Tuesday, April 26, 2011

Time to pull the plug on government subsidy: When oil companies declare obscene quarterly profits?

Keywords or Terms: Strong earnings; Obscene profits; Subsidies; Below cost loans; Defraying pollution costs; Domestic production; Oligopoly arrangements; Tax rates; Public goodwill; Chevron; British Petroleum; and, Exxon-Mobil

Can huge profits obliterate sin against the environment? Probably not, but many oil companies are already saying that their contribution to the economy should not be measured by one or two errors of environmental bastardization by one lone wolf among them. Chevron Corporation wants to be an ideal company; and, this is probably why it has been running advertisements ahead of the quarterly earnings set to be released sometimes this week. British Petroleum is set to release its second quarterly profit first among peers, tomorrow. British Petroleum would also want you to overlook its recent omission or commission in the Gulf of Mexico. Other oil and gas companies that have not suffered the faith of British Petroleum, would want you to see their industry as one that promotes civic responsibility, pay taxes, create jobs, increase higher levels of workplace skills, develop confidence and professionalism among workforce, and contribute to America’s independence from foreign energy sources; achieving all these and more, under a regime of disciplined environmental custody. Are these really true? Are oil companies making all those reported obscene profits without some corporate welfare and or environmental capitulation?

If oil companies make the 'holier-than- thou' argument or pronouncement regarding their expected huge profits, each of them must realize that but for some federal subsidies, in terms of tax deferments, royalty forgiveness or bank rolling of their explorations activities, none of those obscene profits will be possible. Many oil companies may have initiated business decisions that have resulted in better outcomes, but for continued subsidies to their industry, some of these companies would not be announcing the eye-popping quarterly profits. Further, many of the oil and gas companies probably achieved the huge corporate profits from environmental pollution and degradation; sales tax deferment; favorable public policy and or, under the auspices of belligerent attitude towards workplace safety management. While British Petroleum had made some atonement for its sins against the environment by setting aside some restitution for its flagrant misbehavior in the past year in the Gulf of Mexico, the company cannot say it is out of the woods yet; neither can it boldly say that the distressingly real experience of the explosion at the Deep-water Horizon rig, must be overlooked because it has declared another block buster quarterly profit. In fact, just a few years ago, British Petroleum committed another sin in the workplace, when it sent a few of its employees to their early graves in the Waco refinery explosion. It is probably getting to be a tradition for British Petroleum to send their workers to early grave in the drive to make huge profits?

Strong earnings by oil companies belie their poor custody of the environment. Many oil and gas companies, including British Petroleum, have reasons to make their pronouncements with tongue in cheek or reservations, considering what we now know, is their errors in safety management; and, the recent experience in the whole industry in general has neither been helpful. Exxon-Mobil gave us a dose of its failure to preserve the environment while moving oil across Valdez Alaska waters a little over two decades ago. Egregious behavior against the environment from other oil and gas companies, some of which have escaped the scrutiny or radar of government regulatory agencies, have only made us wonder, when is the oil and gas industry going to sit up and get with the program of averting constant oil spills and repeated deaths on their work-sites or projects.

Probing a bit more deeply into how these companies come about their huge profits, one discovers that there is a serious problem of corporate welfare for oil and gas companies and the profits declared quarterly are both the derivatives of excessive government subsidies and a deceptive representation of the true cost involved in making the profit. Cleantech.com reported that the US Government has generally propped up the oil and gas industry through: 1) Construction bonds at low interest rates or tax-free; 2) Research-and-development programs at low or no cost; 3) Assuming the legal risks of exploration and development in a company's stead; 4) Below-cost loans with lenient repayment conditions; 5) Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire; 6) Sales tax breaks - taxes on petroleum products are lower than average sales tax rates for other goods; 7) Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth); 8) The U.S. Strategic Petroleum Reserve; 9) Construction and protection of the nation's highway system; 10) defraying the cost of pollution; and 11) Relaxing the amount of royalties paid by oil and gas companies. The site further documents that oil and gas industry often want to justify these subsidy under the pretext of energy security, environmental compliance, bolstering domestic production and meeting defense requirements.

Critics of government subsidies to oil and gas companies argue that the basis of subsidies for the industry by the federal government are questionable. Advancing argument against further subsidies to the industry on the grounds that: 1) subsidies hardly improve domestic production, since other variables, including oligopoly arrangements, futures trading and speculations enter into petroleum production and marketing; 2) royalties that could have accrued to government benefit oil and gas companies exploring in some difficult terrain have often been deferred; and 3) flip-flopping on existing energy policy allow oil companies to take advantage of loop holes, critics maintain that the whole industry is part of a network of government wastes. For instance, the roll back in the Energy Policy Act of 2005 has made it very easy for oil and gas companies to take advantage of government refusal to enforce part of its own policy to rake in additional profits. Further, there are questions permeating from every corner of the revenue collection apparatus of government, that if environmental regulations like the fuel efficiency standard for vehicles and local gasoline taxes are enforced by federal, states and local communities adjacent to oil and gas explorations, it would be more difficult for these companies to declare the size of quarterly profits that are often broadcast to the world.

A number of counter argument are often advanced by the oil and gas companies. Except there are enough subsidies, many companies would not explore for oil and gas off-shore or inland, because of the difficult geology and initial capital needed to explore at greater depths, as in the Gulf of Mexico. An argument that has been debunked by critics of subsidies to the oil and gas industry: while other countries’ governments continue to demand more of the oil producer’s revenue, the United States government continues to demand a smaller share of producer’s revenues on public lands and waters. Coupled with this, is the actual cost of watching a company like British Petroleum, owner of the largest leases in the Gulf of Mexico, pollute the environment. Till date, no one has been able to adequately cost the environmental debacle at the Deep-water Horizon rig, nor inform the government and public, the true cost of the oil spill and clean up to pre-April 20, 2010 status, in the Gulf Coast.

Despite the pro and con of government subsidies to the oil and gas industry, the reality of the obscene profits from players in the industry, is starting to sour the mouth of the public, who have to pay an average of four dollars and more per gallon at the gas pumps. The clamors for the removal of oil and gas subsidies are more likely to become pronounced. With gasoline prices at the pump turning up north in the past month and a half, the public goodwill towards subsidies to the industry may be waning. Indeed, there are already signs that some congressional leaders are asking blunt questions regarding what the increases in the gasoline prices are costing their constituents. Senators Patty Murray (D-Washington) and Maria Cantwell (R-Washington) were asking blunt questions at a rally organized in Olympia, Washington, regarding the impacts of future markets and speculations on the ever increasing price at the gasoline pump. Just like the politicians, the public is getting fed up; and past romance with the oil and gas companies, may be evaporating.

Finally, the escalating increases in the gasoline prices at the pump may be doing more havoc to the sluggish economy than has ever been told or measured by keen observers. The announcement of obscene profits by oil and gas companies may only exacerbate the pains felt by consumers at the pumps; and, may end up turning the public goodwill against any further subsidy from the U.S. government. The difficulty of an under-performing economy and the potential of increasing gasoline prices slowing down any type of improvements in the same, may be the final straw. The setbacks in profit outcome and performance in other industries are now gravely becoming serious with the increasing cost of gasoline at the pump. The magic of oil and gas explorations may produce huge profits and output, but for all intense and purposes, these increases do not seem to be benefiting the public as alluded to by the industry; or as advanced as argument for continued U.S. government subsidies.

There are institutional arrangements within the structure of government to manage the troublesome problem of excessive profits and environmental pollution from the oil and gas industry. There is every reason to believe that the oil and gas industry is not playing fair many at times; and if it is, there are some other illicit market behaviors, including future markets speculations and underhanded trading, that is making it difficult for the average public to benefit from any increased domestic production that is drummed up as the true reason for the government subsidies. For its part, the Obama’s administration has the obligation to correct this problem, if its ambition for the economy is not going to be completely eclipsed over the summer, when traditional price increases at the pump often phase in.

Thursday, April 21, 2011

One Year after the Environmental Disaster: Seeing BP’s Law suit against the trio from a unique prism?

Keywords or Terms: Strategy; Lawsuits; Halliburton; Transocean; Cameron International; Civil Penalty

Could BP’s strategy really work? It is plausible, anticipatory, and probably a long shot from being certain. In case you are asking what exactly he is driving at, here is the news: BP launches a gigantic lawsuit against Halliburton, Transocean and Cameron, suing for the total cost of the spill. How much you ask? Since the accidental explosion a year ago, it is public record that British Petroleum has set aside about $40.9 billion. The suit against the three defendants is for at least the same amount: about 41 Billion moolas! Who is Cameron? Well, Cameron International provided the blow out preventer that failed. Halliburton poured the cement for the Macondo well and Transocean was the operator of the rig. Could BP’s strategy still work? This is the question contemplated on the blog today.

