CPSIA – CPSC Shows Its True Colors in the Annals of Absurdity

In a move calculated to test the limits of what I can get you to believe, the CPSC last week conducted a raid in New York City to confiscate imported chocolate Easter eggs to save America from a choking hazard.

CPSIA – Health and Safety Update

More fascinating revelations from Japan today.

CPSIA – Tea Party Comments

I received a provocative comment on my recent blogpost on the Tea Party and quote from it here:

“I’ve come on here less and less because the blog is starting to seem less a good source of information and more like a long, angry political rant. If that’s what you want, more power to you. You’ve certainly earned the right to rant. You have the freedom to write what you want and I have the freedom not to read it. If you’re posting this because you care, well yes, I do think you’re alienating quite a few people, myself included.”

This is a fair comment and probably accurate. The blog is angrier and more focused on elections and politics that before. Frankly, I have known for some time that I increasingly lapse into a rant. Why is that?

Here’s the problem – I can’t provide much information to you anymore because there’s nothing much to report. There is a steady drumbeat of ordinary or trivial details from the agency to pass along but the excesses of this CPSC administration have gone on so long that they now bore most people. On a more macro level, the news spigot shut off because (a) the Dems in Congress stopped listening a long time ago and are doing NOTHING to fix this mess, and (b) the CPSC has demonstrated that they are going on their merry regulatory way no matter what we say or think. Time and partisan appointments are giving Mr. Waxman his tacit victory.

So we are stymied. And what tools do I have left at my disposal? Consider what I have already tried: I have employed representation in Washington for now almost two years. The cost of this exercise comes out of my personal pocket. No need to feel sorry for me, but that’s a fact. I have also testified before Congress, I have testified before the CPSC (several times, at their request), I have written numerous comment letters (none of which were answered), I have appeared in endless articles and on 60 Minutes, I have given speeches, sponsored a rally, and yes, given up thousands of hours of my life to write almost 500 blogposts for you (and the CPSC) to read. I have left no stone unturned.

If you had done all this over a two-year period and produced the scant results I had, what would YOU do, Anonymous? Keep mumbling to yourself? Is that really productive? If the problem is as serious as I say it is, then continuing with a losing strategy seems pretty dumb to me. It was Albert Einstein who reportedly said “The definition of insanity is doing the same thing over and over again and expecting different results”. It appears that a change in strategy is needed – if we want to produce a different result.

And blaming the parties responsible is appropriate. My readers know I am being honest and candid here. You know where I stand. The Dems are responsible for this mess. They may have had help creating the law in 2008, even the signature of Mr. Bush to close the deal. Then again, when the carnage became clear, the Dems employed the Nancy Reagan “Just Say No” defense in the face of indisputable evidence of their policy failures. The Dems have been a rock of intransigence and indifference for two years now. The Republicans have not. Again, that’s a fact. And the CPSC is being run by Dem politicians who work consistent with the wishes and desires of the Congressional Dem leadership. I am supposed to overlook this? Possibly not notice, look away? That view, if you hold it, insults my intelligence.

These days I have few choices available to me. I can continue to pursue a clearly ineffective strategy and find my voice increasingly marginalized by its irrelevance, or I can work within the political system (as is my right) and find another route to the desired outcome. I hate the CPSIA and I hate what Congress and the CPSIA have done to the CPSC. I cannot abide by this. So now what? Sucking my thumb is not an option. It’s time to get RID of these people. They made themselves a big part of the problem and deserve what they get. After all, the rules of the games were known in advance, and they knew what they were doing.

It’s my right to take steps politically to fix this situation. I hope I don’t lose you as a reader, Anonymous, but if you have better things to do or better sources of information, I trust you will come here less often. My commitment to our employees, customers, suppliers, consumers and other stakeholders remains unwavering and has to come first. I am loyal to them and won’t be defeated by this year’s version of tyranny.

Onward to November 2 and the defeat of the people responsible for this Greek tragedy!

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CPSIA – Tea Party Comments

CPSIA – Thumbscrews, Jobs and You

This week we learned that the G-20 nations established near term fiscal deficit reduction as a twin priority with economic growth. The U.S. says it will reduce its fiscal deficit from this year’s breathtaking 10.2% of GDP to a mere 4.2% in 2013 (that goal translates to about $600 billion in red ink, more or less). This fantastic goal is apparently based on the premise that Mr. Obama’s big spending plans are going to stimulate so much growth that the United States will literally grow away from this problem.

