RUSH: Ladies and gentlemen, I mentioned this story yesterday, and here are the details. It’s an AP story from Helena, Montana: ‘A new national limit on lead in children’s products — which has toy makers scrambling for new testing methods and retailers for storage space for inventory they’re not sure they can sell — also is forcing motorcycle dealers to pull dirt bikes off showroom floors. It became illegal Tuesday to sell off-road machines geared for children younger than 12 because parts in them contain lead at levels greater than 600 parts per million. Most motor vehicles have such parts. ‘I think they took this law a little too far,’ said Margie Hicklin-Krsul, the owner of Redline Sports, a sports bike dealership in Butte. ‘I’ve never had anyone come in and say, ‘My child keeps putting parts of his motorcycle into his mouth.”’
So you could say here that government regulations are about to ruin yet another business. I’m unable to get to the bottom of this. People have been sending me so much stuff I’ve gotten confused now. The esoteric analysis of this, it’s above my pay grade to listen to some of these scholars write about this stuff, but apparently it’s possible, and I’m not sure if it’s the case, some people believe that it is, that children’s books, hardcover children’s books printed before 1985 will become illegal because of lead content in the manufacture of some hardcover books. Now, some people say, ‘No, no, no, no, no, this been changed,’ others say, ‘No it hasn’t been changed.’ It’s like so many other things in the stimulus bill, most people don’t know really what’s in it yet and won’t know until it’s signed this afternoon and people start implementing what’s in it. Do you realize people can do whatever they want and say it’s in the stimulus bill and who’s going to know? Nobody has read this thing. So the stimulus bill can be pretty much what anybody wants it to be. But the dirt bike provision here is a pretty serious thing, and it’s more government regulation ruining or threatening to ruin yet another business under the rubric here that we just can’t police ourselves, we can’t protect ourselves, we’re too stupid, we’re too idiotic to know what’s good for us, or at least a few of us are and since some of us are so stupid and incompetent, rules have to be written for all of us.
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RUSH: Hillsdale, Michigan. This is Sean. It’s great to have you on the program, sir. Hello.
CALLER: Hi, Rush. How are you doing today?
RUSH: Just fine. Thank you.
CALLER: Good. Rush, I’m calling about the CPSIA, or the Consumer Product Safety Improvement Act of 2008 —
RUSH: Yeah?
CALLER: — and how it’s affecting some of the small businesses around this country.
RUSH: Well, that’s the lead rules. Yeah.
CALLER: The lead rules, exactly. You referred to them in your last set there. There’s two things about this act that really I think need to be brought to light and the first one is, how the act came to be. You know, I’ve been around the automotive industry for years and when legislation and regulation came in to those industries, there was years to react; years of time to be able to react to new rules and redesign products and whatnot. And this act was passed last August, it was kind of sprung on everybody this winter, and now companies like mine who manufacture products for the off-road motorcycle market are literally blindsided and given only a few weeks to react to this whole thing. I think that’s one of the reasons why there’s so much uproar around this new legislation.
RUSH: Well, the uproar is just now starting to build. I wouldn’t even call it an uproar yet. I think it’s just now starting to percolate. I don’t think it’s reached uproar status at all. Which is why we here on the cutting edge of societal evolution, if there’s going to be big problems, we’ll tell you about it when it’s small. You’re in the dirt bike business, right?
CALLER: Yeah, yeah. Our company focuses on the youth off-road market, mostly on the high performance end of things. We’re the only manufacturer in the US of this kind of product. We’re a small business. We have under 50 employees, but we use several manufacturers around the country for our products. We actually have about a hundred other countries that rely on our business to help stay in business. So the tentacles that are out in the marketplace, even though we’re a small company here, are pretty deep.
RUSH: I know. This is sad. It’s happening to every industry that the government attacks. The Congress has attacked the private jet industry. You wouldn’t believe the number of orders that have been canceled. The ripples throughout that industry, which I tried to chronicle last week, are profound. I had a story yesterday that I did not get to but it was a story about the Ritz-Carlton at Half Moon Bay in California. They’ve had 30 cancellations of golf trips — conventions, business golf trips — because these people simply don’t want to go someplace nice to appear conspicuous. So the ripples of commerce, ripples of these attacks and the class envy are happening throughout the country. Your business, making dirt bikes, is all about inventory. I read a story that there are some retailers, Sean, that have a hundred million dollars worth of inventory they may have to take off the showroom in weeks just to comply with this stupid law! Because the kids, of course, are going to come in and lick the lead parts that are in these dirt bikes and of course they might get sick and die and so forth. This is a tragedy that’s happening throughout the American capitalist system. There’s an all-out assault on it.