The four corporations involved in the law suit are oil and gas explorers, contractors or manufacturer of equipment used on the ill-fated well. BP alleges in its suit, failure to act and failure to provide functional equipment, meanwhile the case against BP as surmised by BusinessInsider.com include, the choice of using cheap and risky well casing option; ignoring Halliburton's advice to use more casing centralizers; skipping cement bond log test; circulating mud through the well to test for flaws; and failure to use a casing hanger lock down sleeve to secure the one remaining barrier to a blowout. The summation of the case against BP somewhat throws a huge wretch in the puzzle of what went wrong on the night of April 20, 2010 on the Deepwater Horizon rig. BP’s strategy here is to ask contractors and equipment manufacturers to pay for its failure to act; and appropriately determine if any of its chosen equipment or processes unmet industry or BP's standard of drilling at a horrendous depth; and, if the contractors employed on the project were up to snuff in executing the requirement of boring a well, cementing it and setting up the drilling process, to harvest black gold from the Macondo well. Many people would have imagined that these requirements were given and that BP had done its homework before commencing on that project.

For a host of reasons, this lawsuit is presumptive of so many things, parts of which are: 1) the universe of exploring and extracting oil from the Macondo well, including BP’s blue prints are available and appropriately discussed with all the contractors and equipment manufacturer; 2) BP did all that was possible, including adopting bidding and leasing a perfect oil reservoir or block from the federal government or its agency to explore for oil; 3) BP met all safety requiremtns of government regulatory agencies and explored different approaches, side by side, on the best drilling and extraction strategies, including testing all equipment on the rig for functionality; 4) BP alerted Cameron International of the potential failure of the blow out preventer, and the company failed to act; 5) BP offered an “ophan” casing centralizer much superior to Halliburton’s, and its skipping of the cement bond log, is an acceptable practice in the industry. Such presumptions could show that BP took all possible restraints to ensure that there is not going to be any failure and the process of drilling and extracting oil from the Macondo well, will go as planned.

The most ambitious plan in drilling for oil and gas from a leased block can go aerie, even when all equipment and processes are followed to a tee, because of the challenging nature of moving fluids in a constraint space. The typical oil well that has been drilled and extraction of the black goal commenced, can still fail because of human errors of imperfect gauges or equipment. Experienced oil and gas drilling engineers and technologists can tell you, that carbon-based energy source, especially crude oil, when trapped underneath or below water in narrow spaces, can misbehave, even if all steps are taken to prevent it. That is why, oil and gas companies in prospective explorations business, buy operations insurance, before commencing on a huge project as the one to be completed by British Petroleum at Macondo well. Even when oil and gas trapped in a narrow space or well does not misbehave during extraction, the possibility of dithering on some steps in the process of extraction, could lead to similar accident as the one at the Deep-water Horizon rig. The possibility of avoiding all the possible risks of drilling and extraction requires active supervision, attentive listening and corporation by all parties involved in harvesting the black gold.

The lesson from the accident at the Deep water Horizon rig is that more than one event led to the insistent oil leaks during the drilling and casing the well. The companies involved in the drilling and construction efforts had noble intentions; however, those intentions gave way to dastardly error(s) that consummated in accidental explosion of the Macondo well because of failure to follow safety instructions and regulations. A more proactive stance on safety management from British Petroleum could have allowed it pre-test and test the functionality of the blow out preventer, after Cameron International supplied it, and before its use on the Deepwater Horizon rig. While a proactive effort on the part of BP could have been helpful, it does not negate the possibility of an accidental explosion, prior and during the process of funneling the oil from the well.

Consider an oil well that was perfectly drilled and from which harvesting had commenced, would the manufacturer of a failed thermometer used in gauging the temperature in the well, be sued for the failure of its functionality? The maintenance record on the blowout preventer is probably suspect at this time; and, the operation of other equipment antecedent to its activation during an emergency, could be out of control and no one would have known except proper and conscientious records of maintenance were logged and made available to all engineers and technicians on the rig. Various oil and gas companies have established safety standards and federal regulatory agencies enacted safety codes on rigs and platforms. But negligent oversight, lack of deliberate effort to follow codes and the choice of management of oil and gas companies to cut corners, could have been additional factors that contributed to the accidental explosion on the Deepwater Horizon rig.

Judging from BP’s past accidental explosions, Waco and Macondo, a possible failure to articulate all risks associated with drilling in the Gulf of Mexico, when waves and currents are unstable, may have been part of the reason for this accident. For BP to win its case against all three, a portion of the cause of the accident must be attributable to cautious and erroneous negligence on the part(s) of the contractor(s) or equipment manufacture. Second, BP’s complaints on equipment failure and contractors' negligence must attract enough weights before a jury for their case or strategy to hold and for a substantial award to go to it, substantial enough to cover the majority of the costs of the spill. The fault(s) on the part of the contractors and equipment manufacturer must be noticeable, not generally inconsequential and BP must have made an initial effort to call the attention of these companies to the potential failures and the companies failed to do something about them. Further, the assoicated failure must be negotiable and fault found distributable in a fair fashio, for BP to recoup enough penalty to defray the cost of the accident. In addition, the accidental explosions must also be attributable to poor performance of expected obligations from contractors on the project to an extent that a reasonable mind can adduce such failures as conscious negligence on the Macondo well project. Third, the negligence of the parties involved must be grand enough to draw the sympathies of technical and non-technical minds, reviewing the steps that led to the accident and the failures on the part of individuals with respect to their responsibilities on the rig that night, for it to provide justifiable civil penalties. Fourth, the failures in duty and equipment, should be transparent, both to the non-technical and technical mind, for there not to be the possibility of doubt or a negation of BP’s argument that the explosion at the rig is attributable to the failures of the contractors and or, equipment manufacturer.

If it is determined that the contractor(s) or their agent(s) on the rig were not receiving timely and accurate information about the equipment, blue print and processes on drilling and extracting oil from the rig, including the possibility of failure of equipment on the rig or platform, then the possibility of BP proving a good case that will lead to an appreciable civil penalty, is argueably remote. The safety codes from defunct Mineral Management Services, the government regulatory agency, require British Petroleum, or any exploring oil and gas company, to submit a plan that would address issues of accidental spills and associated steps to manage the aftermath. Once approved, which in this case one may imagine, the oil and gas company exploring, must make a good faith effort to carry out the plan as approved.

Drilling plans or blue prints approved by the defunct Mineral Management Services have some minimum requirements for notification of all contractors and employees on the project in case there is potential or, an emergency on the project site. BP or exploring company, must publicize this information on the project site and share the information with lead and managers on the project, whether they are contractors or sub-contractors. The exploring oil and gas company is expected to corporate with contractors on site to ameliorate the risks of accident or to manage the potential expansiveness of the impact of the accident. Appropriate level of support and aid is expected in an accident of the nature at Macondo well. Families of accident victims must not be invited to sign off their right to sue with a pittance some of money. BP was alleged to have invited family members of the dead oil workers into a hotel and asked them to sign off their rights just after the accident. This last allegation if true, automatically gets BP and its executives into problems, because the rights of the relatives of the victims may have been abridged in this process.

BP may not be completely liable for all the errors on the accident site, unless it had conducted itself in a grossly negligent way or constituted intentional misconduct; on the other hand, it might be, depending on who argues the case before the courts. Further, engaging in unsolicited communications with family members of victims of the accidental explosion is a potential action of claim for personal injury and wrongful deaths. Adjudicative facts are specific and unique, especially in a case where there has been deaths and associated negligent errors. For this reason, the fact that BP may be dinked for the deaths of all the ill-feted men on that rig a year ago, puts BP's management in a tight spot and may impact how adjudication of this and other cases, proceeds. There may be other employees on that rig that may want to sue for industrial hazards sufferage; a skillful attorney may make a careful case and present the facts in ways that completely put the blame on the doorsteps of British Petroleum. Because facts can be perceived and interpreted differently by different people on a jury, BP’s strategy to bring in Cameron International may backfire in the case against it; and, by other parties in this horrendous explosioin and experience.

Sunday, April 17, 2011

A Tale of BP Oil Spill in the Gulf of Mexico: One year after?

Keywords and Terms: British Petroleum; Oil Spill; Board and Management; Workplace Safety; Macondo well; Deepwater Horizon Rig; A Call For Action; Executive Compensation; Transparency; and Safety Improvement

During the long oil spill from the Macondo well last year, people had it in their minds that they were in a dream, or so it seemed. The picture of dead marine life, oil soaked birds’ feathers, polluted beaches and contaminated white sands and marshes in the Gulf of Mexico was just too much for many, they all wanted it to end, now. With British Petroleum oil executives asserting they had the Deepwater Horizon disaster under control, the public felt a sense of inconvenient safety. However, after the accident turned from mayhem to a nightmare, the chagrin of the public, who would rather not deal with their source of seafood being polluted, their beaches altercated and their marine environment abused, became rather pronounced and evident. But BP executives, who were bent on playing it safe, failing to appreciate the gravity of the nightmare, made unfortunate statements that are better forgotten; and we now know, they wish they could take back.

Accidental explosions and oil spills seem to be an endemic problem in oil exploration, off- and on-shore. The Deepwater Horizon explosion was not going to be an exception; however, the size of the explosion and the spread of escaping oil from the Macondo well, were daunting, miserable and overwhelming. According to the new government regulatory agency, the Bureau of Ocean Energy, Regulation and Enforcement, British Petroleum spilled 205 million gallons of oil into the Gulf of Mexico. Most Americans expected lesser volume and would have preferred the management at British Petroleum were more safety cautious with respect to off-shore drilling; and probably in all their company’s operations. While executives in the petroleum industry saw the example of BP oil spill at the Macondo well as a public relations disaster for the industry as a whole, British Petroleum and its executives continued to portray the oil spill as a problem for their associated contractors, Halliburton and Transocean.

