a great deal of credit for these decreases in
violations. Although OIRA has made good progress, 244
violations of law in 1 year is not acceptable.
In addition, some longstanding violations have not been
addressed. Of the 120 unresolved violations at the end of the
fiscal year, 45 had been occurring for over 1 year, 9, for over
5 years. The cost to the American taxpayer was $1.4 billion.
While agencies have brought a number of these violations
into compliance up to January 2003, 74 still remained
unresolved. Agencies can and should achieve OIRA's goal of zero
violations.
Thank you, Mr. Chairman.
Mr. Ose. Thank you Mr. Rezendes.
[The prepared statement of Mr. Rezendes follows:]
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Mr. Ose. We're going to go to questions now.
I want to make sure--Mr. Rezendes, I'm going to take you
first--we're going to go 10-minute rounds here.
I just want to make sure I understand something, and, if
you could clarify it, I would appreciate it.
In order for an agency to put out a request for information
to the public, that form that they use must go through Dr.
Graham's shop for approval.
Mr. Rezendes. Correct.
Mr. Ose. And, if it doesn't go through Dr. Graham's shop
for approval, do the citizens have to comply with the request
for information?
Mr. Rezendes. Technically, they do not. However, there
could be statutory requirements that would supersede whether
OIRA has approved the form or not. And, in addition, a lot of
the collections are applications for benefits. So, there is an
incentive on the public to complete the forms.
Mr. Ose. All right.
Now, you also mentioned nine such instances that have been
in existence for more than 5 years.
Mr. Rezendes. Yes, sir.
Mr. Ose. Do you have a list of those?
Mr. Rezendes. I just happen to have a list, yes, I do.
Mr. Ose. Would you submit that to the subcommittee for the
record.
Mr. Rezendes. Be happy too, sure.
[The information referred to follows:]
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Mr. Ose. Thank you.
Dr. Graham, is it your understanding of the requirement for
approval of forms, do you concur with Mr. Rezendes in terms of
the form having to be approved by your shop before it's put out
so to speak?
Dr. Graham. Yes, sir.
Mr. Ose. OK. I just wanted to get that on the record. Those
nine.
Dr. Graham, my invitation asked for your written testimony
to address five specific subjects. The first of those was the
specific reductions in reporting and recordkeeping of at least
250,000 hours accomplished since April 11th of last year and
additional specific paperwork reductions of at least 250,000
hours expected in the remainder of fiscal year 2003. The
question I have, well, it is a statement actually. The question
I have is, when you put out the statement--this was to the
agencies--OMB stated, ``In the fiscal year 2002 Information
Collection Budget, we asked each agency to identify at least
two major initiatives to reduce paperwork burden on the
public,'' and then went on to say, ``That while we encourage
you to identify additional paperwork burden reduction
initiatives, it is not required.''
Now, the question I have is that, I mean, you and I have
gone round and round and round since I got here on this issue,
and I think you're doing a lot of good work. Why didn't OMB
require additional paperwork reduction initiatives for fiscal
year 2003? It's the ``require'' issue that I'm trying to get
at.
Dr. Graham. Well, Mr. Chairman, last year, as you recall,
we required all but 12 of the agencies to provide us
initiatives and a number of them did. And, what we did this
year is, we brought the remaining 12 which had not provided
initiatives, we required them to come up to the pace of the
rest of the agencies.
I think implicit in the question you're asking is the idea
that these initiatives only take a year to do, and you are
done. After this year, you could start a new initiative. We
made the assessment that just layering on an OMB
``requirement'' for another set of initiatives on top of the
ones that are still already in progress wasn't likely to reach
tangible results.
Mr. Ose. So the previous year's request, if I recall
correctly, was you had asked for two initiatives from a host of
agencies and departments. And then this year, to those agencies
and departments where no request had been made, you went back
to them this year and asked for them to put forward their
initiatives.
Dr. Graham. That's right. And, as I recall, Mr. Chairman,
you encouraged us to make sure that we didn't let those 12
agencies slide another year. That's my recollection of it.
Mr. Ose. I agree. I am interested in having across-the-
board impact here. The paperwork reduction initiatives that
have resulted in decreases of at least 250,000 hours due to an
agency action, those that were accomplished since April 11,
2002, I would be interested in having that list for the record.
And then, I'd like to know what significant initiatives are
planned for the remainder of fiscal year 2003 for the five
following non-IRS agencies. For the five following non-IRS
agencies, which each levy, according to our numbers, over 140
million paperwork hours of burden on the public.
I'm going to read them to you, and then we'll send you a
question on this beyond, unless you know the answer today. The
first is Health and Human Services, the second is Department of
Transportation, the third is Department of Labor, the fourth is
the Environmental Protection Agency, and the fifth is the
Securities and Exchange Commission. Those five agencies have
significant influence on the paperwork burden for the public,
and we'd appreciate knowing what specific initiatives we've got
going now to reduce the paperwork burden on those.
Now I'm going to recognize the gentleman, Mr. Janklow.
Thank you.
Mr. Janklow. Thank you very much, Mr. Chairman. Thank you.
If I could, Dr. Graham, I'm puzzled. You said, I believe,
in your testimony, that, although there have been millions of
hours worth of successes, we're dealing with billions of hours
of paperwork. Well, if we assume we've had 10 million hours
worth of success, versus 1 billion hours of paperwork, there's
been a 1 percent reduction. At that rate, to get to zero, I'd
have to be, like, 163 years old. And, I'm just wondering, is
there better light at the end of the tunnel than a 1 percent
reduction per year? And, I say this understanding that you
showed up at the scene of this crime. You know, at least you're
not one of the perpetrators yet. You're just an investigating
officer. But, what does it take to get people moving? What's
the problem. I mean, is it they ignore you? Is it that they
don't understand you? Is it that they don't care? Or they're
incompetent. You know, World War II only lasted 3\1/2\ years.
And, it seems like this is going to take decades to do. What's
the problem?
Dr. Graham. Well, I think there is a problem. But let me
try to break it into pieces for you, sir.
The chairman of this subcommittee has for several years
been pushing us to report our data in a way that you could tell
whether increases in paperwork burden were due to discretionary
actions on the part of agencies or whether they related to
statutory demands placed by Congress or whether they related to
demographic factors or simply the growth of the economy or
changes in the population, for that matter.
We have done that in this year's report, and that analysis
is part of the ICB. And, what you'll find is, that, if you look
at the subset of the paperwork burdens that are within the
control of the agencies, the people at this table here today,
if you can think of them in some ways as the more discretionary
types of paperwork burdens, they're actually going down in net
terms and at some of the agencies, the ones I mentioned,
they're going down quite significantly.
So the big--and I hate to turn the table a little bit on
you here. If we're going to make big progress on this problem,
we can't do it alone at OMB. We can't do it alone with the
agencies to my left. We need the U.S. Congress to join us in
that effort.
Mr. Janklow. Look, nobody says this group's blameless. As a
matter of fact, the public blames them more than they blame
your agency. They think we're, you know, we're co-conspirators
at least, if not principals in the crime.
But, I listened to Mr. Rezendes' testimony, and I listened
to Mr. Wenzel's testimony, and they look like two trains
passing in the night on different tracks. Either Mr. Rezendes
is correct with respect to the substantially increased burden
in the IRS or Mr. Wenzel you are. What do you disagree with Mr.
Wenzel with respect to what Mr. Rezendes said about your
agency?
