As former counsel and trainer in political tactics for ACORN, President Obama used a well-known ACORN tactic, the shakedown, in getting BP to create the $20-billion escrow (slush!) fund without any law, legal controls, or binding rules to guide it on how and how much those injured materially by the oil spill (and whom among them) will be paid. Attorney Kenneth Feinberg, well-respected and well-known for heading the September 11th Victim Compensation Fund, was appointed by the president to administer the escrow fund. BP will pay $5 billion into the fund for four years, starting in 2010.
BP announced early after the spill that it would pay all justifiable claims resulting from the disastrous oil spill. It opened 25 claims offices. As of June 15, BP approved initial payments that amounted to $63 million, expected to rise to $85 million by the end of the week, to businesses claiming $5,000 or more in damages. Why did the president insist that his own personal organization take over the job of paying claims? After all, supervising reparations is a judicial function, not an executive function. BP created its own fund, appointed its administrator, and determined how it will be staffed with a view to ensuring only qualified persons, businesses, and governments would be reimbursed for its losses. Now those decisions will be made politically.
It is obvious that BP’s CEO agreed to create this fund and allow the president to administer it to prevent President Obama from bankrupting their company. After all, the president was on record saying that he would “kick BP’s ass,” and a cabinet members declared he would “put his boot on BP’s neck.” The president, when announcing the creation of the fund, stated that the terms of the fund would keep BP viable. He cannot know this. BP’s liability is not affected by the fund except to the extent claims are voluntarily settled. Those refusing to settle and their lawyers are not bound by it, nor are juries that will hear their lawsuits.
The president has no legal authority to create the escrow fund and no authority to compel BP to contribute to the fund. Forcing BP to agree to the terms of the escrow is ultra vires (i.e., illegal), beyond the powers of his office. Rep. Barton (R-TX) accurately described the slush fund as a “shakedown” (i.e., blackmail), a felony. If so, Pres. Obama has committed an impeachable offense. Congress itself does not have the authority to create the escrow fund retroactively. Congress will have no voice at all except to vilify any Republican who raises questions about it. All the ACORN employees who lost their jobs when the banks stopped paying “blackmail” to ACORN may be getting better-paying new jobs processing claims.
No doubt the media, which show pictures of the spill and pelicans covered with oil 24 hours a day, seven days a week, will hail the president’s tough dealing with BP. But BP’s oil spill deserves the strongest action under the law, not above the law. A few miles away, there are pelicans flying “free as a bird” with no oil on them. Not a single photo of them. And more than 10,000 barrels of the spilled oil are being recovered by BP daily with no photos at all; vessels are skimming oil near the spill, and no photos. And the federal government has yet to grant exception to the Jones Act that is preventing foreign vessels ready to skim oil from getting closer to shore to prevent more serious damage which would, incidentally, help save a lot of pelicans. No wonder BP believed it had to surrender to the president.
You don’t have to be paranoid to suspect the president (and many in the media) of ulterior motives, a hidden agenda. If you can get enough people to hate the oil companies, you might get the cap-and-trade bill passed. By the time they regret such hasty action, it will be too late to undo the damage. Cap-and-trade was given no chance for passage before the spill. The president pacified the environmental extremists by banning drilling in the Gulf for six months, adding to the rolls of the unemployed and increasing our dependence on foreign oil. To make the hidden agenda more believable, the president overreached by getting BP to agree to pay the lost wages incurred by workers who lost their jobs as the result of the president’s six-month moratorium on drilling in the Gulf. The hidden agenda obviously includes getting cap-and-trade passed. It looks like “cap-and-trade, cap-and-trade, cap-and-trade” has displaced “jobs, jobs, jobs.”
The president employed a similar tactic when he nationalized GM, violating the bankruptcy laws by denying bondholders their rightful control of the future of those enterprises, and he gave the bondholders’ interest in GM to the unions instead, literally. He gave Chrysler to Fiat. The bondholders of both gave their consent, being afraid of having their asses kicked or having a boot on their necks.
When an executive uses threats to secure the “cooperation” of private businesses, we have a name for it: fascism. It is the kind of act we expect from Venezuela’s Chávez, not from a president who swore to uphold the U.S. Constitution and its separation of powers. I believe the President’s behavior is ultra vires and that he has committed an impeachable offense.
Raymond L. Richman, J.D., Ph.D., is a member of the Illinois Bar and has a Ph.D. in economics from the University of Chicago. He and his son and grandson maintain a blog at www.idealtaxes.com and co-authored the 2008 book Trading Away Our Future: How to Fix Our Government-Driven Trade Deficits and Faulty Tax System Before it’s Too Late, published by Ideal Taxes Association.