The volume of oil and gas spilled into the Gulf of Mexico and the associated pollution of marine life, beaches and habitat indicate that corporate bosses at British Petroleum failed to appreciate the gravity of the spill and the nightmare of the deaths and explosion at the Deepwater Horizon rig and what messages it carried with it across the globe. The oil and gas industry were working hard to help everyone understand the challenges of exploration for gas and oil, while at the same time, hoping that BP executives will take early responsibility for their actions or inaction, and get the industry past the nightmare.

The strategy adopted by BP management to initially cover up the impact of the accident, made matters worse and eventually led to an unforgiveable perception of failure of leadership at the company. Many residents in the Gulf States, who saw their livelihood depleted, savings account and or business go bankrupt, and who had a first hand experience of the impact of the explosion at the Deepwater Horizon dig, were completely disillusioned when it seems the executives at BP were not going to take responsibility for the accident. It was probably the stepping in of the Whitehouse, holding BP and its executives accountable for the inexcusable failure of leadership of management in the handling of the aftermath of the accidental explosion at the Deepwater Horizon rig, was it clearer to BP that it was not going to go Scot free on this one. Not only were the management at BP made accountable and asked to have a down payment of 20 billion dollars in compensation for the potential impact of the accident on the way of life of residents of the Gulf Coast, they were asked to submit their operations regarding the management of the aftermath of accident to a government agency; a national command control center headed by a retiring Admiral of the United States Coast Guard to oversee the whole process. The national control center became the co-coordinator of the clean-up process, including contemplated engineering processes for stopping the endless oil and gas leaks from the Macondo well.

Admiral Thad Allan of the United States Coast Guard, who supervised the aftermath of the explosion and directed the activities of British Petroleum in managing the clean-up efforts from the National Command Control Center, confirmed so many fears of the public regarding the oil leaks into the Gulf of Mexico; and, gave the public a better perspective of what really went wrong on April 20, 2010, when balls of fire and explosions led eleven oil men from either British Petroleum, Transocean or Halliburton, to meet their God. According to oil industry experts, it wasn’t the fact that there was an oil spill at the Macondo well that really mattered, it was the fact that BP’s Management failed to appreciate the challenges of drilling off-shore at a horrendous depth below the sea level, a foray no other oil company had over gone, and to rapidly respond to the explosion and its aftermath, that actually complicated the problem, turning a mayhem to the nightmare in the glare of the whole world. Not only did British Petroleum executives failed that night, the whole Petroleum industry got a black eye which only time can tell, if the industry will ever receive the type of confidence once reposed in their operations and explorations for oil and gas, offshore.

As BP Board continued to switch Chief Executive Officers, Tony Hayward to Bob Dudley, thinking it was more important to have a new face in the CEO’s office rather than instituting a bottom up investigation and evaluation of how the company manages its safety issues and encourage associated contractors of the company, to abide by the same safety standard expected of any company venturing into deep-sea off-shore drilling, it became very evident that the whole organization had lost its bearing temporarily and probably most of its reputation; and, what was left of the company's reputation, no company in the oil and gas industry that wants to be taken seriously, would ever want or attempt to emulate. The BP's brand was so much bastardized that for some time, the board at BP was confused regarding the best action to take, or order of apologies to offer, and what best avenue to use in offering the apologies, regarding the failure of leadership at the executive suites of BP.

American public expect oil companies, particularly those venturing into deep sea off-shore drilling at horrendous depth, to maintain a safety standard that will ensure employee and public safety. While good record keeping on issues of safety management on rigs and platforms are part of these expectations, many oil and gas companies’ executives, who were seeking oil and gas permits for drilling in American soil and waters, understand that oil and gas exploration and extraction off-shore, come with a caveat. Oil and gas companies venturing into greater depths must remain engaged with all the steps and processes involved in the exploration and extraction of oil and gas; whether directly or through a contractor, associated subcontractors, or subsidiary of the company. The technology, research and development information in off-shore oil explorations and extraction are changing in leaps and bounds and no one unit or organization can understand the whole process and blue prints, and it may be necessary to seek crucial advice and information in managing the next step in operations to avert accidents as that at the Deepwater Horizon rig. This is probably why the new consortium and collaboration to manage horrendous oil spill and disaster, if one ever comes up, is in order in the oil and gas industry

A comprehensive and objective review of the whole accidental explosion and associated aftermaths will show that British Petroleum executives probably failed to remain engaged in all the steps and processes involved in drilling and maintaining the Deepwater Horizon rig. The unfortunate repercussion of that failure led to the nightmare that the spill from the Macondo well, ultimately became. Further, the failure of contractors to British Petroleum to probably develop a strategy for improving the process of managing accidental failures of equipment and BP’s unconscious oversight to ensure that their contractors meet minimum standard for managing potential failures of safety equipment, and other associated events, probably led to the accident at the Deepwater Horizon rig.

A higher expectation of decision making by executives at a multinational conglomerate as the British Petroleum, Transocean and Halliburton isn’t beyond the description of their positions; and, can hardly be excluded from an enterprise whose stocks are publicly traded. Commitment to accountability of leadership of such companies is often tied to executive compensation. When executives fail to act or are negligent in their decision making, it is imperative that they are penalized. Unfortunately, this has not been the case at British Petroleum and or its subcontractors. It was with great dismay when Transocean, one of the sub contractors at the Deepwater Horizon rig, condescended to offering executives of the company, performance incentives for safety performance in the past year. When executives are highly compensated as those at BP, Transocean, Halliburton and many other companies, it is expected that they give their all; or at least, do the job to keep employees safe. When these companies and their executives fail, it is a high order of hypocrisy to offer anyone in the executive suite additional compensation for a service that was not rendered and to paper the action over, as if nothing of error had been committed by the executives, in the way they manage the businesses of the company.

BP Shareholders probably demand performance from the company’s executive suites; hopefully, it isn’t at the expense of the lives of innocent workers. The kind of accidental explosion at the Deepwater Horizon rig and probably insensitive cover-ups and statements made by executives at BP, ought to be fully investigated and anyone found wanting, punished for dereliction of duties and the deaths of those eleven workers. Paying safety management or performance incentives to any executives in any of the three companies associated with the Deepwater Horizon’s disaster must be questionable.

Further, reading out names of ill-fated employees at the annual BP shareholder’s meeting, far away in London, could not be considered as adequate in any form for the grieving family members from the Deepwater Horizon disaster, so is any ploy to pay executives for safety performance incentives of any kind in this past year to anyone associated with this disaster. Any effort to make such pay-out must be considered, criminally culpable. That is why a criminal investigation of what transpired on the night of that explosion at the Deepwater Horizon rig by the US Justice Department, is not out of order.

Recent emerging findings regarding the accident, both within British Petroleum and outside of the company, from Scientists at Laboratories, Universities, Regulatory Agencies and Industry Experts and Associations, indicate that there is still real work to be done at BP and its associated contractors’ executive offices, regarding the issue of safety management. Accidental explosions at work sites, while still not widespread among the three companies which worked on the Macondo well, an exception could be made for British Petroleum, whose accidental records at company’s sites and refineries since 2005 seems to have escalated with the Macondo well explosion. BP had suffered accidental deaths at its refinery at Waco, Texas; a dubious badge that makes BP’s safety records a dismal one; and, probably a byproduct of the company’s culture of operations. With the Deepwater Horizon disaster, it can now be said that, once in every five years in the past decade, British petroleum has suffered an accidental explosion at its work sites that has led to the deaths of at least ten workers. Even, if British Petroleum and executives would like to deny full responsibility for the workplace accidents, there are public records showing probably cause of accidental explosions and deaths of innocent employees at British Petroleum refinery and rigs or platforms.

A Call for Action

It is clear that US Government would like to find out what exactly is happening at British Petroleum that is leading to repeat workplace accidents and deaths. It is probably clear also, that the Board at British Petroleum is interested in changes to the operations at British Petroleum, so that accidental explosions, oil spills and deaths are things of the past. However, the task still remains with the culture in the organization regarding workplace safety: Are executives and management of the enterprise on-board with a new plan to ameliorate accidental explosions and spills or not? Is management serious about dealing with the problems of workplace accidents and explosions or not? What kinds of steps on safety management are valuable for the kind of operations at British Petroleum? Answers to these questions are now paramount.

Part of the success of the Board of an enterprise, depends on how the executives of the enterprise handle challenges and manage risks with respect to its operations. While the Board of an enterprise, may seek changes in the way executives at the enterprise manage challenges and risks, it still behooves those handling the day-to-day operations of the enterprise to remain committed to the goal. Are current executives and management at BP committed to finding lasting solutions to the accidental explosions, deaths and spills at British Petroleum’s refineries and rigs? Is the rank and file willing to work with management of BP enterprise to ensure that repeat accidents are substituted with safe work environment? Tentative plans or diversionary tactics like seeking to shift dependence on US oil exploration and extractions may seem advisable at this time, but they will remain cosmetics, as other companies are willing and ready to take-off from where BP had failed, woefully.