Mr. Wenzel. I want to comment on the example that was given
regarding the three additional lines that were added to the
Form 1040 this year, Line 23, Line 26, and Line 49. These lines
deal with tax credits that the Congress passed into law that
were required to be implemented for tax year 2002. These are
good credits. They're really favorable. One was for teachers,
one was for tuition, and one was for retirement credit.
Obviously they needed to be added onto the 1040, and that
increased the number of burden hours.
We view the changes as mandatory, required the law that was
passed, and believe the form was changed that is as clear and
as concise as possible to minimize taxpayer burden.
Mr. Janklow. Mr. Rezendes, have you had--were you asked to
or have you estimated what percent or what volume of the
paperwork problem, if I can call it that, within the government
can be attributable to be Congress? How guilty are we in
mandating the types of things that are creating problems for
the American people.
Mr. Rezendes. You're asking me?
Mr. Janklow. Yes.
Mr. Rezendes. In looking at the ICBs, which are the
documents that the agencies submit, there is one column that
breaks out what is attributable to statutory increases. And,
there was 120 million hours attributable to statutory increases
this year.
But if I could comment on your question earlier, I think
Dr. Graham correctly pointed out in his testimony earlier that
there are three ways to cut paperwork. You're either going to
reduce a question on a form or eliminate the form, you're going
to provide categorical grant exclusion to a certain class of
people from not having to fill out that form, or three, you're
going to use technology. I think your point earlier was
technology has not been utilized to the extent it needs to, and
I think IRS is a good case example of that. While they're
certainly making a lot of progress in technology, there's a lot
further way to go. I also think at IRS there's some ways to
look at their form design. We are about to issue a report this
afternoon that's being released to the Senate Finance
Committee, which will be talking about that. I can't talk about
it too much now, but we are talking about the way to redesign
forms and get others involved in the design of those forms.
Mr. Janklow. But, sir, do we really need to have a special
report to the Congress on how to redesign a form?
Mr. Rezendes. Well, yes. If you are going to do a
questionnaire to somebody, you want to pretest it. You want to
see how are they answering the questions, are they flipping
back, are they confused, are they in the right order? Are they
getting the information you need in a timely way?
Mr. Janklow. You think that's the way the normal business
does it, I mean the small business? They field test their
forms?
Mr. Rezendes. Yeah. By and large, that's standard industry
practice.
Mr. Janklow. That's why we need to change it.
Dr. Graham, a question for you. With respect to the--you
testified that you had to go all the way to the Deputy-
Secretary level at some agencies. What agencies were those?
Dr. Graham. U.S. Department of Agriculture, Department of
Housing and Urban Development.
Mr. Janklow. Why would you ever go to that level to get
compliance with an act of Congress and your mandates, the
mandates of the OMB? What's wrong within those two departments
that you have got to go all the way to the Deputy/Secretary
level to get compliance with the law?
Dr. Graham. That's a good question. And frankly, you have
more experience in the public sector management process than I
do.
We were struck by the fact that at some agencies, when we
started at the CIO level, we were able to make progress
immediately. But, at other agencies, the way they're organized
the CIO doesn't necessarily have the influence within the
agency to make this kind of progress happen, that violation
reduction. In other agencies, we went to the general counsel,
who has a good bit of influence, and we made progress at those
agencies. But, there were two of them, I just mentioned them,
where we were not able to get attention of the people who need
to the following whether or not they're violating the Paperwork
Reduction Act. We couldn't get their attention without the
Deputy Secretary.
Mr. Janklow. Let me ask you, sir, and I say it
nonfacetiously. We're struggling to deal with a budget deficit
this year that may be anywhere from $400 to $500 billion, or
$300 to $500 billion. Would it be helpful, as we all talk about
waste, fraud and abuse, if we were to be able to identify who
these people, inefficient people, are so we can just eliminate
them from the government and the funding and get them out.
Would that be helpful and would that be an incentive to some of
the others to maybe think that maybe they ought to follow the
law?
Dr. Graham. I think we definitely need to find ways to get
people to take more seriously the paperwork.
Mr. Janklow. Would that be a way to make it----
Dr. Graham. I don't have a good sense of what the best
solution to that is. We have learned, at different agencies,
different solutions work. And, I don't have a good sense of
whether the particular proposal you have is well-intentioned. I
just don't have a good feel of whether it would work.
Mr. Janklow. Then we should have a pilot project this year
at HUD and Ag.
Dr. Graham. Hey. HUD and Ag have made a lot of progress.
Mr. Janklow. Well, we keep saying a lot of progress, sir,
but then the testimony is the amount of paperwork has gone up.
And so, I don't understand.
Dr. Graham. I was just, actually, referring narrowly to
just the violations question. And, for those of us who have
been here for several years at these hearings and who have seen
what we have observed from those two agencies, for them to have
made the progress they have made on paperwork violations, I
mean, that is a lot of movement.
Mr. Janklow. Let me ask you this, sir, if I could ask you.
Unfortunately, you're the focus of a lot of my questions. But
could you tell us what agencies we might want to ask to come
before this committee, or this subcommittee to respond to
questions? Is it HUD and Ag? Are there any others that are
troublesome, so maybe we could help them discuss it in the
public arena, that it might give them additional incentive?
Dr. Graham. Well, I think--was it last year? The chairman
may remember better than I do. I believe we had--it may have
been USDA and some of those agencies. And, I think that is
helpful. I mean, people have an image that OMB can make a
requirement and these agencies are going to march off and
devote resources to solving these problems. The process of
government is more complicated than that. It requires a lot of
encouragement on the part of the agency for multiple quarters
to make things happen because agencies have a lot of issues and
priorities in front of them.
Mr. Janklow. Mr. Rezendes. And, this will be my last
question. Mr. Rezendes or you, Dr. Graham, do we have an
estimate as to how many forms there are in the Federal
Government that the public has to fill out?
Mr. Rezendes. I'm told 8,000.
Mr. Janklow. Do you know, Dr. Graham, whether or not you'd
agree or disagree with that?
Dr. Graham. I don't know for sure. But, I remember seeing
some data that just a couple of forms account for a very high
fraction of the overall burden. And, my colleague from IRS,
sitting to my left could probably tell you which forms those
are. So I think while it's useful to look at the number of
forms out there, the burden is concentrated on a couple of key
forms.
Mr. Janklow. My time's up.
Mr. Ose. Congressman Janklow, I have a form here regarding
the paperwork burden in millions of hours by agency. It's got
the Treasury, 81 percent of the government's paperwork burden
primarily focused on the IRS.
I want to followup on something, Dr. Graham. In previous
testimony, you have been very, very thorough, and you've talked
about the necessity of evaluating whether or not information is
worth collecting, as well as whether it's worth reporting. I
mean, that's kind of been a consistent theme. What efforts have
you made over the past year in giving, what I thought was one
of the more creative things, prompt letters to agencies, asking
the question do you really need this information? Could you
give us some examples of that, if any?
Dr. Graham. Well, we have been engaged not in prompt
letters specifically, but in meetings in my office with
officials from agencies on the subject of particular paperwork
collections. And, I want you to understand, Mr. Chairman, that
a year ago these meetings on paperwork-reduction issues were at
my staff level, OK. There have been, in the past year, with HUD
and with USDA particularly, meetings in my office, in my
presence, looking people in the eye and asking why do we have
to have the situation we're having.
So, sometimes a public prompt letter will do good, other
times, simply gathering people in the room and asking, this
seems like a pretty straightforward issue, can't we solve that
problem, and we've done that. And, that's what violation
reduction is about.
