CPSIA – Obama Doesn’t Get It . . . .

In response to the release of yet more terrible jobless claims numbers this AM, President Obama renewed his call to lower taxes on small business and to ease the small business credit crunch. The legislation, which promises to lower certain taxes on small business and to increase federal funding of loans to small businesses through various means, is “stuck” in Congress. Mr. Obama blamed the Republicans for “blocking” the bill: “‘There will be plenty of time between now and November to play politics,’ Obama said. ‘Let’s put aside the partisanship for a while and work together.’”

I think this is rich, personally. We run a small business and I know what it feels like to be a small business in the Obama-cized children’s product market. We are facing skyrocketing costs nicely matched with soft revenues and mounting taxes (funded by the company, too). Cost increases include $300K in new medical plan expenses to accommodate the terms of the Obamacare initiative, plus astronomical all-in costs for increased safety testing under the new CPSIA rules and related manias. The increased testing has yet to reveal any useful information of identify any health threat that constitutes a human safety risk – so all that money is wasted.

These costs have a common link – they are both a result of increasing regulation. I know, I know, Mr. Obama has lectured us that we really need all these new regulations. Well, I don’t agree, but in any event, we see these regulations as major impediments in our business. These high costs affect our cash flow and our business outlook – to the bad. Do the Democrats think we maintain our sunny disposition when we face a shaky market lacking confidence (soft revenues), higher costs (a lot higher) and mounting cash needs from higher taxes and other federal regulatory expenses? This is rather a recipe for managers who want to hide until the storm passes. Who will spend money on new investment now? While we are not cutting our product development efforts, we haven’t bought new equipment, fixtures or additional office/warehouse space in several years now. And we have no plans to do so. Welcome to the Dems’ economy. No wonder new jobless claims are over 500,000 in the last month.

In the case of the CPSIA, the Dems are only too happy to whack us with heavy regulations, all justified by imaginary benefits. The imaginary benefits of the new CPSIA regulations are as invisible as the imaginary problems they are designed to solve. The absence of data on effectiveness is matched by the absence of data suggesting that there was a problem in the first place – the “know nothing’s” jacked up your costs and destabilized your business to no purpose. Now Mr. Obama wants to fix it all with another handout. Throwing money at the problem is new style. And after that handout is parcelled out, the Dems will proceed to raise taxes on higher income individuals (read, small business owners, particularly S Corp owners) to attempt to staunch the hemorrhaging Federal deficit, and then express “shock” at the sluggish economy. No doubt the next step will have to be more handouts and perhaps Cap-and-Trade to raise more costs. What a great cycle. . . .

Is there another way? Well, as for small businesses in the children’s product market, I would note that the voluminous new CSPIA rules (two feet high and growing) impose massive costs on industry (to comply) AND on government (to enforce). I think of the stupid health official bent on enforcing his food handler’s license rule against the little girl in Portland operating a lemonade stand – many of the new CPSIA rules are pointless from a safety standpoint and cost big money to administer as well as to comply with. If the Dems seriously want to stimulate the economy and add jobs, here’s an efficient way to do it for NO out-of-pocket cost – DROP your boundless regulations and go back to something more modest and manageable. This also means that the Obamite idea that life is better with lots more government needs to be shelved. I submit the recent rules on testing frequency and “reasonable” testing programs as evidence that inviting bureaucrats to become involved in operating businesses brings nothing but trouble, inefficiency and devastation. There must be a better way.

Hey, I figured out some time ago that I am talking to myself here. The CPSC certainly doesn’t care or understand what I am talking about (or else they might have done something about it perhaps 300 blogposts ago). The Democrats in Congress likewise are deaf and disinterested. I cannot name a single Democrat, NOT ONE SINGLE DEMOCRAT, who will stand up in front of their peers and demand significant amendment or revocation of the CPSIA. The Dems are in lockstep agreement – no light shines in if your head is in the sand, after all.

You can’t work with people like this.

I urge you (URGE YOU) to select the CPSIA perpetrator of your choosing and WORK to knock them out of Congress in this election cycle. Remember – they are trying to put YOU out of business. You need to return the favor.

Return the favor . . . this is my theme song until polls close on November 2. Then the party begins.

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CPSIA – Obama Doesn’t Get It . . . .

GUEST BLOG – Congressional Office of Compliance Confirms: Congress is Dangerous to Your Health

Okay conspiracy theorists. Do you think the Capitol Hill newspaper Politico held this story until Rick was out of town? In a front page story today “Dangers on the Hill” Politico reported that Congress’ Office of Compliance have found an estimated 6,300 safety hazards that are “potentially fatal or could leave victims with serious injuries.”

That’s right, Congress is dangerous to your health.

Here are some of the juiciest excerpts from the story. In Rick’s honor, we provide commentary after each excerpt, Woldenberg style:

“Workplace safety experts say that if Congress were a private-sector business, it would be at risk for massive fines from government regulators.” (oh, the irony!)

“But Congress has exempted itself from key parts of federal workplace law.” (Without even proving it was impracticatable for Mr. Waxman to comply?)

“…the latest study offers arresting detail. Investigators estimate there are 1,742 electrical hazards, 1,058 fire-safety hazards, 102 storage shelving issues, 61 first-aid emergency-care lapses and 70 machine-guarding problems, to name a few found so far.” (Hey, no lead violations?)


The report divides the hazards into categories, with some more routine and others potentially life threatening. (Wait a minute, that sounds like risk assessment!)

