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Reports

The Michael Jordan of Bailouts

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Posted on May 27, 2010

By David Sirota

Based on John Kerry’s 2004 declaration that “I actually did vote for the $87 billion before I voted against it,” you could credibly argue that the Massachusetts Democrat is the founder of modern political flip-flopping—the James Naismith of the political world’s most dazzling sport. By that metric, though, you would also have to acknowledge that Kentucky Republican Sen. Mitch McConnell is the game’s Michael Jordan.

As the upper chamber’s GOP leader, McConnell backed the Wall Street bailout in 2008, calling it “one of the finest moments in the history of the Senate.” A year and a half later, he was telling reporters that he vehemently opposes bailouts of big business.

Now, just weeks after that textbook “for-it-before-against-it” feat, McConnell and his Republican cohorts are leaping past the Kerry-inspired fundamentals. Determined to pull off an all-star caliber act of “for-it-against-it-for-it” acrobatics, the GOP is pushing a bailout for yet another big business: the oil industry.

True, we haven’t heard that word—bailout—during the Gulf of Mexico disaster, which the government calls the worst petroleum spill in U.S. history. But we have heard a lot about the oil industry’s “liability cap”—a term that is just another synonym for bailout.

See, someone is going to bear the massive cost of damage to the Gulf Coast economy. The lost wages, sales and revenues will be borne by either (A) fishermen, motel owners and other small businesses whose livelihoods are being choked in oil plumes, (B) taxpayers whose cash would finance disaster aid and victims’ benefits or (C) oil firms whose rig caused the catastrophe in the first place. In this particular calamity, a bailout would permit C to pass off major portions of the economic cost to A and B.

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Which, of course, is precisely what existing liability caps are designed to do.

That’s right, under current law, “Oil companies face unlimited liability for the cleanup costs of an offshore spill, but their liability for economic damages to affected communities is capped at $75 million,” reports Congressional Quarterly.

Considering the fact that oil-spill costs can far surpass $75 million, this is the old “too big to fail” idea propping up the oil companies. Applied specifically to the gulf cataclysm, the statute suggests that the national interest is best served by having taxpayers and communities foot the bill for the destruction rather than having companies like British Petroleum suffer the balance-sheet pain of paying the full damages.

In response, Democrats are proposing sensible new legislation to eliminate the cap and reaffirm the “polluter pays” principle. As President Barack Obama’s associate attorney general told Congress this week, “We don’t think there should be an arbitrary cap on financial liability.”

Yet, McConnell apparently does. Appearing on “Meet the Press,” the Republican leader, who weeks ago railed against “guaranteed perpetual taxpayer bailouts,” not only refused to support eliminating the liability cap, but warned of “the danger of taking the cap too high”—in effect, opposing even moderately reducing the size of the bailouts that the cap inevitably creates.

Obviously, the GOP is trying to help its oil industry benefactors stall for time. As Sen. Bernie Sanders, I-Vt., said in chastising the obstructionism, “A year from now, the television cameras will be gone, and it will be a fisherman who’s trying to file a claim and he’s going to be by himself” with no means of redress.

That’s the Republicans’ unfortunate goal, and because of the GOP’s intransigence, prospects for the Democrats’ legislation remain cloudy. What’s clear, however, is McConnell’s place in the Flip-Flopping Hall of Fame. His spectacular contortions have earned him a hallowed spot in the building’s brand new Bailout Wing.

David Sirota is the author of the best-selling books “Hostile Takeover” and “The Uprising.” He hosts the morning show on AM760 in Colorado and blogs at OpenLeft.com. E-mail him at ds@davidsirota.com or follow him on Twitter @davidsirota.

© 2010 Creators.com


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By homas, May 30, 2010 at 8:18 am Link to this comment

McConnell is a traitor. Plain and simple.

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By ofersince72, May 29, 2010 at 11:07 pm Link to this comment

John…...Amen

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By John Kace, May 29, 2010 at 10:55 pm Link to this comment

That Texas sized trash pile has been in the Pacific ocean and growing for years and you dont see anybody doing anything about it. If we were a real country our military would have taken charge. I say put those blackwater killers in wet-suits and pay them to do some real work. Fuck those killers and the sons of bitches who pay them. Where is Green-peace and the boy-scouts on that one? There is work for the homeless and the illegal immigrants. Bleeding heart liberals wont allow it, weapons companies own the republicans the drug companies own the democrats.

