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The $20B “escrow fund” may turn out to be a slush fund, but it wasn’t the result of a shakedown

By: JSobieski (Diary)  |  June 22nd, 2010 at 12:18 AM  | 

RESIZE: AAA

I am a conservative for a wide variety of reasons.  I am skeptical of utopian attempts to “perfect man” or to “socially engineer” society.  I am skeptical of the power of fiat, and respect the power of unintended consequences.  My conservatism is also based on the premise that truth is the highest value.  The metaphysical forces  of faith, hope, and love are by definition false if not grounded in truth.

In the aftermath of Rep. Barton’s comments about the $20B “shakedown” for the Obama “slush fund” I have found myself in strong disagreements with people I would typically be in agreement with.  I would characterize myself to be a straight-up Reagan conservative.  I almost always find myself in agreement with someone like Rush Limbaugh in terms of substance, and often in terms of process/strategy.

My instincts and experience on the issue of the $20B “escrow account” was that it probably wasn’t BP’s first choice, but that they probably agreed to it without much arm twisting—definitely not arm twisting of a magnitude to justify the characterization of a “shake down” or “extortion.”

As an attorney and an engineer, I appreciate the inefficiencies and costs of litigation.  I also appreciate the fact that when it comes to the issue of damages, it is easy for courts to treat similar claims differently, even if the courts are in the same jurisdiction.  Conduct some legal research on consequential damages in the 50 United States, and you will see that even courts in the same state aren’t consistent on the issue.

The bottom line is that I didn’t think BP’s acqiescence to the “escrow fund” was inherently stupid, and thus I didn’t see that acquisence as inherently the result of a shakedown.  Not saying it was a wise decision, but it wasn’t per se stupid either.  I do think that Obama has instituted so many transgressions against conservative values that we as a conservative community understandably were quick to put this particular action in the same category as other crowning Obama “achievements.”

The truth of the matter, is quite different.

http://voices.washingtonpost.com/right-now/2010/06/do_republicans_deserve_credit.html

Apparently:
(1) The original idea for a non-BP managed “escrow account” came from Republicans, not Obama or the White House.

(2) BP agreed to fund the $20B escrow account BEFORE the meeting at the White House.

The evidence in support of the two propositions above can be found here below:

Do Republicans deserve partial credit for the BP fund?

Rep. Trent Franks (R-Ariz.), who was an oil and gas engineer before he started his career in politics, says President Obama is politicizing the BP escrow fund after having little to do with it being set up.

[T]he real story here is that BP had already made the decision to set aside $20 billion to compensate those harmed by this tragic disaster several days prior to the President’s speech. The true outrage is that this was never the President’s idea at all, and he should be ashamed for pretending it was for political purposes.

On Thursday, Rep. Anh “Joseph” Cao told me that he pressed BP on the fund idea a month ago, inspired by the example of Exxon after its 1989 spill off the coast of Alaska. And on Friday I talked with Ray McKinney, another engineer, who is running for Congress in Georgia against Rep. John Barrow (D-Ga.). McKinney stressed that there was no serious disagreement about the escrow issue, and said Democrats were concocting a political debate when all that mattered was making BP pay and investigating the disaster.

I think the reason Barton agreed to “recant” his apology is in large part because the Republican leadership understands the point above.  Given the value that conservatives place on truth, we should get past attacking the creation of the “escrow account” on the basis of coercion and instead focus on making sure that it functions properly.

UPDATE: The full money quote direcly from R-Franks press release:

“However, the real story here is that BP had already made the decision to set aside $20 billion to compensate those harmed by this tragic disaster several days prior to the President’s speech. The true outrage is that this was never the President’s idea at all, and he should be ashamed for pretending it was for political purposes.”

http://franks.house.gov/press_releases/467

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  • JSobieski

    “However, the real story here is that BP had already made the decision to set aside $20 billion to compensate those harmed by this tragic disaster several days prior to the President?s speech. The true outrage is that this was never the President?s idea at all, and he should be ashamed for pretending it was for political purposes.?

    http://franks.house.gov/press_releases/467

  • http://www.veronicaestrada.com/ Veronica

    is that we’re not obligated to toot a horn for Obama nor correct the record.

    Consider the news cycle. MSM is in error daily, hourly, you name it. Do they issue corrections? No, they move on to the next story while pollsters rack up the points to see who won the last round.

