Printer Friendly

Lemon laws.

Laws are like sausages," Bismark once famously intoned, "It is better not to see them being made." Comparing laws to sausages is, of course, grossly unfair--to sausages. Sure, the rough and tumble of a bench-clearing legislative brawl is probably not much prettier than a machine stuffing fats and fillers into pig meat. But a bad sausage will just ruin breakfast, while a bad law can turn your stomach for years.

We've had our share of howlers in the past, laws that cost us a fortune, taxed us incomprehensibly, or were just plain idiotic. The problem is that the confluence of forces that create any particular law is unique, which means there's no sure-fire way to tell when Congress or the president is about to hand us something really inane. The best we can do is look at past experience, examine a handful of genuine stinkers and ask, what went wrong?

The laws here have been chosen not because

they are necessarily the worst we have on the books, but because each is illustrative, in different ways, of how legislation can go haywire. In some instances, it's good intentions gone wrong; in others, it's greedy intentions gone right. With a new president coming to town promising a shopping list of reforms, now may be the moment to learn something from earlier disasters.

A legislative hall of shame

Mandatory Minimum Sentences for Drug Crimes

Approaches to criminal sentencing, like wide ties and Tony Bennett, go through periods of fashion-ability. Sometimes judges have discretion about how long convicts get sent away, other times their hands are tied. In 1984, Congress ushered in a new era of the latter and delivered a legislative triumph of hype over good sense by creating a system of mandatory minimum sentences for a wide range of crimes, while eliminating most time reductions for good behavior.

The idea was to bring some uniformity to the system and insure that convicts served at least 85 percent of their sentences. The premises were sound enough. Race, class, and even gender figured into too many sentences and some liberal judges were reportedly letting violent criminals off easy. But in practice, the new system forces judges to incarcerate criminals--even non-threatening ones--for far longer than is often necessary, which is not only unfair, but spectacularly expensive. Nowhere is this more evident than in the minimum sentences for drug-related crimes.

Congress, in all its wisdom, drafted these laws so that the amount of drugs involved in a particular offense is the paramount consideration, making the relative roles of the offenders secondary. An example: Say a guy, let's call him Bob, is part of an operation importing one thousand kilograms of cocaine into the country. Bob's role is little more than a

Where were the Democrats in the free-for-all that created '81 ? After gamely pressing for saner tax cuts for business and more relief for middle- and low-income earners, eye-witness accounts have the Democrats actually competing for the support of the business lobby, which found itself powerful enough to be courted by both parties. The results show it. Ultimately, most Americans didn't get any tax relief from '81. Which means that the supply-side theory-that if you put more money in people's pockets they'll work harder and save more--was only tested on the wealthy.

Just about all parts of the political spectrum can now find something to loathe in the 1981 Tax Act. Long-time Democratic insider Stuart Eizenstat reviles it because "it was a binge of tax cuts that have continued to leave the Treasury bereft." Herb Stein, a neoconservative economist with the American Enterprise Institute, decries its middle income tax cuts "because they only fed the deficit and were not enough to change behavior." Brookings Institute economist Charles Schultz says it was "the biggest single contributor" to our present deficit. At minimum, it was the harbinger of what was to come. There are estimates that during the eighties, upwards of 70 percent of new wealth went to the richest 1 percent of Americans, while the incomes of the bottom four fifths of the nation declined.

The only defenders left, it seems, are members of the Carlton Group. Cliff Massa, who was then "informal chairman of the group" and is now a partner at a D.C. law firm, says that the big problem with '81 was that it wasn't given enough time to work. And he still can get misty thinking about how it all came together. "We were really just along for the ride while the Gipper was pulling us through," says Massa. "Those were the good old days."

