Democratic Louisiana flag
Volume 1, Number 15
By Democrats For Democrats
May 26, 2010
Welcome to Democratic Louisiana!

Bobby Jindal found his way to Baton Rouge this week, but did not find much to his liking. His edict to end the budget spat between the House and Senate fell on deaf ears. His meeting with House leaders did not include the Speaker, who was busy fighting with the Senate President and plotting maneuvers against higher education.

In all, the Governor was having a lot more fun on the coast, although he was equally ineffective in both places.

That repeal of the income tax portion of the Stelly Plan is looking like one of the all-time bonehead moves of the Louisiana Legislature — and that is saying something. Legislators now have a $400-plus million hole to in the current budget before they even get to dealing with the even bigger hole in the 2011 budget.

About the only good news this week is that Governor Jindal's book is being delayed until the end of the year. Ah, the book he did not write about the principles he no longer holds dear. Can't wait to get my hands on that!

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

BP Gulf Gusher Exposes Cozy Relations Among Lawmakers, Regulators, Industry

As the damage inflicted by the BP Gulf Gusher continues to grow, there is a concerted effort taking place in Washington to ensure that BP — not taxpayers — gets the tab for this disaster.

Twice in recent weeks, Republican Senators have blocked attempts to raise the liability limit under the Oil Pollution Act of 1990, which capped corporate liability at $75 million. The first defeat was led by Alaska Republican Senator Lisa Murkowski; the second by Oklahoma Republican Senator Jim Inhofe.

Everyone claims to agree that the $75 million cap is too low and won't come anywhere near covering, for instance, BP's liability exposure resulting from the current gusher off the Louisiana coast.

Or, at least, that is what the Republicans are saying. Yet, they have been unable to come up with a figure higher than the current liability limit that is not too high, not too low, but just right. While Republicans search for their Goldilocks liability limit, the oil has kept gushing and the damage growing.

John David Vitter of Louisiana wants to cap liability at the profit level of the previous quarter. In the current incident, that would cap BP's liability at about $6 billion. If the blowout is not shutoff today, that figure might not be adequate.

New Jersey Democrat Robert Menendez introduced a bill on Tuesday that would have completely removed the liability cap. Inhofe again objected.

The problem for Republicans and a number of Democrats is that their close relationship with the energy companies (primarily through campaign contributions) run counter to the interests of their constituents, particularly those directly impacted by the BP Gulf Gusher.

The coziness extends beyond the Congress and into the Department of the Interior's Minerals Management Service (MMS) the entity that leases oil and gas tracts in the Gulf as well as had responsibility for safety and environmental issues (or, did pending a reorganization of that office announced this week by Secretary Ken Salazar).

Salazar's move is meant to fundamentally change the nature of the relationship between the industry and MMS. The need to do so was driven home this week with new revelations about abuses in the MMS office in Lake Charles, LA.

The new report from the Interior Department's Office of the Inspector General can be found here (PDF).

According to the New York Times, a source told IG investigators that oil and gas officials on the platforms had filled out inspection forms, which would then be completed or signed by an MMS inspector.

The IG also "found a culture where the acceptance of gifts from oil and gas companies were widespread throughout that office," although that has improved in recent years, the report says.

Fishermen, sportsmen and environmentalists are not the only people depressed by what has been happening along the Louisiana coast for the past month. This still evolving economic and environmental catastrophe is going to radically alter the politics in this country because when the final accounting of the BP Gulf Gusher is written, it will have killed more than people (as dear and as important as those 11 workers were to their friends and families), more than birds and fish, and, possibly, industries.

It will have also killed a myth that is at the core of modern conservatism — the myth of the self-regulating marketplace.

The myth was on its last legs before the disaster. The near-death experience of the financial system involving securitized debt obligations, credit default swaps, and pumped up ratings from credit agencies nearly hurled us into a global depression. We're still not out of the woods, but we have not fallen into the abyss.

Wall Street stalwart Goldman Sachs was revealed to have sold products to one set of clients that it was helping other clients bet against. It set up a 'heads we win, tails you lose' scenario that undermined what little credibility the financial community had left in the wake of the Bernard Madoff and Alan Stanford ponzi schemes — and those are merely the largest and best known of a large crop of financial scammers that thrived in the last financial regulatory environment that persisted even after the Enron scandals earlier in this decade.

Toyota — a company that built its brand on quality — sold millions of auto mobiles that had potential runaway acceleration issues, kept it secret from costumers and regulators, and only fessed up after the evidence was too big to deny.

