The Economist’s Matt Steinglass reports on an egregious government giveaway to the oil companies—one that started accidentally and has now been intentionally enshrined by Republicans in Congress.
The Minerals Management Service was supposed to give free leases to oil drillers in the Gulf in areas in which paying royalties would make drilling uneconomic.
So apparently, in 1998-99, the folks at the MMS were too busy flirting with each other, or accepting private-jet rides to college football games, or whatever, to notice that the price of oil had gotten pretty high and they shouldn’t be handing out free leases anymore. As a result, 24 companies got free leases they shouldn’t have gotten. And ever since, they’ve been making extra money that they really ought to be returning in the form of leases on public property to the American taxpayer.
How much extra money? About $1.5 billion this year and an estimated $53 billion over the next twenty-five years. That money goes straight out of taxpayers’ pockets and into oil companies—at a time when gas is creeping up on $4 a gallon.
Democrat Ed Markey offered an amendment to change this last week, but it was rejected by House GOP, which is trying to gut everything from Head Start to Pell Grants but won’t reclaim wrongfully gotten money from Big Oil. The vote wasn’t even close.
Steinglass:
There is no rationale for continuing to oblige regular taxpayers to pick up the tab for these distortionary favours to major oil companies except that the oil companies want the money. For this Congress, that’s plenty reason enough
If you’re like me, you didn’t hear a peep out of this from the American press. Don’t you think we should have heard more about this story?
— Anecdotes are good, but they’re not enough.
The Huffington Post has an all-anecdote story today that clearly shows their limits and why they need to be backed up by data and other reporting.
It’s headline asks “Are These People Overpaid?” and it goes on the ground in Madison, Wisconsin, to talk to a retired firefighter, a paramedic, and a teacher about how much money they make as the right is in full attack mode on government pay. It’s a great idea for a story and there are some good anecdotes here, but there’s little substance.
Even if you don’t get into a full discussion of the debate over how much government employees make relative to private-sector workers, you should at least acknowledge it. The data’s readily available. For instance, the liberal Economic Policy Institute says Wisconsin’s government workers make far less in total compensation than their private-sector counterparts who have similar degrees.
A paragraph or two about that would have made this story so much better.
— Yves Smith of Naked Capitalism has covered the foreclosure fraud scandal better than anybody, and she dissects today the news of a possible settlement. You should read the whole post for her take on that.
But what particularly interests me is this:
RMBS investors thus have a nuclear weapon in their hands. If they want deep principal mods, and we are told in no uncertain terms that they do, a credible threat of litigation on this front ought to bring recalcitrant banks and trustees to heel, quickly. The last thing the mortgage industrial complex wants is litigation on an issue that would both call into question the validity of RMBS and if successful, would leave the banks with massive damages. And you don’t need to do this publicly and rattle the markets; some investors with the right legal top guns could spell out the consequences if the banks failed to get off their duffs and enter into serious negotiations.
Smith is saying that the owners of the mortgage bonds at the heart of the financial crisis want the mortgages they own to be changed dramatically with “deep principal” modifications for the borrowers in the homes. But it’s not happening. It’s the opposite of what mortgage servicers have been saying about why they won’t modify mortgages so they’re payable.
I'm having a hard time feeling bad for the good people of Wisconsin. It seems to me they are getting exactly the government they voted for. The majority of Wisconsin voters elected an ideologue who was bought off by billionaires, and their House and Senate at the state level has a majority of totally whacked-out, extremist rightwingers. Evidently, they are there by virtue of winning a fair election. They haven't done much better at the federal level. The voters sent the moderate Russ Feingold packing in favor of a millionaire plastics manufacturer who bought himself a Senate seat, and they are responsible for sending the genuinely looney Michele Bachmann to Washington DC to represent them.
So they pretty much have the government they deserve, and that includes the union members. I'll bet a good number of those cops and firefighters voted Republican. This is what happens when you cast unwise votes "to send a message," or you can't be bothered to pay attention to what you are voting for, or can't be bothered to vote at all. Reality check.
#1 Posted by James, CJR on Fri 25 Feb 2011 at 09:07 PM
RE: "Grand Oil Party"... So, it's not that the federal govt has such cartelizing power; the objection is that the wrong party is exercising it. Is that the rub? Or, maybe, it is as Thomas Jefferson and co. warned: When the federal govt is allowed to absolutely determine the bounds of its own power, it will inevitably and constantly find new powers, which it will gladly employ for or against any preferred or opposed interest.
#2 Posted by Dan A., CJR on Sat 26 Feb 2011 at 10:26 AM
Dan A.,
The world awaits with bated breath
Your claim that taxes equals theft.
Had you another, all would cheer
Yet "taxes/theft" is all we hear.
#3 Posted by edward ericson jr., CJR on Mon 28 Feb 2011 at 01:33 PM
"edward ericson jr.,"
Before I take time to thoroughly respond to your mashing of the English language, you must quote me in reference to the pertinent context. Of course you could respond to my comment on the current thread, though I won't hold my breath. I'll tell you what: while you're crafting your next episode of fact-deficient ankle-biting, I'll leave you with just one morsel of reality to chew on. Monetary inflation is a "hidden tax" — a "transfer of wealth" from low-and middle-income Americans to Wall Street, the MIC, and other govt-connected tax-feeders.
#4 Posted by Dan A., CJR on Mon 28 Feb 2011 at 11:37 PM