Government regulation is a bit like sex. (Bear with me for a moment—or would you prefer to read about “cost-benefit analysis” right away?) Most people can agree it’s a necessary thing, but start talking about how much is necessary—and of what variety—and opinions quickly diverge.
Liberals generally tend to be permissive in both regards, and on occasion they indulge in what only can be considered bizarre and self-destructive acts. What else can explain the gas pump lock rule? If you live someplace like Buffalo, New York, and make a habit of .trying to save a few pennies by buying your gas at a self-service station, you should be particularly aware of this one. The Occupational Safety and Health Administration until recently prohibited self-service gas pumps from featuring a device that allowed you to put them on automatic so you could scurry back into your car until the tank was filled. Instead, you had to stand there in five-degree weather while the wind whipped snow into your face and your hand froze off.
Meanwhile, conservatives have had their own peccadillos —like abstinence and self-control— that in the regulatory world go by the name “voluntary compliance.” The faith in self-control is well exemplified by Raymond Peck, the new administrator of the National Highway Traffic Safety Administration (no auto-eroticism jokes, please). Peck figures the best way to keep people from dying needlessly on the highway isn’t airbags or even automatic seat belts. Far better is to persuade people to buckle up. At first, Peck hoped to do this by prompting”safety Sabbath” speeches at churches. Now he is breaking new regulatory ground—seatbelt messages in fortune cookies.
On government regulation, like most other political issues, certain people just won’t listen to rational argument—they just believe. Whoever came up with the gas pump rule probably is absolutely convinced gasoline attendants can be trusted with locking devices—but let the average motorist off the street use one and he’s likely to immolate himself. Peck, for his part, probably believes people really will change their attitudes about seatbelts if they open a fortune cookie at their favorite Chinese restaurant and read, “You Are About to Go on a Long Journey. Wear Your Shoulder Harness.”
Given that regulations have proliferated in recent years, it’s only natural that liberals have more often been the ones caught looking like deviants. The dumb rules not only harassed business and the public, they helped elect Reagan, who used the juicy anecdotes to great politic a l advantage. Reagan also got a lot of advice from a then-obscure economist from Washington University in St. Louis named Murray Weidenbaum.
Weidenbaum at one point estimated that regulation costs American industry $100 billion a year, and though he never quite explained how he came up with that figure, it became a staple of Reagan’s three-by-five card file. (Weidenbaum went on to become chairman of the president’s Council of Economic Advisors, a post he left this summer.) After the election, Reagan appointed George Bush chairman of a special task force entrusted with reviewing all major federal regulations. The charge of the task force was to scrutinize these rules, separating those that were truly necessary to protect health and safety from those that some busybody GS-14 might have cooked up as part of a malicious campaign against America’s hearty entrepreneurs. The main device the task force supposedly would use for this winnowing process was something known as “cost-benefit analysis.
Pavlovian Watchdog
This sort of technical approach may be enough to send you home from a dinner party at 8:30, but it supposedly lies at the heart of the traditional conservative critique of government regulation. Liberals have never had much faith in the idea, pointing out (correctly) that the equations can be easily manipulated to produce the desired results; besides, how can you put a value on human life? But conservatives have responded—also quite correctly—that just because an idea might some day keep one or two workers or consumers from getting sick or defrauded doesn’t mean it merits automatic inclusion in the bible of regulation known as the Federal Register. A balancing of costs and benefits must be undertaken, the Reaganites-in-waiting wrote ad nauseam in Regulation magazine.
All of which sounded reasonable enough— until some disturbing clues started suggesting a wholly different purpose. First, there was the name Bush’s group gave itself: Task Force on Regulatory Relief. Not reform. Relief. The very name carried with it the assumption that the group’s main task is not to determine which regulations are worth the cost and which aren’t, but simply to get rid of as many as possible. And as if this Rolaids approach wasn’t enough, the deregulators started fiddling with the axioms behind their equations. This August the Bush task force released a progress report that detailed changes in or recisions of 111 regulations. Arguments against the regulations all mentioned the costs of complying with the old rules and the “net cost savings” to industry and local government, which were said to total $9 billion to $11 billion in one-time investment costs and $4 billion in annual recurring costs. But never once were the benefits of the rules expressed, even just to prove how paltry they were. This is most unusual, considering that less than a month after taking office President Reagan issued an executive order requiring every major regulation to go through the paces of “cost benefit” review.