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By John Kace, May 29, 2010 at 10:44 pm Link to this comment

I kind of see this as a bad thing/good thing. Maybe we run out of oil before planned. Nope we will destroy the planet before we let Iran or Hugo Chavez have their day. We are already ruled by machines. Politicians they are called we are but slaves, yet talk of slavery 15 decades past divides at will. Sad.

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By John Kace, May 29, 2010 at 10:31 pm Link to this comment

Martha: They should of had some kind of hydraulic shut-off valve installed every fifty to a hundred feet. The price of gas is going to go down. Those assholes want us to forget about this. We will too.

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By MarthaA, May 29, 2010 at 8:25 pm Link to this comment

Too bad they keep putting that dispersant into the oil and mixing the oil with the water, because it seems that it would be easier to vacuum/skim the oil off the top of the water into tankers if they didn’t do that, unless there is so much oil that it covers the ocean to a depth that the tankers motors can’t run.  I am of the opinion that emulsifying the oil with the water should be stopped.

It is ironic that the world is running out of oil, and the U.S. is fighting unforgivable wars to gain control of other nation’s oil and their own oil is spurting over 2 million gallons a day into the ocean. 

There is no way I will ever blame the whole Right-Wing oil baron private enterprise scenario on the Obama administration, because that is apparently what the Right-Wing has chosen to try to do, but President Obama had ever right to trust that the professional oil barons knew what they were doing, because the country isn’t ready to go cold turkey off oil, but after this Right-Wing scenario, we may be back to having to ride horses, especially if the Right-Wing manages to provide the nation with a few more of the same type of catastrophe in order to have oil.  Besides, in the end times, isn’t Russia suppose to attack Israel on horseback?  Maybe all the Right-wing destruction will end up putting the whole world on horseback.

Louisiana and the Gulf Coast was coming back strong.  My personal opinion is that there are those in the Right-Wing that knew what they were doing and deliberately sabotaged the site for the destruction of the Gulf Coast, because immediately the Right-Wing media was tooting that this was Obama’s Katrina, before anyone even realized the full extent of the disaster.  If so, they have definitely changed the Gulf Coast and are making the Gulf Coast and part of the Atlantic Coast uninhabitable for man or beast.  And, who knows how far a few hurricanes can scatter that oil.

It is unacceptable that these professionals with all their expertise and money can’t stop the flow of oil.  It would seem that they should be able to make a cap and screw it into the pipe coming from the well and close it.  With all the resources of the nation and their subs, it would seem that could be done, if they really wanted to.

I don’t think they really want to, because the Right-Wing is too ready to blame the government., when it is not the government’s fault at all.  The government relying on private industry to know what they are doing in a private capitalist nation is not the government’s fault, but it is time for the government to be thinking of changing to a socialist type capitalist country and leave all the private for profit capitalists who don’t consider the country’s populace or the environment behind. 

It is time government quit relying on private industry to protect interests of the populace, because they do not, never have and never will.  It is time our government socializes capitalism and takes private profit out of the picture.

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By G.Anderson, May 29, 2010 at 7:39 am Link to this comment

The absurdity of this article is amazing….

Why? Because there isn’t going to be any clean up.

Oh sure, they’ll try everything from pumping sea water into super tankers to filter out the oil, to microbes to eat it.

But none of it will make much difference. In fact it’s likely that the chemical dispersants mixed with oil will soon be raining on Florida. The damage that has been done to the Gulf, will be there for many hundreds of years after we are all dead..

Just as, there is still suffering from the Exon Valdez oil spill many decades after it happened.

This oil spill makes that one look like an eye dropper full.

It’s more than likely that the entire region will have to be relocated, some where else just like Katrina, never to return.

In which case who has the liability, is the least of our concerns.

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By Fat Freddy, May 29, 2010 at 6:04 am Link to this comment

Norman michael harman

You just made a good argument for free market capitalism.