[Please don't bring up the additional expense of new federal entitlements like health care reform - I believe the plan is for magic or heaven above to provide those multi-billions.]

Rosy scenario? To my way of thinking, it is delusional government or at least government in a deep state of denial. Those of us suffering from the CPSIA debacle know why – Obama’s new withering regulations are strangling businesses and the markets. The environment created by these awful rules are killing jobs everywhere. Mr. Obama’s apparent belief that we need a lot more government will render his plan to reduce deficits moot. The passage of time will reveal that thumbscrews are just not a good jobs program.

Consider the trajectory of our companies’ employment ranks over the past four years. Our headcount reduction in 2007 was 3.2%, 2008 was 15.9% and 2009 was 6.6%. There were two big factors in those reductions – a really lousy economy and a really terrible law affecting children’s products. But what about the glorious recovery sparked by our wonderful government? Please note that our businesses are presumably a “beneficiary” of much of that largess because of our dependence on educational sales – schools received MANY billions under the stimulus spending plans. Revenues for first quarter 2010 rose sharply in many industries (an easy comparison to 1Q 2009 but up is up!), so what about jobs at our companies? January – May: our employee headcount shrunk by 2.3%.

We are still not creating net jobs. While we pour endless resources into regulatory compliance, none of which is producing a scintilla of results (and certainly not any sales), we are allowing attrition to lower our costs. We have only so much money – and the government has plans for us to waste it in large quantities. The result – fewer and fewer jobs and a very difficult environment to create jobs. Our total four-year job loss is 25.7%. Some job program. . . .

Mr. Obama prefers to look the other way. While the WSJ notes that “an influential group of U.S. corporate leaders this week accused Mr. Obama of retarding growth with a slew of new taxes and rules”, Mr. Obama simply noted at the news conference at the close of the G-20 meeting “We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs today.” Time for a hearing test?

And if it weren’t bad enough that Obama endorsed a wishful thinking plan to reduce the deficit through high spending while at the very same time creating the most hostile business environment in recent memory, there is another shoe to drop . . . on you: “President Obama said that next year he would present ‘very difficult choices’ to the country in an effort to meet deficit goals. The president cited his disappointment with the U.S. tax code. ‘Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, ’cause I’m calling their bluff.’”

What you aren’t spending on new health care costs or CPSIA compliance, the government plans to take away from you. And by the way, create some jobs while you’re at it.

I cannot help but connect the national issues being discussed with our own travails. We are being sent to the gallows by a truly unconcerned CPSC Democratic leadership. They assert that they are making everyone “safer” without looking at data or considering the serious problems being created in the market. Warnings, dire warnings backed up with data and reason, are falling on deaf ears – it’s as if the Dems are daring us to go out of business to prove our point. Theirs is a catastrophic policy but it seems as though they are bound and determined to see it through. This is terrible news for you, for your customers and suppliers and for our country.

Humpty Dumpty was never the same after he fell over, as we all know. I am committed to prevent this disaster, notwithstanding an uncaring Dem-controlled Congress and Dem-controlled CPSC. I am working for change in Congressional leadership come November, and I URGE YOU to raise money and commit time to candidates offering to help us reform this terrible law. The people who did this to you and me should pay with their jobs. Soon.

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CPSIA – Thumbscrews, Jobs and You

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 – Zhu Zhu Pets Win the Battle But Lose the War

In the modern game of forming public opinion by fanning fear, victory by over-zealous consumer groups and political zealots is all but assured. With an incurious media all too ready to fall in behind unfounded accusations, destruction wreaked by these defenders of our rights is hard to prevent.

I submit as evidence an article in today’s News Journal (DelawareOnline.com) entitled “Choose toys not only for fun value, but safety value” which continues the irresponsible and debunked attack on Zhu Zhu Pets. The article began:

“Zhu Zhu Pets may be the hottest holiday gifts for kids right now, but an investigation into whether the toy is dangerous was enough to deter Lilian Latan from buying one. Latan, who lives in Middletown, has two daughters, ages 6 and 4. She reads safety labels before buying toys and games and pays attention to investigations and recalls. ‘Especially with the 4-year-old, I still have to be very careful’ about her putting things in her mouth, Latan said. ‘I read everything about a toy, and if it’s small and if it’s something that looks like candy, I won’t buy it.’”