Why hadn’t OMB’s number-crunchers bothered to report on the benefits of the regulations rescinded? “On the face of it,” says Christopher De Muth, executive director of the Bush task force, “the benefits of these are almost always negligible.” So however much they talk a big intellectual game about cost-benefit, it’s becoming clear the Reaganites simply don’t want to assess both sides of the equation. Indeed, in the Reagan-backed regulatory reform bill pending in Congress (and likely to pass), the phrase “cost benefit” has been consciously replaced by the term “cost effectiveness,” which to the layman may sound like splitting hairs, but to those in the regulation field is as significant as the difference between “beyond a reasonable doubt” and “by a preponderance of evidence” is to lawyers.
The truth is that a number of the changes on the regulatory landscape have been so radical that even some of the industries the administration means to help are feeling ambivalent—if not a bit angry. The Wall Street Journal reported in September that a wide range of manufacturers— from Exxon to Bacardi—already in compliance with EPA regulations are discovering to their dismay that relaxation of environmental standards will give an advantage to competitors who haven’t been responsible (or foolhardy?) enough to install pollution control devices. Similarly, a Reagan proposal to withdraw a long-planned OSHA regulation requiring the labeling of hazardous chemicals in the workplace sent chemical industry lobbyists scurrying to Washington for a reversal. About the last thing they needed, they told the administration, was 50 states with different labeling requirements. So much for the “New Federalism.”
When the mood of a conservative government has reached the point where even some of its natural allies get nervous, it’s a good sign that a very debilitating sort of polarization is setting in. On the liberal side, this is reflected in the widespread assumption that because so much bad news comes out of the government, all Reagan news is bad.
That isn’t so. Consider the Consumer Product Safety Commission, a Naderite agency if there ever was one. The CPSC not only has survived intact, but over the objection of industry has decided to go through with banning urea formaldehyde insulation and requiring safer lawnmowers, both long-time consumer priorities.
But the polarization does much more than prevent good news from being appreciated. It also prevents sensible regulatory improvement. The Clean Air Act, to use the best example, is clearly in need of some reform. According even to Carter administration estimates, it costs industry $25 billion a year, much of it irrelevant to clean air. The act is structured in such a way that old, dirty plants are protected and construction of new, cleaner plants using low-sulphur coal is made less attractive. But there is little chance that the act will be improved when it comes up for renewal this year because Reagan has become so suspect—and rightly so—among environmentalists.
That’s how regulatory reform breaks down: you’re either for regulation or against it; improvement becomes a side issue. “He has put people at the head of some of these agencies so hostile to the goals of regulation that the pendulum will eventually swing all the way back to the zealots on the other side,” warns Alfred Kahn, who deregulated the airline industry under Carter.
If you’re still wondering how the Reaganite’s heart really beats on the matter of regulation, consider this from Weidenbaum himself: “There is a famous Sherlock Holmes story in which the decisive clue was the fact that the dog did not bark. Similarly, the most significant development on the regulatory front last year may be the event that did not happen. Not a single new regulatory law was enacted during the year[1981], nor was a major new regulatory program promulgated by a federal agency. It was the first year in several decades that the federal dog did not bark.”
Whatever the merits of Holmes’s hound, it should be clear that the most useful kind of watchdog knows how to sit silently, but also knows to yelp and even snap at a sign of legitimate danger, such as, say, the widely agreed-on projection that exposure to toxic chemicals in the American environment will double within a decade. The dog that barks indiscriminately isn’t the one we want—but neither is the one that merely licks the shoes of any visitor.
With that said, it’s time to take some stock in what Reagan has really done on the deregulation front in his nearly two years on the job. Fear not, we won’t insist on looking into the Department of Transportation’s marine vessel documentation standards. What follows are simply a few highlights.
Some Small Consolations
In the vast universe of federal regulations, it’s to be expected that Reagan has found several genuine stink bombs to defuse. They maybe few and far between, but there are enough to suggest that not all the belly-aching has been for naught.
In addition to repealing its aforementioned gas pump lock rule, OSHA has eliminated some unnecessary reporting requirements for white collar offices, where occupational hazards consist primarily of paper cuts and spilled coffee. Manufacturers will no longer be required by the National Highway Traffic Safety Administration to inform consumers of a useless feature called the “tire reserve load.” What is it? This rule is so unimportant and irrelevant to safety that not even Ralph Nader’s top auto people really know—or care.
The administration has made some other changes that are not specifically related to health and safety but deserve mention anyway. (For more on economic regulation, see sidebar.) The Department of Transportation has rescinded rules that all federally funded public transportation systems provide full access for the handicapped. For the cost of putting lifts on buses and elevators in subways ($1.7 billion for New York City alone), cities could chauffeur the handicapped around in limousines and use the extra money to keep the subway tunnels from collapsing.