Mr. Ose. Well, one of the issues we talked about in this
regard was, as it particularly relates to Agriculture and
reporting requirements for different operating entities and
what have you, whether or not we could simply add a box to the
form that says, ``No,'' and could you check that box, and it
would say, ``No change from last year.''
Has that been the subject of any discussions such as you've
described, or has it been focused more on the violations of the
forms?
Dr. Graham. We had a meeting on the subject with Bureau of
Reclamation and another agency. But, we had a discussion on
that subject.
Mr. Ose. Regarding the water use in the Central Valley
Project?
Dr. Graham. Yes.
Mr. Ose. What was their response?
Dr. Graham. You know, I want to be careful I remember this
exactly right. I may have to give this to you in writing, but I
think there was an opportunity for people to express comment on
the need for that, and the agency said they didn't get any
comments so they don't have to do that.
But I will get you in detail, what the response was, if you
are interested.
Mr. Ose. We are going to add the Bureau of Reclamation the
next time, because we are going to have this discussion.
Dr. Graham. Please get that question to me in writing so I
can get a fair representation of exactly what the sequence of
events was. It was not without attention that it got to the
point where it was.
[Note.--The information is provided on page 20 of OMB's May
23, 2003 response to post-hearing questions located at the end
of the hearing.]
Mr. Ose. I can guarantee you, if someone wants comment, we
will get you comment on the necessity of having that little box
there.
The other issue is that I'm looking at table A-2 in the
Information Collection Budget and table A-1 going back to the
question of the burden is it generated by congressional action
with new statutes? Is it generated by agency action? Is it
generated by something else?
And, if I look at the fiscal year 2002, changes due to
agency action and the overall burden, it was a nominal
decrease, statistically not meaningful against the total; in
fact it is rated here at 0.0 percent in 2002, changes due to
agency action. And, then in 2003, while the number is larger
the meaningful impact remains at 0.0. And, this, again, is in
terms of agency action; in other words, interaction with your
office and the like.
Now, there was also a question earlier today about how much
burden has been placed on the American public due to new
statutory requirements. And, this Information Collection Budget
reports on that. In fiscal year 2002, that number was 1.5
percent; in other words, there was 1.5 percent greater
paperwork burden as a result of congressional action than in
the previous year. And then, in fiscal year 2003, that number
was 0.0, so it wasn't meaningful.
My point in bringing this up, there doesn't appear to be
any significant change from 1 year to the next, whether it's
agency action or added burden from Congress. And, I just keep
coming back to that question. This is table A1 and table A2 on
pages 40 and 41. And, it shows 0.0 for fiscal year 03 as a net
result, which I find unsatisfactory. And, that accounts for
every agency and department in the aggregate, not by agency,
but in the aggregate. And, I am trying to figure out how to
push that 0.0 first to 1.0 and then 2.0 and then 3.0 so we get
back to complying with the Paperwork Reduction Act.
What do you suggest we do in that regard? You are there on
the front lines and interacting with the agencies. What's the
key here?
Dr. Graham. There is no one single key, but I think one
thing that will be helpful is when we talk about the overall
burden, which is on the order of billions of hours, we have to
understand that agencies on their own actions are never going
to move the dial on the billions, but they are responsible and
they can make a difference on the order of millions. We have
demonstrated to you at several agencies that they have made
that net progress on the order of millions.
So, I think it is very important at the same time that we
criticize the agencies and we criticize OMB for not moving the
billions, that we understand that's not going to happen. We
alone are not going to move the billions. We should acknowledge
the agencies when they make progress on the order of millions,
because that's the scale that's within their control on these
types of issues. They cannot on their own change the size of
the economy, they can't change the statutes they're
implementing. Those are not within the control of the agencies.
Mr. Ose. Well, the primary burden as you pointed out is
over at Treasury anyway. That's where the big-dog-hunts kind of
thing.
Dr. Graham. When you look at the change from year to year,
when we make progress like that on that flip chart of reducing
violations of paperwork, the recorded burden and the statistics
that you're looking at are going up because now these burdens
are counted accurately. So, the more progress we make on those
violations, OK, the way these statistics are generated, burden
will now go up because these data are in the system. So it's
important to realize that you have to take out--when you look
at the increases, the 8 percent in the last year, we can't
control what Congress does, we can't control the violations
problem. It's only that fraction which is in the control of the
agencies that we can get our hands on.
Mr. Ose. Well, the same report that I just cited, tables A1
and A2 show in the aggregate the violation to be not
meaningful, 0.1 percent of the total.
Dr. Graham. When you're taking a percent of billions you
are going to get a lot of zeroes. I think if you look at the
question of why we are up 8 percent compared to last year, OK,
and you break that out, it turns out that, what was in the
agency's control, was a pretty small fraction of that. And,
that I think is an important message.
Mr. Ose. Willy Sutton used to always say, ``Why do you rob
banks? That's where the money is.'' I keep looking at this
chart, Treasury has got a huge piece of this. And, Mr. Wenzel,
I do want to compliment you. When you do something right, you
need to be complimented, applauded, and what have you. The
discretionary act you all took relative to the reporting of
dividends and interest, that was discretionary. I mean, the
Commissioner made the decision, raised the threshold,
eliminated the reporting requirement for hundreds of thousands
if not millions of Americans.
The question I have is are there other opportunities
discretionary in nature that we need to be asking you to go
ahead and implement?
Mr. Wenzel. Mr. Chairman, absolutely appropriate question
in terms of the example you gave, and no we haven't stopped
there. Our Office of Taxpayer Burden Reduction and the staff
and other parts of the IRS, including our National Taxpayer
Advocate Office, for example, are providing input in terms of
opportunities like the Schedule B, and we have committed
ourself in going forward to go over every single line on every
form on every schedule that is currently part of the IRS's
inventory. We are looking at both individual forms and business
forms, and exempt organizations, to see where there's
opportunities like the Schedule B where we can make changes
that are at the discretion of the Commissioner, based on what
the Secretary of the Treasury delegated to the Commissioner of
the Internal Revenue Service.
Mr. Ose. One of the things on that particular issue is that
you get this information in the form of W2s and the like from
other sources. So, you have a source of information other than
the taxpayer that's generally computer-generated or
electronically-generated. Are there other such opportunities?
For instance, mortgage interest, I suspect you get statements
filed electronically or by magnetic tape?
Mr. Wenzel. That's correct, Mr. Chairman. It's the form
1098 and a very high percentage of that form is now transmitted
to the Internal Revenue Service electronically as are the 1099s
that include the dividends and interest.
Mr. Ose. If that's the case, why not set--I mean if that's
the case that you're getting that information electronically
transmitted to you, you're still requiring the taxpayer to turn
in their form and what have you, and you got to write the
number in and what have you, what's the purpose of asking the
taxpayer to attach the form that they receive from the
financial institution to whom they've paid interest?
Mr. Wenzel. Generally all we require in terms of
attachments is the W2 statement. Attaching other forms, the
1099s and so forth are optional.
Mr. Ose. Do you have specific examples similar in nature to
the dividend interest that we just talked about that we can
talk about today, specific things that the IRS is looking at?
Mr. Wenzel. We have some of the initiatives underway with
small business and with the larger corporations.
Mr. Ose. You talking about Schedule Cs and the like?