1)Limit the power that government has to give (rent seeking)

2)Hold those in error responsible for their mistakes.

You are one step away from being a free market advocate and you probably don’t even know it. Now, we just need to get you off of the Keynesian economic theory crap.

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By Fat Freddy, May 29, 2010 at 5:24 am Link to this comment

There’s another important fact that you conveniently left out, Mr Sirota. The US government owns the “property” that BP was drilling into. If I own a piece of property, and I lease it to a company, and there’s an accident, there’s a good chance I could be held financially liable for clean up costs.

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By Fat Freddy, May 29, 2010 at 4:49 am Link to this comment

DaveZx3

I would add, real wealth can only be achieved by savings and investment in production, not through debt and consumption. You sound like a student of the Austrian School smile

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By Fat Freddy, May 29, 2010 at 4:21 am Link to this comment

You seem to have left out one important fact, Mr Sirota, regarding the liability cap. When the federal government instituted that cap, they also instituted a per barrel tax on all oil produced in the US. Since business taxes ultimately get passed along to consumers and shareholders, we’ve already paid for this. The problem is, the federal government, instead of setting up some sort of trust fund, simply made it part of the overall budget, and we all know what the federal budget looks like. The government spent the money it collected. If an insurance company did that, they would be criminally liable.

Also, regarding the cost of the spill itself, BP chose to “self insure”. They have no liability insurance, at all. The costs end up getting absorbed by the shareholders, even though it was a management decision. How many people have shares of BP in their 401(k)s? How about state and local pension funds? I don’t know, but we all know what happened to pension funds and 401(k)s when Enron went down. I own a small construction company. The state of NJ says I must carry at least $500,000 of contractor liability insurance. I carry $1,000,000. The idea that BP, or any other company, is allowed to self insure, sickens me. I would love to see upper management sued, personally, by the shareholders for that bonehead decision.

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By DaveZx3, May 29, 2010 at 12:29 am Link to this comment

By johnnyfarout, May 28 at 12:45 pm #

“Some stupid as stones comments here. First off Tex, money doesn’t come from the work and time of the people… it comes from the Federal Reserve System of fiat banking”

I think you are deluding yourself Mr. Farout.  Without work, there is no money, but worthless paper.  Tex was talking of real money, which is produced by the sweat of labor. 

The piece of paper printed by the federal reserve is only a representation of money, legal tender and currency only by decree, but not real money or not convertable to real money. 

So far the US is kept afloat by the printing press and loans from their “friends”.  But sooner or later, the US must get back to leadership in the production of high quality, innovative products.

The value of a country is not the amount of paper it can print, but the gross national product of its citizens. 

The fiat system only allows entities, including governments to perpetuate the illusion that it is possible, by manipulating the fiat, to live above ones means.  Socialist governments could not exist without a fiat system because they spend way more than they produce. 

If it was up to most conservatives, they would probably want to go back to the gold standard.

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By carl moore, May 28, 2010 at 10:11 pm Link to this comment

Memphis Slim wrote:  “I don’t care how rich you are.  I don’t care what you’re worth.  When it all comes down you got to go back to Mother Earth.”
    That was in the old days.
   
    The Gulf of Mexico and the shorelines, marshes, bayous and coral reefs are…..strike that - - used to be - -  the spawning ground for an abundance of life on Mother Earth.  What price must she pay?

    British Petroleum is still working on it.

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By nemesis2010, May 28, 2010 at 5:51 pm Link to this comment

By rfidler, May 28 at 10:57 am

”BP will end up paying well over $15 billion when all is said and done; and “when all is said and done” won’t end for several decades; fishermen, tourism providers, uncounted new “victim” classes and welfare scammer will get paid; and finally, BP won’t be able to raise prices to recoup the losses because it has to compete with all the other oil companies for market share.”

Who cares how much BP ends up paying? They have a proven track record of negligent behavior. People’s lives are ruined. But you are dreaming, Mitch McConnell has already begun crying the “Woe is BP mantra” and both BP and Transocean are in court attempting to short circuit any attempts by those seeking just recompense.

