Monday, June 28, 2010

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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