Mr. Wenzel. Schedule C is part of the 1040. And, as I
mentioned, we are going over lines on every form and on every
schedule and when I our new Commissioner appears before this
committee next year, I believe he will report other positive
results similar to what we have achieved with the Schedule B.
But, the area that we really need to start and we're doing
it right now, is to reduce burden on business tax returns. One
of the forms that right now is under our scrutiny because it's
required to be filed four times a year is the Form 941. As you
know, that's where employers are required to report the
withholding and Social Security taxes and it requires a lot of
preparation and a lot of work.
Incidentally, I know that you were interested in this, but
the one initiative that we took at the IRS that wasn't required
by legislation was the four lines added to the 941 this last
year, which when calculated, increased the burden hours. We
added the four lines at the request of the taxpayer and his or
her third-party preparer. All those four lines are is the name
of the individual who prepared the form, the telephone number,
and other important information, because the taxpayer has,
through focus groups and other outreach activities has asked
for them the taxpayer does not want to be burdened by taking a
call from an IRS employee when they are paying somebody. So, we
were able to add the four lines to the form at their request.
So now, when a call comes in from a third-party preparer, we
see it is already authorized by the taxpayer and we deal with
that individual by taking the information from him.
Mr. Ose. Gentleman from South Dakota for 15 minutes.
Mr. Janklow. Thank you, Mr. Chairman. When Congress is
contemplating legislation, do any of the administrative
agencies let Congress know the extent to which they think it
will add to the paperwork burden to the American people? Is any
of that kind of testimony or information given to Congress at
the time we're acting? Any of you know?
Dr. Graham. I think there is an effort by the agencies and
certainly by the OMB to indicate the impacts of legislative
proposals. But, quite frankly, in the dialog between the
executive branch and the legislative branch on the burdens and
benefits of legislative proposals, oftentimes there are other
sources of that information that are more credible than even
the executive branch, and there are arms like the Congressional
Budget Office, the GAO and so forth. And, my suggestion to you
is to not rely exclusively on the executive branch.
Mr. Janklow. I wouldn't.
Dr. Graham. And, I think you're on a good track.
Mr. Janklow. It's not the legislative agencies would have
any expertise in understanding how great an additional burden
this might be, and it's very valid to complain or to suggest
that, while we criticize, we add to the burden. And, so that's
why I was asking if anybody gives insight or any estimate to
Congress or the various houses or committees as to what impact
it might have.
Mr. Henshaw, if I could ask you, sir, what is it that could
be done to make the Labor Department get to zero in a year to
have no problems? What's it going to take?
Mr. Henshaw. Congressman, I think zero--I don't know zero
burden, and to carry out the statutes that are required under
the Department of Labor, I don't know if zero is attainable to
still fulfill the requirements under the statutes. I can speak
directly to the occupational safety and health.
Mr. Janklow. When I say zero, it's zero within the
framework of carrying out the statutes. I understand that, if
you're ordered to do something by law, that shouldn't count
against you. I am talking about the discretionary stuff.
Mr. Henshaw. The discretionary stuff you referred to as a
war, there's continuing battles. And, we are continuing to
pursue to reduce those burdens, the discretionary burdens. To
give you an example, at least from the Occupational Health and
Safety Administration, what we are trying to do, we have the
standards improvement project. Some of our standards are quite
old. We ought to do away or improve those standards and do away
with the requirements that don't add value. And, we're in the
process of doing that. When we determine what they are, then
we'll reduce those burdens.
Mr. Janklow. Is there anything we can do to help you?
Mr. Henshaw. Keep the pressure on, and you're obviously
doing a good job of that. I come from the business side and I
understand the burdens that government places on business,
small and large. My father was a small business person. And, we
have to be mindful of everything we do, whether in fact it's
going to cause a burden or does it add a benefit or is the
benefit worth it.
Mr. Janklow. Do you think that psychology exists within the
agency?
Mr. Henshaw. I think it exists in parts of the agency. It
needs to be up front and foremost in everything agencies do.
And, I think in the Department of Labor and certainly in OSHA,
it's up front and foremost in our agency.
Mr. Janklow. I think in your testimony, you said employers
with 10 or fewer employees don't have to fill out the logs; is
that correct?
Mr. Henshaw. The recordkeeping log, yes.
Mr. Janklow. Would there be any effectiveness in increasing
that number beyond 10? Let's say we were to take it to 12 or
14; has anyone estimated how much of a savings that would be?
Mr. Henshaw. I don't know----
Mr. Janklow. Would that be a significant increase?
Mr. Henshaw. Given the fact that most of the employers out
there in this country are small businesses, I don't know what
percentage are less than 10 or less than 20. I am sure we have
that number somewhere. In the recordkeeping rule that was
revised in the draft proposal that was out in 1996, there was a
suggestion that the threshold be moved up to 19 employees.
During the comment period, it was discussed whether that would
add value, whether that's the right thing to do in respect to
the tradeoffs of job safety and health, which is what our
statute requires. And, it was determined based on those
comments that bringing it up to 19 would not add any value in
respect to accomplishing the requirements under the statute, so
we left it at 10. And so, the new rule that came out in January
2001 maintained the same limitation. If you're 10 or less--10
or less, you don't have to fill out the logs.
Mr. Janklow. I am puzzled as to how--what's the basis that
they would determine a 90 percent increase in the threshold
would be--from 10 to 19 would not bring much value?
Mr. Henshaw. The tradeoff in respect to the benefit versus
the value. Certainly it would have reduced burden on those that
were between 10 and 19.
Mr. Janklow. All right. But when you talk about the benefit
ratio, what would be the negative side of it? What is it that
you wouldn't be giving? Is it a data base you need to make
decisions? Is this what you utilize it for?
Mr. Henshaw. That's correct. Not only for us but the
employer. Keep in mind that the majority of our fatalities that
occur in this country work for small employers. The majority of
the injuries and illnesses or a lot of the injuries and
illnesses that occur in workplaces are in small workplaces. Our
techniques are around enforcement, developing the right kind of
standards that impact those businesses. But, it's just not the
standards, it is also outreach, education and assistance,
compliance assistance. We wouldn't know which industries to
focus on in our free consultation services, for example, to get
those consultation services to those businesses--which is free
of charge--so they can reduce the hazards.
Mr. Janklow. Are all these injury/illness logs submitted to
OSHA?
Mr. Henshaw. We don't require those to be submitted. They
are required to keep them, but we don't require them to be
submitted. However, we do do an initiative of about 95,000
workplaces where we do require those logs to be sent into the
agency.
Mr. Janklow. Are they sent in electronically?
Mr. Henshaw. Yes, partially. If it is available
electronically, not all.
Mr. Janklow. It is the discretion of the filer?
Mr. Henshaw. To do it electronically or hard copy.
Mr. Janklow. So 100 percent are available to be filed
electronically?
Mr. Henshaw. Absolutely.
Mr. Janklow. Now, with respect to having the businesses
above 10 keep the logs--and you said you needed them for data
base purposes--but they don't send them to you, what good is
that? Why don't you have them send them to you if they can be
done electronically and then you'll have the data and maybe
you'll be able to raise thresholds then.
Mr. Henshaw. We have 7 million work sites out there in this
country sending all those data to us; we don't need those data.
Our data initiative addresses about 95,000 workplaces and we
request data from those workplaces so we can do our targeting.
We don't want to do enforcement on facilities that have low
injury rates. We want to focus on enforcement on those
facilities that have high injury rates.
Mr. Janklow. I probably didn't ask it very well. If I am an
employer with 12 employees, I am required to keep the logs. But
unless you come around to my place, you don't know what's in
the logs, correct?