It’s always touching to see a conservative cry foul about a few welfare scammers and the victim class while totally ignoring the rigged game by corporations to steal the wealth of the working poor and middle classes. It brings a tear to my one good eye.

Big Oil is an oligopoly and the prices are fixed. OPEC is not called a “cartel” for nothing. Jeezus on a Ritz cracker what planet do you live on?

Corporations are anti-free-market. AmeriCorp—a wholly owned subsidiary of Big Corp—is not a free-market economy; it is mercantilist. Iraq and Afghanistan are public financed military actions to protect private interest access for exploitation of the resources of other nations.

By rfidler, May 28 at 10:57 am

”I realize that terms like “compete” and “market share” are incomprehensible to redistributionist progressives, but that is the way the real economy works. BP will suffer mightily for this, as well it should.”

Get outta here with that that RNC pseudo-conservative mantra! Progressives—on average—are far superior to conservatives. It’s like W. Wilson said: “A conservative is a man who just sits and thinks, mostly sits.”

By rfidler, May 28 at 5:38 pm

” The dominant progressive mantra is “tax the rich, soak the big boys, give handouts to the poor”

Bullshit! Stop listening to that fat-head Limbaugh and start listening to what the people are really saying. If you get to field a football team with 22 players on defense and offense while the other team is limited to 12, that doesn’t make you better, it means who’ve an unfair advantage.

By rfidler, May 28 at 5:38 pm

”Name me a single rich guy (outside of Africa) who has bought a government.”

The man who bought an army: J.P. Morgan, Robber Baron, 1871.

The man who bought a government: J.P. Morgan, Robber Baron, 1895.

The man who bought Wall Street: J.P. Morgan, Robber Baron, 1907.

Corporations have unlimited access to the so-called “people’s representatives” through lobbying efforts that real people simply do not. I’ve yet to have a single Congressman tell me to write the legislation that I, or my client, desires and have him present it as a bill and voted into law. This is a daily occurrence in their (Big Corp & Big Oil) nation’s capital.

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By FRTothus, May 28, 2010 at 2:00 pm Link to this comment

Norman michael harman, May 28 at 3:51 pm #—>  Well
said!

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By ofersince72, May 28, 2010 at 1:41 pm Link to this comment

rfidler,,,,, you should leave the
threads comedy to leefeller, at least he is funny.

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By rico, suave, May 28, 2010 at 12:38 pm Link to this comment

Norm Harman:

Well, you’re right on both counts. Yes I believe in free markets, and no, there hasn’t been one of significant size anywhere in the world. It’s possible to believe in a concept that is only an ideal. Sort of like your belief that government is better at running your life than you are. And, what don’t you understand about the term “redistributionist progressive”? The dominant progressive mantra is “tax the rich, soak the big boys, give handouts to the poor”.

Then you say, “...the fact that it’s easier for a single rich man to buy a
government than it is for a million poor men to organize.” Is that a fact? Name me a single rich guy (outside of Africa) who has bought a government. I know of a few poor guys who have stolen governments- Castro, Chavez, Mao…

You’re right though. I don’t know of a single organization sponsoring a million poor men… oh, wait…, SEIU, AFSCME, IBT, USW, UMW, UAW, ACORN, NAACP… never mind! And you’re asking me what I’M talking about???

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By Norman michael harman, May 28, 2010 at 10:51 am Link to this comment
(Unregistered commenter)

rfidler:
“compete?” “market share?” “redistributionist progressives? What the hell are
you talking about?

You don’t actually believe in the fantasy of the “free market,” do you? There
hasn’t been a “free market” economy since Homosapiens killed off the
Neanderthals nearly 10,000 years ago - and probably not even then.

It’s actually quite simple; either private wealth uses government to control the
people and increase their wealth, or people organize and force government to
work for them. The latter is never quite as efficient or powerful as the former.
This is largely due to the fact that it’s easier for a single rich man to buy a
government than it is for a million poor men to organize.

BP will not pay this bill, whether Congress “lifts the cap” or not. No corporation
ever has to pay the bill. As usual the people will pay, either in the form of taxes
as the government picks up the tab (as we did after the “free market” fiasco
known as the “financial collapse”) or as passed-on extra costs when we buy
gas for our cars, pay our electric bills, buy groceries, etc.