It is possible that public pressures like demonstrations at annual shareholder’s meeting may influence the way things work out at BP with respect to safety management. It is also possible that investors registering their disapproval of an accidental explosion that led to the deaths of employees may have an impact on the Board’s decision on where the company should be heading, or the conscience of executives and management at BP, with respect to the issue of safety management in the whole organization; however, it is imperative that the Board, executives and management, seek out new ways for finding lasting solutions to the accidental deaths and explosions at British Petroleum’s work-sites.

Finally, when hundreds of BP investors frown at the loss of $55 billion in market value in the past year and are complaining about the issues of executive compensation, transparency and safety improvement, definitely, some new and radical approach are necessary to address these issues and agenda before BP Board. The leadership at BP, the Board, Executives and Management, must now realize that investors, just like the public, are not particularly happy with the operations of the company, including of course, the way the aftermath of the Deep-water Horizon rig accident was handled.

Thursday, April 14, 2011

2012 Federal Budget: Let the Debates Begin?

Keywords or Terms: Obama's Budget Speech; Bipartisanship; Congressional Leadership; Tea Party; 2011 Budget; 2012 Budget; Fiscal Commission; Republican Sen. Alan Simpson; Democrat Erskine Bowles; Private Insurance Market; Keith Hennessey.

For all the Tea Party rhetoric over President Obama’s budget speech on Wednesday, it is now on record that some of them voted alongside the Republican leadership in congress to move the nation past the horror of a belated 2011 budget. Paul Ryan, are you there? One of the critics of the President’s speech was that it failed to reach across the aisle. Even if President Obama’s speech had reached across the political aisle, the ideological constraints that have made some Republicans, mostly Tea Party members, abstain or refuse to vote in support of the 2011 Budget, necessarily negate the need for such an olive branch or endeavor. Bipartisanship and cooperation require respect, understanding and compromise.

The contribution of the republican leadership in congress, especially those Republicans who understand the dynamics of negotiations in passing a bill, exposed the weakness of the neophytes Tea Party members, who still saw the need for a pound of blood, in exchange for a pound of flesh. With the negotiations over the passing of the 2011 budget bill sealed at the beginning of the week between the Republican and Democratic Parties' leadership, you imagine that less than fifty-nine Republicans will vote against the passing of the 2011 budget; or, more than eighty-one Democrats will vote in its favor. Frankly, no one should frown on the Republicans who voted against the passing of the 2011 budget more than the Democrats, who did. The reality of the case today is that bipartisanship, respect, understanding and compromise won over, to give us a vote of 260 Yea and 167 Nay in the House of Representatives and 81 Yea and 19 Nay in the Senate, to pass the 2011 Federal Budget.

The next step on the budget debates has moved to 2012 Budget; and, President Obama’s speech has redefined the essence of bipartisanship; if not given us the moral compass or road map to a less acrimonious debate(s). As deficient as the President’s speech may have been, it definitely has shown the President as a leader willing to borrow from the Fiscal Commission’s proposal and recalibrate the purpose budget in the context of being our brother's keeper, rather than defaulting completely on the advancement from Republican Senator Alan Simpson and Democrat Erskine Bowles. The gloomy recommendation of Chairman of the House Budget Committee, Representative Paul Ryan, would have dissolved Medicare and Medicaid, as we know them currently, into Armageddon. If the private enterprise insurance market could not save America before the depression of the 1930’s, how does Representative Ryan expect it, to provide a more friendly competitive market for our elderly to buy health insurance with a coupon or subsidy? The private insurance market does not attract enough competition to lower premiums or rate, if there is no hand of the government to afford a level playing field. There is always a need for an expanded supervision of the arm of the market for there to be full competition that will allow for reasonable prices. Even with all that, the private insurance market is known to be full of other extraneous variables, which make it difficult for not only the elderly and beneficiary of social programs as Medicare and Medicaid to suffer a disadvantage; but also, for average American to seek and purchase health insurance at reasonable rates.

Fraud is often embedded in private insurance market. The intertwining practice of railroading customers, dumping high risks customers and reselling policies and insurance companies, just to get around competition, is the stock in trade of the insurance industry. How does representative Ryan, expect such a system to provide adequate insurance products to our seniors with fixed income and small savings, yet huge health issues. The relationship between insurance companies and their customers has shown that a ‘free-for-all’ health insurance market, will never substitute for the quality of care and services provided by the current Medicare and Medicaid programs. Except you believe in miracles, it is imperative that Republicans who are nursing the idea of us throwing our seniors to the dogs, abstain from advancing the free-market dynamics to the prescription drugs and treatment needs of men and women over 55, in the dispensation of Medicare.

Most of the time, ideologues bite their nose to spite their face. Ideologues will never drive debates of mutual interest to opposing parties on an issue. For all conservative opinions like: “The President attacked the Ryan plan and stressed what he will not do: He will not cut spending in medical research, or clean energy technology, or roads or airports or broadband access or education or job training. He will not allow changes to the Affordable Health Care for America Act, which added two huge and unsustainable new entitlements on top of the already unaffordable promises made by past politicians’ from Keith Hennessey of the Hoover Institution, there are talks like: 1) Thank you for reminding people that we should be looking out for our fellow neighbors and other people because when people look out for each other, the society itself will be stronger. I like how you mentioned the compassionate ground of many Americans that certainly looks to be long gone in the midst of terrorism and today’s cut-throat world; 2) Thank you for denouncing the insane Medicare “Voucher program” which is not only unsustainable but it is insulting to our seniors. Would you really tell your grandparents to purchase insurance from these rotten insurance companies? And be subjected to the very death panel these right wingers are crying about. Analyst mentioned the voucher program as 1 trillion dollar jackpot for insurance company and I cannot fathom why in the world anyone want this to happen. This program would give the seniors $15,000 in voucher for them to purchase insurance. Shame on you if you support this program. This country has not been responsible for the health care of its citizens and [often]leaves it to the hands of for-profit organizations. The ever increasing share price and profits of insurance company is the vivid example of this sham; and, 3) thank you for being optimistic. In this hard time, there is no better medicine than being optimistic amid growing pessimism from those in the right wings. These are information threads from ordinary Americans on Facebook. Except you believe that a senior economic adviser to a Presidency under whom the economic tanked, millions lost their jobs and many more suffered humiliation, will serve the larger interest of our seniors better, would anyone subscribe to Mr. Keith Hennessey of the Conservative think than Hoover Institution, comments.

The Debate Proper

First, having struck on the implicit fraud of privatizing Medicare and Medicaid to save our budget deficit, this blog has defined the burden that is about to be unshared, as propagated by Republicans and their cohorts. Hence, the perception that Republicans, especially the Teas Party members, have the silver bullet to solve our deficit problem, is a shroud. President Obama has called for a shared burden in bringing about some sensibility in cutting down our deficit. can we give it a chance?

Second, the republicans overemphasize security, increased military expenditure at the expense of quality life for our citizens, and in their usual self, a willingness to mortgage the future of our retirees and seniors, under the pretext of cutting our deficits. Tea Party members and by extension Republicans, must put themselves in the shoes of our seniors: would they accept insufficient monetary vouchers to cure their economics science amnesia?

Third, the disjunction in the proposal of Representative Paul Ryan has been exposed in President Obama’s speech. The critical comments from Keith Hennessey of the Conservative think tank, Hoover Institution, seem more like groundless assertions based on concocted innuendos. AARP vigorously rejects and abhors any gimmick to privatize Medicare and Medicaid. If republicans want to continue to irritate this huge voting bloc, we wish them the best of luck in the coming 2012 elections.

Fourth, lawmakers on either sides of American congress, must realize that time is ticking and there is need to find solutions to our huge deficit problems. There must be the willingness to work together to achieve reasonable solutions to the continued nagging problems as we know them today. However, let us not achieve this goal by haunting and throwing our seniors under the wheels of the bus.

Finally, the gap in our debt ceiling has to be dealt with first. Our legislatures must be well informed of the dynamics of our debts and the possibility of defaults, if something is not done. Raising the debt ceiling is probably the first consequential effort that needs to be made on the road to solving our budget issues. Republican and Democratic leaderships in congress must begin to coordinate their efforts to help fight the possibility of a default. The nation cannot be allowed to slide into a default mode that would compound the budget issues. If we do not do something, quick, neither the Tea Party proud stars nor the negligent lawmakers will survive. We are now in suspenseful and dramatic times and no amount of wishful thinking can save us!

Tuesday, April 12, 2011

Taking on the 2011 Federal Budget Negotiations and Agreements: implication for the Nation's Health Care and Environment?

Keywords or Terms: Environment Issues; Health Care Issues; Budget Negotiations and Agreements; Republicans; Democrats; White House; Media report; Calibrated Negotiations; 2011 Budget; and 2012 Budget

Even as the Congressional lawmakers grapple with passing a bill on budget for the outgoing accounting year, the next big challenge on fashioning out a 2012 budget has already descended on them. A perusal of negotiated agreement on 2011 budget has shown that policy riders on health care and environmental issues received disproportionately cuts, when compared with other areas, like the military, fine arts, election reforms, unused funds for federal highway and other programs. To the chagrin of some Americans, there are discrepancies between what the White House is reporting as the intended cuts to programs and what the media is reporting, with respected to what transpired between Republican and Democratic Lawmakers over last week. To a large extent, this makes it rather difficult to argue for or against the level of cuts to any one program. However, the blog tonight will build on assumptions and work its way through to drawing implication of cuts to healthcare and environmental programs in the 2011 Budget.

