Lemon Laws

...OIRA resolved the natural tension between regulation and profit-maximization more regularly than even the captains of industry would have liked...

...Proportionality in sentencing is so important," says Wilkins, "and the mandatory minimums are not proportional...

...This approach might be justifiable if it served as a deterrent, but there's little evidence dealers have been daunted...

...In 1988, eight years after Johnson & Johnson's request, a short-term exposure ethylene oxide regulation was finally published...

...Germain did little to impact and which had been given, via compliant state legislatures, virtual carte blanche to run their affairs...

...It also provides an object lesson in what can happen to legislation when lobbyists get dealt into the game and find themselves holding a couple of aces...

...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...

...One says that he had relatives with cancer...

...Now that parents are warned about Reyes, the syndrome has virtually disappeared...

...What's certain is that by the mid-seventies, advances in analytic chemistry started making Delaney look foolish...

...With a new president coming to town promising a shopping list of reforms, now may be the moment to learn something from earlier disasters...

...Race, class, and even gender figured into too many sentences and some liberal judges were reportedly letting violent criminals off easy...

...The irony is that E.O...

...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...

...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...

...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...

...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...

...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...

...He's easy to find: he still has a seat in the California State Assembly...

...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...

...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...

...Besides, when a stupid regulation becomes law, nothing short of divine intervention will undo it, so another round of do-we-rea/Zy-need-this is worth the effort...

...Meanwhile, Reagan's chief of staff, Donald Regan, secretly plotted to have Gray fired and Congress, stoned on the S&L lobby's $11 million in individual and party campaign contributions, sideswiped Gray at each step...

...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...

...Fernand St...

...Mandatory minimums were such a broad axe that they have produced unfair sentences," says Judge William Wilkins, chairman of the Sentencing Commission, a group Congress created back in 1984 to study the issue...

...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...

...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...

...And he still can get misty thinking about how it all came together...

...The problem is that the cost-benefit analysis demanded by OIRA rarely accounted for costs other than those found on the bottom line...

...Henry Waxman threatened to legislate the warning onto aspirin labels, a move that caused aspirin makers to put it on themselves...

...You very rarely see those kinds of sentences for violent crimes...

...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...

...It was the Carlton group that in 1978 dreamed up "10-5-3," a plan that depreciated business investments at a rate dizzying enough to amount to a government subsidy...

...But a whopping 75 percent of the cost of the bailout comes from the collapse of state-chartered thrifts which Garn-St...

...It sounds sane enough, but in the 34 years since Delaney was passed, advances in science have made the clause embarrassingly outdated...

...Charles Schumer, chairman of the House Sub-committee on Crime and Criminal Justice and an early backer of mandatory minimums, "and our committee is going to start to look into those...

...And it's not just anti-regulation Republican types who think so...

...Brookings Institute economist Charles Schultz says it was "the biggest single contributor" to our present deficit...

...cent of their sentences...

...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...

...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 andD...

...We've had our share of howlers in the past, laws that cost us a fortune, taxed us incomprehensibly, or were just plain idiotic...

...Under the guise of doing cost-effectiveness analysis, they second guess risk...

...The idea was to bring some uniformity to the system and insure that convicts served at least 85 perDavid Segal is an editor of The Washington Monthly...

...No congressman wants to run for re-election and be tarred as the guy who "voted for cancer...

...Back in 1983, Citizens for Tax Justice found that inflation and Social Security tax increases that took effect in 1981 meant that after all the tax cuts, families with incomes between $10,000 and $15,000 actually ended up with a 7 percent tax hike, and that those making more than $200,000 found themselves, on average, $60,000 in the black...

...But '81 was the curtain raiser in the 12-year run of the supply side tragicomedy and, far more importantly, it set the tone for the eighties by putting a president in the historically unprecedented position of defending huge deficits...

...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...

...More perversely, Bob's judge will sentence him to far more years than many dangerous criminals get...

...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...

...The prisons are increasingly loaded with drug criminals—they now comprise more than half of the prisoners in the federal system—as the costs of incarceration climb ever higher...

...Fortunately, I have a nominee...

...It's likely he was motivated by money and highly unlikely that he is violent...

...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...

...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...

...But he'll get three decades...

...ACRS's original Senate sponsor: Lloyd Bentsen...

...Nowhere is this more evident than in the minimum sentences for drug-related crimes...

...A legislative hall of shame by David Segal Mandatory Minimum Sentences for Drug Crimes Approaches to criminal sentencing, like wide ties and Tony Bennett, go through periods of fashion-ability...

...At first the idea was roundly ridiculed on the Hill, but after two years of lobbying and the arrival of Reagan, enough wavering members—those aware of 10-5-3's potential repercussions but scared of seeming "anti-investment"—had been buffaloed into supporting the idea to create majorities in both the House and Senate...

...A single mechanism of overview also makes it easier to figure out when one agency is creating laws that conflict with another...

...Germain Act as the real culprit...

...The commission, ironically, is now vocally against the entire mandatory minimum system...

...Which leaves us right where we began...

...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...

...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...

...Long-time Democratic insider Stuart Eizenstat reviles it because "it was a binge of tax cuts that have continued to leave the Treasury bereft...

...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...

...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...

...Those were the good old days...

...But a bad sausage will just ruin breakfast, while a bad law can turn your stomach for years...

...The premises were sound enough...

...Texas and Florida passed only slightly less liberal laws...

...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...

...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...

...It doesn't help that both the Democrats and Bush like to finger the Garn-St...

...In 1982, the FDA proposed a regulation that would have required aspirin makers to include a Reyes syndrome warning on their labels...