How else could it be done? This is America after all, the land of free enterprise
and entrepreneurial spirit, or, as old Calvin put it, “the business of America is
business.”

If we were serious about placing blame and responsibility, the top management
of BP, Trans-Ocean, and Halliburton would all be arrested and jailed without
bond. Upon conviction for criminal negligence in the deaths of 11 workers and
massive fraud (they consistently lied in their statements to regulators about the
safety of their operation), all of their personal assets should be seized, all three
companies should be seized, and the proceeds from the sale of these should
be allocated accordingly to those who suffered losses of their livelihood from
this spill. The criminals should then be sentenced to a minimum of ten years
working at cleaning up the mess they made.

In addition, the top managers of the responsible regulatory agencies who were
in bed with these companies should be arrested - also for criminal negligence
and fraud -  and upon conviction, be sentenced to work along side their
corporate cronies.

Then we should turn our attention to Congress and the White House and vote
these corporate shills out into the street where they belong.

WIll any this happen? It’s about as likely as Stephen Hawkings getting out of his
wheelchair and walking across the Atlantic Ocean.

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By steve pesce, May 28, 2010 at 10:24 am Link to this comment
(Unregistered commenter)

I just find it amusing that you see this as only a Republican flaw.  Yes, the Republicans are most nakedly corrupt.  But both Dems and Reps deregulated everything that protects us and voted for the bailouts.  They will all go along with letting BP off the hook in many ways still to be revealed.  They’re all in the same business.  And they take money from the same people.  They’re all on the take.  And taking money in exchange for votes is a criminal activity.  Influence peddling, bribery, etc.  All of this is crime.  Put these Senators and Congressmen (President) in jail.  I’m not kidding.  Get the lobbyists out of DC.  Get the money out of politics.  No campaign contributions, even to your own campaign.  No political ads by anyone except paid for by US the taxpayers via public financing.  And lobbyists can’t work for candidates nor government officials for three years.  And vice versa, staffers can’t work for industry.  And office holders can work for industry for three years after their service.  (We will pay their salaries for three years to sit at home and not go into industry.)  And term limits.  Government has a tendency to become corrupt over time.  It should be a short stop over for people who are willing to give up that time and money to do the right thing.

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By Jimnp72, May 28, 2010 at 10:13 am Link to this comment

Some minority leader-the man is a common low class thug not fit to take out my
garbage.

he could not say much during the War Criminal’s reign as he had his head too far
up the war criminal’s ass.

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By wildflower, May 28, 2010 at 9:09 am Link to this comment

Re Mike: “One saving grace is that Southerners will see what side of the toast the butter is on when the Republicans side with mega corporations.”

I wouldn’t count on this, Mike. The Southeast has an over abudance of slick irresponsible Republican representatives like Mitch McConnell who work night and day to limit our government’s effectiness and to make sure that the public pays and accommodates every desire of big business – even in matters involving public health and safety.

Take Tennessee’s Bob Corker, for example. I’ve noted this guy has conveniently opted to ignore the BP environmental disaster. To acknowledge it, might interfere with Corker’s current efforts to undermine the Enviroment Protection Agency’s new safety rules in regard to lead paint. Instead of advocating for an increase in the number of EPA qualified trainers for contractors in his State, Corker is trying to get legislation passed which would bar the EPA from levying fines against unqualified contractors.

Like a lot of other Southern Republicans, Corker is the kind of unethical politician who believes it is far better to undo safety laws and place the public at risk – including laws protecting children, pregnant women and construction workers from lead paint dust - than to do anything to strengthen the abililty of government agencies like the EPA to protect the public from such environmental dangers. God forbid that mega corporations and/or businesses and in the South should have to put out a few dollars to protect the health of the public.