As reported by Whitehouse.gov, here are the cuts and reductions to the 2011 Fiscal Year U.S. Federal government budget: 1) $18 billion in cuts deemed unnecessary by the Pentagon; 2) $13 billion from funding for programs at the Departments of Labor, Education, and Health and Human Services; 3) $8 billion in cuts for State and Foreign Operations; 4) $2.5 billion in transportation funding; 5) Over $1 billion in a cut across non-defense agencies; 6) $630 million in earmarked transportation projects; 7) $35 million by ending the Crop Insurance Good Performance Rebate for subsidized insurance premiums; 8) $30 million for a job training for specific certain student loan processors; 9) Reductions to housing assistance programs; and 10) Reductions to some health care programs. Contrast this information with what the media is reporting as the intended cuts and reductions: 1) $2.5 billion in unused money from federal highway programs; 2) $5 billion in fudged savings from capping payments from a Justice Department trust fund for crime victims; 3) $1 billion in unspent money from the 2002 Help America Vote Act election reform program; 4) Commission of Fine Arts; 5) Military projects like the Navy’s CGX Cruiser; 6) $390 million cut to low-income heating assistance; 7) A $3 billion cut to agriculture programs, the biggest portion of which comes from the Women Infants and Children fund (WIC), which loses $504 million; 8) $45 million pulled from nuclear nonproliferation funds; 9) $1 billion cut to HIV and disease-prevention funds; 10) $786 million cut in first responder grants to state and local governments; 11) $600 million in cuts to community health centers; 12) $414 million in cuts to grants for state and local police departments; 13)$1.6 billion cut in the Environmental Protection Agency‘s budget, of which nearly $1 billion comes from grants for clean water and other projects by local governments and Indian tribes; and 14) $7 million cut to the Bureau of Public Debt, which accounts for and provides reports on the debt (Source: Motorgasm.com).

It is an open question whether the information provided by the Whitehouse is at variance with what the media is reporting. Since the Whitehouse information appears to be official and one that can be referenced from an official Presidential release, we will assume the information as a working paper to derive implications. Further, since the media information appears to be conveying some mixed messages, with some media outlets reporting that the following programs are being cut, programs administered by the Environmental Protection Agency, one or two provisions on the Patient Protection and Affordable Care Act, FBI's fleets of sedan, Interior Department's Travel costs; Commodity Payments to wealthy farmers; and moving around of funds in NASA’s Constellation Program, while the following are not, Federal pay raises, IRS, Pell grants, health research, raise to the top initiative, foreign aid and planned parenthood. This confusion makes it difficult to evaluate the agreed negotiations between lawmakers from both parties for concrete inferences.

Republican lawmakers have continued to define their acclaimed cuts to programs strictly on the basis of ideology and have mostly resorted to belligerent methods to broadcast their achievements in the negotiations with Democrats. In the known categories or line items of government budgets, health care, welfare, defense, pension and other categories (research, infrastructure programs, transportation, education, police and law courts),there were some known cuts that seem to be rather heavy handed. Some of the cuts to the programs at the Environmental Protection Agency and the health care reform law funding may be broadly affecting other important initiative associated with these agency and program. This is why we are having the additional debate tonight: Have Republicans sought direct attack on health care and environmental programs in the recent cuts, or have they chosen to comb through all categories of the budget equally? Although Democratic leaders in Senate appear to have remained optimistic and attempted to save majority of the provisions of the health care reform law, were they able to fend off convincingly all the parts of the Patient Protection and Affordable Care Act, that will allow the remaining provisions of the act to be phased in as scheduled?

If Democratic leaders have calibrated their efforts in negotiation over what ratio of spending on programs to cut without having a disproportionate impact on the poor and middle class, then maybe a convincing argument may be made that the negotiations with Republicans were fair and still in the interest of most if not all Americans. Contrarily, if Democrats were more concerned with the consequence of a shutdown of the federal government and bent over too much in their negotiations with the Republicans, maybe justice was not served in the agreements entered into with those lawmakers. The hard part of this whole shenanigan is that Republicans appear to have made progress in their desire to cut down on government spending and have literally done it at the back of the poor and needy members of our society. Whether this is right or wrong, will be a subject for another day.

There is reason to believe that Democrats meant no harm in reaching accord on some cuts to some programs, which they themselves have problems with the size of funding going into them. Democratic leadership maintains a remarkable unity and a sense of purpose as they negotiated with Republicans. At one spectrum, one is apt to believe that the cuts agreed on with Republicans were the best to make given the strenuous negotiations and time limitations. At the opposite end, one is also tempted to believe that in the drive to be more pragmatic, Democratic leadership may have wavered too much on the size of cuts that was conceded to the Republicans. In between what was given away and what was accepted in terms of cuts, is the real ideal cut that would hardly have hurt the course of some programs and probably; and would have probably positioned Democrats to win better concessions from Republicans come 2012 budget negotiations.

The current split of being better-off than worse off that is being paraded by leaderships of both parties may look very admissible to the public who have sought a quicker resolution to the 2011 Budget issues. Both party leaders, Democrats and Republicans, are probably looking ahead at driving a harder bargain come 2012 federal budget negotiations. This aspect of it all would probably create another gridlock in negotiations over the 2012 budget. Only if Republicans recognize that cutting the social programs alone will not resolve the federal budget deficit issues and that there must be a way for government to bring in more revenue for there to be mutual agreements on many line items of the 2012 budgets with the Democrats. Further, only If Democrats recognize that some clouts and pragmatism will be essential to win over some triumphs for the poor and middle class among us with the Republicans on the 2012 budget negotiations. The differences between the two party’s positions on the current budget negotiation, shows the stark truth about how, when parties drive policy issues and budget debates on the basis of ideology, it is often difficult to reach faster settlements and probably, difficult to come to terms with the sacrifices being made by other parties in the negotiations.

Republican Party of today is about or has probably lost to a faction among them who are basically full of contradictions. Tea party members are willing to cut social programs to the poor and middle class, yet they are so much in love with giving tax breaks to the rich. Tea party members consider themselves as the actual fiscal conservatives when compared with other Republicans, yet they are willing to spend more on defense or cut less funding to defense. If the members of tea party continue to antagonize the Republican leadership, it will be difficult to find a partner to negotiate with; and, rely upon with the type of negotiations that goes into budget formations. In addition, if these group of Republicans believe strictly on the notion of my way or the highway, it will be difficult to have a less stressful budget negotiations in congress when the 2012 budget negotiations come up. No one is condemning the Tea party member's position on the outgoing budget cuts of 2011 for now; however, if they stretch their luck too hard on the coming 2012 budget, then it will be necessary to tell them that affirmation of discontent is not one quality of political leadership in American Democracy.

For now, here are the probable impacts of the negotiated cuts to health care and environmental programs: 1) The Environmental Protection Agency may not be able to meet all its mandates as required by law; 2) crucial support for health insurance products consumption under the Patient’s Protection Affordable Care Act maybe in jeopardy; 3) advocacy for women and children programs nationally may take a turn for confrontations as these group have suffered somewhat disproportionately in the 2011 cuts; 4) the goal of achieving a green economy or developing technologies to help reduce carbon-based energy consumption is about to suffer a set back – the going green motto may end up being just a motto for the nation; and 5) deterioration of our habitats and failure to enforce environmental regulatory laws on books, may be much more difficult.

Monday, April 11, 2011

After the Brouhaha over Government shut-down, now can the real federal budget debate begin?

Keywords or Terms: Cataleptic Exhaustion; Budget Negotiations and Agreements; Stop-gap financing; Federal Employees; Defaulting; Senate Majority Leader Reid; House Speaker Boehner; Representative Jim Jordan (R-Ohio); Partnerships; and, Relationships

We were so fortunate to have such an amazing group of lawmakers, Democrats and Republicans, alike. After taking the country to the brink of a nervous breakdown over the budget of 2011, a budget that should have passed last year and should have been winding down, we were dragged into a cataleptic exhaustion over whether House lawmakers will reach an agreement with U.S. Senate and the White House, last week, over the passing of the belated budget. Welcome to the roller coaster world of lawmaking in the United States Congress!

Mr. Boehner’s Chief of staff was congratulated for the behind the scene efforts and contribution by Senate Majority Leader Harry Reid. While announcing in a press conference late Friday night that an agreement among the lawmakers have been reached, Senate Majority Leader was magnanimous enough to give credit to many who never get their widows mite in difficult circumstance as this. Yes, there were so many staffers, both in the House and Senate, who put in extra number of hours to ensure that the deal does not fall apart, or that lawmakers do not continue to drift apart. Many listeners last Friday appreciated the Majority Leader's gesture and understood the difficult challenges that many lawmakers and their staff, were facing as they attempted to reach an agreement on passing the budget that will expire in September, 2011. The rig-marrow over the budget began in April 2010!