Coalminers for Massey Energy died in one of the largest mine disasters in a quarter of a century and it was revealed that the company had been fighting (successfully) for years to stave off fines for safety violations while keeping the mines operating with unsafe conditions.

Then, of course, there is the energy industry (symbolized today by BP) that had the run of the Department of the Interior during the Bush/Cheney years. The corruption of that department is best illustrated by the way the industry treated the Mineral Management Service as a captive arm of the industry as a direct result of strategy driven by Vice President Dick Cheney to retain a facade of a regulatory structure while waging war on the ability of the Department of the Interior, the EPA and others to provide the kind of regulatory oversight that people expected but Cheney, his fellow conservatives, and the industry detested.

The catastrophe taking place in the Gulf of Mexico and in our coastal marshes and along our shore is the emphatic real world result and consequence of what the ideological struggle so-called free market conservatives have been fighting to achieve for decades. They wanted government off the back of industry. Conservatives didn't get all of what they wanted but it was clearly closer that we, as a society interested in its survival, can any longer afford to allow them to come.

What these recent disasters have demonstrated is that corporations cannot be left to their own devices to deal with the operation of their individual businesses or their industries. In today's rabid economic environment where the only sacred trust has been how to "maximize shareholder value" things like safety, protection of the environment, the public interest get crammed down the totem of corporate priorities until they just don't matter.

Hard Learned Lessons Unlearned

Previous generations of Americans learned the lessons that this generation is learning now. Specifically, the lesson is that only government can protect the public's well-being in an economic system where profits is king.

The lesson was learned during the excesses of the Guilded Age — an era in the late 19th Century where political leaders were reluctant to get the federal government involved in the operation of the national economy. Coming out of that era which included the creation of monopolies and great wealth along with a the wider distribution of great poverty, the Progressive Movement pressed a series of economic reforms that sought to regulate the economy but also improve product safety in the U.S. It is not possible to describe the complexity of the effort in a blog, but here's a passage that does a pretty good job of it:

By the turn of the century, a middle class had developed that was leery of both the business elite and the radical political movements of farmers and laborers in the Midwest and West. Known as Progressives, these people favored government regulation of business practices to ensure competition and free enterprise. Congress enacted a law regulating railroads in 1887 (the Interstate Commerce Act), and one preventing large firms from controlling a single industry in 1890 (the Sherman Antitrust Act). These laws were not rigorously enforced, however, until the years between 1900 and 1920, when Republican President Theodore Roosevelt (1901–1909), Democratic President Woodrow Wilson (1913–1921), and others sympathetic to the views of the Progressives came to power.

Click here to continue reading "Myth Die Hard"

"Stelly" Repeal: The Hole That Keeps on Digging

The real news coming out of yesterday's meeting of the Revenue Estimating Committee was that the hole in the current year deficit is bigger than the original $319 estimate that is only a month old.

You have to dig down near the end of the Times-Picayune story to find the reason. Here it is — Repeal of the income tax portion of the Stelly Plan in 2008.

Greg Albrecht, the chief economist for the Legislative Fiscal Office, told the committee said income tax collections are far below last year's levels. He said the fiscal office, which analyzes the financial impact of bills moving through the Legislature, may have underestimated the effect of a 2008 law that rolled back the "Stelly" income-tax increase on high earners that voters agreed to in 2002.

Jindal Book Delayed; Is Budget Next?

Regnery Publishing, the company producing Governor Bobby Jindal's ghost written book about authentic American values, has delayed the release of the book. The reason given was that doing so would allow the Governor to devote "150 percent of his attention on the BP oil spill and its impact on Louisiana and the Gulf Coast." The Times-Picayune brief is here. The Associated Press story is here.

The book, originally entitled "On Solid Ground," is currently entitled "Real Hope, Real Change." The July release date has now been pushed back to "before the end of the year."

Upon Further Review, We'll Take That!

Days after a majority of the members of the Louisiana House voted to allow Louisiana citizens to abstain from participating in provisions of the Patient Protection and Affordable Care Act (healthcare reform), another majority of that same body voted to require health insurance companies doing business in Louisiana to comply with one part of the act.

Last Thursday, 67 members of the House voted to support HB-244 which would require companies selling health insurance in Louisiana to offer coverage for those up to age 26 on their parents' health policies. This is a provision of Presdient Barack Obama's healthcare reform package that became law in April.

Republican Chuck Kleckly of Lake Charles authored the bill. He told member of the House that extending that coverage as the ACA does is good idea whether the federal law is upheld or not.