“Furthermore, the report makes clear that the hazards may prove dangerous to Capitol Hill visitors, including constituents and lobbyists.” (in other words, visiting Congress is hazardous to….people)

“This measure was inspired by that year’s new Republican majority and some Democrats who were aggrieved by what they saw as supreme hypocrisy: Congress and regulatory agencies imposed all manner of rules on the private sector and the states through laws such as the Family and Medical Leave Act and the Americans With Disabilities Act, but lawmakers themselves did not have to obey those rules.” (Can anyone think of another law that they could have included – hint –it rhymes with SHEE SHPEE SHESH SHI SHAY)

The compliance office cannot issue investigative subpoenas to Congress and its entities, even to seek information that could solve a workplace hazard. (Call in the AGs!)

Whistleblower protections for staffers who report hazards are essentially nonexistent, leaving aides responsible for their own litigation costs if they are fired or an office retaliates against them. (C’mon, the Onion couldn’t write a better article – oh the hypocrisy!)

“It’s hard to defend Congress when things are this bad,” said Center for Progressive Reform board member Sidney Shapiro, … But if Congress is going to insist on running its own safety regime, then it ought to do it the right way.” (Are we sure they’re not talking about CPSIA?)

“Congress faces a major challenge in trying to fund fire- and life-safety projects, historical preservation and deferred maintenance campuswide, all within very limited resources,” said a congressional aide familiar with the blue-ribbon panel. (Hey, they told us safety at any cost – even if the costs don’t improve safety)

“On the upside, a number of offices have become more proactive about protecting safety by voluntarily requesting inspections ahead of the compliance office’s regular schedule; 154 offices in the 111th Congress achieved hazard-free status. “Over the years, we’ve found that working cooperatively with employing offices to reduce hazardous conditions in the Capitol complex can be more effective than a confrontational approach. The statistics bear this out by showing remarkable progress in reducing hazards.” [Working cooperatively? What a novel idea! Nah, we say use the CPSIA model – enforce, enforce, enforce, treat every risk equally, discourage cooperation and levy huge fines!]

We couldn’t make this stuff up. To read the entire article for yourself, click here. (warning it’s about 1800 words).

Posted by the Alliance for Children’s Product Safety Staff

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GUEST BLOG – Congressional Office of Compliance Confirms: Congress is Dangerous to Your Health

CPSIA – Deaf Congress Makes Up Its Own Justifications for New Law

The recently approved H.R. 4678 Foreign Manufacturers Legal Accountability Act of 2010 is based on testimony given by several of the usual suspects. Consumer groups filed testimony portraying the need for this law as rather “obvious”:

Consumers Union (June 16, 2010): “While [the CPSIA] has made great strides in improving product safety, and will continue to do so as its implementation continues, the CPSIA focuses on improving safety by requiring that children’s products subject to mandatory standards be tested to ensure compliance with the standard. The law does not address bringing foreign manufacturers into our civil justice system. However, to fully protect consumers from unsafe products, wherever they are made, American consumers must be able to hold manufacturers accountable when they are harmed – no matter where the products are made.”

Consumers Union goes on to assert: “If a foreign manufacturer knows that they cannot be held responsible in U.S. courts for the products they sell, this knowledge has a likely significant impact upon their manufacturing decisions. Do they use the stronger, more expensive component? Do they ensure that the product meets the safety standards? Do they prioritize safety if they know they are not accountable to U.S. consumers in U.S. courts? Holding manufacturing entities accountable in our civil justice system acts as an important deterrent to unethical and potentially harmful business conduct.”

The Briefing Memo for the mark-up (prepared by the Dems) takes up the anti-business, leftist consumer group cause, namely that we need to change the rules to allow consumers to sue foreign manufacturers to protect our way of life. The new law is intended to overcome a little legal wrinkle preventing true consumer justice – the U.S. Constitution:

“In addition, even if a victim successfully serves process on a foreign manufacturer, the manufacturer will likely challenge the exercise of personal jurisdiction over it by a U.S. court. Under well-established constitutional due process principles, before a U.S. court can exercise personal jurisdiction over a defendant it must consider: (1) the defendant’s purposeful minimum contacts with the state in which the court sits, and (2) fairness to the defendant of being subjected to jurisdiction in that state’s courts. . . . H.R. 4678 requires foreign manufacturers and producers that import products into the United States to designate a registered agent who is authorized to accept service of process here in the United States. . . . Registering an agent consistent with the Act constitutes acceptance by the manufacturer of personal jurisdiction of the state and federal courts of the state in which the agent is located.”

Problem solved! Congress found a way to circumvent the framers’ intent. That darned Constitution gets in the way of good government, you know.

Notably, the “urgent” need to go around the Constitution was not echoed in the CPSC’s own testimony:

“Additional authority allowing the CPSC to require foreign manufacturers designate a U.S. registered agent for service of process could be helpful in some cases – particularly those involving administrative requests for documents or information.”

“In a few cases, however, the lack of a registered agent for service of process has hindered the Commission’s ability to develop information that would help us to provide relief to consumers.”

“The lack of a registered agent for service of process has also been recognized by Chinese industry groups, and some local lawyers in China have provided legal advice seeking to exploit this situation . . . . This type of sentiment appears rare.” [Emphasis added]

Opponents to the bill made arguments similar to those previously highlighted in this space (see above and here): American Association of Importers and Exporters and National Customs Brokers & Forwarders Association of America.

I estimate that our business will lose 25-50% of our foreign suppliers and untold numbers of component factories if they are required to have a registered agent under this new law. Most of these sources are irreplaceable in our business (for a variety of reasons). That means that the products we make at these factories will have to be discontinued. Too bad for us, I guess. This could happen quickly, too.

I wish that were the only problem. The lame-brained notion that foreign countries will allow U.S. citizens to cross borders to take domestic assets to settle foreign disputes will prove to be delustional. U.S. companies will soon be greeted by reciprocal registration requirements or even harsher laws exposing them to onerous trade barriers and significant new legal risks. Again, our business is squarely in the bullseye of this maelstrom. We have worked tirelessly for more than 20 years to build an international network of dealers for our products. That creates JOBS here. Anyhow, it is inevitable that a law like this will spawn a need to register our company in dozens of countries abroad, meaning we would need to hire a law firm for each country, translate all the laws, decide if we want to bear the expense and risk of registration. Our foreign business would evaporate quickly and efficiently.

