CPSIA - What Can We Learn From the Toyota Debacle?

It was about one year ago when the Federal government went into overdrive in trashing Toyota, a widely admired and reputable company, for its apparently defective automotive accelerator mechanism. I say "apparently" because our fearless leaders in government reached the conclusion that Toyotas were defective based on hasty conclusions and a document review . . . but no scientific research. This is hardly a shock. I have previously observed that manufacturing a dangerous public enemy in an election year is quite helpful to members of Congress - after all, we need to be reminded who's working so hard to save us.

A quick reminder: the CPSIA was passed in August 2008. Oh my gosh, that's right before a national election!

The drive to jump on board and bash Toyota was overwhelming. Recalling Joe Biden's helpful 2009 advice to not fly or take the subway because of a swine flu outbreak, Secretary of Transportation Ray LaHood warned Americans to stop driving Toyotas in a Congressional hearing last year. You can't be TOO safe! Think of the impact on the company and its brand. Yesterday he announced Toyotas "are safe to drive". Oops. . . .

Not to be outdone, Rep. Henry Waxman, the man principally responsible for our being subject to the CPSIA without amendment now almost three years later, torched the company for its supposed misdeeds in his opening statement at his committee's hearing on February 23, 2010. What did Toyota do wrong? Well, he says the "defect" in their cars had to be in the newfangled electronics in the accelerator mechanism. Callous Toyota didn't look at the electronics, Mr. Waxman contended. Instead, he said "There is no evidence that Toyota . . . took a serious look at the possibility that electronics defects could be causing the problem . . . . Toyota had three responses: first, blame the driver; second, blame the floor mat; third, blame a sticky gas pedal. And NHTSA, without doing any meaningful independent review, accepted Toyota's recommendations."

Clearly NHTSA needed David Strickland to fix everything and make us all so safe - he did such a great job on the CPSIA.

Ironically, Mr. Waxman was pretty clairvoyant that day. NHTSA (under David Strickland's guidance) concluded yesterday that Toyota's purported three "responses" were the right explanations for the sudden acceleration problem. See the WSJ article linked above. Hmmm. Mr. Waxman carried on to warn Toyota that "safety must start coming first" (implying that Mr. Waxman's judgment on auto safety is superior to Toyota's) and concluded that "ultimately . . . addressing this problem will require legislation."

I feel another CPSIA flashback coming on . . . .

The Toyota feeding frenzy even swept up our own Chairman Tenenbaum who couldn't resist pointing the finger, too: "A new Commission that has new powers - and we are not afraid to use them. If you resist our efforts to recall children's products, be forewarned, this Commission stands ready to be creative in the use of our enforcement authorities. As the Toyota experience has shown in recent weeks, this government will not allow for delay in recalling dangerous products." No delay whatsoever - even to figure out if they are actually dangerous! Didn't McDonald's recall safe Shrek glasses "out of an abundance of caution" at the request of the CPSC? Toyota was quite inspiring, I guess.

To put a bow on the conclusion of this comedy of errors, Public Citizen (a consumer group purporting to "protect" you in the CPSIA saga, too) asserts that the government's Toyota study is not "convincing". I have previously explained why folks like Public Citizen will NEVER give up the ghost here. There is probably nothing that could convince them that they were wrong in the first place. After all, that's pretty de-legitimizing. We certainly can't have that! Think AAP on lead.

Blamestorming in Congress, jumping to conclusions based on a media frenzy, little hard information and a lot of political drum banging? Brandishing the blunt force of excessive government power to beat a company senseless? Toyota is one of the largest companies in the world. Imagine if this excessive power were taken against a small business? Imagine . . . .

As I said last year, the Toyota feeding frenzy is what we have been subject to, now for three years, in the sad CPSIA debacle. At a Congressional hearing next week when I may face the same legislators who took Toyota down - for no good reason - I must again defend our right to conduct business responsibly without the intrusion of government into everything we do. Having written a law to keep children "safe", Congress is quite reluctant to admit their error and admit that we can keep kids safe without being told how to do it. The basic reason is that they can't acknowledge that kids weren't at risk from lead BEFORE the law. It's easier for them to ruin our businesses than to do the right thing.

Just to be clear, it is absolutely irrefutably clear that the agents for change here are the Republicans and the opponents to remaking the CPSIA into something workable and sensible are the Democrats. As I have stated before, Democrats in the Senate are still working to block change. They are like Public Citizen - NO possible data can convince them.

Will Congress ever admit that the definition of Children's Product is too broad, that the scope of ages covered by the CPSIA is damaging to our markets, that we are over-regulating extremely minor or unreal risks while ignoring big risks (thereby actually making children LESS safe), that the rising (risen?) specter of liability is having a very negative effect on the conduct of business, that the encouragement of rabid enforcement at the CPSC has created an environment of mindless and uncompromising rule following (creating many starkly unfair results and ruining the reputation of a proud agency accustomed to doing good), and so on? That's a good question.

Tune in next week and see for yourself!