Tag Archives: public safeguards

White House Cozies up to Big Tobacco

White House changes to a recent proposal by the Food and Drug Administration (FDA) have weakened draft health and safety standards related to tobacco products and have more broadly paved the way for watering down consumer protection in other sectors.

Nestled inside the White House is a little-known, small office with extraordinary power over our government agencies. This office, known as the Office of Information and Regulatory Affairs (OIRA), has routinely contributed to the delay and weakening of health, safety and financial protections. Operating quietly with little media attention, OIRA has struck again – this time to weaken a recent FDA proposal to regulate electronic cigarettes, cigars and pipe tobacco.

The FDA’s original draft proposal contained an extensive section on the health benefits from reduced smoking, including the number of lives that would be saved and the value of those additional lives. Following review by OIRA, this section was deleted and edits were made that weakened language about the FDA’s health concerns over e-cigarettes. OIRA also altered language about restriction of non-“face to face” sales, which will prevent the FDA from regulating online sales of tobacco products, a platform that is used by children because of the difficulty in verifying the age of the person making the purchases. Even worse, in a blatant display of White House acquiescence to industry interests, “premium cigars” could be exempt from regulation altogether.

As if this weakened rule wasn’t bad enough, in a preliminary assessment of the benefits of regulating e-cigarettes, OIRA included a 70 percent discount to account for the “lost pleasure” that would result from reductions in tobacco use. In other words, if the health benefits of this new regulation were estimated to be $1 billion, they would be reduced by 70 percent to just $300 million because people will “lose pleasure” from smoking fewer cigarettes.

Cost-benefit analysis has long been a tool used by industry to weaken, delay or prevent the imposition of new regulation by government agencies. U.S. agencies routinely determine the potential costs and benefits of their rules and, in certain instances, are required to prove that the benefits of a proposed rule outweigh the costs of its implementation. While this may seem like a sensible request at face value, its real application has been devastating for public protection: costs of compliance are often overstated by industry, while non-quantifiable societal benefits are undervalued. How do we quantify the value of a saved IQ point in children not exposed to lead, or the value of a measure of increased privacy for online consumers?

Not only will this “lost pleasure” approach make it much more difficult for government agencies to regulate tobacco, but this principle also could be applied to other sectors to weaken protections against trans-fat-loaded fast food, alcohol consumption and even reckless driving. Some people find it fun to drive really fast on the highway, but does that mean we should deduct a measure of “lost pleasure” from the benefits we derive from speeding laws the next time state legislatures propose traffic rules? “It will undermine anything they try to do about anything,” said Dr. Stanton Glantz, a tobacco control expert and professor of medicine at the University of California, San Francisco.

Even more complicating is the fact that tobacco products contain highly addictive nicotine. Consumer surplus, the economic principle for which this “lost pleasure” discount is based, relies on the assumption that consumers will act rationally in determining whether or not to purchase a product. Highly addictive substances and practices make this rational thinking next to impossible – just think back to World War II, when desperate Europeans traded their scarce food rations on the black market for cigarettes!

Jonathan Gruber, a health economist at MIT whose work was cited by the FDA as a source for their 70 percent calculation, thought the choice to account for consumer surplus in this instance was wrong. “I think this is really a misapplication of my work.”
When corporate interests override the public interest and dominate the policymaking process, government agencies can’t do their job to safeguard public health. The U.S. needs a regulatory system that puts American families, children and consumers first. Let the FDA know what you think about its proposal as it accepts public comment through Aug. 8.



U.S. Chamber, You Are Wrong

The U.S. Chamber of Commerce and other industry groups sure do kick and scream when any new major safeguard to protect the environment, worker safety, or consumers is being proposed. Their oft-repeated mantra about the impacts of regulation, however, is “the sky is falling” rhetoric.

The most recent example is the U.S. Environmental Protection Agency’s (EPA) new proposed rules on existing power plants. The U.S. Chamber came out with a report on May 28th that claims nightmarish outcomes for consumers and the U.S. economy, but past experience just doesn’t match up with such claims.

For instance, utilities that operate coal-fired power plants tried to claim the end of the world was near when the EPA finalized a rule curbing pollution that crosses state lines, a rule the U.S. Supreme Court recently upheld. A large power plant in Homer City, PA warned of “immediate and dire consequences” due to this EPA rule three years ago. Three years later, that power plant still exists and has cut its sulfur dioxide emissions by 80 percent without raising anyone’s electricity prices.

The idea that smart regulation can spur innovation is nothing new. Rules on consumer products led to better and safer goods for millions of Americans. A report from the Center for International Environmental Law on chemical safety noted that chemical safeguards helped the larger national economy. “Our study finds that stronger laws governing hazardous chemicals can not only drive innovation, but also create a safer marketplace,” said Baskut Tuncak, staff attorney at the Center for International Environmental Law, and author of the report. “Well-designed laws spark the invention of alternatives and further help level the playing field to enable safer chemicals to overcome barriers to entry, such as economies of scale enjoyed by chemicals already on the market and the externalized costs of hazardous chemicals on human health.”

The problem with warnings about the effects of regulation from places like the power plant in Homer City and from groups like the U.S. Chamber is that analyzing rules on a purely economic basis almost always emphasizes and overestimates the negative consequences and the costs of the standard in question. At the same time, this analysis overlooks the tremendous social and societal benefits that result from standards and safeguards, such as improved health, lower medical costs, and fewer deaths.

“[R]egulations also shift jobs and can create new ones too. The weight of the evidence is that regulation is not a significant factor affecting overall employment levels in the United States,” notes Cary Coglianese, Director of the Penn Program on Regulation at the University of Pennsylvania Law School.

Americans are too intelligent to be fooled by false claims about our public protections. Bad corporate actors, however, do quite a bit to kill jobs and damage the economy by polluting the environment, endangering consumers and shipping jobs overseas. Americans want a strong system of sensible safeguards that protect them from buying an unsafe product at the store, that allows them to know they can visit a nearby river or lake without worrying about toxic waste, that they can use their credit cards and know they have expanded protections, and that they can go to work and not be put in harm’s way. Smart standards exist to make sure people have access to a fair economy and a healthy environment that benefits everyone.