Mr. Henshaw. Unless they are part of the data initiative.
Mr. Janklow. Of the 95,000. How many people keep logs in
the country? You have 95,000 over here that are part of the
initiative. How many businesses keep logs?
Mr. Henshaw. I don't have that figure.
Mr. Janklow. Tens of millions?
Mr. Henshaw. If there are 7 million work sites out there--
--
Mr. Janklow. You have 95,000 versus 7 million. If it's
100,000 it would be, what, one, seven-hundredths?
Mr. Henshaw. The value of the employer keeping the log is
one for their own records so they can make improvements or know
where the injuries and illnesses are.
Mr. Janklow. I understand that, sir. But my point is if
you're going to make them keep them, why can't all of them who
want to submit them to you electronically and you have the
software that compiles this and gives you the reports you need,
now you really have a database that will give you the
information; and maybe over time, once you have established
that, you'll be able to reduce that as a burden also for
people. Am I making sense?
Mr. Henshaw. I think we are adding burden as opposed to
taking away burden. We require all workplaces now to mail that.
Mr. Janklow. I said let them send it in voluntarily if they
wanted to, only electronically.
Mr. Henshaw. On the data initiative, they have the option.
Mr. Janklow. That's the 95,000. I am talking about the
other 6,910,000.
Mr. Henshaw. There's nothing to prohibit them from sending
it to us if they want, but we're not asking them to do that.
And, if we ask them to do that, I think that would be an
additional burden.
Mr. Janklow. Dr. Graham, what's the most frustrating part
about getting this done? Where are you really having the most
difficulty?
Dr. Graham. It's a good question. I think the biggest
challenge in this area of reducing needless paperwork is, quite
frankly, that there are so many other priorities that agencies
face that, at the staff level, they would frankly prefer them
spend their time doing. Apathy is our biggest enemy in the
battle against government paperwork. And, that's why the
efforts of this subcommittee are very important because we need
to raise the profile of this issue. It's an accumulation of
lots of little paperwork requirements that create billions.
And, even if you look at non-IRS, it's still a big enough
problem to care about and work hard on.
So, I think the root of the problem is there aren't enough
people saying this needs to be a priority of the Federal
Government. As much as I know this subcommittee has as its
priority, I am not sure a lot of other subcommittees have it as
a priority.
Mr. Janklow. Mr. Rezendes do you agree that those are the
biggest issues?
Mr. Rezendes. IRS is 81 percent of the total governmentwide
burden.
Mr. Janklow. I think what everybody is suggesting is we
ought to ignore everybody else and focus on IRS for a while.
Mr. Rezendes. I'd agree to that. That's really where you
have to put your money. That's really where it's going to have
the biggest impact. And, there's two pieces to that. One is
obviously legislation simplifying the Tax Code could probably
do more to simplify IRS's paperwork burden requirement than
anything else; and two, using technology at IRS in redesigning
their forms on a more electronic basis will give an improvement
pending simplification.
Mr. Janklow. Mr. Wenzel, when I listen to your testimony, I
believe you indicate it's 31 million hours you were able to
reduce in the last year; is that correct?
Mr. Wenzel. Yes.
Mr. Janklow. Of that 31 million hours, 20 million of it
came from eliminating the reporting threshold. So eliminating a
reporting threshold that is 20 million hours' worth of savings,
10 million hours was from reduced recordkeeping for day care
centers and 1 million was just by taking out the less-than-zero
checkbox. That's it? I mean, is that the result of a real hard
year-long effort? How hard was it--I am not trying to be
facetious. It couldn't have been very hard to change the
threshold.
Mr. Wenzel. No. In that case, the change to Schedule B was
at the discretion of the Commissioner.
Mr. Janklow. It couldn't have taken long once the decision
was made, so that takes care of two-thirds of the savings. And
then, getting rid of the less-than-zero checkbox couldn't have
taken long. So, we're down to reduced recordkeeping for day
care providers. I can't believe that's where the major focus of
the IRS has ever been anyhow. Frankly most day care providers
don't care what the recordkeeping is. They don't keep them.
Mr. Wenzel. You're absolutely right. As I mentioned
earlier, based on just a couple of those examples, we are fully
committed now, putting the resources that need to be put in for
a complete review of every form and every schedule.
Mr. Janklow. Are you doing it now?
Mr. Wenzel. We have started it.
Mr. Janklow. How long will it take?
Mr. Wenzel. With the number of forms, it's difficult to
estimate other than commit to you we want to get this done as
quickly as we can.
Mr. Janklow. Are you starting with the forms that take the
most amount of paperwork and then working down?
Mr. Wenzel. Absolutely. We do a complexity analysis anytime
new legislation comes to the IRS in terms of implementing a new
tax law provision early on in the process, determine the real
complexity of what the new law is and the burden that's going
to be placed on individuals or businesses. And, obviously in
terms of the effort I described, we really need to look at
those that would have the best effect in terms of the number of
individuals or businesses and the quickest results.
Mr. Janklow. Thank you very much.
Mr. Ose. Thank the gentleman.
Dr. Graham, the small business paperwork law that was
passed out of the House and the Senate and signed into law has
a number of requirements. I'm trying to check on the status of
those. The operative date is June 28th of this year. The
requirement was that OMB publish a list of all compliance
resources available to small businesses in the Federal
Register. Is this list going to get done? Is it going to be up
on the Web site for OMB by June 28th? Have you thought about
how to organize the list so it will be useful for small
business? And, we had a discussion last time you were here
about the codes and which codes to use and all that sort of
stuff. Which code standard is going to be used in terms of
listing the categories?
Dr. Graham. Mr. Chairman, the work that you're referring to
is being done in the context of the interagency task force that
is mandated within the statute. It's being co-chaired by myself
and Mark Forman, who is sort of our electronic government guru.
And, the agencies have been working for several months now on
the project. They have had two plenary meetings and then three
subgroups who have broken up pieces of the charge that were in
the statute. They don't have the results yet and I haven't been
briefed on the results of those activities. What I have been
told at a general level is they're still on target for the date
you mentioned, which was specified in the statute. My guess is
that, if we were to miss it, we wouldn't miss it by a lot.
Mr. Ose. There is a requirement to simplify the point of
contact as a liaison. Do you know how many agencies have
identified that single point of contact requirement?
Dr. Graham. I don't. My understanding is that's part of the
work of the task force.
Mr. Ose. We're going to be sending a specific question on
that and we'd like to get that down. How many meetings of the
task force have been held?
Dr. Graham. Two plenary meetings and there are three
subgroups that are working. Some of that is electronic and
phone. I don't know if those are full meetings, but there's
been definite progress.
Mr. Ose. I'm not going to ask whether you are going to make
the June 28th, because then I am going to have to ask if you
don't make the June 28th, when will you? I don't want to
encourage you to miss June 28th.
Dr. Graham. We may make the June 28th. I haven't given up
on that one bit. I just don't want to overpromise.
Mr. Ose. I understand. Underpromise and overdeliver. Mr.
Henshaw, I want to go back to this illness injury log question.
Your testimony is based on a 1996 rule and then you also
mentioned a January 2001 rule that was published in the Federal
Register.
Mr. Henshaw. That was the completion of that rule.
Mr. Ose. Affirming the 10-employee level threshold.
Mr. Henshaw. Correct.
Mr. Ose. The date of that publication is January----
Mr. Henshaw. January 2001. I don't know the precise day in
January.
