Democratic Louisiana flag
Volume 1, Number 13
By Democrats For Democrats
May 19, 2010
Welcome to Democratic Louisiana!

Well, it looks like it's official. Bobby Jindal is seeking appointment as the nation's oil spill coordinator-in-chief.

Jindal has abandoned all pretense of governing the state in exchange for the role which does not yet exist but, we are told, that Jindal is writing the job description as he strafes the slick from the BP Gulf Gusher in a National Guard Blackhawk helicopter.

Have we entered into a new era of moral hazard created by the small price large corporations must pay for violating regulations and laws? It's beginning to look that way. The top story today takes a look at that.

A committee in the Louisiana Senate displayed uncommon (for Baton Rouge) common sense today in defeating Senator Robert Adley's attempt to strip Tulane University of all state funding because the Louisiana Chemical Association has tired of being made to comply with environmental laws. The Advocate story is here.

If you've missed an earlier edition of Democratic Louisiana, here's the link to the archive page.

Thanks for reading!

Mike Stagg, Editor

Democratic Louisiana

Elections Show Emerging Trend Favoring Dems, Progressives

J.P. Green, writing at The Democratic Strategist, says that Tuesday's primary election results in Pennsylvania, Arkansas, and Kentucky show encouraging trends for Democrats and progressives.

In the special election to fill the unexpired House term of the late John Murtha, thoughtful Republicans won't find much to cheer in the results of Tuesday elections, Green writes, Democrat Mark Critz, a Murtha aide, beat Republican Tim Burns, who Critz will oppose again for the November general election. With 70 percent of precincts counted in the potential bellwether election, Critz lead Burns by a margin of 53-45 percent.

He notes that former half-term Alaska Governor Sarah Palin and House Minority Leader John Boehner, stumped for Burns, as did Sen. Scott Brown and former Speaker Newt Gingrich. Former President Clinton and Sen. Bob Casey campaigned for Critz, a "pro-life, pro-gun" Democrat, who made jobs his top policy priority.

"Critz's win suggests that candidates who articulate a convincing vision for job-creation and economic recovery will have an edge with working class voters," Green said.

Retired Admiral and Congressman Joe Sestak defeated Arlen Specter in the Democratic Senate primary in Pennsylvania. Green said that Sestak's decisive win is getting lots of national attention, and soon perhaps, contributions from Democrats who see him as a rising star.

"Let it not be lost on Dems that his win was also an impressive demonstration of the power of media over Specter's well-established ground game -- Sestak's uptick in the polls tracked the emergence of his sharply-focused attack ads," Green noted. "In a tough economy, it appears that well-done attack ads have more resonance than the warm and fuzzy 'I love my family and my country' ads of more prosperous times."

Arkansas Lt. Gov. Bill Halter, who is supported by many progressive Dems, forced Sen. Blanche Lincoln into a run-off in the party primary there. Democratic voters cast more than twice the number of Republican ballots in the Arkansas Senate primaries, and both Lincoln and Halter out-polled Republican primary winner Boozeman. Green noted that "the so called 'enthusiasm' gap favoring Republicans did not materialize in the May 18 elections."

Even in KY, Dem Senate candidates Jack Conway and Daniel Mongiardo both received more votes in the Democratic primary (226,773 and 221,269 respectively) than did tea party darling Rand Paul in the GOP primary (206,159). Nearly half a million Kentuckians voted for Democratic U.S. Senate candidates, compared with less than 350 thousand who voted for Republicans.

The Rising Tide of Moral Hazrard

Transocean, the owner of the drilling rig Deepwater Horizon that was lost in the explosion and fire that killed 11 workers and led to the BP gusher that will plague the Gulf of Mexico and the Gulf coast for years to come, has a plan to come out of the disaster with a $530 million profit.

Citing the vintage 1851 Limitation of Liability Act, attorneys for Transocean are seeking to cap the company's liability in the disaster to the value of the drilling rig. The law was intended to protect shippers and their cargo. Transocean is using the act claiming that the value of the rig (which burned and sank) is $26.7 million. That, they say, is the limit of the company's liability in the still unfolding disaster that began on April 20 off the coast of Louisiana.

BP, the company that holds the drilling rights and that leased the rig from Transocean, has said that it will pay all legitimate damages resulting from the spill. This despite the fact that the company could seek to cap its liability at $75 million under the provisions of the Oil Pollution Act of 1990. That law and that liability cap came in the wake of the 1989 Exxon Valdez oil spill in Alaska.

Twenty years later with a still-uncontrolled gusher in the Gulf sending thousands of barrels of oil into the Gulf everyday, $75 million ain't what it used to be. The liability cap seems quaint in today's economic environment where BP declared profits in excess of $6 billion for the first 90 days of this year. Friends of the energy industry have thus far blocked the U.S. Senate from raising the liability limit in the law.