The article carries on:

“Still, there have been some high-profile recalls and investigations. The commission recently opened an investigation into the popular Zhu Zhu Pets after the consumer watchdog group GoodGuide reported that the toy hamsters contain higher-than-allowed levels of antimony. If ingested, the heavy metal can sicken children. Cepia, the maker of Zhu Zhu Pets, has disputed the findings.”

In fact, as you know, the CPSC cleared these toys last week. Oops!

This is a current news article. Apparently, the News Journal didn’t know that the CPSC cleared this toy, nor did Lilian Latan, the consumer. They both knew of the ironicly-named “GoodGuide” and its defective test report, however. That’s the problem.

This kind of damage is almost certainly irremediable. Zhu Zhu Pets lost Lilian Latan through no fault of their own. Even the highly-publicized efforts of the CPSC to stop the unfair damage to the year’s hottest toy couldn’t stop this permanent loss of goodwill and good reputation.

It’s time to tell the consumer advocates to stop the game-playing. The toy mania, ongoing for almost three years now, helped identify the abusive practices that we, the consuming public, must resist and oppose. While you are at it, demand more of your news outlets. Newspapers and other news outlets need to ask more questions and make sure they get the story right.

You don’t need to live in a tabloid world – make your opinions heard!

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CPSIA – Zhu Zhu Pets Win the Battle But Lose the War

CPSIA – Still Steaming Over Mr. Waxman and His Unilateral CPSIA Amendment

I am still trying to unpack what happened late Friday when the Waxman amendment to the CPSIA leaked out. Since the news is so fresh and so few of the actors have come forward to account for themselves, let’s be conservative and analyze only the most positive possible scenario:

• Mr. Waxman now accepts that some aspects of the CPSIA need to be fixed.
• Mr. Waxman now accepts that the CPSC cannot fix the law through rulemaking alone.
• Mr. Waxman is being a “good guy” and showing his “good faith” by allowing a change to the law.
• Ms. Tenenbaum believed that something is better than nothing and made a practical judgment to support the Waxman amendment as a step in the right direction.
• Ms. Tenenbaum concluded that fighting with Ms. Waxman might worsen the situation for the agency and for the victims of the law.
• Ms. Tenenbaum thought that getting an amendment now might open the door to more amendments later.
• Ms. Tenenbaum thought the Commission could use this “loophole” to ease pressure on at least some victims of the law.
• None of this affects the good vibrations that emerged in recent weeks with the CPSC who has noticeably softened its rhetoric and reached out to the regulated community to find amicable solutions to the perplexing issues caused by the CPSIA.

I think that’s about as sympathetic a portrayal as I can paint of the Waxman amendment and the way it was generated. With that sunny scenario in mind, how would I now interpret the events?

