BP's 20 billion--Obama was snookered by his inexperience?

This is flying around the internet in viral form, and I'm no expert on the figures, nor is the person who sent it. This piece is about BP's escrow account to compensate Gulf businesses. It's been posted, and reposted on various forums and blogs. So I googled to see where it might have originated, and found the earliest form (it gets revised as it moves along like most virals) by Dick Miller in the Savannah paper on July 1, 2010. I can't determine if it is his own work, although he has appeared in other op ed columns.

BP dupes the president

It seems a miracle that our beloved leader was able to convince BP to establish a $20 billion slush (oops, escrow) fund to compensate those hurt by the ongoing oil plume in the Gulf of Mexico. After all, he had no constitutional power to force them to do so; so had to resort to Chicago-style negotiating.

But, let us take a closer look at the effect on BP's finances:

1. BP will establish a $20 billion fund, but will pay only $7 billion into it during 2010.

2. BP is a British corporation, but has a very large operating entity in the U.S.

3. By generally accepted accounting principles, BP must book the entire $20 billion expense in the year accrued. Therefore, they will book a $20 billion expense in 2010, reducing their U.S. tax liability by $7 billion.

4. Our dear leader also convinced this massive corporation to show their concern for the "small people" by withholding dividends to their shareholders for the last three quarters of 2010. This reduces their outward cash flow by about $7.5 billion, including approximately 40 percent of that amount to U.S. citizens. Assuming the Bush tax cuts will survive through 2010, the U.S. Treasury will lose another $450 million in taxes on that amount. We won't even discuss the effect on the U.S. economy.

Let us review the results:

BP Cash Flow:

Escrow funding ($7 billion)

Dividend saving $7.5 billion

Tax savings $7 billion

Net favorable cash flow :

$7.5 billion

US Treasury Tax Receipts:

BP Corporate income tax ($7.5 billion)

BP Shareholders ($0.45 billion)

Net unfavorable tax receipts ($7.95 billion)

I guess we really should expect this. After all, our dear leader is the most inexperienced man in any room he walks into.

DICK MILLER

Savannah

HT Murray

Update: According to the Washington Post, hardly a right wing spoof, the U.S. taxpayer may get hit even harder by the deal between Obama and BP (one of his biggest contributors going way back to his Senator years).