The basic idea that our country actually needs this law is hard to comprehend. Where are all the hungry plaintiffs’ attorneys who can’t put food on the table? Which rights aren’t being satisfied? For each product imported into this country, there must a U.S. importer. Why isn’t that pool of assets enough to satisfy this need, as it has been for years and years? Why doesn’t importers’ exposure under the U.S. tort system provide enough incentive to address Consumers Union’s parade of horribles above? I thought that’s why we have our crazy tort system in the first place. No answer has been provided by Congress to these questions. They just gave us a wonderful new law to worry about.

Thanks so much, Democrats in Congress. We love ya! And we can’t wait to vote AGAINST you! See you at the polls.

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CPSIA – Deaf Congress Makes Up Its Own Justifications for New Law

CPSIA – CPSC Sets Its Sights On the Real Menace to Society . . . Buttons

In yesterday’s USA Today article entitled “Lead testing can be costly for mom and pop toy shops“, Scott Wolfson, Director of Public Affairs at the CPSC, cited the “positive effects” of the CPSIA on the market. What were those “positive effects” that Wolfson bragged about to the national media? “[Wolfson] notes global suppliers are choosing lead-free buttons for adult and children’s clothing, which is safer for everyone and helps shift the burden from small businesses to suppliers up the line. He says Tenenbaum is trying ‘to find the right balance between compliance and not putting companies out of business.’”

Let’s be clear here, Wolfson is talking about making everyone “safer” by eliminating lead-in-substrate in buttons. He is NOT talking about lead-in-paint. Lead-in-paint has been illegal for decades, and a small number of recalls have occurred for lead-in-paint violations relating to buttons. [No injuries were ever reported, of course, but don't get me started.] Buttons have been recalled for coming loose and violating the small parts rules. This is a REAL hazard to small children. Kids can actually choke on a button and be injured. Wolfson is NOT talking about this issue. He is focusing on other “positive effects” from the law.

Wolfson also took pains to note that the buttons were being removed from adult clothing, too. Did you realize how much danger you were in before the CPSC was able to induce these “positive effects”? I really appreciate Wolfson bringing this to my attention. Thank heavens for our federal protectors!

How many recalls have occurred in the United States for lead-in-substrate in buttons – EVER? According to the CPSC website, ZERO. According to a Google search this morning, I believe this kind of recall has NEVER occurred ANYWHERE IN THE WORLD. And the removal of lead-in-substrate is a positive effect of the law? Is Wolfson responsible to explain this puzzling remark?

So after two years of continuous arguing and the devotion of many tens of thousands of man-hours of work to implement the noxious CPSIA by the federal government and industry alike , the CPSC holds up as its great achievement – buttons. Whew, it’s safe to walk the streets of America again!

Thank you CPSC for seeking the right balance between compliance and NOT putting companies out of business. Yeah, I get it.

Unfortunately, by highlighting something as asinine as buttons as a possible lead hazard, the CPSC fuels a long-simmering public hysteria over latent chemical hazards. No one was previously aware that buttons could kill you from their bound=in lead content, but apparently our federal government is quite concerned about button lead content. Isn’t that what Wolfson said? After all, why would he mention it to USA Today if it wasn’t a problem at all? This kind of remark helps persuade the public that dangers lurk where they can’t see them. Lead must be terrible, right, if the CPSC is so hysterical about it? The conclusion is inescapable.

And let’s not forget the McDonald’s Shrek glasses. Cadmium must also be a terrible problem or else why would our trusted federal government urge recall of the drinking glasses out of “an abundance of caution”? Which are we to believe – the CPSC’s actions in demanding the recall for undisclosed trace levels of cadmium in the enamel on the OUTSIDE of the glasses, or Wolfson’s own written reassurance that the glasses aren’t toxic? And of course, there is the Congressional “inquiry” by Waxman and Stupak as further evidence of the “justifiable” health concern. As the relentless stream of breathless and panicked media stories confirm, the public believes that the recall was justified and therefore that cadmium is a real concern, a silent “killer”. The fact that there has never been a single reported cadmium injury from a consumer product in this country’s history is never discussed.

This kind of reinforcement leads to paranoia about many safe products – and makes doing business in the children’s market in this country exceptionally difficult and unpleasant now. No one trusts us anymore and the only thing we did wrong was elect the wrong people to Congress.

The message that we business people can’t be trusted is clogging the airwaves almost daily. The weekly corporate bashings by Congress and the White House paints a clear picture to the American public. You need only consider the treatment of BP, Toyota, Wellpoint, Massey-Ferguson, GM, Chrysler, evil bankers . . . the list is long. We’re all bad, right? That’s the theme these days.

CPSC leadership also reinforces the notion that corporations must be closely supervised by the federal government. Corporations will cut corners and take chances with your children’s health but for the crusading efforts of this pioneering and courageous safety agency. Remember Tenenbaum’s theme: the CPSC is not a “teething tiger” anymore. With this approach at the CPSC, small wonder then that these are among the USA Today comments:

“Yeah…Tests can be costly, but on the other hand death seems to be pretty costly also. But I guess the determining factor will always be money. Save 10 cents, 10 dollars, 100 dollars at the cost of someone else.“

“Well if they cannot test the products they make to insure that our children are safe. Then its time to start making other items. The simple fact is that the Chinese and our bought and paid for congressmen/congress women have allowed this to happen. My opinion ban all products from China since it is evident that they do not care for the health of our citizens.“

“WE can never ever trust the Chinese. They are the worst people! Why do we do any business with them is beyond me.“

“This is just more gov regulation that the GOP says get’s in the way of the Free Market. Let the Free Market get the lead out on it’s own. Too bad there’s no profits in ‘getting the lead out’. It’s cheaper to use lead as a filler, and hire lobbyists to pay-off congress. We’ve got it all dialed-in in America!“

Thanks for all the help, CPSC. You sure are helping our market. Your efforts will only succeed in driving the good people out of this market, along with their good products, their innovations, their productivity gains and their jobs. And who will be around to help educate your kids and grandkids? Let’s not think about that one. No, no, ignore me for a few more years. This can go on indefinitely. We’ll just take it. We love it. Go ahead.

