Thomas Sowell thinks the $20 billion fund President Obama's extracted from BP is yet more evidence that we're on a "slippery slope to tyranny."
In our times, American democracy is being dismantled, piece by piece, before our very eyes by the current administration in Washington, and few people seem to be concerned about it. ... Just where in the Constitution of the United States does it say that a president has the authority to extract vast sums of money from a private enterprise and distribute it as he sees fit to whomever he deems worthy of compensation? Nowhere.
And yet that is precisely what is happening with a $20 billion fund to be provided by BP to compensate people harmed by their oil spill in the Gulf of Mexico.
Many among the public and in the media may think that the issue is simply whether BP's oil spill has damaged many people, who ought to be compensated. But our government is supposed to be "a government of laws and not of men." If our laws and our institutions determine that BP ought to pay $20 billion — or $50 billion or $100 billion — then so be it. But the Constitution says that private property is not to be confiscated by the government without "due process of law."
Technically, it has not been confiscated by Barack Obama, but that is a distinction without a difference. With vastly expanded powers of government available at the discretion of politicians and bureaucrats, private individuals and organizations can be forced into accepting the imposition of powers that were never granted to the government by the Constitution.
I agree with James Joyner, who thinks Sowell's reference to Hitler elsewhere in the op-ed from which I just quoted undermines his argument.
I’ve got plenty of concerns about the Obama administration. But, seriously, Hitler and Stalin?! Two men who, between them, are responsible for the slaughter of tens of millions of innocents? Who notoriously employed secret police forces that arrested, tortured, and killed anyone who dared disagree?
Yet, I don't share James' insouciance about Obama's "pushing the envelope" of the rule of law, even if James is right that doing so, "in our system, has provenance as far back as the earliest days of George Washington’s presidency." We are supposed to be a nation premised on the rule of law, but Obama has been willing to use his bully pulpit all too often to bully people into doing things he has no legal right to compel them to do:
- Twisting AIG's arm to get it to revoke bonuses to which employees were contractually entitled
- The cram down on Chrysler creditors for the benefit of the UAW
- The threats against Perella Weinberg Partners for opposing the Chrysler bailout
- Pressuring health insurers not to raise premiums, lest people realize what a money pit Obamacare will be
- Pressuring banks to reduce executive compensation
- Firing Gerald Walpin
- Trying to buy off Joe Sestak from running for the Senate
Setting aside the abuse of power, moreover, another key problem with taking shortcuts like the one Obama took with BP is that we have no idea how it will work. Victor Schwartz spots some of the problems:
The $20 billion victims fund, recently announced by the president and paid for by BP, has the potential to provide a solution to this developing problem, but only if the fund is set up to draw clear liability lines and reduce litigation costs. This will not be easy. Already, dozens of plaintiffs' firms throughout the United States have filed claims against BP, Transocean, Halliburton and others. ... A witness of this rush to the courthouse commented, "Only one animal has thrived in the Gulf oil spill, hundreds of sharks." But when he looked more closely, he said, "No, they're not sharks, they are plaintiffs' lawyers."
To make the fund work and reduce the litigation bonanza, the following must occur: Potential victims, many of whom have been mechanically placed in class actions, should be given a clear and voluntary choice: fund or litigation? The benefit and risks of each choice should be explained fully to them. The fund can be an important model for that choice. Clear guidelines must be established for who is eligible for the fund. Obviously, persons who suffered physical injury or damage to their own property should be eligible. It is less obvious with respect to claims for direct or indirect economic losses. Tort, or liability, law is as murky here as some of the Gulf tar balls.
For example, if a person negligently causes an accident in a tunnel, he is responsible for all direct physical and property harms that are caused by his negligence. But if someone behind the wrongdoer cannot open his business that day and loses earnings, tort law generally does not allow recovery for those damages. It is essential to draw clear and fair guidelines on this crucial point. Guidelines that are too strict may be unfair. Guidelines that are too loose will bankrupt the fund.
The challenging questions of who gets paid and how to reduce the legal costs should be addressed now by Congress. First, the fund should be used only to compensate plaintiffs who have suffered a material loss from the oil spill. Damages in nonpersonal injury cases also should be confined to actual economic loss. If BP directly or indirectly already paid the claimant for his loss, that should be deducted from the amount of the claim. Claimants should include those who can show by the preponderance of evidence specific economic loss, not generalities. Finally, a claim paid under the fund should be in lieu of any existing or future lawsuit.
The trouble with making policy via arm-twisting is that you skip over all of those sort of implementation questions. If Obama had been willing to let the usual process or tort law work its way through the courts or had been willing to go to Congress to get legislation passed, we wouldn't be sitting here with a pile of $20 billion wondering how to keep it all from ending up in the pockets of trial lawyers.
And that's why we shouldn't be glib about Presidents pushing the edge of the envelope.