...Which makes pinning the $150 billion bailout debacle on any one bill or person a tricky business...

...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...

...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...

...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...

...OIRA blocked the regulation for four years...

...I routinely get drug sentences more severe than anyone I ever convicted for second degree murder when I was a state prosecutor," a federal prosecutor told me, "We get 20- to 30-year sentences for first time offenders...

...Eventually the scheme became '81's most audacious measure, the Accelerated Cost Recovery System (ACRS), a regime of goodies that translated into Christmas seven days a week if you happened to run a very large corporation...

...The opening salvo of Reaganomics, you might recall, was billed as an "across the board" tax cut and featured a series of tax reductions fashioned along the lines of the Kemp-Roth proposal to cut personal rates by 10 percent a year for three years...

...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...

...How did business—especially oil, chemical, and utility companies—find itself on the fat end of such largesse...

...It's been fashionable ever since to be the toughest guy on the Hill when it comes to sending dealers to the slammer...

...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...

...Even in 1958, Delaney's insistence was baffling...

...Ultimately, most Americans didn't get any tax relief from '81...

...It's unlikely, however, that we'll ever know—Delaney has since passed away...

...Because the men and women who administered the order brought to the job an anti-regulation fervor that bordered on fundamentalism...

...law firm, says that the big problem with '81 was that it wasn't given enough time to work...

...But late in the game, Delaney lobbied hard for a clause that would provide a blanket ban against all animal-tested carcinogens...

...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...

...Watchdog group Public Citizen took OMB to court and forced the agency to pass the regulation...

...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...

...California got the most carried away, passing a law that was written and "sponsored" by the state's S&L league...

...The "Delaney Committee" issued, among other laws, the 1958 Food Additive amendment which was initially a sensibly vague prohibition against harmful additives...

...in dire need of a convenient repository for our national rage for a scam we'll be paying off generations hence...

...At minimum, it was the harbinger of what was to come...

...So why is 12291 on this list...

...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...

...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...

...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...

...There are a variety of theories...

...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...

...Executive Order 12291 The insufficiently famous E.O...

...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...

...Germain, in most instances—with a recklessness that made politicians in Washington seem downright circumspect...

...In some instances, it's good intentions gone wrong...

...Why the Delaney Clause exists at all is something of a mystery...

...After E.O...

...If Bob gets caught, the mandatory minimums hamstring the judge into giving him between 25 to 30 years, even if it's a first offense...

...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...

...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...

...Another is that Gloria Swanson got to him...

...This approach had an irresistible populist ring, but it didn't take long to calculate that middle- and low-income earners weren't going to do as well by Washington's new math as the rich...

...The real fun for OMB watchers since 12291 has been the agency's reason-be-damned rationales for killing different regs...

...The best we can do is look at past experience, examine a handful of genuine stinkers and ask, what went wrong...

...The favorite whipping boys have traditionally been Senator Jake Garn and ex-Rep...

...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...

...Scientists warned that since they were unable to determine what constituted safe levels of carcinogens, an absolute ban would pointlessly box them in...

...Animals and humans, we've since learned, metabolize differently, so what causes cancer in a rat doesn't necessarily cause cancer in humans...

...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...

...26 The Washington Monthly/January/February 1993 Where were the Democrats in the free-for-all that created '81...

...in others, it's greedy intentions gone right...

...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...

...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...

...At least some credit must go to the Carlton Group, a coven of corporate lobbyists who took their name from the Sheraton-Carlton in Washington, their favorite meeting place...

...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...

...Sure, Reagan and Congress didn't give away the whole farm in one stroke of the pen, and yes, subsequent budget deals and tax laws mitigated some of the act's effects...

...The results show it...

...Just about all parts of the political spectrum can now find something to loathe in the 1981 Tax Act...

...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...

...He needs a very loud wake-up call, not three decades behind bars...

...But that was chump change compared to what businesses made off with: tax credits and write-offs that would have reduced the government's intake from the private sector by half a trillion dollars through the eighties if the act had not been undone by later legislation...

...Finally, in 1986, Rep...

...We were really just along for the ride while the Gipper was pulling us through," says Massa...

...Cliff Massa, who was then "informal chairman of the group" and is now a partner at a D.C...

...The only defenders left, it seems, are members of the Carlton Group...

...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...

...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 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...

...And to do this, they very often misrepresent the data and do work that is fundamentally flawed, incompetent, and misleading...

...Bob's role is little more than a January/February 1993/The Washington Monthly 25 cameo, making a phone call or two, setting up a meeting, doing logistics work...

...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...

...Bob no doubt could use some time to rethink his career ambitions, but odds are good that he's the type of person who would need no more than a couple years to get that thinking done...

...There are egregious cases where mandatory minimums bring about a miscarriage of justice," says Rep...

...The Economic Recovery Tax Act of 1981 We can't really blame the whole of the staggering $290 billion deficit on the 1981 Tax Act—but let's anyway...

...Maybe we should all give him a call and tell him just how we feel...

...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 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...

...Garn and St...

...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...

...This logic, as you might suspect, doesn't bear up to intense—or even mild—scrutiny...

...Germain, however, deserve only a slender portion of the guilt...

...We could end up with a whole generation of kids hooked on Tylenol because of that regulation...

...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...

...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...

...An example: Say a guy, let's call him Bob, is part of an operation importing one thousand kilograms of cocaine into the country...

...The mandatory minimums for drug crimes were drafted, not surprisingly, during the Reagan-era hysteria over drugs...

...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...

...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 FHLBB back...

...Defenders of the status quo, even in Congress, are getting harder to find...

...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...

...But Delaney was not to be deterred...