Mr. Ose. OK. Now the question I have, if you were going to
change that threshold, you would have to go back through due
process, put it out for comment and the like; is that correct?
Mr. Henshaw. That's correct.
Mr. Ose. And, yet following up on Mr. Janklow's testimony,
you don't know how much of an impact; raising it to, say, 19 or
keeping it at 10 or 14--you haven't quantified that?
Mr. Henshaw. I didn't have the information when you asked
it, Congressman, but I have it now from my compatriots behind
me. The 10 and above represents 14 percent of the total 7
million work sites. So if we add--I don't know what the 19
would be, what percentage of that 14 percent. I don't know what
percentage that would be, but what we have right now, the
requirement impacts 14 percent of the 7 million work sites.
Mr. Ose. Following on Mr. Janklow's questions also, in
terms of the work sites across the Nation, you mentioned 7
million work sites. And, you're collecting data from 95,000
work sites off these illness/injury logs, which is roughly 1\1/
3\ percent of the total work sites. How did you come to a
sample size? How did you come to a sample size of that number?
Mr. Henshaw. The rationale behind--this is part of our data
initiative, which is used for our enforcement. So, we make sure
we don't go to places that don't need enforcement. And so, what
we look at is industries that have or you would expect to have
a high injury and illness rates. So we look at SIC codes, first
of all, and see whether, in fact, those SIC codes are typically
those areas that have high injuries. Manufacturing is a good
example. And, that's the basis by which we pick the 95,000, it
is based on injuries and their historical injury and illness
rates and our inspection history.
Mr. Ose. Now, how do you know--going back to the due
process, how do you know as industry evolves that safety
records don't also evolve and thereby invalidate where you're
looking? If you're only sampling those 95,000 and it's based on
basically almost 10-year-old data, I mean how do you know that
something hasn't evolved to shift the----
Mr. Henshaw. It's based on last year's data. So we're
gathering the most recent annual injury and illness statistics
for that facility.
Mr. Ose. So you use those 95,000 for the previous year to
build your data inquiry base for the coming year?
Mr. Henshaw. Yes. Every year we ask for 95,000 facility
records and then we base our inspections on that last year's
report.
Mr. Ose. We have a number of written questions that we will
followup with you.
I have one last question I want to ask Mr. Henshaw. Last
April, when Secretary Chao was here, we brought to her
attention 38 Department of Labor information collections of
500,000 hours or more of burden. Now, you have attached to your
testimony a status report for paperwork changes associated with
about half of the 19 particular items and I have a list here of
a significant nature. But, we haven't seen anything in the
Federal Register relative to proposals for paperwork changes
related to those.
What I'm trying to find out is what specific program
decreases and increases were made for any of these 19 since
last April or are planned for the coming fiscal year? And, I'd
be happy to give you this list or send it to you in writing so
you can see it. It's got things ranging from noise to access to
employee exposure medical records, to powered industrial
trucks. Every one of these is over 500,000 hours in paperwork
burden.
You can expect this question in writing to find out what
exactly Department of Labor has done in the past 12 months to
affect either increase or decrease to the paperwork burden in
these 19 areas. I just want to let you know that.
Now, Mr. Janklow, I'd be happy to yield for a final round
to you.
Mr. Janklow. I'll be very brief, Mr. Chairman.
Mr. Graham, if I could ask you this. In reviewing the
testimony of the next panel of witnesses--because you're going
to be gone--one of the witnesses has submitted testimony that
basically says that he's required to fill out forms for his
business, that he received a 2002 economic census from the
Department of Commerce, OMB form 0607-0887. He says in the 16
years of doing business, he's never received this form before
and that it asks for all kinds of information. He's been told
by the Department of Commerce that the Department of Commerce
has told NFIB that the information provided on this form
doesn't have to be 100 percent accurate and that the responses
can be estimates. He says then on page 6 it says you are
notified, though, if you don't fill out the form, you could be
subject to a $500 fine.
What efficiency could there possibly be in sending me a
form from the Federal Government that tells me I have to fill
it out or be fined $500, and then I can estimate whatever it is
that I put down there? Who in the world could use that
information? And, let me ask you this: Is this the information
that we then collect and pass out to the American people as
fact, these estimates that are given to us by tens of
thousands, if not millions, of reporters?
Dr. Graham. It's a good question and I will be eager to
hear more about it. And, I'll be happy to look into it. If you
determine after hearing the full testimony that there's
questions there, I am happy to look into it.
Mr. Janklow. Thank you. No other questions, Mr. Chairman.
Mr. Ose. I want to followup on something. Is there an OMB
number?
Dr. Graham. He said there is an OMB number. It's not a
violation apparently.
Mr. Ose. I want to thank the witnesses for joining us this
morning. As always, it is a pleasure to be educated on these
subjects and to interact. We do have a number of questions
we'll be submitting to you in written form for response. The
record will be open for 10 days. We would appreciate a timely
response. Thank you for appearing. We're going to take a 2-
minute recess here.
[Recess.]
Mr. Ose. We are going to move to our second panel here we
are in a little bit of a time dilemma here. We expect some
votes here in the next 20 minutes. There will be a series of
votes. So, one of the things we do on this panel routinely, or
on this committee routinely, is we swear in our witnesses so if
you all please rise.
[Witnesses sworn.]
Mr. Ose. Let the record show that the witnesses have
answered in the affirmative.
Joining us on our second panel today are Joanne Peterson,
who is the president and CEO of Abator, Pittsburgh, PA; we have
Mr. Victor Schantz, who is the president of Schantz Organ Co.
from Orrville, OH, a constituent of a very good friend of mine,
Mr. Regula; and we have Mr. Frank Fillmore, Jr., who is the
president of the Fillmore Group in Ellicott City, MD, to give
us a real life experience.
I do want to recognize in particular that Mr. Schantz is
accompanied by his daughter. Welcome. Nice to see you. I
believe you're up here on the Hill. Welcome. As you saw in the
first panel, we have a 5-minute rule. Your testimony has been
received. We've read it. We have a number of questions. We'll
move through each. If you could take the 5 minutes allocated
and summarize, that would be great.
So, Ms. Peterson, you're recognized first for 5 minutes.
Welcome.
STATEMENTS OF JOANNE E. PETERSON, PRESIDENT AND CEO, ABATOR,
PITTSBURGH, PA; VICTOR SCHANTZ, PRESIDENT, SCHANTZ ORGAN CO.,
ORRVILLE, OH; AND FRANK C. FILLMORE, JR., PRESIDENT, THE
FILLMORE GROUP, INC., ELLICOTT CITY, MD
Ms. Peterson. Thank you, Chairman Ose, for holding this
hearing on the burden of Federal paperwork. I appreciate the
opportunity to testify and I thank the members of the
subcommittee for seeking ways to reduce the burden on small
business. Small business faces complex and diverse challenges
and priorities. One challenge that we have to overcome is the
complicated and expensive process to do business with State and
Federal agencies. Another is the significant cost in preparing
and filing routine paperwork.
Ohio directed Abator to qualify for its State term list.
This involves successful completion of a Federal GSA
solicitation process. Federal acquisition and GSA clauses run
56 pages, the document itself another 84, and the attachment 68
pages. That's an awful lot of fine print. I'm not sure why Ohio
has decided to use this Federal procurement process. I am
certain, however, that it will be expensive. We have already
spent $840 in labor and another $125 in processing fees for
credit and customer satisfaction checks. We could spend another
$175 an hour in legal reviews or engage a Federal procurement
consultant that would run us $8,000 to $25,000. We won't do
either, given our current economic position. By the way, the
contractors pay the GSA an industrial funding fee of 1 percent
of sales.