Kleckley said the expansion of coverage would help eliminate some of the uninsured people who are costing taxpayers money as they show up in hospital emergency rooms for care. DOH!

Voting in support of Kleckly's bill were a number of Republicans who led the charge to push nullification of the federal law, including Rep. Kirk Talbot of River Ridge.

Jindal/Tucker Rift Growing?

Absence apparently does not always make the heart grow fonder.

Witness the relationship between Governor Bobby Jindal and House Speaker Jim Tucker. Jindal, having spent most of the past month chasing oil and photo ops along the state's threatened coastline, somehow ended up in Baton Rouge on Tuesday. The Advocate actually had photographic evidence.

Jindal apparently dropped by the Capitol to declare that a new state budget will be passed by the end of the Regular Session (which ends on June 21), despite the ongoing dispute between the House and the Senate over use of the Rainy Day fund and how soon that money has to be paid back.

The Advocate reported that Jindal met with legislative leaders on the budget. In their photo of one session, Jindal and two of his staff members are shown meeting with members of the House leadership, including Appropriations Chairman Jim Fannin, Speaker Pro Tempre Joel Robideaux, and Representative Jane Smith of Bossier City.

Conspicuous by his absence was the actual leader of the House, Speaker Jim Tucker.

Tucker might have been busy ratcheting up his dispute with Senate President Joel Chaisson II down at the meeting of the Revenue Estimating Committee, but relations between the Speaker and the Governor haved cooled considerably during this session. Jindal and his staff were openly critical of Tucker's retribution against House members who did not support Robideaux's bid to become Speaker Pro Tempre earlier in the session.

For his part, Tucker dismissed Jindal's plan to close the state's deficit in the current fiscal year right after it was announced.

The current budget impasse centers on a disagreement as to how quickly money in the Rainy Day fund has to be repaid. Tucker, Fannin and others in the House leadership say it has to be repaid in the 2011 budget if funds are drawn down to cover this year's still-growing budget hole.

Chaisson said Tucker, et al, took a completely different stance last year. He said having to immediately repay the money makes no sense since the state faces an even bigger budget hole in 2011.

Neither Chaisson nor Tucker appear ready to budge. Both are term-limited so it's not like they are going to have to defend their actions against angry constituents at home.

They might have to answer to Jindal, but only if the governor can find time in his busy coastal schedule to return to Baton Rouge to talk with either of them.

Meanwhile, the challenge of filling the current budget hole got a little bigger on Tuesday as it was revealed that the size of the hole has grown from $319 to as much as $419 million.

The work on the budget for 2011 has barely begun, awaiting completion on closing the hole in the current budget. Surely at some point someone will remind legislators that it was Tucker's idea to delay addressing the 2010 budget hole until May. June could be iffy.

Not content with the budget impasse and miffed by his House colleagues' defeat of his plan to eliminate the Board of Regents for Higher Education, Tucker struck this morning with a surprise revision of HB-996 that would clearly establish the Board's power over all other university system boards instead of eliminating it. No one in the House Education Committee seemed prepared to cross Tucker, so his bill advanced without opposition, despite serious concerns about the lack of review and input that went into it.

Tucker's mercurial nature and Jindals prolonged absence from Baton Rouge have combined to leave control in the House hanging by a thread — and with it Jindal's budget and priorities. Jindal's coastal distraction has let Tucker run roughshod over the House and that imperious attitude has carried over into his dealings with the Senate.

With national media camped out along the coast watching developments from the BP Gulf Gusher, Jindal will be inexorably drawn there, leaving Tucker more room to run when he needs to be reined in for the sake of Jindal's program.

BP Pledges One Week of Profits to Gulf Gusher Research

Part of BP's PR strategy in dealing with their Gulf Gusher has been to throw money along the Gulf coast.

This week, the company announced it was creating a $500 million fund that will fund research on the impact of the BP Gulf Gusher on the Gulf of Mexico. LSU's School of the Coast and the Environment will be the first recipient.

It is a huge amount of money by academic standards, but not so much by oil company standards. It amounts to about one week of BP's profits based on their earnings reported in the first quarter of this year.

Here's the math:

BP reported in April that it earned profits of just over $6 billion in the first quarter that ended on the last day of March. There are 13 weeks in the quarter. Divide 13 weeks into $6 billion profits and you get $461 million per week, roughly what BP pledged to their research fund.

It's a big deal for the researchers, but not that big a deal for BP.

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