The Delaney Clause

Proposing legislation that is bitter medicine for the country usually takes some courage, but changing legislation that is stupid medicine for the country often takes more. A case in point is this clause in the 1960 Food Additive Amendment to the Food and Drug Act which stipulates that any additive found to cause cancer in laboratory animals cannot be used in foods. It sounds sane enough, but in the 34 years since Delaney was passed, advances in science have made the clause embarrassingly outdated. Animals and humans, we've since learned, metabolize differently, so what causes cancer in a rat doesn't necessarily cause cancer in humans. And methods for measuring levels of carcinogens have so improved that taking the Delaney Clause at its word would mean banning essential minerals as well as vitamins like A and D.

Why the Delaney Clause exists at all is something of a mystery. The move for a bill regulating food additives began in the late forties, after technologies developed during World War II made emulsifiers, additives, sweeteners, and processed foods possible. James J. Delaney, a Democrat from New York, and some of his colleagues decided that a new committee was needed to look into regulating health standards for these innovations. The "Delaney Committee" issued, among other laws, the 1958 Food Additive amendment which was initially a sensibly vague prohibition against harmful additives.

But late in the game, Delaney lobbied hard for a clause that would provide a blanket ban against all animal-tested carcinogens. Even in 1958, Delaney's insistence was baffling. Eliot Richardson, then assistant secretary for legislation at Health, Education and Welfare, wrote a letter to Delaney on behalf of HEW arguing that the clause was redundant. Scientists warned that since they were unable to determine what constituted safe levels of carcinogens, an absolute ban would pointlessly box them in. But Delaney was not to be deterred. Why? There are a variety of theories. One says that he had relatives with cancer. Another is that Gloria Swanson got to him. It's unlikely, however, that we'll ever know--Delaney has since passed away.

What's certain is that by the mid-seventies, advances in analytic chemistry started making Delaney look foolish. "People began to realize that the clause would impact many more compounds than anyone ever thought before, compounds about whose risk there was no real concern," says Richard Merrill, who was counsel for the FDA in the eighties. The FDA has tried its best to avoid rigid enforcement of the Delaney ban, but since the clause doesn't allow exceptions, the agency often loses when taken to court by consumer groups. The FDA was forced to ban a color additive used in lipstick that studies showed would cause cancer in one in 19 billion people--odds that are slightly worse than hitting the lottery and getting flattened by space junk on the same day. Saccharin would have vanished under Delaney, but angry constituents hooked on diet sodas inspired Congress to pass a law to keep it on the market.

Health and Human Services Secretary Louis Sullivan has called for Congress to acquaint Delaney with the science of the nineties, but don't count on a legislative review any time soon. No congressman wants to run for re-election and be tarred as the guy who "voted for cancer." The likelihood is that Delaney will linger on the books, a flatulent old poodle of a law---occasionally distressing, usually ignored, but something no one has the stomach to get rid of.

Executive Order 12291

The insufficiently famous E.O. 12291, the first piece of legislation signed by President Reagan, routed any new regulation being considered for publication by any agency through OMB's Office of Information and Regulatory Affairs (OIRA). After E.O. 12291, if the FDA, for instance, wanted to publish a regulation it would need approval from OIRA, whose machinations were largely controlled by then-Vice President Bush's Task Force on Regulatory Relief and later by Quayle's Council on Competitiveness. The goal was not just to give Veeps a reason to get up in the morning, but to centralize review of regulations, prevent unnecessary and cost-prohibitive regs, and to give the executive a stronger hand in the implementation of laws.

Not a bad idea, really. No one elected any of those agency regulation drafters, so why shouldn't Reagan and his cohorts have a say in the process? A single mechanism of overview also makes it easier to figure out when one agency is creating laws that conflict with another. Besides, when a stupid regulation becomes law, nothing short of divine intervention will undo it, so another round of do-we-really-need-this is worth the effort. And it's not just anti-regulation Republican types who think so. Jimmy Carter was the first to try his hand at centralizing regulatory review, and during the campaign Clinton intimated that he would keep the present system.

So why is 12291 on this list? Because the men and women who administered the order brought to the job an anti-regulation fervor that bordered on fundamentalism. "We were doing the Lord's work," James C. Miller III, the first administrator of OIRA and author of 12291 told me, and the record reflects this quasi-religious fervor. Everyone knew that regulations made Reagan seethe, but the consistency with which his minions blocked, sat on, and otherwise choked the life out of all regulations that could remotely be construed as a hindrance to commerce had to take even the Fortune 500 by surprise.