It’s time for Nero to share the stage with the Democrats. Go on, fiddle while Rome burns.

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CPSIA – CPSC Sets Its Sights On the Real Menace to Society . . . Buttons

CPSIA – Lowest Common Denominator Government

We saw a display of Mr. Obama’s team in action this past week as McDonald’s was cornered into a national recall of a safe product. How did it happen? Did our government rise to the occasion, or simply resume its descent into the abyss?

“Americans want to be safe. And they expect their federal government to protect them. So that is what I’m here to do.” Chairman Inez Tenenbaum, NPR Report “Under Obama, Agencies Step Up Rule-Making”

Last week in a coordinated media extravaganza, an anonymous caller alerted Rep. Jackie Speier (D-CA) to the trace presence of cadmium in Shrek glasses being sold by McDonald’s. In a rapid fire series of events, McDonald’s announced a voluntary recall of the offending Made-in-America glasses “at the urging of the [CPSC] commission ”. The CPSC apparently pushed for the recall of the glasses by McDonald’s after quickly testing the glasses.

[It turns out that there were two "anonymous tipsters", one of whom is Jennifer Taggart, a regular reader of this blog. Ms. Taggart has acknowledged that cadmium levels on the McDonald's glasses are well within California's Proposition 65 restrictions. Prop. 65 is easily the most restrictive and challenging of the myriad local safety regulations.]

Rep. Speier seized the election year opportunity to lecture McDonald’s on safety: “’Our children’s health should not depend on the consciences of anonymous sources. Although McDonald’s did the right thing by recalling these products, we need stronger testing standards to ensure that all children’s products are proven safe before they hit the shelves,’ said Speier. ‘Cadmium is a toxic substance that is extremely dangerous to the developmental health of children. . . . Thanks to this anonymous tip received by my office, the proper agencies were alerted, necessary action was taken by McDonald’s, and the long-term health of millions of children is no longer at risk.’”

Jackie Speier is a Democrat representing the San Francisco area.

A media deluge followed the recall. Typical of the hyperbole is this article from NJ.com: “McDonald’s announced the voluntary recall after small amounts of cadmium were found in the enamel with which character images were painted on the glasses . . . . Long-term exposure to low levels of cadmium from those glasses can cause various health problems, including cancer, bone softening and severe kidney problems. [NJ State Assemblyman Paul] Moriarty, in a news release, demanded an investigation . . . . ‘It’s stunning that in this day and age our children can still come into contact with toxic materials just by using a glass featuring a cartoon character,’ Moriarty said in the release. . . . ” [Emphasis added] AP could not resist the McDonald’s cadmium frenzy that it helped to create: “A recall of 12 million cadmium-tainted ”Shrek” drinking glasses sold by McDonald’s raises questions about the safety of millions of similar cheap promotional products that have been sitting in Americans’ kitchen cabinets for years.”

It all boils down to trust, right? After all, it’s McDonald’s. McDonald’s is America, McDonald’s is children. If you can’t trust McDonald’s, who can you trust?

I will attempt to answer that question.

First – Can you trust McDonald’s?

Yes, absolutely, without reservation. McDonald’s (not a customer of ours, never was) has the best reputation of any company in the toy industry (in my humble opinion) for safety, conscientiousness and attention to detail. McDonald’s is HARDLY asleep at the wheel. Rep. Speier’s remarks are outrageous but for the fact that she is a California Democrat from San Francisco. Consider the source. I believe McDonald’s ten times out of ten against Rep. Speier.

On the other hand, if McDonald’s is so wonderful, why on Earth did they recall these glasses? Okay, you be the CEO of McDonald’s for a moment – what would you do? Fight for the right to sell cadmium-laced glasses? Argue that the glasses are “safe”, that toxic cadmium isn’t harmful? Please, McDonald’s had no choice because it has to protect its brand. Listen to the Moms in the video above. If they don’t trust McDonald’s, they will walk across the street to Wendy’s. McDonald’s has NO CHOICE but to “do the right thing”. The cost of the recall is a secondary concern. Burn, baby, burn.

Second – Can you trust an anonymous tipster?

Why be anonymous if you are acting “heroically”? Well, for one thing, being anonymous means you aren’t accountable if you are wrong. The two tipsters were using XRF guns, acknowledged by the CPSC to be imperfect and best used to screen for possible faults. It might be embarrassing – or expensive – to start a public panic and then be proven wrong. This mess might be seen as your fault and somebody might want you to pay for the expenses. Hmmm.

What if the caller had reason to hide his/her identity? This is the very worrisome scenario. There are many people who might want to rat out a McDonald’s. How about a competitor? Or a spurned supplier? A disgruntled employee or spouse of an employee? This is one of the primary objections I made to the public database – the potential for abuse is rampant. An anonymous tipster very well might be up to no good. McDonald’s loss could be the tipster’s gain – an ill-intentioned tipster in partnership with a self-promoting fear monger in election season (like Jackie Speier) could be a powder keg. [Ed. Note: It is worth noting for clarity's sake that Jennifer Taggart has identified herself so this discussion does not apply to her.]