I applaud the GSA's efforts to recoup part of its operating
costs through this mechanism, but I hope it will explore ways
to reduce the paperwork burden on the small businesses that are
striving to support them. We have no experience in bidding
Federal contracts, so I'll talk about a recent State bid. It
required 289 complete bid packages in triplicate and we hand-
delivered over 44,000 pages to avoid the shipping charges since
our other costs ran about $12,000. Adding the Federal
solicitation to this already burdensome process puts small
firms like us at a competitive disadvantage.
I am grateful for President Bush's Contract Unbundling
Initiative. Abator, as a member of the Women Impacting Public
Policy and the Women Business Entrepreneur National Council,
supports this initiative. We hope that it will lead to greater
Federal participation by small minority and historically
underutilized businesses. Though our efforts go unrewarded, we
have completed reams of paperwork to support prime vendors on
various Federal contracts. We remain undeterred and we will
complete the GSA solicitation process despite the intimidating
amount of paperwork.
All business bears the burden of annual tax reporting. We
spent about $7,700 last year, funds that we could have used to
invest in equipment, hiring new employees, or coping with the
increasing insurance cost. Streamlining the process would help
reduce our cost.
Last year, we spent another $1,575 in reorganizing our
pension plan's paperwork to comply with Federal regulations. We
didn't change the plan, only the paperwork, and that money
could have been used to provide larger pension contributions.
Independent employment status is another issue for us. We
believe that section 1706 of the Tax Reform Act of 1986
discriminates against technical experts restricting their
access to entrepreneurial independent status. We filed our SS-8
form in 1986. Twenty questions ran 50 pages. We repeatedly
requested a ruling. It took 11 years for the IRS to
investigate. Eventually we received a letter that says we
appear to be complying with the law. We felt relieved because
an adverse ruling could have closed our doors, but we remain
concerned because the text contains many gray areas and the IRS
can always change its mind.
Since section 1706 we have lost revenues because customers
feared their organizations may be at risk and they have
canceled contracts because the regulations are murky and
inconsistently applied.
Finally, we have had experience in filing three green card
applications. The process was a nightmare. Immigration and
Naturalization Service phone numbers always ring busy and we
never once managed to speak to a live INS representative. Twice
they lost the paperwork. In 36 months, no progress was made. We
requested some assistance from Senator Santorum and, through
his staff, we facilitated a subsequent approval and award
process.
Small business is supposedly the backbone of the economy
and a high-tech industry is a major slice of our economic
future. Many small business owners find ourselves spending
limited resources on excessive and often redundant paperwork.
Any assistance your committee can offer in freeing up our
resources to be used productively would be greatly appreciated.
Mr. Ose. Thank you Ms. Peterson. We got the cross hairs on
paperwork up here.
[The prepared statement of Ms. Peterson follows:]
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Mr. Ose. Mr. Schantz, I talked with Mr. Regula last night.
I was hopeful that he would come to introduce you. I did call
him a few minutes ago, or at least his office, to alert him. We
can hold for 5 minutes and go to Mr. Fillmore and give Mr.
Regula a chance to get out of his conference committee or you
can go ahead. Your choice. What would you like to do?
Mr. Schantz. Congressman, I know Ralph's busy and I know
it's a busy day for him after last night and I would be happy
to proceed and let him off the hook.
Mr. Ose. Gentleman is recognized for 5 minutes.
Mr. Schantz. Chairman Ose and Congressman Janklow, I
appreciate the opportunity to be here today and I want to thank
the National Small Business United Group for making me aware of
the fact that this opportunity existed.
Schantz Organ Co., in Orrville, OH, is a 130-year-old
family business. My great granddad, my granddad, my dad, and I
basically had the same job. My grandfather was a Swiss wood
worker and he was a good mechanic and he became fascinated with
musical instruments. Today, we build pipe organs for churches
throughout the United States. We recently completed our first
international project. We restored a famous pipe organ in
Melbourne Town Hall in Melbourne, Australia.
We employ 95 craftsmen and women. Our annual sales volume
is $7\1/2\ million. We build about 20 custom-designed hand-
crafted instruments each year. And, there are about 65 firms
engaged in the pipe organ business in the United States and
probably account for 1,000 workers. We generate an estimated
$80 million of sales revenue each year, so we are one of those
tiny little micro-industries that are in community after
community all across the United States. These businesses
support the local churches, the libraries, the schools, United
Ways, charitable organizations of all kinds, and help make
America the kind of place it is.
As we have heard, small businesses are being pounded by
regulatory burdens. And, the Small Business Administration
reports that the average per-employee cost of all Federal
regulation for companies with fewer than 20 is about $6,975 per
year. That per-employee cost is $2,512 more than what firms in
excess of 500 employees pay.
So, I am grateful to the committee and the chairman's
leadership in passing the Small Business Paperwork Relief Act
of 2002. I think it is a step in the right direction, but more
has to be done. To illustrate this, I want to give you an idea
of the forms that our company fills out each year. This file
folder represents Federal income tax compliance forms. For a C
corporation in the State of Ohio, we have the 1120 tax form.
The 940 and 941 are quarterly reports. I only have one of each
of those in here but they have to be done four times a year.
The W3 reporting requirement is to get all the employee's
information to the Federal Government on a form like this.
1096s are the duplication of the 1099 reporting.
But, in spite of the fact that this is what we go through
each year for one small corporation, that's not why I am here
today. This file folder contains one report from the Department
of Labor 5500 report for health and pension plans. TEFRA,
DEFRA, COBRA, ERISA, EGTRA, HIPAA, over the last number of
years have created a paperwork process in which employers have
to report information that, in my opinion, has become such a
difficult thing to do that small businesses have had to punt.
Now the work is done by third-party administrators and
insurance companies along with employers trying to find a way
to comply with these data for which results are hard to figure
out. But that's not why I'm here.
These are the annual censuses sent to us by the Department
of Commerce, the Bureau of the Census, the Department of Labor,
to annually have us fill out information. One is concerning our
plant capacity. If there was a war and we had to have a defense
industry, how much is the plant utilization in the United
States currently being utilized? Another asks what the cost of
health insurance in the United States?
This is the census data from OSHA. Not only do we keep our
OSHA logs but we also have to send that information into the
government as to what our accident rates are. The accidents and
injuries are not occurring in little businesses like this.
We're keeping the logs, but that's not where the problem is.
And, this is not why I'm here.
This is the EPA toxic chemical reporting inventory. For the
first time this year in the United States, little companies
around the United States have to report because of the lead
component--lead has been determined to be a toxic chemical; and
the reporting threshold was decreased from 10,000 pounds to 100
pounds. And, for the first time, micro-industries all across
the United States have to comply.
I am not going to make this in 5 minutes. I am sorry. The
EPA inventory is the most egregious example I have been able to
find. Now I want to point out the dripping irony. There are 195
pages of instructions on how to fill this form out. On page 30,
your Paperwork Reduction Act notice estimates this form alone
to take 52 hours to fill out, between form R and form A, it's
82 hours estimated for a company to fill this thing out. Do you
see? If you make something of an alloy, if you make something
that is bronze or stainless steel using lead in the alloy, the
threshold is 25,000 pounds.