One group that were pleased to see that our lawmakers were doing what is in the best interest of the nation, were Federal Employees, who were about to be locked out, if an agreement was not reached among the lawmakers. Some in the public actually joked that they were thankful that this task was not sourced out to China!

Majority of Americans who had keen interest in the debate over the budget understood that the agreements reached were tentative and can still fall apart, if other lawmakers in the House and Senate do not share the same convictions over all the items that were negotiated. The presumptive nature of the agreement and the possibility that all may not be totally well with the agreements, until when passed in the full house and senate, make a lot of us, wonder: What was all the brouhaha for? Is this how negotiations and deals are made in congress? Do we need to be dragged into the stress of ironing out differences among lawmakers in congress? Why are some people and programs made scapegoat due to the pressures from the Tea Party faction in the Republican Party?


The best that came out of the negotiations and agreement was probably that, America’s credit rating would not suffer or be down graded. Our creditors needed to see our lawmakers demonstrating significant flexibility or corporation, so that some of our debts do not go into default. Those creditors who were apprehensive lately about extending credit to Uncle Sam were relieved. Some of our creditors who could hardly careless about our lawmakers passing a budget, are convinced that America’s economy is the biggest and the almighty green back is a stable international and respectable currency that will never fail; these group were hardly perturbed by all the wranglings going on. For this latter group: agreements, disagreements, negotiations, deals and no deals among US lawmakers were part of the nature of American politics, and no one should read too many meanings to them; or, take them more seriously than they should. In addition, for this group, Uncle Sam’s children will do the right thing! Is this always true? Can our creditors be sure that America will tidy up its finances, pay her bills and guarantee that the nation does not go into default because our lawmakers fail to pass a workable and reflective budget?

American politics is occasionally messy and needed solutions to the question of our over-sized deficit. Our lawmakers are drawn into the annual fights over the budget line items and occasionally, the extent of the fights or how messy it gets, depends on leadership in the two chambers of congress. Initial negotiations among lawmakers this year around exhibited signs of stress, including discontent from political pressure groups, makers and shakers in congress. While some pressure groups may get so ideologue that it seems as if, no one can penetrate their defense, there are occasions, when experienced lawmakers, who know what weight to carry and which to leave behind in negotiations, cradle the process of negotiations, agreements and debates to success, even with recalcitrance from their memberships. House Speaker Boehner was faced with a tough pressure group within his party, and for some time, it looked as if the Republican Party was in disarray; however, the speaker found a way to ensure that the Tea Party group fell in line. For whatever it’s worth, we must give credit to him for bringing all the horses back to the barn or store house, after the long stormy night on friday.


It is critical to assess what was tentatively agreed on in the negotiations over the last week's Friday that prevented a complete shut-down of government. This is necessary, knowing fully well that all we are talking about here, are still presumptive. If you have been part of a negotiation deal, you understand that until all the parties to an agreement had signed on, it is still just a gentleman agreement; things can still happen that will make the deal fall though. For this past deal among lawmakers, words and data were supposed to be drafted in form of a bill that could be voted on. Except voting takes place and all the provisions agreed upon were still part of the ultimate document, it doesn’t matter what people said was agreed upon, or the benefits of the contents of the bill, the deal will remain only a gentleman’s agreement! Lawmakers, who were in negotiations and those not necessarily close to the negotiations, must still sign on to the provisions and negotiations, for the agreements to be valid and for it to pass through the house, and the senate subscribe to them.

People knowledgeable about what was agreed upon, stated that, the Republicans probably got a better deal out of these negotiations. Depending on what data and source you are looking at, you are probably sure that there is going to be a cut in the over all budget of about 38 billion dollars, give or take. If you source your data from the benchmark of the initial budget forwarded to congress by President Obama, the budget cut is in the neighborhood of about 87 billion dollars. Republicans, especially those in the Tea Party, wanted badly to cut the budget for the remainder of the six months to the tune of $61 billion dollars. With what is now in agreement, it does not seem that the Tea Party members had their way. Could this be a sore point for the negotiations? Yes and NO. If you go by the words of Representative Jim Jordan (Republican – Ohio), the negotiations are doom because of their sixty-one billion dollars threshold of cuts that weren't met in the agreement.

Because of other compromises and the stop-gap measure financing the government through this Thursday, it is very plausible that the agreement will stand, baring any other last minute recalcitrance. There were winners and losers in the negotiated compromises and a few of them, include: 1) Policy rider over abortion and Planned Parenthood Services; 2) Policy rider over environmental regulations; 3) Policy rider allowing locally generated taxes in the District of Columbia to provide help for poor women seeking abortion for unplanned pregnancies; 4) Policy rider shifting federal funds for planned parenthood to grants awarded to state health departments to allow for discretionary spending by Republican led states; and, 5) Republican’s attempt to strip funding for the provisions of the Patient’s Protection and Affordable Care Act. Of all these, the last one, defunding of the health care reform law, was vigorously defended by the Democrats; and, it will not be part of the triumphs for the Republicans. Although the GOP were able to cut community support grant sent directly to Cities to help the poor and homeless, a program initially signed into law by Republican President Nixon, to afford city administrator’s some flexibility in managing outcome programs for the poor and homeless, they were unsuccessful in their effort to defund the National Public Radio. A very welcome news to many us avid listeners to public radio!

A successfully debate that will lead to the final vote on 2011 Federal Budget by both chambers of congress is anticipated. If Republicans remain in disarray, then all bets are off; however, if the Speaker of the House is able to keep his house in order, it is probably a foregone conclusion that we will witness the type of apprehension and anxiety that beclouded the nation last week; and, made many federal agency leaders jittery. True and solid partnerships are needed on the budget negotiations deal; and, none can better bring this to fruition except the leaders in both parties. The key to having successful partnerships and negotiations buddies on federal budgets is leadership. The Republicans in the House may waive their responsibility; however, it is very unlikely at least with the 2011 Federal Budget.

As Democrats long to have some workable relationships with lawmakers in the opposing party, it is very difficult for Democrats to roll over, when Republicans, due to the plodding from the Tea party members among them, go on a rampage against women and children programs designed as safety nets. Further, it is going to be a rather strained relationship, if the Republicans are only interested in cutting down on entitlements programs, while they want to give tax break to the rich. If the goal is to solve the budget deficit problem, there must be a way to increase source of revenue for the government. Cutting entitlement programs cannot achieve the goal of a balanced budget, the way Republicans have chosen to go about it.

Thursday, April 7, 2011

Fairness and Balance in the current debate over the Federal Budget: controversy over what the intentions of the Republican Party is in the Gridlock?

Keywords or Terms: Federal Budget Debates; Fairness and Balance; Unfamiliar Territory; Civility; President’s Veto; Tea Party

Fairness matters in any debate over a conflicting subject. It matters even more when the hold out by one of the party to the debate has the potential of undermining the welfare of a greater number of Americans. The untouched underlining argument of the Republican Party of, my way or the highway, places things in unfamiliar territory or floss: understanding exactly what the Republicans are attempting to achieve by flip flopping on their demands regarding the size of cut to the Federal Budget?

That the agenda of the Republican Party for the Federal Budget continues to change with the whims and caprices of a pressure group within that party, says a lot about the disarray in the Republican Party of today; and, probably horns on what the pressure group will wroth on public policy, if given the leeway. The Tea Party, and by extension, the Republican Party, view issues of budget cuts in the context of down-sizing the federal government to the extent that successful management of the basic services expected of a civilized government and society, are unachievable. That is why the threat of veto from the President is in order and probably long overdue. In light of the possible Presidential veto to the budget passed by Republicans in the House, the blog tonight is exploring the issues of fairness and balance in the current initiative over the Federal Budget.

The relentless but yet unenviable plodding of the Republican party’s faction asking that the Federal Government be shut down, smacks of a sense of responsibility to the led; and, questions the integrity of this group, if ever called to lead. Rather than talking about what we, Republicans and Democrats, can achieve together, the Tea Party faction are calling for us to throw out the baby with the water in the bath tub. No member of our society, who appreciates the good work of fire fighters, police officers, air traffic controllers, men and women in the uniform, immigration and naturalization officers, nurses and doctors, will consider any effort to undermine it. The mindset of being the apostle of government grounding does not show political leadership nor a currency for understanding behavior attuned to a balanced welfare of the state and its inhabitants, or decorum of leadership in challenging times. And, maybe we may talk about this in the future, but the question must be asked: why is it that when Democrats occupy the White house, Congressional Republicans are most embolden to shut down the government, or chose to always ground budget negotiations debates? Does this have anything to do with political civility, Republican nuances or a desire to be heard at all cost at 1600 Pennsylvania Avenue?

Some kid seeking a Ph.D. in American Political Science or Public Policy may attempt to provide some credible answers to the last questions. For now, the public wants the process of congressional debates over federal budget negotiations overhauled and specific order of outlier position reassessed, so we can have some civility in agreements or disagreements over the thorny budget issues. Obviously, with our current experience, fairness and balance mean very little to the faction in the Republican Party that is holding the nation to ransom.