This could happen to you, too. The CPSIA encourages this kind of rat-me-out frenzy. How many businesses will close or sell out because of this shameful law? Time will tell. In the meantime, the sport of trashing trademarks and company reputations will thrive at the hands of the “anonymous tipsters”.

Third – Can you trust the CPSC?

We ought to be able to trust them. Have they earned this trust?

Here’s a June 4th tweet from Scott Wolfson, Director of Public Affairs: “Scott_Wolfson: Note to reporters: the recalled McDonald’s glasses are not toxic.” Interesting – the CPSC apparently pushed for the recall of safe products. Wolfson is also responsible for the press release detailing this recall: “The designs on the glasses contain cadmium. Long term exposure to cadmium can cause adverse health effects.” Same guy. And Wolfson offered these calming words of reassurance to the AP: “Wolfson said the recalled glasses have ‘far less cadmium’ than the [recently] recalled jewelry. He would not say how much cadmium leached from the glasses in tests, only that it was ’slightly above the protective level currently being developed by the agency.’”

I believe Mr. Wolfson is the author of the CPSC’s OnSafety blog – here’s how he counseled consumers about the McDonald’s glasses in a recent post: “If you bought these “Shrek Forever After 3D” glasses at McDonald’s – millions of you did – stop using them immediately. . . . The glasses contain low-levels of cadmium. . . . The company has stepped up to do the right thing [in issuing a recall].” [Emphasis added] He also justified the recall of non-toxic glasses in the New York Times as follows: “Both C.P.S.C. and McDonald’s are being highly protective of children in announcing this recall.”

Scott has a way with words, doesn’t he? Makes you wonder what his job is, exactly.

So the CPSC admits that the glasses were safe. Yet the “commission” urged McDonald’s to recall the glasses. Why? Wolfson says implausibly that the CPSC was being “highly protective” in recalling non-toxic glasses. Actually, “Why” may not even be the right question.

Let’s consider the question of “how”. On what legal basis did the CPSC press McDonald’s to take this step? The authority of the agency to demand a recall depends on the presence of a “substantial product hazard”. There is no other basis for the agency to take action – it cannot act on whims or because it is always crabby on Mondays. I have addressed this issue previously in this space, and noted that the authority to initiate a recall is based on the existence of “a product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public.”

If the CPSC’s Director of Public Affairs notifies the press that the product is not toxic, it is incontestably certain that the glasses don’t present a substantial product hazard in this case. For perspective, consider the views of the U.S. factory responsible for the glasses:

“[VP Ron] Biagi . . . added that [in addition to McDonald's] Durand Glass also does material safety tests. ‘We will do nothing (different) because we don’t need to,’ Biagi added. ‘You are always looking for the most healthful way to make a product. What we’re producing today, it is safe.’ Biagi said there are multiple suppliers, domestic and foreign, of the enamel used for the Shrek glasses. Other glass producers use the same product, he said. Late Friday, the company issued a short statement from its CEO for North American operations, Fred Dohn. ‘All the products, whether decorated or undecorated, that Arc International is delivering on the markets meet the highest standards of quality and safety,’ Dohn stated. ‘Arc International is a professional manufacturer that stands behind all its products. We therefore see this as an internal decision by McDonald’s and will be investigating the matter once we receive more information.’”

So what gives? By all appearances, the leadership of the agency substantially exceeded its legal authority in pressuring McDonald’s to recall these glasses. Any problem with that?

I won’t insult your intelligence with a rant about the trustworthiness of the Democrats who are running the shop these days. If you trust Jackie Speier and the like after this sorry tale, I can’t help you.

In closing, let’s recall the words of Ms. Tenenbaum: “Americans want to be safe. And they expect their federal government to protect them. So that is what I’m here to do.” By all appearances, Ms. Tenenbaum was doing exactly what she promised – her agency is wrapping you in bubble wrap whether you need it or not. She says that’s how you want it – no matter that it’s outside her legal authority, well-beyond any notion of common sense and implemented with a complete disregard to economic consequences or the impact on other market participants. It’s okay because the press eats it up . . . and it helps reelect members of Congress. Everybody’s a winner as we sink into the abyss.

Lowest Common Denominator Government. Yes We Can.

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CPSIA – Lowest Common Denominator Government

CPSIA – Thank You Sir, Please Give Me Another . . . .

Today I was assaulted with the news that our company had just received a bill for more than $4,000 to test one of our older items as required by one of our major retail clients. This particular retailers requires that we test every shipment to them using their lab, their prescribed assortment of tests and their pricing – at our expense. There are no exceptions to this rule and no negotiations are tolerated. It’s said to be “a cost of doing business”, and we are supposed to take this cost into account when we price our products to them.

This item has been tested I don’t know how many times. Many times in many forms. Every test was a pass. This latest $4,000 test told us NOTHING we didn’t already know. Had we done the tests ourselves using our primary test lab, we would have spent a fraction of the $4,000 we were required to pay by our retailer client. The product is no safer with this latest test. Most of the money (60%) went to phthalates testing.

Although there is nothing about this test that does NOT irritate me, proving the absence of the six banned phthalates is BY FAR the most offensive. We use materials that do not contain the banned phthalates. This is something that our supply chain management is supposed to address. Even more to the point, since these chemicals have been banned for almost two years for use in toys (for better or worse), they are largely absent from the supply chain without our doing anything at all. Yet, the geniuses who wrote the CPSIA require that we test each product, over and over, to prove they’re not there. Phthalates cannot spontaneously generate themselves – they are an ADDITIVE. Having jacked up penalties to the sky and hit several retailers with highly-publicized irrational and vindictive penalties, the CPSC has created a caustic environment in which testing is not negotiable with large retailers. Hence, we must prove again and again that the phthalates that weren’t there, aren’t there. This costs BIG MONEY. It accomplished absolutely nothing.

