Ford's Hot Issue: Agency 'Despots'

Federal regulations have entangled far too many aspects of our economic system. In far too many cases, Government regulation has become counterproductive and remote from the needs and interests of businesses and consumers alike.

The rhetoric is neither especially rousing nor original. Yet for the past nine months, whenever Gerald Ford has launched into his attack on the abuses of the federal regulatory agencies, his audiences--big businessmen, local storekeepers, ordinary consumers--have jumped up and cheered wildly. Two weeks ago, when the President delivered his bust-the-bureaucrats message at a small-businessmen's convention in Washington, he was repeatedly interrupted by applause. In post-Watergate U.S., where resentment of encroaching Government is still high and economic worries persist, the President has found an important and highly attractive issue that fits in with his own deeply ingrained distrust of federal controls.

No Cobwebs. Ford believes that the regulatory system, whose origins go back to the founding of the Interstate Commerce Commission in 1887, has grown so large that it threatens to choke the free enterprise system. He wants to "free the business community from regulatory bondage."

Having flogged the issue from podiums all over the country, the President last week finally launched his program "to clear the cobwebs from our Government regulations." At his invitation, 24 Senators and Representatives, divided evenly between Democrats and Republicans, gathered at the White House to hear Ford's proposals. Prudently, he has at present limited his regulatory enemies' list to ten major independent agencies.*

Ford does not envision the dismantling of any agencies. Instead he advocates reforms that will 1) cut down on the paperwork that is flooding the agencies, 2) bring about more responsiveness to public needs by those agencies that act as accuser, judge and jury all at one time, and 3) make the regulators far more aware of the inflationary impact of many of their rulings. Ford says that each American family pays $2,000 annually in higher prices because of "unnecessary" rulings. That figure may be high, but Ford has a point.

The President's assault on the bureaucracy will begin in earnest next week, when he will meet the chiefs of the ten agencies at the White House to seek their cooperation. In general, Ford plans a piecemeal approach to regulatory reform. It involves White House action over the next several months to:

> Establish a more flexible system of fare setting by the ICC and CAB to allow air and surface carriers to adjust passenger and freight rates up or down at will within a 40% range of present tariffs.

> Remove antitrust immunity from the trucking industry and possibly the airlines, with the aim of encouraging new firms to enter those fields. Only one new airline has entered interstate service since the CAB was founded in 1938.

> Delete from the 39-year-old Robinson-Patman Act the sections that effectively prohibit manufacturers from giving price discounts to big retailers.

> Support a bill, sponsored by Massachusetts Republican Senator Edward Brooke, to repeal the so-called Fair Trade Law. Now in force in 25 states, the law enables manufacturers to set prices on their products.

Understandably, the Democrats want to block Ford from appropriating regulatory reform as a campaign issue. At last week's White House meeting, the twelve Democratic delegates presented to the President a statement that emphasized the differences in their approach. Said the Democrats: "One person's regulatory reform is another's consumer ripoff, unconscionable cancer risk or return to the robber baronies of yesteryear." Consumer Crusader Ralph Nader has charged in Senate testimony that "there is a well-orchestrated publicity campaign, in which Gerald Ford is a willing cheerleader, to confuse wasteful cartel regulation with life-saving consumer regulation." Liberals worry that under the guise of reform, the Administration may be trying to kill off the consumer-policing agencies that rile manufacturers.

Still, at the White House meeting, the Democrats found much that they could support in Ford's program. Senator John Pastore of Rhode Island applauded Ford's determination to stop the heads of the regulatory agencies from behaving "like despots." But another Democrat, Representative James Wright of Texas, warned that "fighting red tape is like fighting a feather pillow. You can knock it into a corner but it just lies there and regroups."

When he begins to put his program into action, President Ford will understandably feel that he is fighting ten feather pillows simultaneously. As he readily concedes, much of the work of the agencies, notably stock market supervision by the SEC, is essential. It will require considerable presidential insight and detachment to focus on activities that are truly harmful to the economy. Ford is also bound to collide not only with an entrenched bureaucracy--the regulatory agencies employ 13,980 staffers and command budgets totaling some $523 million a year--but also with highly influential business interests that profit from cozy relationships with agencies that supposedly regulate them. Some of these industry groups have agitated for increased freedom from the regulators only because they felt confident that no one, not even a President riding an unexpectedly popular issue, was likely to give it to them.

*The ten: Civil Aeronautics Board (CAB), Commodities Futures Trading Commission (CFTC), Federal Power Commission (FPC), Federal Communications Commission (FCC), Federal Maritime Commission (FMC), Federal Trade Commission (FTC), Nuclear Regulatory Commission (NRC), Interstate Commerce Commission (ICC), Securities and Exchange Commission (SEC) and Consumer Product Safety Commission (CPSC).

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