Civility in political debates, even on issues of budget negotiations, calls for minimization of controversy even on items in the budget that one has a preconceived position. A line item in a budget that is being frowned upon by one aisle of congress may be treated in isolation as long as it does not show intent of systemic bias. When Republicans in the House passed a budget that funds defense till the end of the year, while it wants only a week’s budget for the rest of government, this reflects a bias for defense and a misunderstanding of the role of government or governance. Or, are the Republicans who championed this idea in the house today taking this route out of symbolism? No one is faulting the ideological position of the Republicans on defense, neither can they claim propriety over the defense of the nation, although they always want to, however, should things always go this way?

By contrast, why didn’t the Republicans in congress support funding of public health and safety; or, are public health and safety, less important? Certainly, funding of the nation’s defense is important, so also are researches into cure of cancer, leukemia and other deadly diseases, known to beleaguer the American public. A purposeful vote for funding of defense is just as critical as the funding of the Department of Health and Human Services. Whatever is wrong with underfunding powerful institutions and segment of the economy is just as wrong with funding or over-funding of defense. Using the power of congressional hegemony to undermine any segment of government financing is a prescription for disaster. Can an unhealthy body go to war for the nation or can an unfed army go to war and win battles? There is just too much interdependence among areas of our budget or line items that we cannot choose to fund one area, while leaving the remainder in limbo.

Only rarely is it wise to independently fund an area of our budget, such as supplementary funding of the operation of a war; however, when you fail to allot required and necessary money for execution of public policy and, or the operation of essential areas of the budget, including public health and safety, then something is amiss or wrong. Fairness demands that what is good for the goose is also good for the ganders. So, allocating necessary money to fund public health and safety or any other budget line items, as well as defense, won’t hurt the bravado of the Tea partier in the Republican Party. In case the Republican Party members are oblivious to this fact: there are 2012 Budget issues lurking around the corner to be addressed. The current fight over the outgoing year’s budget is like fighting over a shrimp while a platter of shark is waiting for you!

The Tea Partier in the Republican party are probably not concerned about fairness and balance in debate, but the anxiety they have created over the possibility of a government shut-down is taking a toll among federal employees who have bills to pay and responsibility to attend to. If ever there is a follow of the federal employees due to a shutdown in government, the republican Party would not only get a back lash, their credibility for showing leadership in time of crisis will be called to question. For example, in 1994, when the last Democratic President was in the White House, the Republican led a losing battle for shutting the government down. The architect of that shut down, the speaker who is now attempting to vie for the office of the Presidency, not only lost his credibility, he lost the office of the Speaker of the House of Representatives. Worse more, he was tarnished forever as hypocritical when caught sleeping with his campaign manager, while still leading another ‘pull-him-down’ effort against the man occupying the White House at that time. In addition, the Republicans lost the house in the immediate election after all the fracas.

For many of us outside the government looking inside, especially into the current budget debates and gridlocks, it is our conviction that, in the name of fairness and balance, it is appropriate for Republicans to bury the hatchet, work in collaboration with Democrats and the Presidency, to reach a workable budget for the outgoing year and save the fights for the upcoming year. By so doing, Republicans would have shown that they are just as reasonable as the President when he subscribed to the initial size of cut to the budget that was advanced by the Republican Party. Number one, you don’t want to overdo the length of time spent on debating the budget when there are other issues of government, including over thirty bills in the house that have not been looked into or debated. And number two, you fight today and run to safety, so you can be here to fight tomorrow. No politician wins in a protracted debate, not even over the issue of funding defense, social security, Medicare and Medicaid.

Our belief is that our congressional representatives do not have to make a choice over what items in the budget must be funded now, while the others are funded for just a week. You can be tough in holding own to your philosophy or beliefs; however, you must always leave room for compromise. You can be oriented towards the goal to cut the federal deficit, but when you take the recalcitrant posture for whatever reason, you are perceived as not being statesman like and somehow, a horrible lawmaker or representative. So, for now, let’s bury the hatchet and reach a budget, so the business of the people may continue. God, Bless America!

Tuesday, April 5, 2011

Should Senate Respond to the House Republican Recalcitrance over the Budget Negotiation Deal?

Keyword or Terms: Budget puzzle; Negotiations; Comprehensive Approach; Ryan’s Plan; Political suicide; Tax Cut; Health Care Spending; Fairness Issues; Incentives; Experience Matters

“How Did We Get Here?”

Federal Budget Negotiations continue to experience significant disagreements between House Republicans, the White House and Senate Leaders. House Republicans continue to perpetrate a position of recalcitrance based on philosophy or associated ideology of their party; and, an unyielding conviction that if Democrats in Senate are not buying into their proposed cuts or similar proposals sent to them in the past five months, further negotiations on the issues of the budget, including the size of cuts acceptable to all parties, are out of place or uncalled for.

Listening to Tea Partier, House Congressional lawmaker, Chairman of House Budget Committee, Rep. Paul Ryan respond to inquiries from an AP Reporter regarding his plan for cutting the Federal budgets now or in the long term, gives you a better appreciation of where the Republicans, or some of their die-hard Tea Party members, are coming from on this debate. Here verbatim are the question from AP reporter and the response from Representative Paul Ryan:

AP REPORTER: What do you say to nervous Republicans who say this is a political kamikaze mission, that you've just given Democrats a big target that may ultimately cost Republicans their majority here?

RYAN: You know, none of them say that. Just kidding (laughs all around, some of them nervous from GOP lawmakers in the room.) You know, Jonathan, you look these people, these new people who just got here. None of them came here for a political career. They came here for a cause. This is not a budget, this is a cause. And, look, we can all go do something else with our lives. We're just not here so we can get this lapel pin that says we're a member of Congress. We're here to try and fix this country's problems. If that means we have to go first and offer solutions, fine. It that means we're giving our political adversaries a political weapon to use against us, which by the way they will have to distort, demagogue and lie to use it, shame on them. We owe it to the country to give them an honest debate."

You get a feeling from what transpired between these men, that it is either one is genuinely concerned about what the net impact of the plan offered on the masses and probably the political credibility of Republicans on this one, considering that the Tea Partier are advocating that they are on a cause, not developing and passing a budget; or, Representative Paul Ryan believe he and his Tea Partners have got the silver bullet to solve all the budget issues before congress. Further, you doubly get the feeling that you are dealing with ideologues, who are advocating conflicting positions or arguments. In addition, at the back of your mind, you want to believe that you are not dealing with a congressman and his Tea Party cohorts, who hardly understand how congressional negotiations and politics play out.

How many leading politician, Republican or Democrat, with some ample experience on federal budget negotiations, is willing to commit political suicide? How many of them are willing to stick out their necks and genuinely say they do not care about what the public thinks about their position on an issue of the federal budget compromises and tradeoffs, if in fact these people understand why they are in congress today. Not surprising, after hearing the response from Mr. Ryan, two seasoned politicians, one Republican and the other Democrat, released the following statements: “While we are encouraged that Chairman Ryan has come forward with a serious plan, we are concerned that it falls short of the balanced, comprehensive approach needed to achieve the broad bipartisan agreement necessary to enact a responsible plan." The Republican in this instance is the former Senator from Wyoming, Alan Simpson, and the Democrat, the former Clinton White House Chief of Staff, Erskine Bowles. These two men have gone into budget battles in the past and understand the pains of their bruises. They are unlikely to keep some of their reservations under their tongue just to get a sound bite or a recognition. This is why their assessments of Representative Ryan's plan, is worthy of an accolade, if not a complete appreciation in the traffic of the ongoing debates.

“Fairness Issues”

To opponents of Ryan’s proposal, it is neither fair to cut tax rate from 35 percent to 25 percent for either corporation or individual, while federal spending on health programs is disproportionately slashed and income brackets reduced to the benefit of the wealthy; majority of whom donate to the Republicans. Many objective people argue that if we are going to have a plan, particularly if the plan is to address those thorny issues that have set us apart, we must address all sectors of the budget equally, tax cut and revenues, into to. Just as we are cutting social welfare programs, we must be increasing federal revenue intakes; which means some taxes, an area the Republicans are not willing to go to. We cannot be cutting Medicare and rail roading Medicaid to the state, while giving the rich huge tax breaks that they have not asked for and hardly need.

Supporters of Representative Ryan’s plan may see a lot of good in his proposal, however, opponents like New York Senator Schumer, chastised the plan as extreme and draconian. Furthermore, a case can be made that balancing the budget on the backs of the poor, the elderly and disadvantaged among us, is close to being callous and inhumane. Ryan’s proposal would not only create an environment where state governors can abuse grants on Medicaid sent to states, if it ever comes to pass, but also disadvantage seniors with respect to insurance costs and out of pocket payment to continue to receive needed or additional care, away from the provision that the new Medicare contemplated by Representative Paul Ryan, would look like.

To address the concerns of critics of Representative Ryan’s plan, we, Republicans and Democrats, must work on a compromise, that gives everyone a fair shake in the long work of attempting to launch an equinoctial federal budget and cutting down on our national debt or deficit. Deceptive grandstanding in front of the media is not the answer; it is part of the problem. To address the concerns about fairness to everyone, trumpeting one’s plan as the only way, the lone way, to resolve the grid lock in congress, is not a prudent direction.


