I do recall that the TSA did want to eliminate the ban on small blades, but it was screaming from other quarters which prevented from doing that, so I can't put this all on them.

On the other hand, the argument that seatbelt cutters on board will significantly increase flyers' safety is pretty lame as well. In the past 4.5 years, 2 people (the two chinese girls on the recent OZ flight) have died in commercial aircraft accidents in the US, out of 3 billion passengers and neither of them because they couldn't get out of their seatbelts. Pretty hard sell to justify the seatbelt cutters or any other sharp blade on that basis.

My preference would be to acknowledge that the risk presented of allowing small blades in the cabin is too insignificant to even consider curtailing people's liberty in this way, rather than to try and justify it on safety grounds.