My God, They’re Standing By the “Shakedown” Line

It’s… beautiful.

Although the Republican Party has been quick to officially run away from Joe Barton (R-TX)’s “apology” to Beyond Petroleum (loving the rebrand right about now), some at Politico note that the sentiment, in all likelihood, runs pretty deep, as a few anecdotes from the Party’s more radical (and therefore popular) politicians indicate. Amid such tight message control, the big pushback to the Obama administration’s plan to require BP to pay in to a $20 billion, independently managed compensation fund is coming from surrogates, like Michelle Malkin’s only-slightly-more-classy front, Hot Air. Starting from the premise that the fund approximates a “shakedown,” the site goes on to compare the fund to “Chicago” politics (whatever that stereotype implies), “SEIU/UAW tactics writ large,” “government-by-agency,” and alleges actual corruption on the administration’s part in the process:

Congress chose to do this for reasons that are no doubt corrupt, because they are self-serving and short-sighted; but money probably didn’t change hands in a way that’s literally unlawful.

It’s far too kind to note that this kind of rhetoric isn’t supported by the evidence. It’s just insane.

Better yet is the “conservative response” to a natural disaster like the Deepwater Horizon spill: remove the damage cap, then let the market solve it!!

Suppose Congress had not set such a cap?  Oil companies would have needed to pay a lot more for insurance.  They would have been less likely to drill in deep water near America’s coasts.  Drilling elsewhere, in waters governed differently by other nations, would have been more appealing at a given price point for the product.

They would have been more eager to drill in shallower water, where the risks aren’t nearly as great; but of course, we don’t let them do that now.  Our gas would have cost us a bit more, reflecting the risk premium that would be represented more accurately in the cost of insurance than by the arbitrary cap set by Congress.  BP would have been more anxious to avoid a drilling accident, and would probably have routinely paid more to execute the whole process because doing so was a way of keeping insurance costs down.  When an accident did occur, the insurer would have to hemorrhage money in settlements, and premiums would go up for everyone they insured, not just BP.  But BP and the private insurer wouldn’t be liable for the consequences of unnecessary actions taken by the government.

It’s curious to see conservatives turn the oil spill damage cap ($75 million total for private claims, plus cleanup costs) into an enemy. The cap originates from the Oil Pollution Act of 1990 (specifically 33 U.S.C. § 2704(a)(3)), which is the product of a Republican Congressman and a Republican presidency, and is otherwise the kind of bill that conservatives normally love, premised on the economic value of protecting industries from crushing, anti-competitive liability, even (and especially?) where the little guy stands to suffer. Cf. the Private Securities Litigation Reform Act of 1995, which the Contract-with-America Congress passed over Clinton’s Kagan-inspired veto, and which profoundly limited the conditions under which a private citizen can recover damages for securities fraud.

Now we’re told that we ought to rely exclusively on a damage cap repeal, and the chance that it would, alone, alter market incentives enough to produce valuable, socially responsible behavior. This is naïve, inefficient, and laughable.

First, let’s put to bed the theory that BP will compensate victims on its own. Even ignoring the odd abuses that have already cropped up, by BP’s own admission, since the spill, they’ve only handed out 31,000 checks, totaling $104 million. They brag about this, but do the math. That’s an average of $3,354.84 per claimant — a pittance that doesn’t come close to approximating the damage suffered by any given Gulf inhabitant.

Second, simple market pressures don’t apply to economic supergiants like BP, especially where wrongdoing can be covered up, or its compensation delayed. For companies like BP, the decision of whether to risk catastrophes involves a calculus that balances those variables, and excludes moral points. The potential for delay, especially, mitigates the impact of incentive structures like the one our author here proposes. To demonstrate what I mean by that, let’s move on to the third point.

As every law school professor drills into you from day one, litigation is costly, messy, and inefficient. Letting individual claimants litigate their claims, even absent damage caps, would mean tying up both the Fifth and Eleventh Circuits for the foreseeable future, and would subject such claims to the incredibly drawn-out process that is federal litigation. Claimants might start seeing uncontested verdicts in a few years. Maybe. The government has created massive trust funds with no-fault claim systems (asbestos) before; why not do the same here, and start making the Gulf’s citizens’ whole again, today? Because speedy redress isn’t the GOP’s goal. This isn’t about principles. It’s about wounding Obama however possible, and if the attack-of-the-moment provides an avenue to run to the defense of corporations, hey, all the better.

I’ll leave you with Hot Air‘s pathos-laced coda:

On such a thread hang our civil rights in Obama’s America.

Ah, I weep! Telling, isn’t it, under what conditions the GOP chooses to care about civil rights and due process?



  1. oneiroi · ·

    For more conservative responses, someone on my facebook posted this trash:

    The whole idea seems outlandish. BP agreeing to set aside money for a disaster it’s partly responsible for, does not equal confiscated or shook down.

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