Archive for June, 2010

Progressives: Are You Out of Your Minds?

June 14, 2010

I have a question for my fellow political progressives.

Are you out of your minds?

You’re really thinking about sitting out this election? You really are migrating to a “what difference does it make” neverland?

Before you get too comfortable with that self-righteous position, let’s review a bit of recent political history.

Like 1968. Progressives were angry at Hubert Humphrey for not breaking sooner with LBJ over the war. And so we got Nixon and 5 more years of war, tens of thousands more deaths, Watergate, impeachment and a spiral of distrust in government that hasn’t bottomed out, even today.

Humphrey nearly won the popular vote that year and the states that would have made him president he lost by inches. But progressives were angry. Angry at the war. Angry that Humphrey beat Eugene McCarthy for the nomination. So we got Nixon.

Let’s move on to 1980. Progressives were mad at Jimmy Carter, mad that Ted Kennedy didn’t win the nomination, mad about a lot of things. And so we got Ronald Reagan and decades of tax cutting and deregulation that’s morphed into multiple banking scandals, and a budget so starved for cash that people are seriously considering cuts in social security and other programs that provide the glue for a stable society.

Then there was 2000. Remember? Tweedle dee and Tweedle dum? What difference did it make whether Bush or Gore won? Now we know, don’t we? Two wars, a meat cleaver to progressive taxation and agencies designed to protect the public turned over to a pack of greedy, hungry industry wolves. Thank you Ralph Nader and all of you who voted for him.

So now we’re all mad at Obama. He didn’t get us single payer. He didn’t take over and break up the big banks. He’s been slow on don’t ask don’t tell and suspect on cap and trade. He doubled down on Afghanistan. And where’s immigration reform?

Last year I sat in on one of the larger progressive conferences of the year, sponsored by the organization Campaign for America’s Future. You could feel the electricity of hope and change crackling everywhere. This year a lot of people stayed home. Some attended just to heckle Nancy Pelosi. Nancy Pelosi! The most progressive Speaker of the House ever. The Speaker who raised health reform from the ashes of Scott Brown’s election in Massachusetts. The Speaker who’s guided just about the entire progressive agenda through a House that by no means has a progressive majority.

If enough progressives pout long enough this year we may well wind up with John Boehner as Speaker and Jim DeMint as Senate Majority Leader. Yes, Jim DeMint.

Add Rand Paul, Sharon Angle, Mark Rubio, and a few others to the Senate Republican caucus, mix in a wave of media about Tea Party victories, and the intimidation that causes in Republican Senate ranks, toss in a dash of resentment and anger at Mitch McConnell and John Cornyn for using the Republican Senate Campaign Committee as a weapon against extreme right wing candidates and what do you have?

Or, maybe you think that can’t happen. I remember, vividly, how happy so many Democrats were that Ronald Reagan won the Republican nomination in 1980. He was so far to the right he was unelectable. Right.

Progressives, Instead of focusing on a wish list of what’s yet undone, how about paying more attention to all the good stuff that’s happened since the 2008 election?

Let’s start with two fairly progressive Supreme Court nominees and the possibility of one or two more if the Democrats can retain a working majority. How about a nuclear arms agreement with Russia? That’s not important? The new health reform act may not be the plan of our dreams, but it’s a giant step down that road and establishes health as a right—no small achievement. There’s a revolution under way in education because of the billions stuffed into the original stimulus plan. And that plan is starting to disburse billions more for mass transit and green energy programs.

Move on to the federal agencies where so much vital work goes on, generally away from the front pages. The Obama FCC is going to get us a national broadband network despite resistance from the corporate giants. The SEC is working for the public again, not the traders. Across the board the Obama appointments have been excellent, public-minded professionals, not revolving door corporate hacks.

Financial reform’s not yet done, but likely. And a reasonably strong reform bill, too, given the infantry division of lobbyists arrayed against it. Energy policy is touch and go. But if Republicans controlled things or the Democratic majority was thinner energy reform wouldn’t even be under consideration. Immigration reform will be on the agenda and don’t count out its passage—-and not just money to complete the border fence.

And lest we forget, Bush’s tax cuts for the rich expire this year. Just use your imagination on how differently the votes on extension will be because Democrats run things.

Anyone active in politics, from the left or right, should know by now that you don’t score by throwing long bombs. Political gains, as exercised under the U.S. system, come in yards and inches. What’s important is to be on the offense and to be moving the ball.

For progressives to sulk this year is to hand the ball over to a 21st century Nixon or Reagan or Bush—-or worse.

To do that you would have to be out of your mind.

(Joe Rothstein can be contacted at joe@einnews.com)

Can BP Survive This? Not Likely

June 9, 2010

To all you good folks in the Gulf states who are taking a financial beating and expect BP to make you whole, good luck.