    The Left extends us NO courtesy in clearing things up and they have forced us to play their game because America is on the brink of becoming a socialist state.

    Don’t lie .. just .. move on.

    BP is in Obama’s back pocket and Obama busied himself in stalling in preventing the oil from reaching the coastline.

    Reaaally nice oil-pastel he painted as a backdrop to pass whatever socialist legislation he and the dems have up their sleeves.

    If you still insist on pushing the “truth,” you have to also think about the narrative that’s out there about Obama’s thuggish ways. There’s the salary caps, the Waxman Witchhunts (#1), the CEO meetings, the Beer Summit — the guy sensationalizes and/or extorts. It’s his MO.

    If this “truth” is “discovered” (oh, brother), then, gee, he can be redeemed for the rest because hindsight is 20/20 and he was “just helping the country…”

    Have you got Messiah wistfulness? Think you gotta confess and come clean? ;)

    Fuggedaboudit. It’s politics. The first one to cement the narrative wins.

    • JSobieski

      I presume he wants to do so because the escrow account is the one thing that might prove popular, and he doesn’t want Obama to get the credit for it.

      Did you ever consider the fact that the protestations of a shakedown could actually help Obama politically?

      • http://www.veronicaestrada.com/ Veronica

        .. and with all due respect, Sobieski, why do you care?

        The escrow account isn’t something Republicans want to claim credit for — because like all slush funds, the cash in it will disappear into oblivion.

        $20 billion is a very low-ball figure when you consider the “trillion” is the new billion; it will go very quickly.

        So quickly, “popularity” won’t even figure into public consciousness.

        America wants the oil spill cleaned up; people want to get back to work.

        Americans want to see those affected back at work, earning their livelihood. They can’t be on the public dime forever.

        • JSobieski

          Do you wonder why? I do.

          I always thought that to continue spinning non-truths for political or other purposes was something liberals did? Are you telling me that you woud be willing to keep pontificating on something that you knew was untrue?

          I don’t have “a truth” what I am interested in is “the truth.” If the truth doesn’t interest you, then it doesn’t interest you—feel free to disregard it.

          I would like to know more about what is actually happening in DC with regards to this oil fiasco. If you are content to focus on misleading media soundbites, then feel free to do so.

          I would prefer to spend time trying to figure out what people like Boehner, Franks, and others are doing to and to see if I agree with them or not.

  • JSobieski

    The democrat says that Obama was the driving force.

    Franks, the Republican, says that Obama really had nothing to do with it UNTIL AFTER BP already agreed to pay the $20B.

    http://video.foxnews.com/v/4246791/obama-taking-too-much-credit-for-bp-escrow-fund?playlist_id=86858

    • http://www.veronicaestrada.com/ Veronica

      It’s already understood that Feinberg’s handing the BP fund reflects a bi-partisan effort.

      Rather clears this issue.

      • JSobieski

        nt

  • cwilson

    that this $20B caps BP’s legal liability, and short circuits all legal proceedings. Thus, BP wanted to do this to avoid the crapshoot/jackpot system.

    There’s just one problem: I don’t remember reading THAT provision anyway. I even seem to recall some admin official saying something like “the $20B is just the down payment”.

    So…now BP is out $20B AND whatever jackpots 52,327 different juries award? AND they still have to pay a bunch of lawyers to represent them in those 52,327 trials?

    Where’s the win (for BP) in handing over $20B? The win for Obama is obvious: $20B to shell out to his corrupt cronies, supporters, and John Q “my vote is for sale” Citizen (’cause TARP and TARP II just weren’t quite enough)

    • JSobieski

      Nothing stops BP from appealing to the court system if money is misused.

      Providing a more efficient mechanism that individual claimants can choose to use (ADR-alternative dispute resolution) as it has been used in other contexts is actually less expensive for the claimants (no court fees, no attorneys required, accelerated schedule for basic claims, etc) and less expensive for defendants (attorneys not required to make lots of court appearances, no punitive damages, consistent treatment of claims, etc).

  • texasgalt

    to agree to the fund as you say or maybe they did a Buy Down.
    Who knows what they were promised?

    I appreciate that an engineer desires efficiencies. Surely, going the legal process is time consuming. They don’t worry about that any more in Venezuela.

    Anyway, another Czar has 20 billion to dole out exactly as he sees fit, with no real oversight or transparency. It could buy a few votes.