We make an alloy to make organ pipes. However, our
threshold is 100 pounds. It doesn't make any sense. I came here
today to try and get some common sense into this process, and I
will just say this quickly and stop. If the Paperwork Reduction
Act of 2002 is to have any validity as an effective piece of
legislation that reduces the regulatory burden on small
business in America, then there has to be a commonsense
advocate for small business in the Congress that can recognize
when regulation has gone too far. This lead rule came about
because of an Executive order at midnight.
Two specific ways where this could be accomplished are
simply to raise the reporting threshold of the Department of
Labor 5500 report from companies like me, or smaller, up to 250
employees or 500 employees where the problem is. Raise the
threshold for the EPA toxic substances reporting industry to
25,000 pounds for lead alloys across the board, or exempt small
businesses from having to do it in the first place. Spending
time on burdensome paperwork is not where productivity occurs
in the United States.
If we can avoid wasting the labor of the people under the
guise of caring for them, they will be happy: Thomas Jefferson.
Thank you.
Mr. Ose. Thank you, Mr. Schantz.
[The prepared statement of Mr. Schantz follows:]
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Mr. Ose. Mr. Fillmore, the bells that rang, those are kind
of like our signals. We had two bells followed by five, which
means we have two votes minimum. First is a 15-minute vote. We
have 12 minutes and 40 seconds from being overdue. What I would
like to ask is for you to do your 5-minute testimony.
The unfortunate circumstances we find ourselves in are that
Mr. Janklow and I will be over in the House for probably 45
minutes voting, and to interrupt the hearing I think would be
counterproductive. I want to ask if you all would be willing
for us to submit our questions to you in writing and have you
respond to them in writing as opposed to sitting here for 45
minutes, coming back and the like? Are you in agreement? We are
talking productivity. We are trying to make the best use of our
time. Mr. Janklow.
Mr. Janklow. I will be very brief. The eloquence of the
first two witnesses--and I have read your testimony, Mr.
Fillmore--I would have no questions for any of them. My
questions would detract from the substance of what you had to
say under oath before this committee. Thank you.
Mr. Ose. Mr. Fillmore, why don't you proceed for 5 minutes?
Mr. Fillmore. Chairman Ose, Ranking Member Tierney, Member
Janklow, I thank you for the opportunity to testify before you
today on the impact of government paperwork on small
businesses. My name is Frank Fillmore and I am a principal in
the Fillmore Group, an international information technology
consulting firm with offices in Baltimore and Ellicott City,
MD. We have five full-time employees who provide data base
software consulting and training to large companies like IBM
and Freddie Mac and small not-for-profit firms like the U.S.
Golf Association.
I also have the pleasure of serving on the Maryland
Leadership Council, the National Federation of Independent
Business, and I am honored to present this statement on behalf
of NFIB's 600,000 small business members nationwide.
As the proprietor of a small business, especially one that
bills by the hour, I am acutely aware of how I spend my time
and constantly evaluate how to best spend the next hour,
whether on a customer project, on marketing and sales leads,
which is our seed corn, or on personnel and administrative
issues to keep the ship from running aground. In many ways it
is probably similar to the ways that you have to manage your
House of Representatives offices.
Small businesses like mine are the greatest source of job
growth in the economy. They unfortunately bear a
disproportionate share of the regulatory burden. In fact, the
burden of the regulatory compliance is as much as 50 percent
more for small businesses. My business is no different. There
is no single government requirement that causes us more
headaches and lost time. Imagine when a form arrives in the
mail from the Federal Government. It often comes with a strict
deadline and, many times, with a penalty for failure to
respond. Small businesses don't have the luxury of a special
department or even one or two employees that can devote all of
their time to work on government forms and regulations. The
paperwork is left to be done by me, the proprietor, who has to
divert precious management and sales time to filling out these
time-consuming forms.
Since there is little time during the course of a normal
workday, a colleague or I must complete these forms over
weekends or late at night. It becomes even more frustrating
when the information requested is redundant and available from
other agencies or even other units of the same agency.
Right now I am holding a 2002 economic census form from the
Department of Commerce. That's the OMB form number that you
mentioned earlier, Member Janklow, 0607-0887. I don't remember
completing this form before in over 16 years of business, so
the government must have found other ways to develop policy
without the data that it demands.
I understand the agency's need to gather information, but
the financial data are certainly available from the Internal
Revenue Service. Personnel and payroll data are readily
available from the Maryland State Department of Labor,
Licensing and Regulation. In other words this information is
collected by other agencies. Why should I have to submit it
time after time to agency after agency? This particular census
form will probably take, in my estimation, between 4 and 8
hours to complete. Four hours may not seem like much, but
multiplied dozen of times with requirements from Federal, State
and local governmental agencies, the drain on the finite number
of hours I have to sell my inventory becomes enormous.
The Commerce Department has told the NFIB that the
information provided on the form does not have to be 100
percent accurate, again as Member Janklow mentioned before, and
my responses to the questions can be estimates. Unfortunately,
the form does not get around to telling me that until page 6.
What it does tell me in big bold letters on the first page is
that were I not to submit this form, I could be liable for a
$500 fine.
Given the Federal Government's tendencies to come down very
hard on businesses, I would be reluctant to provide incomplete
or estimated information. Each request by itself may not seem
like much. When accumulated together, however, it is like death
by a 1,000 cuts.
The net result for our firm is stifled software
development, eroded customer relationships, and diminished time
to plan and just think, each of which is crucial to me as a
business owner in these uncertain economic times.
Let me state this in clear language: Paperwork requirements
directly impact the bottom line of my business. Time burdens
are not the only problem I have with paperwork requirements.
Often government forms require the disclosure of information
that I consider proprietary and sensitive in nature.
Particularly the census form requires financial data on sales
and revenue. The Fillmore Group is privately held and we do not
publish financial statements. The only two entities that
receive that information today are the IRS and my banker. The
form further requires that I split that revenue either via
dollar amounts or percentage basis into 52 different categories
and subcategories. While that may seem reasonable to a
methodical analyst at the Department of Commerce, that's a far
greater level of detail than we have ever used to manage our
business in the past. To try to comply would be unduly
burdensome, fraught with error over interpretations over the
services we provide our customers versus the categorizations in
the form.
I make recommendations in my testimony on how technology
used in the private sector can solve many of the paperwork
problems that plague small businesses. But, in the interest of
time, I will just defer to those in the written testimony and
conclude my remarks.
Mr. Ose. Mr. Fillmore, thank you.
[The prepared statement of Mr. Fillmore follows:]
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Mr. Ose. Mr. Schantz, thank you. Ms. Peterson, thank you.
I am looking at a clock that is clicking down to 5 minutes
here and I've got to get over there and vote. We have a number
of questions for each of you individually we would like to
forward to you in writing for you to respond.
Mr. Schantz, the items you have in front of you, I could
take them into the public record, but, if they have proprietary
information, I'm not sure you want to do that. So we will
decline your offer to submit them to the public record.
Mr. Schantz. We will give you examples.
Mr. Ose. We will ask for a list without the specific
proprietary data, being respectful of your privacy. This issue
is not going away. Four and a half years ago I was on the other
side of this dais, and I have not forgotten. So I do thank you
all for coming.
Again, I apologize for the abrupt ending of this hearing.
We will send you questions in writing. If you could respond
timely in 10 days, that would be great. It is good to see
business people down here and I appreciate all of you for
taking up the fight. Thank you.
[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]
[Additional information submitted for the hearing record
follows:]
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