BP has paid hundreds of millions of dollars if fines in recent years resulting from the way it has conducted operations at its refineries and pipelines. Some of the fines have resulted from investigations into incidents, like the 2005 explosion at its Texas City, Texas, refinery that killed 15 workers and injured 180.

Despite the fines and penalties, BP has not fundamentally changed its behavior. BP is so big and so profitable that hundreds of millions of dollars in fines have not induced the company to change its behavior for the better.

When Regulators Refuse to Regulate

There has been a concerted effort in recent years to reduce the regulatory burden on companies. No where was this better exemplified than the Department of the Interior during the eight years of George W. Bush's presidency.

When Dick Cheney moved from Halliburton to Vice President, he brought with him a commitment to unshackle the industry from what he and his industry cohorts believed were burdensome environmental and safety regulations.

The Department of the Interior, which is supposed to act as the steward of the nation's natural resources, became a fully captured arm of the energy industry. No office was more compromised than the Mineral Management Service (MMS), which ran the offshore oil and gas leasing operation as well as set safety rules for drilling and production.

A 2008 Inspector General's report found that MMS staff members were not just cozy with the industry but — in some cases — they had intimate relations with the people they were supposed to regulate. MMS officials withheld information about billions of dollars in royalty revenue that the companies were not paying the federal government. The regulators had sided with those they were supposed to regulate in direct opposition to the interests of the people on whose behalf they were supposed to be acting.

During the early days of the 2008 financial crisis, conservative columnist David Brooks, writing in the New York Times said:

Our economic system is based on the idea that people take responsibility for their own decisions. It would be ruinous if people felt free to take horrendous risks knowing that the government would bail them out if those decisions didn’t pan out.

What we evidence in the Gulf of Mexico and across the corporate world of just the kind of behavior Brooks was describing as ruinous. Goldman Sachs was packaging 'deals' for some of its clients while betting against those same deals with other clients.

In a business climate where short-term results were all that matter, where any cost that impacts the bottom line is to be avoided, safety and regulatory compliance were things to be avoided or escaped. When supposed regulators colluded with those to be regulated (as was the case at MMS), then a moral hazard is created.

Click here to continue reading "The Rising Tide"

Senate Opens Door to 'Hired Gun' Deals with AG's Office; LABI gets the vapors

The Senate Judiciary A Committee voted on Tuesday to allow Louisiana Attorney General Buddy Caldwell to enter into contingency fee agreements with outside attorneys hired to pursue the state's interests in litigation against BP.

The 4-2 came over the strenuous objections of the Louisiana Association of Business and Industry (LABI) and other business interests who fear that encouraging litigation might be contageous and result in an outbreak of legal action on other matters that they thought they had put an end to with tort reform back in 1996.

The Advocate story is here.

Under Senator Joel Chaisson’s SB731, the attorney general could hire lawyers on a contingency fee basis — meaning they could get a percentage of the funds recovered. The chosen lawyers would also be reimbursed for reasonable costs and expenses.

Chaisson said the contingency fee provision would put the state’s law on a par with that of Texas, Alabama, Mississippi and Florida as they go up against the oil giant BP and its lawyers.

No word on whether the lawmakers will allow the hired attorneys to carry concealed weapons into court hearings or if the weapans will be reserved for religious services only.

Slick, Bobby and the Budget

You knew things were not going well with the Jindal agenda this session when the Governor opted to spend most of May chasing down microphones and cameras along the Gulf coast using National Guard helicopters.

Facing a $300 million plus budget hole in the current fiscal year and a billion dollar-plus hole next year, Jindal proposed a solution that looked shabbier than an MMS environmental impact study. Legislators recognized it. So, too, did "The Serious People" at PAR and the Louisiana Association of Business and Industry (LABI).

Like an unemployed lottery player banking on hitting the PowerBall in order to make this month's rent, Jindal proposed using winnings he had not yet collected (another round of federal stimulus dollars) to pay off an IOU that he wanted to turn into collateral (the money set aside for a Medicaid settlement).

Apparently figuring that he was needed to personally direct the state's response an unprecedented oil spill, Jindal has been lashed into a seat of a state-owned helicopter coming out only for press conferences and to tag tar balls.

He's left the heavy lifting in Baton Rouge to the Angelles — Commisioner of Administration Angelle Davis and newly minted interim Lt. Governor Scott Angelle.

With about a month to go in the session, nothing is settled on any of the budgets with holes in them (2010, 2011, and 2012), and the spill continues to gush. Prospects are not good for the Governor to the return to the business of governing until the spill is capped and the coast cleared. Looks like his two-year window of interest on this gig has officially closed.

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