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Ralph Nader > In the Public Interest > The Honeymoon Ends

No one can fairly accuse Ronald Reagan of reading or thinking very much. But he does a superb regurgitation of what his advisers feed him. Such a foren­sic performance occurred Feb. 5 in his televised address on the state of the economy.

As has been his practice for 20 years, Reagan told the American people that government is to blame for the troubles in the economy. By way of example, he declared: “It is estimated that altogether, regulations of every kind, on shopkeep­ers, farmers and major industries, add $100 billion to the cost of the goods and services we buy.”

Whose estimates are these? Reagan did not say. And what were the benefits in lives saved, disease reduced, injuries prevented, consumer dollars not gouged and property values preserved because of these health, safety and consumer-protec­tion regulations? Reagan did not say.

For several years, the people who advise Reagan have had a field day providing the media with bogus figures and intellectual hocus-pocus. One of these individuals is Murray Weidenbaum, who is now Reagan’s chief economic adviser in the White House. Weidenbaum is the source of the $100 billion figure. How delighted he must be with the way many in the media have picked up his theme. In a speech before a business audience two years ago, Weidenbaum gushed:

“You know…people think I’m in my second childhood. When they walk into my office, what do they see? Tables, charts, statistics? N000, I’ve got my walls lined with comic strips. All say the same thing: ‘Government is overregulating.’ “

But Weidenbaum is not Pogo; he pretends to be an economist. Here is how he arrived at his $100 billion calculation. He took the budgets of the regulatory agencies and multiplied by 20. Why 20? Well, it’s a nice round estimate rooted in other arbitrary estimates. He then tried to make his guess more credible by saying that it is an underestimation…

Whose budgets are included in this $100 billion figure? One agency is the Coast Guard. Another is the Internal Revenue Service. These are lumped together with the Food and Drug Administration, the Federal Aviation Agency, the Environ­mental Protection Agency, the National Highway Traffic Safety Administration and the Consumer Product Safety Com­mission—to name a few of the health and safety missions of your government.

Anyone with a little common sense would ask Weidenbaum about the bene­fits which flow from these regulations. For example, about 100,000 American lives have been saved, in addition to many more injuries prevented, just by the traffic and auto-safety standards of the Department of Transportation since 1968, according to a General Accounting Office report and other impartial studies.

Weidenbaum mentions a hugely inflat­ed figure of $666 which he says regula­tions have added to the price of each auto­mobile (a figure also used in Reagan’s speech). He doesn’t mention that just one of these regulations—the fuel-efficiency standard—will save a future owner of a 1985 car at least $2,500 net over the fuel cost of an unregulated 1977 car, accord­ing to the National Highway Traffic Safety Administration.

To show what Weidenbaum has gotten away with by ignoring benefits entirely and inflating costs, suppose a consumer group were to declare that General Motors takes almost $90 billion a year from consumers, but failed to mention that millions of cars are exchanged for this money. The media would either ignore the group or ridicule it mercilessly.

But the ignorance of a Murray Weiden­baum becomes nearly invincible when clothed with economic jargon and mari­nated in political and corporate power. That combination makes for wide and un­critical media acceptance. Forgotten are the critiques of Weidenbaum’s statements such as that by the respected Congres­sional Research Service, which called his methodology “a dubious rationale for a questionable procedure.”

Nor is attention drawn to “cartel” regulatory costs (about one-third of his $100 billion) which proceed from indus­try’s historical demand that agencies like the Interstate Commerce Commission approve fixed prices for freight shipments by truck and rail.

The new director of the budget, David Stockman, also receives wide coverage for asserting that eliminating safety standard would save corporations many millions of dollars without taking into consideration the casualties and economic costs which revoking such safeguards would produce.