2010 - %3, July

API: We Like Our Handouts!

| Tue Jul. 6, 2010 8:58 AM PDT

The Gulf oil disaster has created some impetus in Congress to reduce the lavish subsidies granted to oil companies to incentivize and spur domestic production. Multiple bills are under consideration that would rescind billions of dollars in tax breaks and other handouts to Big Oil. But the industry's lobbying group, the American Petroleum Institute, isn't about to let these giveaways go without a fight.

API launched television ads in ten states this week to attack what they classify as "new taxes on the oil and natural gas industry." Actually making oil companies pay their fair share like other industries, API claims, would have a "devastating effect on our jobs, economic recovery and our energy security."

A bid to cut $35 billion in tax subsidies to oil companies from Sen. Bernie Sanders (I-Vt.) lost by a vote of 35-to-61 several weeks ago, but there are several other legislative efforts underway to cut major subsidies for oil companies.

Sens. Bob Menendez (D-N.J.), Bill Nelson (D-Fla.) and Jeff Merkley (D-Ore.) have also introduced a bill that would raise more than $20 billion in the next 10 years by recouping royalties that oil companies haven't been paying to drill on public lands, barring oil companies from dodging US corporate taxes, and ending some tax breaks granted to oil. In the House, Rep. Earl Blumenauer (D-Ore.) has circulated legislation to eliminate $30 billion in tax breaks for oil companies. The Obama administration put its own plan forward well before the Gulf crisis, which would raise up to $39 billion in the next 10 years by cutting 12 tax breaks for oil, gas, and coal companies. Some manner of subsidy reform is expected to be included in an energy and oil-spill package after the July recess.

Sima J. Gandhi, a senior policy analyst at the Center for American Progress, has a good takedown of API's arguments. And it's worth noting that even the proposed cuts to subsidies would be just a fraction of what US citizens hand out to oil companies every year. Between 2002 and 2005, we spent $72.5 billion on fossil fuels between 2002 and 2008, an analysis from the Environmental Law Institute found last year. This is even more absurd when you consider that most of these oil companies really don't need a hand, given how much money they make every year. Exxon made $6.3 billion in the first quarter of this year alone; BP made $5.5 billion pre-oil disaster. 

The API ads start today in Colorado, Michigan, North Carolina, North Dakota, Pennsylvania, Virginia, Maine, Missouri, Ohio, and West Virginia.

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BP: Putting the "Fun" in Dysfunction

| Tue Jul. 6, 2010 8:50 AM PDT

Talk about creepy foresight meets dark humor: The UK Metro unearthed a 1970s board game marketed by BP, "Offshore Oil Strike." The game's tag line, "The thrills of drilling, the hazards and rewards as you bring in your own …" seems somewhat regrettable given the company's current situation.

Metro explains how the "exciting board game for all the family" works:

Up to four would-be tycoons can compete at exploring for oil, building platforms and laying pipelines to their home countries.
But BP Offshore Oil Strike players must also avoid the dreaded 'hazard cards', which state: 'Blow-out! Rig damaged. Oil slick clean-up costs. Pay $1million.'
Unhappily for BP, that is just one per cent of the amount it has spent each day tackling the very real Deepwater Horizon leak, which has seen millions of barrels of oil gush into the Gulf of Mexico and hit the southern US coast.

The House On The Hill Toy Museum in Stansted, Essex, is the proud owner of a mint-condition game. "The parallels between the game and the current crisis… are so spooky," museum owner Alan Goldsmith told the paper. Spooky indeed that simulated blow-outs were once BP's idea of family fun.

On Opposing Torture

| Tue Jul. 6, 2010 8:47 AM PDT

Jay Nordlinger is outraged:

I’ve discussed North Korea and torture. But bear in mind that the Chinese Communists are no slouch in this department. We wouldn’t want to leave them out, would we? Especially when they’re torturing Americans. Here is an article from the Associated Press: “An American geologist held and tortured by China’s state security agents was sentenced to eight years in prison Monday for gathering data on the Chinese oil industry.”

[A bit of outrage over an Obama official criticizing Arizona's immigration law during talks with the Chinese.]

There is a sickness in our society, ladies and gentlemen — a sickness of what, back in Cold War days, we called “moral equivalence.” Let’s debate that.

