21 June 2010

Barton & BP

EconLog | David Henderson | Joe Barton is Wrong

Yesterday, Republican leaders John Boehner, Eric Cantor and Mike Pence issued a statement castigating their fellow Republican Congressman Joe Barton. Barton had apologized to BP's CEO, Tony Hayward, for the shoddy treatment he received from Congressmen of both parties. He also accused Barack Obama of a "$20 billion shakedown" of BP. Boenher, Cantor, and Pence wrote, "Congressman Barton's statements this morning were wrong."

But they didn't say why he was wrong. He wasn't wrong for apologizing for his colleagues' horrible behavior. He was wrong for claiming that Obama had carried out a "$20 billion shakedown." As later news reports made clear, the shakedown could be more than $20 billion. So the correct statement is that Barack Obama carried out a "$20 billion or more shakedown."

Note that I'm not talking about whether BP should be held accountable for the horrible consequences of its actions. Rather, I'm defending the rule of law, something Barack Obama, at one time a professor of constitutional law, might have some dim memory of. His tactics--asserting executive power with no legal basis--were Bush-league.
"Bush-league"! Bazainga.

I'm with Henderson. Holding BP accountable is important. Maintaining the Rule of Law is more important.

Note that there are at least four reasons for BP to cooperate with Obama's "shakedown" that I can think of right now.

(1) Good PR. They can immediately claim to have spent this big pile of money on making things right. It also takes some wind out of their critics sails who want them to suffer more.

(2) When the costs run up above $20B it makes it easier for them to tell people to piss off since they've already worked up this deal with the White House. If $20B turns out not to be enough it's now their fault but also Obama's fault that the money has run out.

(3) When people filing claims get turned down, or just hung up in the bureaucracy of getting reimbursed, it's not BP giving them the bad news. It falls to whichever agency administers the escrow account to explain to people why they don't get the money they want.

(4) It maintains good will between Obama and BP. Obama is the single largest recipient of BP's and its employees' political donations in the last 20 years. Additionally BP is extremely gung ho about Obama's carbon rationing scheme. (I read somewhere (the Economist?) that no one has spent more lobbying in support of cap-and-trade than BP has.)  If they can maintain their seat at the table when that gets hashed out they stand to make back their $20B plus a lot more.

(Yes, I realize Barton is also a huge recipient of contributions from a company that is a partner of a partner of BP at this well. I'm not saying his hands are clean here either.)

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