Who's Picking Up The Tab Again?
by digby
Huzzah:
President Obama visited Louisiana yesterday afternoon to observe the response effort to the BP oil spill, which he called a “potentially unprecedented environmental disaster.” “Your government will do whatever it takes, for as long as it takes, to stop this crisis,” he pledged. But Obama said taxpayers would not be on the hook for the cleanup, saying “BP is responsible for this leak — BP will be paying the bill.”
Really?
The federal government has a large rainy day fund on hand to help mitigate the expanding damage on the Gulf Coast, generated by a tax on oil for use in cases like the Deepwater Horizon spill.
Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheries and other wildlife habitats.
Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.
That fund is a drop in the bucket. The lost revenue and damages are going to add up to much more than a billion. And the fishermen and other actual humans (as opposed to "corporate persons") are not going to be able to sue BP for much (75 million is chump change) --- that drop in the bucket fund is supposed to cover all those costs and more. And when it's gone, either the taxpayers pick up the rest of the tab or that's it.
Once more with feeling. Quoting from the financial advisory I blogged about below:
This will be a financial calamity for many firms, not just BP and its partners and service providers. Their liabilities are immense and must not be underestimated. The first estimate of $12.5 billion is only a starter.
Wrong. The law caps BPs liability at 75 million (plus costs of clean-up, which will be substantial.) Everyone else is going to have to line up for that paltry 1 billion, which nobody thinks is going to be enough.
This sheds some light on just how efficacious that 50 billion dollar bank fund they are all so havey-cavey on will actually be, doesn't it? TBTF is always TBTF.
BTW: BP made $163 billion in profits from 2001-2009. It made $5.6 billion in the first quarter of this year alone.
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