The problem is that the cost-benefit analysis demanded by OIRA rarely accounted for costs other than those found on the bottom line. "They've got a lot of economists over at OMB who know nothing about industrial safety," says Peter Infante, director of the Office of Standards Review at the Occupational Safety and Health Administration (OSHA), offering his personal opinion. "Under the guise of doing cost-effectiveness analysis, they second guess risk. And to do this, they very often misrepresent the data and do work that is fundamentally flawed, incompetent, and misleading."

Back in 1980, for instance, scientists first noticed that when children with chicken pox or some strains of the flu were given aspirin, they developed Reyes syndrome, an illness which can lead to brain damage and is often fatal. In 1982, the FDA proposed a regulation that would have required aspirin makers to include a Reyes syndrome warning on their labels. When the reg got to OMB, Jim Tozzi, then deputy administrator at OIRA, called a pediatrician who told him that the science on the connection between aspirin and Reyes syndrome was not definitive. OIRA blocked the regulation for four years.

Finally, in 1986, Rep. Henry Waxman threatened to legislate the warning onto aspirin labels, a move that caused aspirin makers to put it on themselves. Now that parents are warned about Reyes, the syndrome has virtually disappeared. But with the Center for Disease Control estimating that before the new labels were added some 300 children were dying of Reyes annually, it's a conservative guess that the OMB delay cost some 1,200 children their lives. Jim Tozzi, now director of a D.C.-based consulting firm called Multi-National Business Services, said he stands by his decision: "We don't know the other side of this. We could end up with a whole generation of kids hooked on Tylenol because of that regulation."

OIRA resolved the natural tension between regulation and profit-maximization more regularly than even the captains of industry would have liked. In 1980, for example, Johnson & Johnson's medical representatives went to OSHA and asked the agency to investigate ethylene oxide, a gas used to sterilize surgical instruments, because some of the company's employees working with it had developed some chromosome aberrations at the same time that preliminary studies on the gas linked it to cancer and spontaneous abortion. In 1984, OSHA published a regulation for ethylene oxide, which OMB blocked, stipulating that before it would sign off, OSHA had to remove the short term exposure part of the regulation. This requirement was ludicrous because the vast majority of people working with the gas are hospital employees who get quick, twice-a-day bursts of exposure when they clean surgical instruments. Watchdog group Public Citizen took OMB to court and forced the agency to pass the regulation. In 1988, eight years after Johnson & Johnson's request, a short-term exposure ethylene oxide regulation was finally published.

The real fun for OMB watchers since 12291 has been the agency's reason-be-damned rationales for killing different regs. There have been some knee-slappers, but the agency might have outdone itself last March in a letter to OSHA explaining that they were blocking a new regulation which would limit worker exposure to air contaminants in agriculture and industry because passing the regulation would--are you sitting?--harm workers' health. How? Well, according to OIRA's acting administrator James MacRae, since workers in wealthier societies live longer and because regulations cost society money and bring down its standard of living, blocking OSHA's reg would help keep America's standard of living high and thus save lives.

This logic, as you might suspect, doesn't bear up to intense--or even mild---scrutiny. But it makes perfect sense within the context of a crusade, where reasons and arguments are jerry-built to justify the quest, where catsup is a vegetable, as Reagan famously claimed, if it gets you any closer to the Grail. The irony is that E.O. 12291 may one day belong on the list of smartest laws if folks without an ideological axe to grind are given a chance to make it work.

