Friday, June 18, 2010

What Joe Barton should have said

Instead of his awkward apology to BP, it would have been nice if he or some other congressman had made the point about the BP escrow account that the WSJ makes today.
BP no doubt concluded that it had no choice but to accept the new escrow account—to be administered by national trustee laureate Ken Feinberg—lest it court even greater political wrath. It also wanted to pacify the capital markets and stop its share-price slide by suggesting there is some limit on its liability. Yet Mr. Obama pointedly failed to agree to any outer liability bound, even beyond the $20 billion.

Meanwhile, BP's agreement sets a terrible precedent for the economy and the rule of law, particularly for future industrial accidents or other corporate controversies that capture national outrage. The default position from now on in such cases will be for politicians to demand a similar "trust fund" that politicians or their designees will control.

There was in particular no reason for BP to compound its error and agree to spend another $100 million to compensate the oil workers sidelined by the Administration's policy choice to impose a drilling moratorium. BP had no liability for these costs, and its concession further separated its compensation from proper legal order.

BP deserves to pay full restitution for the damage it has caused, but it ought to do so via legal means, not under what Texas Republican Joe Barton rightly called the pressure of "a shakedown" yesterday. On the other hand, BP does not deserve the apology that Mr. Barton also offered, though he quickly backtracked when the White House pounced on his comments.

The American people seem to have concluded that they dislike both BP for causing this disaster and the White House for appearing to exploit it without stopping the leak, and maybe that's the right response. BP at first sounded arrogant and now is so obsequious it won't even stand up for its legal rights. But it's hard to know who is more unlovable, BP or its Washington expropriators.
It's the precedent that this establishes that is so disturbing, not the idea that BP must pay for the damage caused by the spill. As Ross Kaminsky writes,
BP is not a victim here. They're not in the least bit sympathetic. But this is the nation that presumes innocence before guilt, that is founded on the rule of law rather than of men. How strange it is that we elected a president who wants to give terrorist murderers the benefit of the doubt, give them access to legal protections they're not even entitled to, but treats a major international corporation -- which had already said it would pay all legitimate claims -- the way Al Capone treated a rival moonshine distributor.
Barton had a point, he just expressed it terribly. We are a nation of laws and those should be followed. This escrow fund is too reminiscent of how the stimulus money and TARP money were handled instead of using the legal processes we have established. Otherwise, we run the risk of having this whole thing being politicized.