I'll leave to another day the burning question of whether assistant secretary of state Michael Posner should have discussed Arizona's law with the Chinese. But did Nordlinger seriously write about Chinese torture and "moral equivalence" without mentioning the fact that it was official U.S. policy to do exactly the same thing during the Bush era? According to the AP report he links to, the Chinese torture consisted of "stubbing lit cigarettes into his arms in the early days of his detention." Glenn Greenwald remarks sarcastically:

A few cigarette stubs into a forearm for a handful of days? That's it? That's "torture"? Not according to the official definition of that term adopted by the U.S. Government, as explained by John Yoo....Placing a lit cigarette on someone's arm is unquestionably painful, but clearly does not rise to the level of pain "accompanying serious physical injury, such as organ failure, impairment of bodily function, or even death."

Here's some moral equivalence for you: how about if we oppose torture everywhere, no matter who does it? That would be the mark of a healthy society.

Finally, A Torture Investigation

| Tue Jul. 6, 2010 8:24 AM PDT

Good news for accountability advocates: The government will soon launch an investigation of claims that it was involved with the torture, abuse, and "rendition" of terrorism suspects.

The British government, that is.

Eighteen months into the Obama administration, there has been no movement towards a full, public investigation of America's treatment of detainees. But on Tuesday afternoon in the UK, David Cameron, the new conservative prime minister, announced that his government will launch an inquiry into Britain's role in alleged detainee abuse. "Our reputation as a country that believes in human rights, justice, fairness and the rule of law—indeed for much of what the [security and intelligence] services exist to protect—risks being tarnished," Cameron said. "The longer... questions [about potential abuse] remain unanswered, the bigger the stain on our reputation as a country that believes in freedom, fairness and human rights grows."

The commission is due to start its work this year, will take some public testimony, and will reach "an authoritative view" on what happened, Cameron told Parliament. The inquiry will be headed by a prominent judge, Peter Gibson, who is currently the commissioner of the UK's intelligence services. It will also include two other experts: former London Times scribe Peter Riddell and Janet Paraskeva, who runs the government's internal civil service watchdog.

The inquiry won't be fully public, however: "Some of its hearings will be in public," Cameron said, but "information about sources, capabilities and partnerships" must be kept secret. Nor will the inquiry be "costly or open-ended," the prime minister vowed. How those restrictions work in practice—and how they interact with the mandate to reach an "authoritative view"—will greatly influence the scope and usefulness of the inquiry. 

The Guardian's Patrick Wintour says "the torture issue" represents a big test for Cameron's coalition with Nick Clegg's Liberal Democrats. Investigating torture claims could also strain US-UK relations:

Torture goes to the heart of the relations between the security services and the government. Many potentially serious enemies could be made if the inquiry happens, and produces findings that compromise intelligence, or relations with the US.

As it is, the US intelligence had threatened to withdraw co-operation if the British government published details of how US agents had treated Binyam Mohamed, a British resident held at Guantanamo Bay.

Cameron's insistence that "intelligence officers [will not] be asked to give evidence in public" and "intelligence material provided to the inquiry panel will not be made public" could be intended as a sop to America, where the politics of investigating detainee abuse are very different. Though the Obama administration has released a range of documents illuminating some Bush administration policies, it has seemed reluctant to delve to deeply into the subject of abuse. That has deeply disappointed civil liberties advocates, who also point to the administration's broken promise to shut the prison at Guantanamo Bay and its waffling on its decision to try 9/11 suspects in federal court.

President Obama could easily appoint a presidential commission to investigate torture and abuse allegations, but legislation granting all-important subpoena power to such a body would have to get past a Republican filibuster in the Senate. The British system of government does not allow the minority party to block this sort of investigation. 

After announcing the inquiry, Cameron also revealed that his government was releasing the guidance that it gives to UK intelligence officers regarding detainees held by other countries. Here's what he said about it:

It makes clear that:

One—our Services must never take any action where they know or believe that torture will occur.

Two—if they become aware of abuses by other countries they should report it to the UK government so we can try to stop it.

And three—in cases where our Services believe that there may be information crucial to saving lives but where there may also be a serious risk of mistreatment, it is for Ministers—rightly—to determine the action, if any, our Services should take.

The second point could come into play in the inquiry: what, if anything, did the British intelligence services and Tony Blair's Labour government do about allegations of abuse by the United States? But the third point could end up being the most important. In America, accountability for detainee abuse has fallen most heavily on the people at the bottom of the totem pole: people like Abu Ghraib defendants Lynndie England and Charles Graner, or the unnamed interrogators who the Justice Department is investigating to see if they went further than the so-called "torture memos" allowed. The third pillar of the UK policy puts the responsibility for "enhanced interrogation" squarely where it belongs: on the shoulders of political decisionmakers. 

This article has been updated and revised.