And good luck to the cities, states and federal government who expect BP to pay for the cleanup and other costs created by BP’s gross incompetence.

Exxon, a much bigger and richer company, left a trail of cost and wreckage in the wake of the Exxon Valdez. Don’t expect BP, a company notorious for its indifference to safety and environmental laws and regulations, to suddenly emerge as a model citizen—-particularly with so much money is at stake.

If fact, don’t expect BP even to survive this calamity at all. More likely is that BP will file for bankruptcy and shed whatever obligations it can ditch in court. Then, look for some suitor to absorb a cleaned up BP balance sheet and feed off the tens of billions of barrels of oil reserves remaining in its portfolio.

An industry insider tells me the buyer of BP won’t be Exxon or Shell, since such a deal wouldn’t sit well with anti-trust enforcers. Think more along the lines of Brazil’s Petrogras—a rich and growing company that is bound to covet BP’s properties.

And add to the list of companies that will be taken down by this disaster lots of small drillers and other oil related companies that no longer will be able to afford insurance because the magnitude of the Deepwater Horizon costs already are driving premiums sky high.

Wall Street apparently isn’t seriously considering the possibility of a BP bankruptcy. Of 17 financial analysts who follow the oil and gas industry most are encouraging their clients to buy BP stock. They look at the current price, now down about 40% since the Deepwater Horizon blowout, they calculate the $5 billion BP netted in the first quarter, and the $17 billion it made in 2009, and the quality and quantity of the company’s oil reserves and they see a bargain of an investment.

This is how it often goes with people whose only goal is financial profit and whose reading material is predominantly numbers, not words. Many analysts were hawking Enron’s stock on the way down, too.

But before this is over, BP is likely to owe the federal government up to $4,300 a barrel for every one of the tens of millions (maybe even hundreds of millions) of barrels gushing into the Gulf. That’s the penalty Washington’s permitted to extract under the Clean Water Act.

BP also owes the government royalties on every gallon of gas pouring from the uncapped pipe. That explains why BP is so reluctant to make an honest estimate of the flow rate.

All this before clean up and compensation costs. How much compensation? The tourist industry in the affected states (and this number doesn’t even include Florida) is estimated at $20 billion a year. The Gulf seafood industry generates another $20 billion a year. It may be years before these industries recover.

And then there’s the matter of cleaning the beaches, the marshes, the fresh water areas—-a number that would compound quickly in the event of an untimely hurricane, or the escape of oil to the U.S. east coast.

Naturally BP will fight to limit its exposure. Exxon spent 21 years in court after the Exxon Valdez disaster and managed to whittle its payment to affected fishermen and other injured parties down from $5 billion to $500 million. But the Exxon Valdez experience toughened the penalties for everyone coming after it. And the Gulf states will be able to apply considerably more pressure than did far away Alaska.

Furthermore, Exxon’s safety and environmental record pre-Exxon Valdez looks pristine against BP’s. In recent days the investigative news service ProPublica has compiled a string of investigations aimed at BP for a wide variety of incidents during the past few years.

The charges include intimidating workers who raised safety or environmental concerns, falsifying inspections of fuel tanks at a Los Angeles refinery (inspectors were forced to get a warrant before BP allowed them to check the tanks), failure of an emergency warning system before the deadly 2005 Texas City refinery explosion, dangerous pipeline maintenance failures in Alaska, and others.

So don’t expect BP to do what its president, Tony Hayward says it will do. Hayward will be long gone before it’s time for BP to put up real bucks to right its wrongs. And the company’s culture shows little evidence of having been hit by anything close to pangs of conscience over this. Remember, BP’s first act after the drilling rig exploded and sank was to send in a platoon of lawyers to persuade fishermen to trade their right to future claims for an immediate $5,000 check.

The choices here are stark. The U.S. either needs to do what former Labor Secretary Robert Reich suggests and take over the company and its assets to recover public and private costs, or to watch helplessly from the sidelines while issues get litigated for years, BP is ordered to pay gigantic sums and avoids them through bankruptcy.

That’s the money side of it.

Then, there’s the question of accountability, which we’ve seen so little of lately. Government officials can lie us into wars and suffer no retribution. Wall Street moguls can gamble away investor and depositor money and keep their jobs, with bonuses, no less. How about one time, this time, bringing to account those responsible for devastating so much property and so many lives? How about doing what legendary frontier Judge Roy Bean was fond of saying: “Give ’em a fair trial. And then hang ’em.”

I’m not suggesting hanging. But some jail time might focus the attention of others in finance and energy about having respect for something more than the next quarter’s stock price.

(Joe Rothstein can be contacted at joe@einnews.com)