The "Me Too" Laws

"The S&Ls," wrote Michael Waldman in Who Robbed America, "are nothing less than a Watergate scandal for the entire government." Which makes pinning the $150 billion bailout debacle on any one bill or person a tricky business. The favorite whipping boys have traditionally been Senator Jake Garn and ex|Rep. Fernand St. Germain, who for all eternity will have their names affixed to a bill that gave the S&Ls more latitude to get into speculative ventures right when the thrifts most needed tough love. St. Germain presents an especially attractive scapegoat, having rung up a $20,000 dinner and drinks bill on S&L lobbyist James "Snake" Freeman through the eighties and then, after being voted out of office, signing on to shill for the thrifts. It doesn't help that both the Democrats and Bush like to finger the Garn-St. Germain Act as the real culprit; the Democrats because it makes the whole nightmare seem more like a Republican problem and Bush because it makes it sound like everything happened on Reagan's watch, not his own.

Garn and St. Germain, however, deserve only a slender portion of the guilt. Their law did--if inadvertently-allow thrifts to get into junk bonds and it did prop up a few S&Ls that should have been allowed to expire before doing further damage. But a whopping 75 percent of the cost of the bailout comes from the collapse of state-chartered thrifts which Garn-St. Germain did little to impact and which had been given, via compliant state legislatures, virtual carte blanche to run their affairs. Since state-chartered thrifts were insured by Uncle Sam, state lawmakers had little reason to be restrained and knew that if things went really sour, the feds were going to pick up the tab.

The states passed these so-called "Me Too" laws when legislation at the federal level in the seventies and early eighties began to convince some state thrifts that life under federal rules would be more to their liking. Under heavy lobbying by state savings and loan associations (who stood to lose money and clout if they lost members), states began deregulating in the early eighties--before Garn-St. Germain, in most instances--with a recklessness that made politicians in Washington seem downright circumspect.

California got the most carried away, passing a law that was written and "sponsored" by the state's S&L league. The law allowed the thrifts to invest up to 100 percent of their assets in "service corporation activities," which translates into "shady, high-risk condo and mall deals," the very type that took the industry belly-up in the coming years. Texas and Florida passed only slightly less liberal laws. It's no coincidence that between 1987 and 1990, California, Texas, and Florida's state-chartered S&Ls accounted for more than 67 percent of the cost of the bailout.

Ed Gray, head of the Federal Home Loan Bank Board (FHLBB), which was charged with overseeing the industry, is one of the rare heros in this sordid tale. Back in 1984, he saw what was coming and began a lonely campaign to force Congress to rein in state thrifts, fighting for legislation that would limit speculative ventures and demanding more regulators. Meanwhile, Reagan's chief of staff, Donald Regan, secretly plotted to have Gray fired and Congress, stoned on the S&L 1obby's $11 million in individual and party campaign contributions, sideswiped Gray at each step. (The Keating Five meeting was called, you might remember, when the now imprisoned head of Lincoln Savings was feeling the hot breath of Gray's regulators on his neck and he needed a show of congressional muscle to brush the FI-ILBB back.) All the obstruction tactics worked and by the time the world got wise to how insolvent the thrifts actually were, every tax payer in this country was out about $500--per finger.

So if legislators who gave us the "Me Too" laws were a major cause of the S&L collapse, then the rest of the government, as they say in counseling sessions, were enablers. Which leaves us fight where we began; in dire need of a convenient repository for our national rage for a scam we'll be paying off generations hence.

Fortunately, I have a nominee. He's Pat Nolan, the California assemblyman who gave us the Nolan Amendment, the 1982 bill which cut the state's S&Ls--and Charles Keating--totally loose. Maybe we should all give him a call and tell him just how we feel. He's easy to find: he still has a seat in the California State Assembly.

David Segal is an editor of The Washington Monthly.
COPYRIGHT 1993 Washington Monthly Company
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:idiotic legislation
Author:Segal, David
Publication:Washington Monthly
Date:Jan 1, 1993
Previous Article:Soldiers of fortune.
Next Article:Blowing up the tracks: stop segregating kids by ability and watch kids grow.

Related Articles
Common law and legislation.
Make "lemon law" lemonade.
Sellers of `laundered lemons' forced to come clean.
Thought police.
Sour auto power: think you've bought a lemon? Here's where you can go for help.
Of data security and tea sandwiches.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters