Tobacco Documents Online

"get to the table:"with 1VIr.Clinton on health-care re- form. Public support for reform is so universal, the thinking goes, that Republicans have to be players, not obstructionists. But, as will become increasingly clear, it's easy for voters to be for health-care reform in general. It's another matter to be for a plan that could cost jobs, limit consumer choice, impose un- workable price controls, and expand government control' over a huge sector of the economy. The Chafee approach promises to sit Republicans down at the table just as the Clinton reform feast begins to look awfully unappetizing. Senators like Don Nickles and Phil Gramm, who. are pushing free-market-oriented plans akin to the Heritage Foundation's, have stronger nerves. It's the second opiizion of these Dr. Gridlocks that could warn the country away from the Clinton plan, which looks more and more like an iatrogenic disease. Eye of the Beholder T HE SOCIAL ISSUE du jour for much of the media is the "shocking" pattern of racial dis- crimination in bank mortgage lending. Ac- cording to a Boston Federal Reserve Bank study of 6.6 million mortgage applications in 1991, blacks of all income levels are rejected for mortgages at more than twice the rate of whites. This disparity shrinks when adjusted for credit criteria such as the age and quality of the house. Minorities then seem to be re- jected at a rate of 17 per cent versus 11 per cent for whites. Nonetheless, according to the Boston Fed,, this is a clear sign of racism. Or is it? The Boston Fed study itself admitted that rejected' minority applications on average had "poorer objective qualifications." For that matter, Asian applicants were rejected less often than whites. And there was a very significant test point- ing to non-discrimination that the Boston Fed study simply got wrong. If banks really hold blacks to a higher standard than whit'es, we would expect to find' the default rate for blacks lower than that for whites. It isn't. Census data show that black and white mortgage borrowers have the same default rate. In other words, the higher black rejection rate retlected a rational-and successful-effort to equal- ize credlt risks among mortgage applicants. When this point was brought to her attention by Forbes magazine. Alicia Nlunnell, the Boston Fed's research director before she accepted a position with the Clinton Administration. admitted that it under- mined her report's main conclusion. "I do not have evidence . . . no one has evidence." she conceded. That did not, of course, change her opinion that "dis- crimination uccurs." Nor did her admission make it into subsequent news reports in the eVew York Times .K 1. \TMNAL ItE'C'IL'W " •EPTEMOEK '0. 1993 and Wall Street Journal on the epidemic of racism in mortgage lending. Discrimination does occur, but not the type that grabs headlines. Banks would rather not make mort- gages of less than, say, $40,000, because processing costs and' federal regulations make such small loans money-losers. They prefer mortgage applicants who have already established credit worthiaesa by pay- ing off credit cards and other loans. A stable job his- tory is preferred to a history of part-time positions. None of these sound business practices has anything to do with race. But color-blind adherence to them might create the appearance of racial discrimination. Yet the adverse publicity-augmented lately, and inevitably, by Ralph Nader's t=unnpetings-has ter- rified bankers. Lenders are bending rules that limit mortgage payments and other charges to a specific fraction of the borrower's income. Some, like Na tionsBaak, go so far as to count food stamps and wel- fare benefits as income of minority mortgage appli- cants. Wells Fargo pays a bonus to any employee who brings in a customer from a low-income neigh- borhood to its mortgage department. And the bottom line? There are several. Other things being equal, banks will be less profitable, sav- ers less well rewarded, federal insurance schemes shakier, the economy slower. Devalued too will be the efforts made by many black people in hard cir- cumstances to meet demanding credit standards- and so the incentives for others to do the same. Why try hard when trying easy is enough? They Don't Embarrass Easy W E HAVE written harshly in the past ("The Week," July 19) about the EPA's manipu- lation of science to justify its imperial agenda. As if control over rivers, wetlands, trash, chemicals, and outdoor air were not enough, the agency seems determined to gain authority to regu- late indoor. air as well. It is revealing that some of the harshest criticism of the EPA's classification of environmental tobacco smoke ( ETS) as a Group A carcinogen has come from scientists within the EPA. Representative Tim Valentine, chairman of the environmental' subcommittee of the Science, Space. and Technology Committee. has released a bunch of internal EPA documents showing how the political operators there tried to ignore the criticisms. An April 27. 1990, report from EPA's Environmental Criteria and Assessment Office (ECAO) says that studies of the health effects of second-hand' smoke reflect limited evidence of human carcinogenicity and recommends that it not be classified as a Group A carcinogen. The ECAO scientists recommended major revisions of the EPA report, given the inher- 2Q2300S09'7

