Thursday, December 9, 2010
Protecting consumers and small businesses
As Christmas approaches, parents and grandparents want to know that products on store shelves are safe. News stories of lead paint decorating children’s toys and defective merchandise understandably concern consumers. Dangerously tainted drywall, which has affected many Mississippi families, also reminds us of the damage caused by poorly-made products.
However, pointless government intrusion can drive up costs and force small businesses to close. As the ranking Republican on the Senate Commerce Subcommittee on Consumer Protection, I recently participated in a hearing to examine both sides of this equation. The federal government needs to strike a balance between ensuring safety and burdening manufacturers with frivolous regulations.
The subcommittee hearing focused on the Consumer Product Safety Improvement Act (CPSIA), which was enacted in August 2008, largely in response to concerns over numerous toy recalls for violations of existing lead limits in paint.
The intention of the bill was something we all support – protecting Americans from harmful products. The law attempted to improve safety by tightening the regulations on children’s products and reducing the use of dangerous chemicals. Unfortunately, despite the good intentions and hard work that was put into creating and implementing this law, the results have been far from what Congress expected.
Over the last two years, this law has increased costs and created uncertainty for businesses. Many small businesses have been forced to comply with unnecessary regulations and testing of products already proven to be safe.
Some businesses reported that prior to this law they were responsible for complying with approximately 200 pages of rules.
Now that number has grown to nearly 3,000 pages. This will continue to increase as more rules are implemented and rewritten.
For many small businesses, the burden is overwhelming and the cost of trying to comply is simply too much to bear. During a time when national unemployment hovers near 10 percent and our government should be doing everything possible to promote job creation, this law has had the exact opposite effect – particularly on small businesses.
The CPSIA has reduced the ability of many businesses to make a profit and make their payroll. One group represented at the Senate hearing listed 24 small businesses that had closed their doors because of the unintended consequences of the legislation. Further, this law has reduced the incentive to innovate and invest in new markets, leaving potential workers jobless.
A Stable Business Climate
In addition to the federal rules and regulations facing businesses, all Americans continue to face a dramatic tax increase in less than one month, if Congress fails to act before January 1, 2011. The uncertainty created by the new health care law, financial overhaul, and unresolved tax policy prevents business owners from expanding or hiring new workers because they are unable to predict future costs and whether there will be a demand for their products in the coming months.
I hear from thousands of entrepreneurs and small business owners from Mississippi who struggle to make difficult decisions to stay afloat each month. Operating one of these businesses is a challenging endeavor with many risks. Rather than overburden these men and women, we should work to create stability and certainty. There are ways we can provide flexibility and keep people employed in the private sector while ensuring the safety of American consumers.
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