Of Course It's a Shakedown

Joe Barton (R-TX) is right:  the $20 billion escrow fund is a shakedown. Not because BP isn’t liable for the oil spill, and not because BP shouldn’t help the people losing their livelihoods on the Gulf Coast.  But because Obama extorting the escrow fund from BP is an exercise of executive power outside the rule of law.

Following the rule of law would produce relief for the oil spill’s victims.  It just wouldn’t put Obama’s appointee in sole charge of a $20 billion fund.  That has a meaning beyond the “Chicago” implication of pure extortion, fund-skimming, and payola.  It means Obama couldn’t use the money to cushion the near-term consequences of his own policies.  He’d be constrained by that pesky rule of law, if he weren’t holding the discretionary purse strings for the damages payouts.

The most obvious current evidence of that relates to his moratorium on deepwater drilling.  A lot of people are losing their livelihoods because of it.  A lot of businesses will be going under, and a lot more jobs will be lost.  The losses will be in the billions just this year alone.  But Obama didn’t have to take this action.  He wasn’t even advised to by professional experts.

A judge in a federal court would take that into account as lawsuits came pouring in against BP.  Even assuming BP is found to have liability through negligence when this is finally adjusted in court, there is every possibility that BP would not be found liable for the drilling shut-down itself, and all the business and jobs lost because of it.

Making BP pay the freight for his agenda-driven, business-killing moratorium is an abuse of executive authority on Obama’s part.  He’s extorting BP for his payoff fund, to be used on the thousands of “small people” who will see their way of life destroyed, not by the oil spill but by Obama’s agenda-perfect reaction to it.

This is worth noting:  within the span of my lifetime, America has become so accustomed to the largely unsupervised overreach of federal agencies that our ability to detect a shakedown in progress has been severely compromised.  We have the confused idea that somebody should somehow be doing something to help all these people, and don’t we have an agency for that? – so why shouldn’t the president, the man in charge of the agencies, step in and take matters into his own hands?

This is, however, confused sentiment.  It’s pure sentiment, with no temper from wisdom or judgment.  It’s not a sound basis for government, no matter how we feel and no matter what the problem is.  Governments good and bad operate on precedent, whether you like it or not, and one shakedown tolerated will lead as night the day to more shakedowns.  Eventually one of them will get to your doorstep.  No one is so perfectly positioned in his universal immune-victim status as to never face being sliced through the mid-torso region by the Super-Whammadine Shakedown-o-matic.

This is SEIU/UAW tactics writ large – and those tactics thrive on the government-by-agency paradigm.  That’s something the original Progressives were always wrong about:  creating professional government agencies doesn’t minimize corruption, it helps corruption become more pervasive, and yet hide in plain sight.  It makes it seem more and more natural over time for government to be regulating us, in ways we would object to if we were presented with a decision-point, as we are on the floors of our legislatures.  Eventually, we are being regulated – to our material cost and someone else’s material reward – in so many ways that the average mind boggles, and no longer distinguishes readily between what Congress is lawfully doing, in the glare of the public klieg light, and what executive agencies are merely getting away with because hardly anyone but their victims knows they’re doing it.

Consider this:  Andrew Napolitano has pointed out several times on Fox that federal law actually caps the damages oil companies are liable for when they drill offshore.  (I think the amount is hilariously low, like $75 million.)  Naturally, the oil companies sought such caps.  Equally naturally, Congress didn’t set the one in question while being dangled from a 58th-story window by thugs named Ponch and Guido.

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.  The transaction came about, most fundamentally, because we accept so much arbitrary regulation now.  Add the risk-waiving condition created by this cap to the crony-ish relations between the Minerals Management Service and the oil industry, and you have a recipe for, well, a mighty good time for a bunch of people in government, in both the legislative and executive branches.

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.

Darn good thing Congress spared us all that, huh?  With BP’s liability capped by federal law, we’re left with Obama and his $20 billion slush fund to address the job and property losses.  And hey, the good news is, with BP’s shareholders and investors – many of them Americans – to shake down, Obama doesn’t have to let this crisis go to waste!  He can shut down businesses and jobs for his own political reasons, having nothing to do with the oil rig explosion, and make BP pay off the people he’s hurting!

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

Cross-posted at The Optimistic Conservative.