And the $4,000? We were theoretically supposed to charge the customer for the testing in our product pricing, but in fact, in most cases, we must absorb the cost. That’s the real world. So we make $4,000 less in profit. We have $4,000 less to invest in our business, $4,000 less to pay health care costs, $4,000 less to pay for innovative product development, $4,000 less to pay bonuses. No one is safer, either. And this is good for all of us? A good way to run a country?

And where did the $4,000 go? To China. The lab which our client requires we use is a public company, and the chosen lab is located in China. Notwithstanding the lab’s low operating costs, the prices we pay for this testing are full boat, un-discounted, nosebleed pricing. They simply vacuum up as much of our money as they are allowed, and your wonderful Democrat Congress shrieks with delight.

We’re so safe now . . . .

I can only hope that the jobs of the Democrats who are keeping us in this CPSIA hell aren’t as safe come November. That seems to be the only recourse we have left.

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CPSIA – Thank You Sir, Please Give Me Another . . . .

CPSIA – Has Congress Ever Done This Before? Ha!

The CPSIA was crafted as a response to a then-shocking but rather inconsequential series of toy recalls in 2007/8 (very few injuries or deaths). After years of intentionally starving the CPSC of budgetary resources, Congress blamed the agency for the large scale toy recalls, leaped to the conclusion that children’s products (not just toys) weren’t “safe” anymore and proceeded to gut the law governing safety and the CPSC (the CPSA). The resulting law (the CPSIA) upended regulation of children’s product safety across an unprecedented array of industries. “Unintended consequences” popped up everywhere almost immediately. Many people claimed to be “surprised”. Given the low injury statistics across the category, the law seems like a vast overreaction.

It’s easy to overlook historical precedent during a crisis. Has Congress ever missed the boat like this before?

Okay, dumb question. But well put!

Consider the response to the Titanic tragedy in 1912. In that famous collision with an iceberg, 829 passengers and 694 crew died when the Titanic sank in the Atlantic. Perhaps you recall the movie . . . . Anyhow, it turns out that the Titanic did not carry enough lifeboats to save everyone. There were 2,228 people on board but the lifeboats only held 1,178. Don’t doubt my math but 705 survived.

Congress couldn’t stand still after the Titanic. Pinning the blame for the loss of life on the lifeboats, rather than the iceberg, Congress passed the La Follette Seamen’s Act of 1915 mandating boats and life rafts for all persons on board seafaring ships. The thinking goes that if every ship had a life boat seat for every passenger, no one would ever die in such a tragedy in the future. The public furor over the loss of the Titanic prevented consideration of the fact that most ships have no risk of colliding with icebergs because of their routes. Likewise, lifeboats are an ineffective remedy in many marine disasters because they would not be able to be launched. No matter, Congress “solved” the problem.

Notably, some members of the maritime industry resisted. In Congressional testimony, A. A. Schantz of the Detroit & Cleveland Navigation Co. noted that the rules intended for the high seas would backfire on the Great Lakes. Schantz pointed out that the light draft and ship design would make Great Lakes ships top-heavy and unseaworthy under the new law. He went so far as to predict that some Great Lakes ships would “turn turtle” if forced to operate with the heavy and useless lifeboats. His argument wasn’t just that the expense was pointless – he also noted that it was counter-productive and even dangerous.

Let’s pause for a second here. Congress rushes onto the field to “solve” a problem it doesn’t really understand. Why doesn’t Congress understand the problem despite hearings and so on? Well, among other things, Congress lacked industry-specific know-how and expertise. It is better at identifying “effect” than “cause”, and therein lies the problem. Consequently, Congress was looking for a particular answer, and tended to reject discordant data (like Mr. Schantz). When industry tried to advise Congress of the inadequacy of its solution, Congress knew better and brushed them off. After all, who has more integrity, Congress or the industry that “caused” the problem in the first place?

Can anyone guess where this is going?

On July 15, 1915, while at dock in the Chicago River, the S.S. Eastland capsized, killing 844 passengers and crew waiting to cruise on holiday to Michigan City, Indiana. The reason? The Eastland was already top-heavy and became unstable under the federally-mandated safety equipment. The ship, when it listed and sank, was described as rolling over “as though it were a whale going to take a nap”. Quite an image. Quite a tragedy. Thanks for all the help, Congress!

Not only is this story creepily similar to the CPSIA saga, it is also a reminder of the risks in the broad financial reforms currently being contemplated by this Congress. Senator Judd Gregg warned: “We shouldn’t put in place a regulatory regime that overly reacts and, as a result, significantly dampens our capacity to have the most vibrant capital and credit markets in the world.” He might as well be speaking of our friend, the CPSIA. As Jim Grant notes: “The intended consequences of government regulations are frequently less potent than the unintended ones.“

As obvious as Mr. Grant’s point has become in the case of the CPSIA, the Democrats if anything have hardened their position and remain resolute that they are doing “everything they can” for us. Put another way, everything else that we want (and which has been denied us) in a CPSIA amendment is NOT forthcoming. No reason supplied except the intellectual pap that everyone wants kids to be safe – America demands it. Apparently, the Dems think they have a much better idea on how to keep kids safe than the industry.

So the Democrats are willing to risk another S.S. Eastland in the children’s product industry rather than admit they went (way) too far. The Republicans, to their undying credit, admit that the CPSIA needs severe restructuring and are working hard to bring about real change. Sadly, Waxman and his Dem co-horts are able to block the Republican effort at reform, and that’s why we are in a stalemate. Who will be the S.S. Eastland of the children’s product industry? It could be my company, could be your company, could be your school or even your child. The unintended consequences keep coming to light, and as the evidence mounts, the Democrats in Congress and their counterparts at the CPSC will held to account for the damage they have wrought. History will not forget.