CALLER: Yeah, there is — and, Rush, to clarify one point there, they’ve already taken their products off the shelves. This has happened last week. The big four manufacturers (the big four being Honda, Suzuki, Kawasaki and Yamaha) have all mandated that their dealers take everything off the floor and this weekend I was at a trade show. I talked to a lot of these dealers, and a lot of them are on the brink anyway because of the shape our economy is. This is enough in many cases to just push them over the edge.
RUSH: Right. Because if you can’t put your product on the showroom and you can’t display it, how do you sell it?
CALLER: That’s it. That’s it. So that’s the first part of this issue. The second part that needs to be brought to light is the testing requirements that the CPSC is putting in place, and they put a reprieve of one year on these requirements, but the fact of the matter is that each and every component of one of these kids’ products — it could be a motorcycle or it can be anything. But as of February of 2010 each and every component has to be tested by a third-party, government-accredited laboratory. And we’ve done some initial looks into this. We’ve obviously tested a lot of our parts already, from non-accredited labs because the accreditation process isn’t even done yet. But to do this is going to cost us about one year of revenues, which is, you know, obviously that’s going to put companies like ours completely out of business.
RUSH: Why don’t you just pass the prices along to the consumer? You know, amortize it over an annual bunch of sales, and pass it along to the buyers?
CALLER: Sure. Sure. I think that’s the mind-set of the people that wrote the legislation, but you and I both know that it doesn’t work that way.
RUSH: Obviously. They think you can pass your cost on like they can.
CALLER: Yeah. Sure.
RUSH: Well, now, let me ask. You’ve done a lot of looking into this. People hear you speak this way, and they just can’t believe that their own government would take action like this so punitive as to put an industry out of business. But that’s a real possibility with you, isn’t it?
CALLER: Absolutely. And it’s not just dirt bikes. I think dirt bikes and ATVs got brought to the forefront mostly because of the companies. I’m not speaking of my own company in this case, but the other big companies that are in this business are big targets. They’re big targets for trial lawyers, they’re big targets for legislators, and they don’t want to appear dirty in this whole things.
RUSH: Well, you see, you’ve just mentioned one of the motivation ideas for doing something like this. This is a pure payback to the trial lawyers for their loyal support, hefty donations to the Democrats. You come up with all these ridiculous laws like lead in books, children’s books before 1985; lead above a certain allowable limit in say the product you manufacture; and you just open the door for tort lawyers to come in here and round up supposedly aggrieved citizens who unwittingly purchase one of these products. Their kids then got it home and started licking it, got sick and so forth, and, ‘Why didn’t you tell us these were dangerous? We thought motorcycles were to be driven, but my kids tried to eat it and my kid got sick!’ You know, the jury, ‘You evil, rotten manufacturers,’ because the Democrats have done such a great job of creating hatred for big business, small business in this country. So that’s one of the inspirations for legislation like this is to provide a target-rich environment for trial lawyers, who need movement. They need movement. They need people having accidents.
CALLER: Rush, I’m not so sure that some of the motivation behind this wasn’t kind of a trade barrier in disguise as well.
RUSH: How so? Explain that to people.
CALLER: Well, if you look at the history of this whole thing and how it got started, it really came about, what was it, maybe two years ago when lead was found in infants’ toys; and most of those infants’ toys (in fact all the ones that had lead in them) happened to come from China so there was outrage, there was lots of talk about what are we going to do about this and the CPSIA really is the end result of all that, but I think — and this is just a guess at this point, but I think — what was kind of a feel-good piece of legislation that nobody was willing to vote against because it was For the Children ended up throwing a huge net around many industries that nobody even anticipated. And dirt bikes are certainly one of those. But I think that the government in some way didn’t really think through that a whole lot because they were thinking, ‘Well, you know what? China’s involved here,’ and a lot of this is kind of a punishment, payback for taking jobs away,’ so to speak, and there was no thought of the ramification it was going to have to American business.
RUSH: The old unintended consequences.
CALLER: Sure. Sure.
RUSH: Well, you are very charitable to your government, who has passed legislation that could essentially shut you down. I don’t buy this unintended consequences business. There are too many of them, too often, too frequently — and I think we have a Democrat leadership now who professes a full disdain for our capitalist system, and whatever they can do to change it, they’ll do.