Another challenge of Ryan’s plan is that it is attempting to replace traditional Medicare with private health plans, in an effort to reduce cost. While the grand objective of reducing costs seems worthy, it is probably going to create a bigger problem, not only for the already passed Patient’s Protection and Affordable Care Act, but also, for the reformed health care delivery to the millions of disadvantaged Americans among us. While many of Representative Ryan’s cohort in the Tea party continue to flex their muscle as if they are the new thing to come next after rice crispy, apprehensive Democrats, including the White House and Speaker of the House, Mr. Boehner, advocate for bipartisan agreement. It is better to work within an atmosphere of compromise rather than one of going it alone and seeking unnecessary attention. House Speaker Boehner is an experienced hand, who has fought budget wars before and understands the challenges of the headaches of recalcitrance or intransigence. He is not advocated bipartisan and compromise because he likes the position of the Democrats, rather, he is conscious of the challenges of not working out a plan that is both acceptable in the house and senate and probably, safe from the veto pen of the President.

"Experience Matters"

If Wall Street, out of greed, cannot save the housing and finance sector, with the prevalent fraudulence found in insurance business, how then does the Ryan’s group or the Tea Partier, anticipate that private insurance can fix Medicare. Has Mr. Ryan forgotten how the derivative products in the housing sector due to deregulation, turned to a fiasco that nearly brought down the economy? Can Representative Ryan stand to be turned down in his old age while he wastes away in a nursing home by a private insurance, for a lifesaving treatment that his doctor recommends? Is he willing to put his faith in private insurance brokers to determine what type of treatment he must have and which, he can’t because of the type of health insurance he carries? Mr. Ryan’s plan is a non-starter, neither is it anything to give a second thought; in reality, some of us believe it is an attempt to undermine the Affordable Health Care Reform Law passed last year and sell the public once again to the insurance industry.

Many experienced hands in congress see the folly in Representative Ryan’s and Tea Party proposal and out of concern, are calling on Republicans to once again, rain in the excesses or extremism in their party. We are talking about people’s life and welfare here, not political cheap shot and opportunity to win next elections!

Sunday, April 3, 2011

How much is too much: When House Republicans Succumb to Excessive Pressure on Budget Cuts Negotiations from the Tea Party Faction?

Keywords or Terms: Budget Negotiations; Republican Leadership; Party Discipline; Excessive Pressure; Tea Party Faction; Lawmaking; Dynamics of Party Politics

In the changing world of budget negotiations on Capitol Hill, a faction of the Republican Party is flexing its muscles, but leaders of the party are maintaining that the tea party lawmakers are hardly challenging their overall party’s discipline. How will Republican leaders account for the continuous challenge to already negotiated cuttings on the budget with Democratic Party leadership, from the newly swept into congress, tea party leaders? Can Republican leaders vow that they are not under threat or pressures from the Tea Party lawmakers among them? Can they dissuade the Tea party lawmakers from making out of line comments with respect to how deep cut budget line items must succumb to under the knife? Can Republic lawmakers guarantee that they will not be party to any ploy to balance the budget on the back of social programs designed as safety net for the poor and elderly? The blog today is exploring the current machination of the tea party faction to expand their leadership role within the Republican Party; and, answer the question: how much is too much?

The pressure from the tea party lawmakers on Republican leadership in the House of Representatives is close to overwhelming, even for some Republican leaders who share tacit support for the brand of demands on budget cuts from the tea party group. It isn’t only that the Tea Party faction is demanding more cuts in the budget line items, it is the fact that these new Republican lawmakers are increasing their profile; and subjecting the Republican leadership to a range of demands that astute and seasoned lawmakers on the hill, understand is close to political suicide.

Astute questions without much reflective listening seem to be the brand of the Tea Party faction in the house; and, this type of brand is difficult for achieving party cohesion or discipline. Republican Party leadership, who have pioneered some reflective changes in the budget cuts of the past, and have worked hard under a give and take arrangements with the Democratic Party leadership, are asking themselves: do these new tea party lawmakers understand what it takes to make a success of negotiations in passing a bill and ensuring that a bill makes it through senate and the office of the Presidency? Do these new lawmakers share the type of experiences and reflective thinking on the size of budget cuts that may make Democratic Party leaders on capitol reconsider their contemplated positions; or, are they merely seeking to be heard or seen as rattling the Republican Party leadership?

Actions of the Republican leadership in Congress in the coming weeks will determine their ability to maintain party discipline with the internal pressures from the Tea Party lawmakers. It is possible that the Republican leadership will allow this new group to overwhelm their sense of better judgment with respect to budget cuts negotiations with the Democrats. It is also possible that the Republican leadership will fight back and attempt to take the middle of the road stance in negotiations with respect to the size of cuts necessary and workable with the Democrats. The ability of Republican leadership to strike a balance between the internal pressures from the new tea party faction and the realities of negotiations on the floor of congress, will actually determine the future of the Republican Party's successes in passing bills that reflect its philosophy; and hopefully, reposition it for successes in the coming elections.

Republican leaders, who understand that leadership negotiations with Democrats on issues of budget cuts cannot just rely on avowed wishes of a few members seeking to be heard at all cost, without an appreciation for past experiences of managing the legislative process without a hitch, are dying to calm the agitation within the party down. A few insiders in congressional leadership and politics, Republicans and Democrats alike, are already talking things over with some of the Tea Party lawmakers. Some in the Republican leadership are already providing answers to inquiries from the Tea party faction; however, the question is: are these new members of congress listening? Do these lawmakers understand how challenges are met, negotiations completed and disaffection smoothen out to cradle legislation(s) to success?

It isn’t out of place to assume that some Republican Party leaders in congress are seeking a way out to achieve stability and party cohesion or discipline in the way their party negotiates with Democrats on size of budget cuts; and, are eagerly working to ensure that the government apparatus do not shut-down. The perceived destabilization of party discipline or leadership authority within the Republican echelon in congress requires actions and negotiated decisions that could bring the dissenting tea party lawmakers into the fold. However, if the Republican leadership fails to rain the tea party factions in at this early time, the Republican Party leadership should not be surprised if this new group hijacks the party from under their feet. Whenever there is a gathering of a group with a focus to bring about change, even without formality, it is best to assume that their energy can actually bring down the house; and in some cases, make a bad situation worse. What must be paramount on the minds of the Republican leadership in congress today, is how to channel the energies of the tea party members toward congressional negotiation strategies or leadership style that achieve successes in lawmaking, even when talking about budget cuts in areas as Social Security and Medicare Benefits.

Republican leadership has the opportunity to facilitate the type of changes sought by members of the Tea Party. However, they have to do this within the status-quo or leadership arrangement of the Republican Party in congress vis-a-vis the Democrat's. Tea Party members must be encouraged to inquire, reflect and learn from the imaginative experiences of Republican leadership in the budget cuts wars of the past in congress. They must be asked to support the course of the Republican Party leadership with all their issues resolved at the caucus levels before it gets blown over in congressional committees or floors while negotiating with Democrats.

It is not enough for Tea Party faction of the Republican Party to seek to kick against the tenth amendment, erode federal powers, and actualize the prominence of state’s rights, it is important to appreciate the leadership in congress, on both sides of the aisle, and understand how the dynamics work to the best interests of those who have mastered the art and science of legislation, especially in the difficult terrain of budget development and line items shrinkage. Given that political preferences of the tea party faction may seem radically aggressive, even within the Republican Party, it is imperative that the Republican leadership understand this brand of politics from those who are convicted in the thinking of this new right, and work with them, so that they do not subsume the Republican leadership in congress.

Given that negotiations on what aspects of the budget may be marginally or excessively pruned without doing much damage to government services, issues of concerns from all factions of congress may seem convenient, but are they expedient? Is it expedient to allow lawmakers and tea party members to demand cuts to implementation of the Affordable Health Care Reform Law of 2010, Women Programs that support their fertility, Health Start Program that gives a level playing field to all children, Medicare and Medicaid for the elderly and the terminally ill? Answers to these and more questions must be settled, if we are to provide solutions to the challenges of developing a national budget and making life a little bit tender for all in time of austerity. Republican leaders attempting to work with pressure groups in their party, must understand differences in opinions, strengths and needs of pressure groups, management of interactions between disparate interest groups, and developing negotiating skills necessary for achieving legislative successes. Anything less is a recipe for mutiny within the Republican Party, a situation no one wants.

Finally, an experienced and proficient congressional negotiator in legislative processes can anticipate some of the demands from the new pressure group in the Republican Party and may tap into them for resolving conflicts in-house; and, laying ground work for mutual understanding among all groups within the party. When new lawmakers with a preconceived agenda come to the table, their determined demands, no matter how relevant and timely they are, often muddle up or sets back the negotiation process. The tea party faction in the House of Representatives has put the Republican leadership in a situation where they have to work with diverse demands that may not necessarily be part of the overall demands or goal of the Republican leadership in both chambers of congress. It is important for the Republican leadership in the debate for developing a federal budget to appreciate when the demands of their intra-party dynamics are getting to be out of place or in the way; and or, when the pressure group(s) within the party are probably exceeding their boundaries.