Attacking Rick Perry on BP

| Tue Jul. 6, 2010 8:14 AM PDT

The first tar balls from the BP oil spill washed ashore on Texas beaches on Monday, which means that the spill has now hit all five Gulf states. The issue has already begun seeping into the Texas Governor’s race as Democratic opponents of Republican Gov. Rick Perry have seized upon his early remarks that the BP spill was an "act of God." While Perry's Democratic opponent, former Houston mayor Bill White, hasn't gone sharply negative on the issue, outside Democratic players have stepped into the breach. Shortly after Perry’s comments in May, a Democratic political action committee released a video slamming his record on the spill, which has begun to surface once again.

The video, from the DC-based Lone Star Project, highlights Perry’s “act of God” remarks and footage from the aftermath of a 2005 BP refinery accident in Texas that killed 15 workers and injured more than 170 others—a catastrophe blamed on BP safety violations that happened under Perry’s watch. Perry's face is seen floating alongside an image of the Deepwater Horizon rig while ominous music—apparently from the horror flick 28 Days Later—plays in the background:

The clip also notes that BP donated some $250,000 to rebuilding Perry’s fire-damaged Governor’s Mansion.

Perry has promised to take “aggressive steps” to address the BP spill (which he incidentally calls “the Deepwater-Horizon oil spill). But as more evidence of the oil spill washes ashore in Texas, I suspect that the Democratic attacks on Perry’s cozy ties with BP will only continue to pile up.

Enviro Links: Anderson Cooper vs. the Coast Guard, API Defends Subsidies, and More

| Tue Jul. 6, 2010 5:00 AM PDT

Lots of oil disaster news over the long weekend:

Anderson Cooper gives a spot-on criticism of the Obama administration's new policies regarding media coverage of the Gulf oil disaster. "We are not the enemy here," said Cooper of the new rules, which create fines of up to $40,000 for members of the media who violate a 65-foot "safety zone" around cleanup operations.

There are apparently a number of people who still think nuking the hole in the bottom of the Gulf is a good solution.

Claims against BP are now up to $3.12 billion.

Oil-slicked beaches didn't deter tourists from making their way to Pensacola Beach for the holiday weekend.

Determining the full extent of the damage that the BP spill has wreaked on the Gulf will be difficult for quite a while.

The National Oceanic and Atmospheric Administration says there is a 61 to 80 percent likelihood that the oil spill will hit South Florida and the Keys.

Nigeria knows all about oil spills. For 50 years foreign oil companies have dumped an estimated 550 million gallons of oil into the Niger River Delta.

The new, best hope for pulling oil out of the Gulf is the Whale–a giant skimmer vessel from Taiwan that responders are now testing.

The American Petroleum Institute is running television ads in 10 states against congressional efforts to repeal large subsidies to the industry.

The US Fish and Wildlife Service went along with the conclusion of the Minerals Management Service that the risk an oil spill in the Gulf of Mexico would pose to wildlife was "low," reports the New York Times.

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Silence of the Anti-Abortion Protesters

| Tue Jul. 6, 2010 3:14 AM PDT

More than 1,000 members of the public tramped through the Senate Judiciary Committee hearing room last week to catch a glimpse of the confirmation hearings for Supreme Court nominee Elena Kagan. Strangely, not a single one of them leapt up to scream "Babykiller!" at her. The hearings, which finished late Thursday night, were a remarkably sedate affair. Throughout Kagan's entire time in the hot-seat, I kept scanning the crowd to see which, if any, of the visitors might be an anti-abortion protester in disguise. But by Wednesday night, it was clear that Kagan was going to survive three days of hearings without suffering that particular rite of passage.

The silence of the anti-abortion protesters was weird. During Justice Sonia Sotomayor’s confirmation hearings last year, protesters gave the proceedings their only element of surprise. At least five people were detained for yelling "murder" and other slogans about the "unborn" at Sotomayor. Even Norma McCorvey, the "Roe" of Roe v. Wade got herself arrested during the event. It’s curious that none of these people came to torment Kagan, for whom abortion was—and will continue to be—a much bigger issue than it ever was for Sotomayor.

During her entire 20 years on the federal bench, Sotomayor handled only a single abortion case. In it, she actually sided with the very same kind of people who disrupted her confirmation hearing. Kagan, on the other hand, was actively involved in the Clinton administration’s political machinations over the partial-birth abortion ban legislation, which Clinton vetoed for a second time in 1997. But even that work wasn’t enough to drive the “unborn” lobby into civil disobedience mode.