The Office of Personnel Management (and a number of other agencies) has made some important progress in reducing the paperwork imposed on states. As for Davis-Bacon Act regulations, the Reagan administration has rewritten “prevailing wage” rules that require workers in rural areas to be paid big city union wages and helpers to be paid as journeymen. This decision could save the federal government more than $500 million a year in unnecessary construction expenses. Unfortunately, organized labor recently took the changes to federal court and won the first round.
I could cite other examples, but let’s move on to look at where deregulation has had its most disturbing consequences—namely in the health and safety area. It is there that the Reagan administration has moved most aggressively.
OSHA: Winkin’, Blinkin’, and Nod
“You don’t hear any OSHA jokes anymore,” Murray Weidenbaum says with satisfaction. The Reagan administration believes that it has eliminated the bad blood that once existed between business and an agency that at one time enforced rules on toilet-seat shape and the safety hazards of cow manure. To be accurate, though, most of those dumb regulations were eliminated under Carter-928 of them, to be exact. And under Reagan the joke is still there—only this time it’s on working people.
Start with “Star,” “Praise,” and “Try.” Those are the names of OSHA’s three new “voluntary compliance” programs, the result of which is that 13 million workers and more than three-quarters of all manufacturing firms will no longer be covered by regular OSHA inspection. A new “targeting” policy allows all citation-free companies whose reported “lost workday” injury rate is below the national average to be exempt from routine inspections for a few years.
Aside from encouraging under-reporting of lost sick days—an irresistible temptation for any business, particularly when such things already are hard to monitor—the change will mean that when OSHA inspectors visit a plant they often won’t be looking around the workplace. They’ll just check the records. Nonetheless, this will count as an “inspection.”
OSHA’s new-found enthusiasm for the virtues of voluntary compliance can be attributed to administrator Thorne Auchter, whose Florida construction company was cited 49 times by OSHA for safety violations during the 1970s. Auchter views his role as serving his “clients,” which in this case means American business. This might seem no worse than predecessor Eula Bingham’s too-cozy relationship with organized labor were it not for the fact that the whole point of the agency is to protect the safety of workers.
As Auchter’s own case suggests, the natural tendency of business is to try to save money by cutting corners on health and safety. It doesn’t take an industrial psychologist to know that the urge gets stronger if businessmen know there’s no real threat of getting inspected. There is nothing sinister in this; it’s simply a by-product of American capitalism. Indeed, to expect a business to take care of these matters itself on all occasions is to expect it not to behave like a business.
Which is what Auchter apparently expects. In 1981, total OSHA inspections were down 21 percent and follow-up inspections were down 72 percent. Initial citations were down 75 percent and penalties down 48 percent. To disabuse you of any notion that OSHA inspectors before this were pestering the factories and offices of America every few weeks, OSHA had all of 1,200 inspectors to monitor three million workplaces. If each inspector got to five workplaces a day, he’d look at each once every two years.
In the area of health standards, OSHA has moved much slower than in the past, despite new studies from the National Cancer Institute linking 38 percent of all cancers in the United States to occupational exposure (a report, by the way, that Auchter said he hadn’t read). Plans to regulate exposure to chromium and nickel, both carcinogens, have been dropped.
And on just one day in April, all three of OS H A’s staff physicians resigned amid grumbling that Auchter was dragging his feet on workplace chemical hazards. This paralleled a major battle between OSHA and the National Institute of Occupational Safety and Health over formaldehyde, which several new studies show to be strongly linked to cancer in animals. NIOSH officials didn’t want a ban, just some exposure-monitoring in places where levels are especially high. Auchter not only refused, but fired OSHA’s top specialist in carcinogens over his role in the matter (under pressure from Congress he was reinstated). Auchter’s deputy, Mark Cowan, sent a letter to NIOSH saying formaldehyde risk assessment would have to wait for data on human exposure—in other words, illness or death. He later said his comments were misinterpreted.
If nothing else, OSHA aims to please. Auchter recently proposed a plan whereby company executives can fill out report cards on inspectors, rating them for politeness and efficiency—and then send the results to Washington.
Upton Sinclair wouldn’t have liked John Block very much. Sinclair was the author of the turn-of-the-century classic The Jungle, which was responsible for the launching of an ambitious federal meat inspection program to protect public health. Block is the secretary of agriculture bent on deregulating meat. His deputy secretary and assistant secretary for inspection are, respectively, former lobbyists for the American Meat Institute and National Cattlemen’s Association. Recently Block kicked off the opening ceremonies for the Meat Institute’s “National Hot Dog Month.”
