The case for (some) regulation.

• Author: Shenk, Joshua Wolf
• Position: Republican anti-business regulation stance - Cover Story

By not distinguishing between good and bad regulations, the GOP could do more harm than good

Jack Faris, president of the National Federation of Independent Business, has a simple message for the 104th Congress. "Our members want the federal government off their backs, out of their pockets, and off their land." Simple enough for you?

It is for Congressional Republicans. NFIB played a crucial role in beating back universal health coverage. Now the small business lobby--with 600,000 members--has a new target: federal regulations. They've asked for a freeze in all new rules, and they are likely to get it. The "Regulatory Transition Act of 1995," sponsored by Rep. Tom Delay (R-Texas), would impose a six-month moratorium on federal regulations, retroactive to last election day.

But don't ask NFIB precisely what this will accomplish. Kim McKernan, the group's chief lobbyist for the House of Representatives, cannot even name a single regulation she'd like to see repealed. "That's what the moratorium is for," she says. "Stop the bleeding. Let's take a look at the landscape and re-evaluate."

Indeed, for opponents of regulation, vagueness is a powerful weapon. Polls show vigorous public support for federal controls on the environment, consumer safety, and food and drugs. Businesses, meanwhile, despise these regulations: They don't want to be told what to do, especially if it costs them money. "Regulatory reform" is the Republicans' magic bullet. Reducing excessive burdens on business, they argue, will create jobs and lower prices for consumer goods. Everyone, they say, ends up richer, safer, and healthier.

But there is no magic bullet. Real regulatory reform--making the process smarter and more efficient, paring out senseless rules and toughening others--would take hard work and political courage. The Republican agenda is old-fashioned laissez-faire capitalism in disguise. Rather than dismantle agencies and provoke a public outcry, they plan to hogtie the system with cumbersome new rules and restrictions. This is a boon to business owners and corporate managers; it's a disaster for the ordinary guy.

Take this moratorium. It's billed as an antidote to red tape, but the volume of paperwork, procedural rules, and sheer mayhem provoked by its implementation would be staggering. Civil servants would be stopped dead in their tracks--whether they explicate tax codes at the Treasury Department, review new medications at the Food and Drug Administration (FDA), or enforce recalls at the Consumer Product Safety Commission. Federal regulators would spend weeks compiling lists of current, past, and future regulations. Millions of Americans who depend on the existing rules will be thrust into a vacuum.

Reagan's Blueprint

Congressional Republicans lifted their blueprint for this wave of deregulation straight from Ronald Reagan. Upon taking office in 1981, Reagan banned new rules for 30 days and issued an executive order forbidding agencies from issuing regulations--large or small--without explicit approval from the Office of Management and Budget. In theory, OMB would amend or reject rules where the costs outweighed the benefits. In practice, wherever possible, it blocked civil servants from enforcing the law.

For example, in the fall of 1981--ten years after Reye's Syndrome was first linked to use of aspirin--the Centers for Disease Control found in four independent studies that children with viral illnesses, such as chicken pox or flu, risked contracting Reye's if treated with aspirin. The FDA commissioned its own study, and concluded similarly. On June 4, 1982, Health and Human Services Secretary Richard Schweiker announced a FDA educational campaign and a requirement that warning labels on aspirin products "be changed to advise against their use in `children with flu and chicken pox.'" As required, he submitted the rule to OMB's Office of Information and Regulatory Affairs (OIRA). OIRA sent the rule back for further study, objecting that the risk of fatalities had not been conclusively proven. In 1983 The Wall Street Journal revealed that OIRA took its cues from the Aspirin Foundation of America, which thought the label would hurt business.

With the FDA paralyzed, public interest groups took the matter to court, a regular event in Reagan's first term, and the administration drew a stem rebuke. "All scientific evidence in the record points to a link between [aspirin] and Reye's Syndrome," the U.S. Court of Appeals for the District of Columbia wrote in 1984. "The pace of agency decision-making is unreasonably dilatory." The warning-label rule took effect in June 1986, but the four-year delay had taken its toll. The advocacy group Public Citizen estimates 3,000 children contracted Reye's Syndrome in that time, a third of whom died; many of the surviving children suffered permanent brain damage.

Disabling the full body of federal regulations was a big job. What couldn't be done through OMB, or with political appointees, was a job for the Task Force on Regulatory Relief. Directed by Vice President Bush, the task force directly solicited industry wish lists of regulations they wanted delayed or eliminated. Three months into the administration, it had already blocked 34 regulations on auto compaines alone--on bumpers, pedestrian safety, fuel economy standards, and lead-reduction standards for fuel, among others. As Gareth G. Cook reports in this issue, Reagan was particularly solicitous of Detroit in thwarting air bag requirements. "Federal regulations," Reagan told a gathering of auto executives during the 1980 campaign, "are the cause of all your problems."

If Reagan had pushed regulators to be smarter, not slower, or more results-oriented, he might have left a legacy of real reform. Pragmatists might even have forgiven some excesses if he had rationalized the system, consolidated overlapping programs, and tightened loopholes. Instead, Reagan (and...