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CPSIA – Has Congress Ever Done This Before? Ha!

CPSIA – New Waxman Amendment Draft Issued Tonight, Mark-up Set for Wednesday Morning

The third draft of the Waxman Amendment 2.0 was released this evening. I have attached a clean copy of the legislation, as well as a redline for your convenience. The powers-that-be also released a draft of their “report language“. The report language is interpretative language and is not included in the law mainly to keep future law clerks busy doing research. It should also give us something new to argue about.

This is the Committee Briefing Memo accompanying the draft legislation.

Consistent with past practice, this draft was issued with the usual coercion. A mark-up has been scheduled for Wednesday AM 10:00 a.m. in Room 2123 Rayburn House Office Building BUT the Dems will decide tomorrow if they will proceed with that process. All talk of a hearing to vet this legislation has been quashed by the Dems who are scrupulous in managing the record. [I will never get to testify, that's for sure.] There will be a meeting on Tuesday at 4 PM to discuss this draft, at which point the Dems will either pull the plug or move forward. Presumably, this depends on the enthusiastic response to this draft. The Dems say they want a bipartisan bill and further want to send it to the Senate with the news that the bill is “supported by industry”. In other words, Mr. Waxman is not interested in negotiating with the Senate, just wants their rubber stamp. He’s not big on “jawboning” if that means he has to listen to others and make concessions . . . .

You are right to consider this another patented Waxman “take it or leave it” offer.

In response to complaints that this bill ignores the many legitimate concerns of the small business community, Waxman staff has advised that they “can’t help everyone”. That means you, guys.

Changes in this Draft:

a. Functional Purpose “Exception” – Minimal changes, mainly reverting back to the “public health or safety” test formulation. References to “all foreseeable users” is gone now. The “town hall” provision allowing “interested parties” to intervene in every proceeding has been eliminated. The “Previously Denied Petitions” provision is unchanged and still makes no sense.

The report language clarifies the meaning of “practicable”, noting that excessive or unreasonable costs should be considered not “practicable”. Specifically, they note: “The Committee does not consider a mere increase in the cost of manufacture or production, in itself, to be excessive. The Committee does expect that the Commission will consider compliance to be impracticable where compliance would place the viability and continuation of a class of products or materials in jeopardy, such as youth All Terrain Vehicles or youth bicycles made with recycled steel.” [Emphasis added]

In case you were wondering about the purpose of the functional purpose exception, it is a gift to the noted industries. It’s not for you. Remember, this relief is only available to those who are capable of mounting an exception application. Not a small undertaking.

Remember that the applicant for a functional purpose exception must apply for relief for a “specific product or material”. You must also PROVE that your costs are not “practicable”. Can you see some wiggle room there? A true believer Commission might have very little incentive to interpret these terms permissively. [You can count on that one with the Dems in charge.] This will be a costly and technical process. Think of this in the context of your business – is this realistic? With our 1500 products, it’s just inconceivable. Too bad for us. Let’s also not forget the stringency of the three-prong test.

The report language specifies that a “measurable adverse effect” on public health or safety refers to changes in blood lead levels. The language is pretty specific and will require a toxicologist’s report to justify any exemption. Here are the magic words: “Given that there is no current blood level at which the scientific community considers lead exposure to be ’safe,’ the Committee understands that a very small adverse effect may theoretically occur at any level of exposure. The Committee intends, however, for the Commission to deny requests for exception under this section as having a ‘measurable adverse effect’ on health or safety only in the case of those adverse effects that the Commission determines to be empirically, as opposed to theoretically, measurable. At present, the Committee understands that there is scientific consensus to interpret the phrase ‘measurable adverse effect’ from lead exposure to mean a measurable increase in blood lead levels.“

This is a form of legislative filter to make sure that the exception is only for the chosen industries or companies. Again, this isn’t meant for small fry, just big business. That’s equity these days, I guess.

Anyone remember how hotly the Dems defended the inclusion of ATVs and bikes in this law back in ‘08 and ‘09? It was intentional, they insisted, necessary to protect the public against deadly lead. There’s no safe level of lead, blah blah blah. Guess they got over that one . . . after they received 170,000 emails from ATV’rs.

b. Thrift Store Relief: Virtually no change, other than minor clarifications.

Not unlike the workings of other parts of the CPSIA, this new provision will be good for large scale thrift organizations like Goodwill or Salvation Army who are presumably able to centrally evaluate complex laws and implement system-wide responses to changes in law. i wonder how the smaller independent Mom-and-Pops will react to this provision. In any event, the provision tacitly bans resale of children’s jewelry, painted toys and vinyl children’s products. Stores will have to keep straight which items are in and which are out. With many resale stores staffed with minimum wage workers, I question how effectively most owners can prevent violations without just avoiding the category (at least in part).

Resale of childcare articles, including cribs, seems unaffected. The real gotcha is the risk the stores will bear from recalls. For that reason, I think many stores will stay away from reselling this category of goods. Clothing may make a reappearance in resale shops, finally.

It is uncredible that the Democrats let this industry flap in the wind for almost two years before acting to save them from CPSIA oblivion. Think of the economic devastation these insensitive legislators wrought on small businesses all America, not to mention the patrons of this important industry – through two cold winters. This is just inexcusable, a true demonstration of stubbornness or being completely out of touch. Those who suffered at the hands of the Dem inaction have no recourse, either. Shame, shame.

c. Relief for Small Batch Manufacturers: The sham of this “relief” is perpetuated in this new draft. The definitions of “covered products” and “Small Batch Manufacturer” were left structurally intact but the thresholds were tweaked upward meaninglessly to 7500 units or $50,000 sold per item per (calendar) year, with an overall cap of company sales of $1 million. “Covered Products” oddly continues to refer only to manufactured items but Small Batch Manufacturers are defined by sales of manufactured OR imported goods. Go figure.