1. Waxman is in control, and will not relent. Both minority members of Congress and minority Commissioners have been largely disenfranchised for the future of this law. His need for control made impossible redress of the many other issues documented by the likes of resale shops, education companies and apparel-makers.
2. Waxman will dictate precisely the speed and dimension of fixes to the CPSIA. The pain and disruption in the market does not influence him. As the terms of the original law indicate, he does not regard economics as a factor in setting safety policy. [An economist would characterize this outlook as irrational.] Political pressure does influence him, hence the meager effort to appease the ATV and publishing industries. This amendment is consistent with the longstanding position of his staff – so there is little to indicate further flexibility. If you believe the “one bite at the apple” crowd, this is grim news and contradicts the concept above that one amendment might lead to other amendments.
3. Waxman has no intention to publicly debate the issues under the law. Likewise, he has no intention of possibly losing control of the discussion or the message. Given his stated interest in reforming the Toxic Substances Control Act, it remains critical to portray the CPSIA as a success and as an advance in regulatory “theory”. The Waxman amendment makes clear that the legitimate concerns of the regulated community are taking a permanent back seat to a political agenda set by consumer groups and the California contingent. Again, not good for us. . . .
4. The CPSIA is now clearly the Democrats’ law. Republicans have been exiled from the safety debate. It is shocking that party lines now define the children’s product safety debate since injuring children is not a political issue. Yet, any notion of bipartisanship has been crushed.
5. Whether for political gain, sympathy with the original design of the legislation or for practical reasons, the Democrats on the Commission have fallen in line with the Waxmanites. The teamwork on this amendment makes them appear to be allies. If this means that the Waxman views on implementation will also hold sway, it forecasts grim developments ahead for regulated companies.
6. The appearance of appeasement or even complicity by Ms. Tenenbaum is inescapable. Even in the friendliest interpretation of events, Tenenbaum comes out as a weak defender of the legitimate interests and concerns of the regulated community. And “common sense” seems forgotten. What kind of partner does that make her? Do her statements on consulting with stakeholders and open dialogue seem somehow self-serving now? Right now, it is very hard to know when or whether she will toss regulated companies overboard. This makes partnership with her difficult because you must give to get . . . now that the “get” is in doubt, how can the regulated community become comfortable with the “give”? I also think it’s reasonable to ask why Ms. Tenenbaum allowed this provision to be negotiated in the dead of night. That’s not how a partner behaves.
7. There is a BIG issue of trust within the Commission here. The very public way in which the Republican Commissioners received notice of their irrelevance will cause lasting injury to relationships. It is hard to see collegiality restored quickly on the Commission after this betrayal. Of course, I can’t help but recall the mantra repeated by many pro-CPSIA advocates – that the CPSC needs a five-person Commission. Doesn’t the amendment “process” expose this as a joke? If Tenenbaum and Waxman are going to ignore the Republicans, was Congress really saying that the CPSC desperately needed three Democrats in a majority position? Gosh, I think the Republicans that voted for the law might take issue with this . . . .
8. The inclusion of lead labeling for excluded items confirms the zealotry of the Waxmanites, the impotence of the resistance movement and the persistent disregard for the needs of innocent victims of this law. Of course, difficult-to-obtain exclusions are quite anti-small business, as are the lead labels. The labeling is even more incredible if you take into account that exclusions will only be granted in circumstances where the inclusion of lead will have virtually no conceivable health impact. So if the Chairman would sell us down the river with a useless and extraordinarily-limited amendment without addressing ANY of the other pressing issues or demanding the right of the Commission to assess risk, then what else can we reasonably expect from here on out?

That’s the $64,000 question, isn’t it? Frankly, this amendment and the behind-closed-doors process which excluded all corporate stakeholders and many political stakeholders, sharply erodes trust in all directions. Doing this behind everyone’s backs – during a two-day workshop purportedly designed to solicit stakeholder feedback and get everyone on the same page – seems remarkably disingenuous. You can safely assume many recent conversations in retrospect seem less than candid or straightforward.

To work out the difficulties with this law, leadership on the Commission (Democrats) and in Congress (Democrats) need to come to grips with the fact that the law is incredibly misconceived and destructive. The dream that the Precautionary Principle actually works to anyone’s benefit has been debunked. To cram down this noxious law despite the legitimate concerns of the regulated community will NOT snuff out opposition – but instead will inflame it. The problems won’t go away, and cannot be buried. The issues will fester and rot until addressed.

If the issues marbling the law are allowed to linger long enough, the Democrats can ensure lasting damage to the agency and market catastrophe. I will repeat myself: there is a legacy issue for Tenenbaum and the Dems – and having jettisoned the Republicans, it’s all theirs now. The CPSC can be rendered ineffective and wholly bureaucratic, with all the attendant damage that entails, or it can be restored to glory. The choice is theirs and the stakes are high. Interestingly, the regulated community will support an effort to restore effectiveness at the agency, but that will necessarily involved restoration of risk assessment and political independence at the agency. Hard to see Waxman going along with that.

Do we have the leaders for this effort on the Commission? Time will tell. Like everyone else, they will be judged by their results. You and I are along for the ride, whether we like it or not.

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CPSIA – Still Steaming Over Mr. Waxman and His Unilateral CPSIA Amendment

Lead Law Leaves Small Businesses in a Lather

The Milwaukee Journal Sentinel covers how the CPSIA will affect small businesses.

Here is the introduction from the article:

Small local companies that make clothing, shoes and toys are struggling to comply with the nation’s new restrictions on lead and phthalates in their products. With the economy in shambles, they say the cost of complying with the law couldn’t have come at a worse time.

Manufacturers Urge Change in Product Safety Law

The Journal of Commerce covers the amend the CPSIA rally in this article.