Cases of out-right fraud are surfacing in association with the Davis-Bacon Act. The 65-year old legislation requires contractors to pay workers on federally-subsidized projects what the Labor Department determines is the local union-scale wage.

For years it has been obvious that Davis-Bacon freezes out many lower-skilled workers, primarily blacks and Hispanics, from these projects. Now it has become clear that many "prevailing wages" appear to have been calculated using fictitious projects, ghost workers and companies established to pay artificially high wages.

• Oklahoma officials have reported that many of the wage survey forms submitted to the U.S. Department of Labor to calculate federal wage rates in Oklahoma were wrong or fraudulent.
• Records there show that an underground storage tank was built using 20 plumbers and pipefitters paid $21.05 an hour -- but no such tank was ever built.
• In another case, several asphalt machine operators were reported to have been employed at $15 an hour to build a parking lot -- but the lot was made of concrete, there were no asphalt operators, and the actual Davis-Bacon wage should have been $8 an hour.

In trying to investigate what appeared to be fraud, the Oklahoma Secretary of Labor was thwarted by union officials and contractors, stonewalled by federal labor officials and targeted by anonymous threats. Ultimately, she established that at least two of the inflated Oklahoma reports were filled out by union officials. Likely fraud examples have also surfaced in Ohio, Idaho, Colorado and Missouri.

The Oklahoma official who blew the whistle there calls Davis-Bacon a "welfare program" that is being used to "lie to federal officials and steal from taxpayers." She wants to see the program abolished. President Clinton has promised to veto any repeal effort.

Source: Editorial "Maximized Wages," Wall Street Journal, April 29, 1996.

Many businesses and policy experts question the need for the federal Occupational Safety and Health Administration (OSHA). For instance, workplace safety has been improving for most of this century, but the reduction in fatal accidents before OSHA was established in 1970 was 70 percent greater than the decline since then.

• According to the National Safety Council, in 1928 there were about 16 workplace fatalities for every 100,000 workers; but by 1992 the fatality rate had fallen about 80 percent, to 3.5 per 100,000 workers.
• More comprehensive figures from the Bureau of Labor Statistics indicate that in 1992 and 1993 the average worker in the United States faced a 5 in 100,000 chance of dying in a work-related accident.
• The BLS also found that 40 percent of recent workplace fatalities were from transportation accidents (of which almost half were highway accidents).
• Another 20 percent were from assaults and other violent acts -- more than 80 percent of which were homicides and 15 percent suicides.
• Thus, only 40 percent of workplace fatalities were caused by dangers unique to the workplace.

In fact, by 1993 the chance of dying in an accident at home was more than two times greater than the chance of dying in an accident at work.

A 1993 study determined that OSHA inspections with penalties reduced lost workdays due to injuries by 22 percent over three years at firms that were fined. However, since the frequency of inspections amounts to one visit every 75 years to each workplace, the injury reduction actually amounts to less than 1 percent.

Furthermore, it is estimated that the cost to business of complying with OSHA's current health and safety standards is $11 billion per year, while the benefits from injuries and fatalities prevented are at most $3.6 billion.

Source: Thomas J. Kniesner and John D. Leeth, "Abolishing OSHA," Regulation ,Vol. 18, No. 4, 1995, Cato Institute, 1000 Massachusetts Avenue, NW, Washington, DC 20001, (202) 842-0200.

About 44,000 patients in the United States are waiting for organ transplants of all kinds, and last year, 3,104 of them died waiting. Why is there a shortage of organs? Because then-Congressman Al Gore, who was concerned that the wealthy would get organs first in an unregulated transplant market, pushed Congress to pass the National Organ Transplant Act of 1984.

The act banned commerce in organs and the Department of Health and Human Services set up a network of 69 regional organ banks to harvest and distribute organs. However, an organ can't be sent out of a region until every candidate on the region's waiting list is considered -- even if a patient in another region has a more urgent need.

• In 1994, a patient needing a new liver in New Jersey faced a wait of only three months, but across the river in New York, patients had to wait 15 months.
• Today, the wait for a kidney in Fort Worth, Texas is only a few weeks; but across the county line, in Dallas, the wait is more like a year.

The chief source of organs is patients who become brain-dead through accidents or other causes, but have otherwise healthy systems. There are some 15,000 brain deaths each year, which is more than enough to meet the needs of patients on the waiting list, since each donor can provide several organs.