True story: The department recently entertained the notion of making it easier for you to, eat tuberculosis-infected hogs, of which there are tens of thousands. Right now, tubercular pork must be cooked intensely to kill any disease. But pork processors think this ruins the taste, thus making it unsuitable for anything but canned goods. The Reagan administration recently backed off on plans to relax cooking requirements, though it still maintains such a change would not affect health. So tubercular pigs won’t be allowed to show up in hot dogs and bologna—yet.
USDA also has relieved the industry of the requirement that it label mechanically deboned meat as containing tiny bone chips (which it does). Instead, the word “calcium” on the label will suffice, making the product more marketable.
At present, meat processing plants are inspected daily. The department is asking Congress to let it inspect more occasionally. “Given the right climate, businesses will accept the responsibility” of producing healthful meat “without someone constantly looking over their shoulder,” assistant secretary C.W. McMillan told The Wall Street Journal.
Given EPA’s enormous scope, finding fault with the agency has never been hard, no matter who was in charge. Fifty thousand plants dis- _ charge waste into rivers and streams each year; another 40,000 into municipal sewers. There are 55,000 chemicals to be contended with (1,000 new ones a year); 160 million tons of air pollutants, 40 million tons of hazardous waste. Eighty percent of that hazardous waste traditionally has been disposed of unsafely.
But lest you think the hard knocks EPA suffers (see “The Budget Cut That May Poison Your Children,” December 1981) are a little excessive, remember that administrator Anne Gorsuch feels EPA has too little work to do. While her plans to destroy the agency by cutting its size in half were beaten back earlier this year, enforcement, lackadaisical even under Carter, is now nearly dead. Gorsuch abolished the enforcement division at the beginning of her administration, scattering its functions to different parts of the agency. Senator Patrick Leahy pointed out recently in a scathing report that between summer 1981 and summer 1982 enforcement responsibilities were reorganized once every 11 weeks, barely enough time to move the furniture. No wonder the number of referrals to the Justice Department for prosecution of polluters has dropped more than 70 percent since 1980.
The reason this should worry the public, as former EPA assistant administrator William Drayton points out, is that it undermines “voluntary compliance,” which has always been the mainstay of EPA’s regulatory efforts. The voluntary approach has spread to many other agencies under Reagan, but what the deregulators don’t want to understand is that the success of voluntarism depends, quite simply, on the stick. “In the 1970s, an industry thought to itself, ‘maybe they [EPA] haven’t gotten to us yet, but they might next week, so we’d better comply,’ ” says Drayton. “Now it thinks the exact opposite.”
On two major issues, disposal of hazardous liquid wastes and lead in gasoline, the administration has had to drop deregulation efforts in the face of powerful public opposition. But on issues less inflammatory than liquid toxics leaching into backyards and lead into bloodstreams, the agency has gotten away with more. Regulations on auto emissions, pesticides, PCBs, ocean dumping, air and water pollution, and other more traditional areas of EPA involvement have all been substantially relaxed.
On acid rain, the agency’s official position is that its harmfulness has not been firmly established, so no regulation of the problem is planned as of now. While that finding may come as a surprise to hundreds of scientists (not to mention anyone who lives in upstate New York or Canada), Gorsuch insists that acid rain and many other environmental hazards simply require more study before the government can get involved. Meanwhile, EPA’s research and development program, which will pass judgment on these and future dangers, is suffering budget cuts approaching 50 percent.
“Superfund,” created at the end of the Carter administration, allowed $396 million to be spent this year on cleaning up abandoned toxic waste dumps. After 20 months in office, Reagan’s EPA has spent only about $80 million, much of it in the last three weeks of this fiscal year. The agency boasts a grand total of eight cleanup operations out of more than 160 dumps that Gorsuch herself has said pose immediate and serious health threats. Rep. James Florio has a different count. He says only one chemical dump has been cleaned up all year a fitting symbol of EPA under the Reagan administration.
Auto Safely: The Sissy Factor
Nothing better illustrates the Reagan administration’s misguided enthusiasm for deregulation than its enmity for the airbag. A year ago, National Highway Traffic Safety administrator Raymond Peck scrapped a regulation to force automakers to equip cars with airbags, automatically fastening seatbelts, or other “passive restraint” systems. He then went on the road exhorting people to wear their seatbelts.
A federal appeals court later overruled the decision, finding it was at odds with any fair costbenefit analysis and that it blithely ignored the results of ten years of federally funded research. Passive restraints would prevent an estimated 10,000 deaths and 60,000 serious injuries a year, not to mention save billions in health care costs. Airbags have been greatly improved in recent years and their total cost would have been just $100 a car.