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By johnnyfarout, May 28, 2010 at 7:45 am Link to this comment

Some stupid as stones comments here. First off Tex, money doesn’t come from the work and time of the people… it comes from the Federal Reserve System of fiat banking. Read up on it and stop with the primitive notions of capitalism is all natural and shit and springs from a place that is rational. The way the “real economy works” is a laughable phrase. Since when has an oil company competed with another oil company in the free and open market place of commerce and ideas? I chuckle as I think this. Maybe in the cloak rooms stuffed with lobbyist vying for a face to face with a lackey dog congress person who actually wants to blow them. Some jungle we got there… all red in tooth and claw. Market share suffering…more laughter… BP has 40% of what our illustrious military suck down or up nowadays. The military protect this company. Real competitive on the part of the old British Empire of freedom and good times for all; they are now part and parcel of our freedom loving empire and the USA treats them real good. Our congress people don’t want these guys suffering…but we can take it good just like we should for our country and the best one on planet earth at that… Hell even the aliens are clambering for a spot on our ticket. It’s always what you love insanely that wrecks you…tragic but true. America loves oil and all the attendant nightmarish stuff that comes with it and suffering from spewing around the blackened and juicy dead of eons past was never a smart life style choice but hey, we’re the winners and winning ain’t pretty, now, is it? rfidler even has the victims winning… nice use of propaganda…A+

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By mike112769, May 28, 2010 at 7:41 am Link to this comment

A politician that is covering for the people that bought him? Really? Where’s the surprise?

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By tedmurphy41, May 28, 2010 at 6:46 am Link to this comment

Whomsoever pays these pipers, calls the tune.
Try waking up to this fact.
As succinctly as Greg Palast’s book title states: its ‘The Best Democracy That Money Can Buy’.
Please don’t try to sell this brand of democracy to anyone else.

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rico, suave's avatar

By rico, suave, May 28, 2010 at 5:57 am Link to this comment

Sirota once again proves his laziness. The less vapor-locked, straw-man wielding, sober media sources of course are reporting things more realistically: The $75 million cap will come off; BP will end up paying well over $15 billion when all is said and done; and “when all is said and done” won’t end for several decades; fishermen, tourism providers, uncounted new “victim” classes and welfare scammer will get paid; and finally, BP won’t be able to raise prices to recoup the losses because it has to compete with all the other oil companies for market share.

I realize that terms like “compete” and “market share” are incomprehensible to redistributionist progressives, but that is the way the real economy works. BP will suffer mightily for this, as well it should.

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By Inherit The Wind, May 28, 2010 at 4:18 am Link to this comment

Isn’t it amazing?  They are going to empty our pockets to save BP but if we say, “No! BP has to pay!” they cry “SOCIALISM!!!!”

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By SoTexGuy, May 28, 2010 at 3:34 am Link to this comment

The only thing that is clear is that directly or indirectly We the People will pay.. Through bailouts or new taxes or higher fuel and energy prices. Money doesn’t come from the government or from the ground (as those peddling petroleum futures suggest).. money is only derived from the time and work of people.

Whatever comes out of the Congress about the liabilities of corporations like BP it will not change who pays and it certainly will not put the necks of those individuals responsible, whether in the corporations or holding the public trust, on the line…

..and it certainly won’t put a stop to the giant sucking sound of work and time and the money derived from that.. disappearing from our communities, states and our country into the obscure coffers of multinational corporations that repeatedly show they have no idealistic commonality with average Americans.

Sure, stop coddling the Oil industry.. but the only thing Congress and the President can do to rein in the the Petroleum problem is to put forward an aggressive plan with timetables and goals to absolutely wean the USA and the world off the oil spout.. THAT would see a stop to all the foolishness.. out in the Gulf and in Washington DC.

Adios.

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By Mike789, May 28, 2010 at 3:28 am Link to this comment

It’s going to be a beeee-atch in the courts. Existing law has hampered the stopping the gusher and clean-up. Maritime law, which was originally put in place for ships in transit, should not apply to stationary oil rigs. Achieving such an adjustment, ex post facto, will be quite a feat for Congress. I hope the high paid lawyer community is up to the task.
  One saving grace is that Southerners will see what side of the toast the butter is on when the Republicans side with mega corporations. All the wedges issues put aside, they’ll jump ship and belie their claims of support for small businesses. Better keep a sharp lookout at the voting for bills to make people whole.

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