Tuesday, May 23, 2006 - The Progress & Freedom Foundation Blog

Data Protection and Small Business

Tom Lenard brought an economists' perspective to the House Small Business Subcommittee on Regulatory Reform and Oversight this morning. In testimony on data protection, Tom said Congress would be wise to perform a benefit-cost analysis on any legislative proposals. He also noted how in many ways data security legislation can be more onerous to small businesses due to fixed costs and other factors, but that federal preemption could be helpful. His testimony is here.

Four subcommittee members heard the testimony, a good turnout for a very busy Hill Tuesday. The topicality of the hearing likely was boosted by the news of the VA's loss of millions of veterans' records as a result of a computer being stolen from an employee's home. (As Chairman Akin pointed out, this is a far more common type of breach than a cyberhack but the media coverage often doesn't reflect that).

The members made clear their wariness of onerous legislation, a hallmark of the House Small Business Committee. They're not the central committee in the data security debate, but as full committee chairman Manzullo showed in the patent fee diversion debate, when the committee feels strongly about an issue they can put themselves in a power position.

Tom was one of six witnesses, and each provided a distinct view on what course Congress should take. While there was some consensus on preemption, there were different perspectives on the merits of data protection mandates. The mood of the hearing, though, was set by freshman member Mike Sodrel of Illinois. A truck driver who owned passenger and shipping companies, Sodrel spoke of the dangers of bureaucrats who want sweeping rules to ensure their own job security and budgets. "We don't want to help these people grow their business, if you will," he said of bureaucrats. None of the witnesses seemed to want that.

posted by Patrick Ross @ 3:25 PM | Capitol Hill