The Deregulation Dilemma

DEREGULATION was touted as one of the Reagan administration's great success stories. This was Reagan getting government ``off the backs of the people.'' Ironically, deregulation is shaping up as one of the Bush administration's greatest dilemmas. If President Bush abandons deregulation, he will risk alienating many of those who swept him into office in 1988. If Bush continues the wholesale pursuit of deregulation, he will risk incurring the criticism of a segment of the public and powerful members of Congress grown increasingly disturbed by deregulation's failures.

To resolve this dilemma, the President should apply the pragmatism that served him so well during the campaign and since the election. The areas that have been deregulated must be comprehensively analyzed, a rigorous assessment of deregulation's relative efficacy must be undertaken, and appropriate solutions to problems tailored.

Crucial to this exercise will be refined, differentiated treatment. Deregulation seems to have worked well in a number of areas of economic activity, such as certain fields of antitrust. In those cases, deregulation ought to continue. In some economic areas, deregulation has not worked well. For example, the Government Accounting Office has blamed deregulation for the savings and loan crisis. In these fields, regulation will be necessary.

Deregulation has not worked particularly well in some areas involving public health and safety and environmental quality. Deregulation in the workplace has unnecessarily exposed workers to dangers, resulting in deaths and serious injuries. In those areas, reregulation or stricter enforcement will be essential.

This is not invariably true. For instance, in certain areas of pollution control, alternatives to regulation, such as tax incentives for installing pollution-control equipment, may improve environmental quality more quickly and cheaply. Differentiated approval of new drugs can be very effective. For example, the Food and Drug Administration should expedite consideration of, and take greater risks in approving, experimental drugs for treating life-threatening diseases like AIDS, in contrast to less critical drugs.

In still other areas, including air travel and certain corporate mergers, the efficacy of deregulation remains unclear. Those will warrant further analysis.

Who should implement these proposals? The Bush administration should continue employing the pragmatic, conciliatory approach that has marked its nominations for the Cabinet. This will be especially important in naming people to agencies, such as the Consumer Product Safety Commission and the Occupational Health and Safety Administration, which will face difficult decisions about deregulation. The administration should work closely with the committees of Congress that have responsibilities in areas where regulation is important.

It may be helpful to draw on the experience of the Task Force on Regulatory Relief headed by George Bush during his vice-presidency. Bush and others, by virtue of their service on the task force, ought to have a good sense about how to make certain preliminary determinations, such as which deregulatory initiatives were most successful. In the long term, it may be advisable to create a commission on regulation modeled on other commissions established by presidents and Congress for policy guidance.

In these ways, the Bush administration should be able to capitalize on deregulation's benefits and minimize its disadvantages.