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The Corporate Stranglehold: How BP Will Make out Like Bandits from Its Massive, Still Gushing Oil Disaster

The existing $75 million cap on damages for offshore drilling companies is a bailout every bit as disgusting as those recently bestowed upon Wall Street.

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There is a theory of law—a very conservative theory, at that—which actually says that BP should have to pay out much more than whatever the ultimate economic tab for the oil mess comes to. The government should amplify, rather than reduce, those costs in order to ensure that dealing out damage to innocent bystanders does not become a regular business practice. If the total cleanup tab is really $14 billion, that sum only amounts to BP's total 2009 profit. We can't have companies dealing out crazy economic and ecological damage on a regular basis, which is why Federal Judge Richard Posner, an appointee of Ronald Reagan, suggests imposing massive penalties on firms that do so.

The point here is not to argue that the way conservatives think about markets is right, but rather to note that the conservative conception offers the minimum legal framework necessary for even theoretically maintaining a functional economy. And by that standard, two of the linchpins of the American economy, finance and energy, are not even acting as markets. They are acting as parasites on the broader economy, cannibalizing other industries for their own benefit. For years we've heard politicians bloviate about the need to cut taxes and reduce costs for big corporations in the name of jobs. But the eight million jobs lost in the aftermath of the Wall Street crash and the millions more to be destroyed by BP's recklessness put the lie to these slogans. BP and Wall Street are not using their political protection to create jobs, strengthen the economy and further the public good. They're using that protection to kneecap other sectors and convert the damage to profits and bonuses.

And yet defenders of these predators still use the language of markets to defend the policies. Senate Minority Leader Mitch McConnell, R-Ky., said that without the $75 million liability cap, smaller companies would be unable to compete with giants like BP. Sens. James Inhofe, R-Okla., and Lisa Murkowski, R-Ala., have made the same argument. President Barack Obama's Secretary of the Interior, Ken Salazar, supports raising the liability cap, but has said $10 billion is too high because, " You don't want only the BPs of the world to be involved in these operations."

This argument is absurd. If any company--large or small--unleashes economic damage of more than $75 million, it should have to pay for it. If you are in the business of creating huge ecological risks, you should also, at minimum, be in the businesses of paying for it.

After more than a year of Republican obstruction, it's no surprise to see McConnell and his underlings resorting to whatever tactics they can to block reforms and curry favor with big corporations—nor is it a surprise to see the Obama administration caving to outrageous Republican demands after witnessing both the health care and Wall Street reform negotiations. But even for McConnell, this marks a new low. The senator from
Kentucky spent months alleging that the Wall Street reform package includes hidden bailouts for Wall Street, a charge that is simply not true. Now, after sounding the alarm on a fictitious bailout, he is actively going to bat for BP's very real bailout.

BP isn't the only company getting away with murder here. Transocean, the firm that actually owns the rig BP was leasing, also has its liability capped at $65 million. If Congress or regulators do not intervene, taxpayers and other businesses are about to do Transocean a big favor, even though Transocean has done everything it can to avoid contributing to society. The Houston-based company even opened an office in Switzerland with just a dozen employees in order to dodge
U.S.
corporate income taxes. Transocean also had the rig insured for more than it is actually worth. With the liability cap, it's likely to actually profit from the disaster. Just in case the government decides to actually do something about this heist, the company is in a hurry to pump $1 billion in cash out to its shareholders in the form of dividends—leaving it with less money to pay out in any future lawsuits.