July 16, 2010
Obama's BP BlusterBy Brad O'Leary
"Speak softly and carry a big stick."
That was former President Teddy Roosevelt's favorite proverb. In the wake of the BP oil spill disaster, we now know that President Obama likes to carry a twig while he's yelling at anyone who will listen.
"I don't sit around talking to experts because this is a college seminar," Obama told the Today Show's Matt Lauer. "We talk to these folks because they potentially have the best answers, so I know whose ass to kick."
Putting aside the un-presidential nature of Obama's rhetoric, let's examine just how sore BP's backside is now that the president is bringing the big timber.
The Obama administration paddled BP into establishing a $20-billion escrow fund, out of which the oil giant and White House friend would pay for damages to individuals and businesses harmed by the oil spill. BP plans to put $5 billion per year into the fund over the next four years.
Under current tax law, however, BP would get to write-off the entire $20 billion this year. BP needs to show the IRS only that this $20-billion fund is a necessary business expense -- and clearly, it is. Though BP is not legally obligated to compensate victims of the oil spill, the money it spends repairing its reputation in this manner is certainly deductible.
This $20-billion write-off could amount to as much as $7 billion in tax savings for BP this year. Put another way, that's $7 billion that the Obama-BP escrow fund could cost the U.S. Treasury (i.e., American taxpayers). Not a bad return for BP's initial $5-billion outlay this year.
In addition, if the $20-billion payment pushes BP into the red, the oil giant could use this year's losses to offset its profits from the past two years.
The White House also whipped BP into suspending three quarterly dividend payments, equating to an estimated $7.5-billion savings for the company this year. Ostensibly, this money is supposed to go toward the $20-billion escrow fund.
Obama's making BP pay, all right...pay itself on the backs of its now-trapped shareholders, and pay Gulf coast residents on the backs of the American taxpayers.
As for the actual compensating of the victims, it isn't going too well.
Dean Blanchard, whose Gulf Coast seafood processing business has lost $1.5 million because of the spill, has been compensated by BP for just 11% of his losses. BP's unwillingness to pay Blanchard has forced him to lay off 72 employees -- cutting his workforce down to just eight people.
So much for President Obama's and BP's promise to make victims "whole."
Tuan Dang, a shrimp boat captain in Gautier, Mississippi, sums it up best. "It's like you're in the middle of the desert and you get a little bit of water," he says of BP's paltry payouts.
If any of this surprises you, it shouldn't. BP is a strong White House and Democratic ally on the cap-and-tax issue. In fact, earlier this year, BP was instrumental in writing the dreaded Kerry-Lieberman cap-and-tax energy bill that President Obama is currently trying to ram through Congress.
Incredibly, Obama is actually using the BP oil spill crisis in his stump speeches to help make the case for the economy-crushing bill BP helped author.
That sure is some ass-kicking. What's Obama got planned next? Steamboat cruises for BP executives powered by Gulf Coast residents shoveling the coal?
Brad O'Leary is the author of Shut Up, America! The End of Free Speech and publisher of The O'Leary Report. To see more, go to www.olearyreport.com.