REVIEW & OUTLOOK
AUGUST 11, 2009, 7:31 P.M. ET
Consumer Product Destruction
Congress's lead in toys panic is set to ruin more businesses.
Congress has the power to destroy, and that's precisely what it has done with its needless 2008 panic over lead in toys. More suffering is on the way for thousands of private businesses because Democrats refuse even to acknowledge, much less fix, their mistake.
Last year, Congress whooped through the Consumer Product Safety and Improvement Act to soothe fears about lead paint on toys from China. In its hurry, it imposed draconian lead limits that have ravaged businesses in industries from childrens books to thrift stores to ATVs since the law went into effect in February. This week, the screws are tightening further, as products directed at children under 12 must meet stricter lead standards, and companies face higher penalties for any mistakes. Because the rules are retroactive, toys or other items that are legal to sell on Thursday will be banned on Friday.
And this time Dick Durbin and Henry Waxman won't have a Republican to blame. Last spring, Congressional Democrats pounded the CPSC's Republican Chairman Nancy Nord for the law's failings. In an April letter to Ms. Nord, 28 Senators, including Mr. Durbin, Mark Pryor, Jay Rockefeller and Dianne Feinstein insisted that "Congress provided for agency discretion" and anticipated the CPSC would use that discretion in a way that "would recognize anomalies in implementation."
That was an attempt to dodge blame for the mess Congress created. The problem is that the law itself explicitly bars the CPSC from making judgments on product safety risks when handing down exclusions. In a July decision denying a petition by jewelry makers to exempt crystal and glass beads, new Obama Chairman Inez Tenenbaum cited the same issue that Nancy Nord did. To wit, for the agency to grant an exemption would mean using risk analysis, which is forbidden by the law. Such an interpretation "appears to be in direct conflict with the statutory language," Ms. Tenenbaum wrote.
Jewelry makers now join the legions of other businesses on the hook for millions of dollars in lost sales, inventory or testing costs despite products that pose little to no risk of lead poisoning to children. In the spring, thrift-store operators like Goodwill and the Salvation Army predicted that without regulatory relief they would have to destroy more than $100 million of inventory. Toy stores expected some $600 million in playthings that would have to be trashed and another $2 billion in losses across the industry. Motorcycle and ATV makers predicted total losses and business disruptions around $1 billion. Children's clothing stores have suffered huge losses, with Gymboree losing 40% of its market value overnight after reporting losses related to the House's lead-paint panic.
Eight bills have since been introduced in the House to remedy the problems, only to stall in the ideological quicksand of Mr. Waxman's Energy and Commerce Committee. He has so far failed even to hold hearings. Texas Senator Kay Bailey Hutchinson wants hearings in the Senate, but Democrats are too busy trying to nationalize the health-care industry.
Commissioner Tenenbaum says she favors a "common sense approach" to regulation, but she needs Congress to rewrite the law. Until Congress acts, products that pose no risk to consumers will continue to be recalled and destroyed while businesses struggle with additional costs in a recession.
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3 comments:
The refusal of Congress to fix this law is astounding. The law was poorly conceived and drafted. It never should have been passed and, it is highly likely that NONE of the legislators who so overwhelmingly voted in favor of it actually read it, including Waxman and Schakowsky.
As our President likes to say, we need to hit the "Reset" button, scrap this dog before more absurdity comes to light and write a new one, this time with industry input.
Rick
As tomorrow's anniversary arrives, we are reminded that we still don't have definitions for things like components, which means that folks are testing for sub components and disqualifying entire garments because a zipper tooth failed. I predict more after Aug 14 levels take effect.
We were taught as kids that for want of a nail, the kingdom was lost. Applying that to out situation we see:
For want of a tooth the zipper was lost,
for want of a zipper the pants were lost,
for want of the pants the order was lost,
for want of the order the account was lost,
for want of the account the company was lost..
So it was a company that was lost - all for want of a tooth.
I know you feel put upon due to the recent lead legislation, but let’s generate a little sympathy for the food industry. As a result of the problem caused by kids putting Little Tykes toys in their mouths and choking on them, Rep. Waxman has introduced a bill that would prohibit the sale of any food to children that could fit in their mouths. Intravenous feeding appears to be OK unless the mixture is solid enough to be held in a child’s hand without seeping through the child’s fingers. There are some problems with the bill as it currently stands, and I understand the House was in session last night trying to decide how to handle some of these meaty issues. For example, is meat loaf OK if it’s not sliced? How about mac and cheese if it sticks together in a large mass that couldn’t fit in a child’s mouth all at once? Will a meal of hot dogs and beans be OK if the hot dog is not pre-sliced? And what about the beans, which clearly are small enough to warrant banning if served separately? We’ll see how all this settles, but just be glad you’re not in the food business.
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