Why Are Businesses Hoarding Cash?

| Mon Jul. 5, 2010 8:47 PM PDT

Fareed Zakaria, after noting that America's 500 biggest nonfinancial companies are sitting on $1.8 trillion of cash, wonders why they aren't spending it on new plants or expansion into new product lines:

I put this question to a series of business leaders, all of whom were expansive on the topic yet did not want to be quoted by name, for fear of offending people in Washington.

Economic uncertainty was the primary cause of their caution. "We've just been through a tsunami and that produces caution," one told me. But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. Some have even begun to speak out publicly. Jeffrey Immelt, chief executive of General Electric, complained Friday that government was not in sync with entrepreneurs. The Business Roundtable, which had supported the Obama administration, has begun to complain about the myriad laws and regulations being cooked up in Washington.

I really have to call BS on this. Fortune 500 CEOs probably do have some genuine uncertainty about the tax and regulatory environment going forward, but big companies work with that kind of uncertainty all the time. It doesn't stop them in their tracks. What's more, most of the current uncertainty revolves around financial regs — which aren't a big deal to nonfinancial companies — and healthcare regs, which aren't a big deal to most non-healthcare companies. In other words, this stuff just doesn't have an enormous effect on the vast majority of the companies we're talking about here.

So what is keeping them from spending their cash? Why aren't they expanding? Could this question possibly be any simpler? They aren't expanding because the economy is weak and they don't see consumer demand picking up any time soon. They'll start spending as soon as they believe that's going to change. It's too bad that CEOs, even Democratic-leaning ones, tend to be so ideologically invested in regulatory issues, because they ought to be the biggest boosters out there of action to stimulate the economy. Enlightened self-interest, if nothing else, should have them marching on Congress demanding action.

Where are the Liberal Hacks?

| Mon Jul. 5, 2010 2:03 PM PDT

Last Friday, following the release of some pretty lousy employment numbers, the White House tried its best to provide some positive spin about the state of the economy ("signs of gradual labor market recovery....private sector employment has increased....continued signs of healing"). Liberal economists were having none of it, however, and Jonathan Bernstein wants to know why:

My question, which I've asked before: where are the hack liberal economists? One would think that there's a real market niche here that someone would fill. I can think of two possible reasons that it's not happening. Perhaps there is no such niche — that is, there are few Democrats out there in the nation eager to buy the product of anyone basically cheerleading for the White House. Or, perhaps the market exists, but liberal economists all have too much integrity to fill it, and insist on saying whatever they believe is true (or whatever they believe suits their policy goals), regardless of whether it rewards them with appearances on MSNBC talk shows and healthy book contracts.

Hmmm. There are, I'd say, more hacks among conservative economists (and economic hangers-on) than there are among liberals, so Jonathan's question is a good one. Still, I don't think that's the primary explanation here. I think it's simpler. Generally speaking, conservative economists like tax cuts. They like them all the time, but they especially like them as a stimulus measure, and that's exactly what they got from George Bush following the 2001 recession. Liberal economists, conversely, think increased spending is the best stimulus during a deep recession, and they aren't getting it from Obama. You can argue about whether this is Obama's fault or the Senate's fault or just the way things are, but still: Obama doesn't seem to be fighting very hard for the policy response that liberal economists want to see.

To the extent that Obama has done what they want, though, I'd say that liberal economists have reacted about the same way that conservatives did during the Bush era. Back then, conservatives spent a lot of time explaining how, if you looked at the numbers right, the Bush tax cuts were improving the economy. Today, liberal economists spend a lot of time explaining how, if you look at the numbers right, the 2009 stimulus bill is improving the economy. Likewise, in 2002 conservatives were insisting that we needed more tax cuts and today liberals are insisting that we need more stimulus.

So....there's not as big a difference as it seems. If Obama and Congress were giving liberal economists what they want, they'd probably be cheerleading as much as Larry Kudlow was during the Bush administration. I don't think they'd be deliberately twisting the numbers the way conservatives seem all too happy to do, but they'd still be cheerleading.

The View From My Windshield: Fires of Centralia

| Mon Jul. 5, 2010 12:29 PM PDT

Signs of Life: Centralia, Pennsylvania—Outside one of the last remaining residential buildings, a sign points to the coal fire that's forced all but of a handful of Centralia's residents to leave the town (Photo: Tim Murphy).Signs of Life: Centralia, Pennsylvania—Outside one of the last remaining residential buildings, a sign points to the coal fire that's forced all but of a handful of Centralia's residents to leave the town (Photo: Tim Murphy).