    Always enjoy your opinions, but I can’t go with this one.

  • JSobieski

    That thinking is like “Obama is the messiah” in reverse.

    Obama is a man, a flawed man, but he is not supernatural.

    The article above makes it clear that everything had pretty much already happened, and then Obama purposely made it look like he was the cause of it happening rather than simply a passive observer.

    The escrow fund in this case is very much analogous to a “special master” in a class action lawsuit.

  • handprop

    Obama is going to own this 20B and he is licking his chops over it. Give it time JSobieski, you might be right but I have this funny feeling……..

    I have a hard time believing Obama didn’t think of this after the first gallon floated to the surface.

  • handprop

    Ok, that’s actually quite funny.

  • JSobieski

    and frankly, that would give him too much credit in the power department.

  • JSobieski

    however, I think it can’t fairly be characterized as an Obama shakedown if:
    (1) the proposition was sufficiently reasonable that non-Obamaphants were supporting its implementation (i.e. did Obama pressure Republican Congressman to support his slush fund somehow?)
    (2) Obama basically had nothing to do with it
    (3) Republicans are complaining that Obama basically stole the idea from the,

  • handprop

    Good point

    This subject has been interesting tonight. We have gone in a full circle, At the rate we are going we may discover Bush set up the fund……..and that means Obama will look good again..

    I can see it happen. I’m going to bed….my brain hurts.

    Handprop

  • handprop

    It seems you have good facts.

    If your right, truth is truth……and you have yourself a good article.

    Handprop

  • JSobieski

    R-Trent Franks is complaining that Obama is “dishonestly taking credit” for the $20B escrow account.

    http://franks.house.gov/press_releases/467

    http://vodpod.com/watch/3651554-lemieux-bp-to-decide-on-1-billion-oil-spill-fund-within-a-week

    http://voices.washingtonpost.com/right-now/2010/06/do_republicans_deserve_credit.html

    http://saintpetersblog.com/2010/06/13/lemieux-getting-credit-for-obama-administrations-idea-for-bp-escrow-fund/

    http://lemieux.senate.gov/public/?p=NewsReleases&ContentRecord_id=c5bd6861-f599-45e6-a0b3-1974f5392c16&ContentType_id=1d62f91e-b8b8-44a9-8175-202346eb6e9e&MonthDisplay=6&YearDisplay=2010

    ttp://blogs.creativeloafing.com/dailyloaf/2010/06/14/mccollom-lemieux-compete-on-who-was-first-to-suggest-an-escrow-account-for-bp-for-future-oil-spill-claims/

  • klondike

    I can’t quite make the leap. Republicans suggest to BP that it set aside adequate funds to more than cover claims for damages and the cleanup. Any fiscal conservative would immediately start setting aside funds to pay for that which insurance might not cover should we cause damage to someone else. Common sense. BP readily agreed. BP had already planned to do so, so no big deal.

    This is what I can’t quite grasp: You seem to want to shift focus away from O’Zero demanding that one of his czars (i.e., no oversight) control that money.

  • JSobieski

    that includes rulings by independent arbitrators. Moreover, nobody is forced to go through this independent claim center. Nothing stops anyone from filing a lawsuit agaist BP in court, and nothing stops BP from challenging/appealing particular awards in court. That is how ADR (alternative dispute resolution) works in the US.

    More importantly, there is a Republican Congressman saying that Obama is misleading the public by taking credit for the escrow accounts when he had nothing to do with them. This doesn’t interest you? If you hate the account, then wouldn’t you want to know which R’s supported them? Are you curious at all as to what actually happened here, or would you prefer just copying and pasting the comments/analysis of others.

    Here in the middle of this huge public controversy about Barton, BP, and oil spill, I am puzzled by Rep. Franks comments and curious as to why they are getting abosolutely no coverage anywhere,

    I am not tying to shift the focus away from anything. I am trying to figure out how in heck we actually got to where we are.

    Barton says Obama conducted a smackdown of HP.
    Franks says Obama is taking credit for what was already in motion.

    Something is very odd here, but don’t let facts get out of your way. I on the other hand am actually interested as to exactly what the sequence of events was.

    Spend more time thinking about what Rep. Franks’ and Boehner’s intentions are and less time thinking about what my intentions are. I am just a self-employed attorney blogging in his spare time.