In his appearance on Jay Leno's show last night, President Obama argued (video, transcript) for financial regulations by making a comparison between credit cards, mortgages, and toasters:
"When you buy a toaster, if it explodes in your face there's a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there's no law on the books that says if that explodes in your face financially, somehow you're going to be protected."
But is there really a law that says your toasters must be safe? Well, not exactly. You are protected by the protection of last resort -- the right to sue in a civil court for damages if you are injured. But it shouldn't have to come to that; there should be some sort of protection enforced by government. Yet for thousands of consumer products -- including toasters -- the Consumer Product Safety Commission (CPSC) has not crafted a mandatory safety standard. The agency essentially relies on manufacturers to police themselves.
In 1981, Congress amended the Consumer Product Safety Act, creating today's system: CPSC largely relies on industry-developed, voluntary safety standards to address product hazards. In practice, CPSC can only step in when a voluntary standard is found to be inadequate to reduce the risk of injury or if there is insufficient compliance in the industry. If CPSC does start working on a better standard, the industry can force it to put that on hold, essentially by saying "ok, we're working on better standards, give us some time." In the end, CPSC rarely undertakes the laborious process of crafting a mandatory standard.
The bigger picture problem is not just CPSC's limited legal authority, but its absurd lack of resources. The agency’s budget peaked just three years after it began operations, with $145M in funding for FY 1976 (that’s in 2007 dollars). By 1982, the agency’s budget had been whittled down to just $70M, and that budget has yet to fully recover to its original levels. The Consumer Product Safety Improvement Act of 2008 authorized an increase in funding from FY2010 through 2014 that would have put CPSC’s budget at $134M, but when the government started bailing out the private sector, Congress decided that it couldn’t afford an additional $30M for CPSC.
This isn't just about toasters. To be sure, there's no epidemic of toaster-related injuries. This is about a wide-range of products, products we may assume are carefully regulated, but actually aren't. Today's toothless and resource-starved CPSC just can't do that much. The agency ought to get the legal authority and funding it deserves and needs.
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Matt Shudtz | March 20, 2009
In his appearance on Jay Leno’s show last night, President Obama argued (video, transcript) for financial regulations by making a comparison between credit cards, mortgages, and toasters: “When you buy a toaster, if it explodes in your face there’s a law that says your toasters need to be safe. But when you get a credit […]
Rena Steinzor | March 20, 2009
The financial cataclysm gripping the country is often (and rightly) blamed on a lax system of public and private oversight of financial institutions. On the private side, investors trusted huge auditing companies like Arthur Anderson to rate multinational corporations for fiscal soundness. Meanwhile, Arthur Anderson also took handsome fees from the same corporations to conduct […]
Margaret Clune Giblin | March 19, 2009
More than 10,000 oil and gas wells puncture the land within Pennsylvania’s half-million acre Allegheny National Forest (ANF)—more than in all the other national forests combined, according to the non-profit Allegheny Defense Project. Back in the mid-1990s, about 100 new wells were drilled each year; today, it’s about 1,300 per year. The boom is driven […]
Yee Huang | March 18, 2009
Florida’s beaches draw millions of tourists each year, and coastal towns like Palm Beach have a great interest in protecting the beaches against erosion and sea-level rise. They have experimented with various adaptation and reinforcement techniques, some more successful than others, but none is a permanent solution. In an administrative hearing on March 2, Judge […]
Holly Doremus | March 17, 2009
This item is cross-posted by permission from Legal Planet. It’s easy for environmentalists to get depressed, given the amount of bad news about climate change, species losses, and the like. But sometimes there is unexpectedly good news. This morning’s New York Times has one of those stories. The Atlantic right whale, which not long […]
Rena Steinzor | March 17, 2009
The Office of Management and Budget (OMB) invited public comments on the design of its new Executive Order on regulatory review, and CPR has now submitted our recommendations. We urged the Obama Administration to make fundamental changes in how OMB and prospective “regulatory czar” Cass Sunstein operate. We're hopeful that the new Administration will convert […]
Dan Rohlf | March 16, 2009
The Associated Press reported last week that the Commerce Department’s inspector general is looking into who leaked a draft of the Bush Administration’s plans to prevent federal agencies from considering the impacts of greenhouse gas emissions on species protected under the Endangered Species Act (ESA). Oklahoma Senator James Inhofe, expressing concern over what he termed […]
Matt Shudtz | March 13, 2009
Last week’s Supreme Court decision in Wyeth v. Levine protected consumers’ longstanding right to take pharmaceutical companies to court for failing to properly warn patients and their doctors about the risks posed by the drugs they market. Unfortunately, people injured by faulty medical devices don’t have the same right following last year’s Riegel v. Medtronic […]
Shana Campbell Jones | March 12, 2009
The truth hurts. Some of us accept the truth; some of us ignore it. All too often, industry-sponsored scientists take another approach to the truth: attack. A recent spat over a study finding that perchlorate blocks iodine in breast milk is an object lesson in what CPR Member Scholar Tom McGarity calls “attack science.” […]