The Obama administration has bullied BP into putting up a $20 billion fund to pay victims of the Gulf oil spill. I’m all in favor of companies paying amounts for which they are found to be legally liable, but this sort of pre-emptive government diktat is problematic, to say the least. A reader sent me this Facebook message:
In response to the notion (not necessarily yours, I understand) that Obama’s generated $20B for US taxpayers, I’d like to to offer some admittedly sloppy calculations.
First, you said yesterday US citizens own 40% of BP. Looking at my Schwab account right now (I own BP stock myself), I see their market capitalization presently stands at $99B.
If their stock price has fallen by 40%, that means the market cap was (before all this ass-kicking started) around $165B — so the value of the stock has fallen by $66B. 40% of that loss, or around $26 billion of it, was sustained by Americans if we hold 40% of the stock.
So the net cost of this drama to the taxpayers is $6B and counting. And that is assuming that $20B is distributed fairly. Perhaps they can put ACORN in charge of it.
Modern politics consists largely of promoting the interests of those who are aware they are getting money, in opposition to those who don’t realize they are paying it. Here, I am not sure how the 40% was calculated, but it is likely that most of those who have a stake in BP don’t even know it, because it is part of a mutual fund or pension fund. So the administration can take credit for “creating” the $20 billion fund without worrying about which Americans contributed to it.