• But last year, the federal system produced 5,100 dead donors, enough for only 15,200 transplants.
• Since organs can be donated only to the regional organ bank -- even if the hospital with a possible donor has patients waiting for transplants -- there is no incentIve for doctors or hospitals to encourage donations.
• Five thousand of the nation's 6,300 hospitals don't produce even one donor per year; for instance, New York's Mt. Sinai Hospital, where 262 transplants were performed in 1994, produced only two donors.

It is a federal crime to compensate grieving families -- even for medical or burial expenses -- so they have no financial incentive to donate. And a recent survey found that 52 percent of families who refused to donate didn't even realize that the relative was in fact dead.

Instead of increasing the supply of organs, the federal government is attempting to control demand through rationing. For example, Medicare expects hospitals to refuse candidates for liver transplants with diseases like cancer or lung transplant patients who smoke.

And despite Al Gore, wealthy patients can transfer to a hospital in a region with the shortest waiting list for an organ, while poor patients just die waiting.

Source: Brigid McMenamin, "Why People Die Waiting For Transplants," Forbes, March 11, 1996.

Behind the debate over blocking access to pornography on the Internet lies an even more serious issue: government regulation of what goes on the Internet and the struggle to control encryption.

Encryption is the technology which scrambles electronic data. The Federal Bureau of Investigation and the Internal Revenue Service are worried that criminal activities and tax evasion will flourish in cyberspace if the government cannot listen in.

Here's how it works:

• The strength of an encryption system -- and the difficulty the government would have in breaking it -- lies in its code, which is measured by the length of the key needed to decipher it.
• The longer the key, the harder the code is to break.
• American manufacturers are now forbidden to export any software with a key length exceeding 40 bits of information -- which is good enough to thwart the casual browser but not much good against a determined code-breaker.
• Domestically, sales of software with key lengths of up to 64 bits are allowed; but last November the Clinton Administration proposed rules which would allow the export of encryption software using up to 64 bits. However,
• A "spare key" would have to be deposited with an "escrow agent" accessible to the government under normal court-ordered wiretapping laws.
• While opponents say the administration should let congress set encryption policy, rather than attempting to do it through export regulation laws.
• They also point out that "spare keys" would allow the government to snoop on the private correspondence of ordinary citizens and the proprietary secrets of the nation's businesses.

Some say that the government's encryption policy appears to be nothing more than a front for increased government regulation.

Source: John A. Barnes, "Will Government Regulation of Codes Give It Control of the Internet?" Investor's Business Daily, January 9, 1996.

• Even if the 20% reduction deadline were extended until 2020, gross domestic product would be reduced by 3.5% from 2010 onward and 600,000 jobs would be lost annually, according to one study.
  
  
• Another study projects that by 2000 U.S. cost will approach 1% of GDP, while after 2020 the cost will rise to nearly 2.5%.

The American Lung Association (ALA) spends less than 1 percent of its budget on direct assistance to lung patients, 42.5 percent on staff salaries and a growing portion on political activity. This charitable organization is becoming a political lobbyist for the regulatory state.

A case in point is the ALA's lobbying for stricter regulations by the Environmental Protection Agency (EPA) that do little to improve public health, but add billions of dollars of unnecessary regulatory costs. At the same time, the ALA has been getting millions in grants from the EPA.

• The ALA has filed "friendly" lawsuits to force the EPA to make its impractical emissions standards stricter by 25 percent, a move that would cost businesses and consumers in Southeast Michigan alone an estimated $55 million per year for new auto emissions testing.
• The ALA ran radio advertisements against two U.S. Representatives for supporting cost/benefit analyses of proposed government regulations.
• The ALA received grants from the EPA of $4,125,660 from 1990 to 1994, a total of 34 grants during the past six years and additional grants for outreach activities related to the EPA's emissions inspection program.
• The ALA has received $200,000 in contributions over the past three years from Envirotest, Inc., a company that won a lucrative contract in Pennsylvania to operate special auto emissions testing centers.
• It received a $150,000 grant from the hazardous waste incineration industry, while campaigning against a competitor, the cement kiln industry, which burns hazardous wastes.

Source: Thomas J. DiLorenzo, "Politics Versus Health: The American Lung Association's Regulatory Agenda," Organization Trends, January 1996, Capital Research Center, 727 15th Street, NW, Suite 800, Washington, DC 20004, (202) 393-2600.