As I pointed out earlier today, Mattell and Hasbro have quarterly revenues of $880 million and $672 million, respectively. The so-called relief here is for companies with annual revenue of under $1 million. If these little companies pop over that revenue hurdle, they will be held to the same standard as Mattel and Hasbro. Don’t worry, the CPSC plans to coach the little guys! Now if only they could provide non-recourse financing . . . .

Even if you are salivating over this pathetic crumb of “relief”, I encourage you to reread what goodies Mr. Waxman is giving you. Here’s the meat of it: “Any such alternative requirements shall provide for reasonable testing methods to assure compliance with the relevant consumer product safety standards.” The reasonable TESTING METHODS must ASSURE COMPLIANCE. You tell me what this English sentence means. I think it means the small fry will be testing. I know the rest of us will, too. Testing and testing and testing and testing. It’s time to buy stock in Intertek, I think. Later on, the bill instructs the Commission to work “cooperatively” with the little guys to “impose the least burdensome testing requirements . . . consistent with goals of statute.” And those goals are, what exactly? Comprehensive, prophylactic testing.

Oh, the bounty of this relief!

d. Phthlates and Inaccessible Components: No material changes.

e. Subpoena Power: No changes whatsoever. Somebody’s going to be sorry someday that this procedural speed bump was removed. Unfettered power of government was always un-American . . . until we met these Democrats.

Conclusion:

I wish I could recommend this bill. It has some good stuff in it. Unfortunately, it is utterly ineffective to arrest the damage being inflicted by the CPSIA. It is a gift to large industries but leaves the hammerlock on American small businesses catering children’s markets. It sustains the fantastic notion that those of us in this business have somehow been poisoning kids for years or decades. That’s a slanderous notion, something deeply offensive to me, but for the Dems to admit otherwise would mean a mea culpa. And there’s no chance of that.

If the Dems manage to tempt enough corporate entities to sell out for this low price, it will be the biggest gift ever given by the corporate community to Mr. Waxman. He should host a champagne party for himself if he buys off the resistance. There will be no remaining organized opposition to the bulk of his CPSIA handiwork, and the focus will shift to surviving a manic CPSC bent on enforcing voluminous but ineffective safety rules and ladling out massive penalties for infractions without injuries. And once the action moves permanently to Bethesda, we’ll see finally how much Cassandra got right.

I’m not looking forward to finding out. Vote NO on Waxman.

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CPSIA – New Waxman Amendment Draft Issued Tonight, Mark-up Set for Wednesday Morning

CPSIA – Waxman Amendment New Draft

There is a new draft of the Waxman Amendment circulating. Here is a redlined version to help you see the Democrats’ changes. This came out about three hours ago.

Notwithstanding that we have endured this torture since August 8, 2008, the Democrats in their infinite wisdom and kindness have set up a meeting tomorrow at 10:30 AM EST in Waxman’s offices to take “final” comments from a bipartisan group including certain representatives of regulated companies. The comments will be solicited in the context of a warning that the revised bill already incorporates “the comments of industry” and represents the “best” the Democrats can do. In other words, an ultimatum.

So we are facing a key deadline less than 24 hours after receiving this critical language, notwithstanding that this “final” meeting was not pre-announced or that this issue has been festering for almost two years.

The meeting was also scheduled notwithstanding that some of us have actual jobs in actual companies and may not be sitting around waiting to do our federal government’s work.

But to heck with people like me. Whiners! We should be happy with all the government our taxes and deficit can buy. Indeed. I can’t make tomorrow’s meeting. Guess I need to content myself with being excluded.

Another shining example of Open, Participatory Government . . . of the Waxman, by the Waxman, for the Waxman. [The Dems certainly are trying hard to make sure it won't perish from this Earth, too.]

Is that how it goes? I can’t remember. . . .

I will try to provide some comments on the bill later tonight.

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CPSIA – Waxman Amendment New Draft

CPSIA – WSJ’s 7th Editorial Against the CPSIA

From tonight’s Wall Street Journal website:

REVIEW & OUTLOOK
APRIL 6, 2010

Waxman’s Lead Poison

A fix of a bad law that is no fix at all.

The word “enhancement” is suspect in any form of advertising, and it turns out the same applies to Congress. In his forthcoming Consumer Product Safety Enhancement Act, House baron Henry Waxman is botching the opportunity to fix a bad law while adding provisions that make life even worse for small businesses.

Since the Consumer Product Safety Improvement Act passed in 2008 after a scare over lead in toys from China, Democrats have defended their handiwork while blaming the Consumer Product Safety Commission for the law’s ruthless implementation. The CPSC, under Republicans and Democrats, has correctly replied that it lacks the discretion to judge whether a product really poses a threat of lead poisoning. It also can’t permit exemptions from the law based on risk, even for books or pogo sticks.

Mr. Waxman is insisting that any product applying for an exemption would still be subject to a three-pronged test to determine whether stripping lead from the product is “practicable or technologically feasible,” whether a product might end up in a child’s mouth and whether its exemption would affect public safety. In a response, CPSC Commissioner Nancy Nord explained that since all three tests have to be met for a product to qualify, “the exception is as empty as the exception for no absorption of any lead. Such a provision does not really help anyone.”

Equally problematic is a provision that would require companies to disclose previously confidential information about product concerns. Today, a company may file something called a Section 15 report acknowledging complaints or internal concerns about a product, and the report remains confidential unless there is a recall or similar action. Under the new law, those reports could become public immediately, which would discourage companies from filing them at all, further compromising the transparency Democrats claim to want.

If Mr. Waxman wants to enhance Congress’s original creation, he should start by letting product safety regulators consider whether products are safe.

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CPSIA – WSJ’s 7th Editorial Against the CPSIA

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