Conservatives believe that passive restraints somehow impinge on personal freedom and that “paternalistic government” should stay in the backseat where it belongs. But the argument is perverse. Would they have the government do nothing to stop a smallpox epidemic? Of course not. By 1990, an estimated 70,000 people will be dying annually on the roads. Auto safety is hardly a peripheral public health problem.
At least the administration is consistent. Peck’s approach reveals the same basic ignorance of the way people actually behave as does the plan to depend on American businessmen to eliminate all safety violations on their own. The seatbelts that Peck wants in place of airbags and automatic seatbelts are easily detachable. What Peck doesn’t understand is that the only restraints that are going to make a difference in saving lives are the ones that won’t make an 18-year-old feel like a wimp when he’s out on a big date namely, the ones he has no choice about. Refusal to buckle up, whether because of such macho feelings or simple impatience, is as American as baseball, hot dogs, apple pie, and Chevrolet. If the government can keep tubercular pork out of hot dogs, it can keep our heads out of windshields.
FDA: Oraflexible
At the Food and Drug Administration, deregulation means reducing the time and trouble it takes to approve new drugs for the market. Until this summer, the FDA under Arthur Hull Hayes Jr., a respected pharmacologist, was moving forcefully to speed such approvals. In 1981 it approved 27 new products, 15 more than in 1980 and the most since 1962. Richard Schweiker, secretary of health and human services, this June outlined a new FDA review process that would speed approval even more. The process would allow drug companies to submit short summary reports in place of thousands of pages of detailed technical data and would permit the use of foreign test results to help obtain approval.
Nothing necessarily to panic about there—until Oraflex came along. This summer the anti-arthritis drug was found to have killed more than 60 people in Great Britain. For three months, the FDA let it be marketed in the United States; on August 4 its manufacturer, Eli Lilly and Co., responded to public pressure and withdrew the drug worldwide. Shortly thereafter, a House subcommittee chaired by L. H. Fountain chastised the FDA for failing to enforce its own rules on reporting adverse drug reactions. It turned out that an FDA staff recommendation pointing to “important adverse findings” about Oraflex had been sitting at the agency for nine months. Speeding up the review process will hardly ease fears that more Oraflexes may lie ahead.
Hayes also has scuttled a three-year pilot program that would have provided consumers with package inserts spelling out the uses and potential side-effects of ten widely used drugs. The FDA claims the costs would outweigh the obvious benefits of this requirement—even though the expense could be easily borne by an industry that is one of the most profitable in America.
Nursing Homes: “Cross Your Heart?”
Someone in the Reagan administration must have had to work overtime to figure out how the federal government could reduce its regulation of America’s nursing home industry—it was already so minimal. Even though much of industry’s money comes from federal medicare and medicaid funds, the federal government delegates to state agencies responsibility for inspections, requiring only that they meet certain minimum standards.
But last May, the Health Care Financing Administration offered a deregulatory plan that would allow the states to use a nursing home industry organization, the Joint Commission on Accreditation and Hospitals, to perform the certification. The JCA H’s reputation for policing this notoriously scandal-ridden industry is hardly reassuring. According to the Philadelphia Inquirer, California is planning to end a six-year arrangement with JCAH because its certification work has been deemed inadequate.
The federal proposals would also require inspection only biannually instead of annually, and permit inspectors to forego personal visits in favor of using the phone or mail when certifying corrections of violations. (“So you got the rats out of the I.V. machine. Promise?”)
Congress has imposed a six-month moratorium on the imposition of the new rules, but the battle is likely to resume next year.
Mine Safety: Underground Economies
More than 100,000 coal miners have died on the job in this century, but since the early 1950s, when mine safety regulations by the federal government were first introduced, that number has dropped steadily. In the 1970s, underground mines produced 28 percent more coal with 49 percent fewer fatalities than in the 1960s.
Then came 1981. Last year, despite a 72-day strike at most unionized mines, deaths caused by mine cave-ins were up 25 percent, and total mining deaths reached 155, their highest level since the disaster-plagued year of 1972.
This was also the year that a new administrator, Ford B. Ford, took over at the Mine Safety and Health Administration. Ford, caught up in the Reagan deregulatory mood, cut inspectors by ten percent, inspections by eight percent, and citations by 15 percent.
Were the increased accidents a coincidence? Ford thinks so, and, undeterred by last year’s grisly record, has proposed that the number of annual inspections required by law be cut in half. He also hopes to institute an honor system known as “self-certification” to allow mine operators to slap their own wrists without the help of an inspector. This would take the place of many follow-up inspections, the assumption being that when a violation has been found the owners can be trusted to take care of it.