ent limitations of the data and the comparative nov- elty of the approach used to interpret the data. That novelty consisted of a huge array of statistical ma- nipulations incUiding exclusion of major studies that inconveniently indicated no health effects, suspen- sion of usual' standards for avoiding chance associa- tion (confidence intervals), and failure to consider confounding factors. A March 23, 1992, review by ECAO epidemiologist Patricia A. Murphy characterizes the EPA report as poorly organized and badly argued, and says that the case for a causal relationship between lung can- cer and' ETS is overstated. She notes there is no con- sideration of what epidemiologists call the "file- drawer problem" (the tendency of researchers to leave in t'he file drawer reports of research that finds no-relationship). Thus, according to Dr. Murphy, t'he process of "meta-analysis," which tries to weigh the results of all the published reports, is inherently bi- ased in the direction of finding a relationship. The report on ETS was entirely meta-analysis of a selec- tion of old studies that had found no more than a weak relationship between ETS and disease. One ECAO reviewer says part of the draft EPA re- port is plagiarism from an article in a 1990 issue of the journal Risk Analysis. He adds: "This could' be a source of embarrassment, as there are surely many people familiar with this article who will also be reading this EPA document." But the EPA appar- ently is beyond embarrassment. Middle East Breakthrough? W E CROSS our fingers, praying that the new agreement unveiled between Israel and the Palestinians turns out to be the breakthrough to peace that it is claimed to be. On the face of it, the plan incorporates key ideas that have been part of Israeli (and U.S.) policy for years-a transitional phase of self-government for Palestinians in the occupied' territories, leaving the toughest issues of sovereignty and territorial parti- tion for subsequent negotiations: limited redeploy- ments of Israeli troops, while Israel retains responsi- bility for overall military security in the transitional' phase: no change in the status of the Israeli settle- ments in the territories. What's new is that a rapid turnover of powers will take place initially in the Gaza Strip and in the West Bank town of Jericho, to jump-start negotiations. The other new wTinkle-and here our concerns begin-is that the deal was worked out in secret talks between Israeli Foreign Minister Shiinon Pe- res and a senior representative of the PLO. For 15 years. U.S. and Israeli policy has been to empower the residents of the occupied territories, precisely in order to diminish the influence of the PLO, now headquartered in Tunis. The PLO was for decades an ally of the Soviet Union; in the Gulf War it aligned itself with Saddam Hussein. It has never convincingly distanced' itself from terrorism; and it has a nearly unbroken record of sabotaging peace. negotiations because it cared more about ensuring a role for itself than about achieving progress for the Palestinians. Has anything happened to justify this reversal of U.S. and Israeli policy? The accord's defenders point to the inability of the residents of the territories to put forward realistic proposals; they call attention to new promises by the PLO to alter its viciously anti- Zionist charter and to accept Israel's existence. They focus on the PLO's strategic weakness in the wake of the Soviet collapse and the cut-off of Gulf Arab fi- nancing; they cite the new willingness of the PLO to accept that any territory liberated from Israel will be confederated with Jordan (another long-standing U! S. and Israeli' preference). And the rise of the Is- lamic fundamentalist movement in the territories frightens the secular PLO as much as it frightens Is- rael. Indeed, hard-line Palestinian radicals are de- nouncing the accord as a sell-out. These are all worthwhile considerations. They are also factors subject to change, some to overnight change. But the surrender of territory, however mod- est, can be reversed only by war-and Israel has al- most no geographical margin for error. In Israel, battle lines are forming, as the opposi- tion Likud Party and settlers'' groups organize to op- pose the accord. The Rabin government has a'razor- thin majority in the Knesset. As diplomacy with the PLO unfolds, we will find out soon whether the gam- ble was wise, in either politics or diplomacy. Laura Tyson's Tall Tale W HEN President Clinton's eye settled on Berkeley economist Laura Tyson as head of his Council of Economic Advisors, Llewellyn Rockwell criticized her writings on Nico- ~ lae Ceausescu's economic policies (NR, Feb. 1). O Her reaction, we have learned late in the day, was. ~ to: deny she had ever written on Rumania. Here's the Cj, exchange with host Brian Wilson on "Fox Morning O News" (March 10), from a Reuter Transcript Report: O, WILSON: A man named Rockwell. Llewell_vn H. R'ockwell, CA wrote in the. NATIONAL REVtEw about something that you O wrote in 1984, and he says, "from her published writ-~ ings, it's difficult to escape the conclusion that Profeqsor~ 'Dyson's ideal in economics is Eastern European social- ism. especially of the Ceausescu variety:" In other words, what he said is you liked what you saw going on in Rumania. and he says that perhaps you care more for 22 NATTOSAL RE\'1iEV' SEPTE~iBER 1U. 1i293