The idea is that if BP doesn't conserve its cash, it will run out later and leave injured claimants high and dry. Not likely. Estimates of the total costs of the spill range up to $70 billion, which sounds large only if you are not a multinational petroleum company.
The oil giant had profits last year of nearly $17 billion, reports MSNBC, and its untapped reserves are worth $1.35 trillion. The quarterly dividend is just $2.6 billion. And BP won't have to bear the whole burden, since its partners on the Deepwater Horizon rig, Transocean and Halliburton, will probably be on the hook for a large portion of the damages.
About the only thing that could keep BP from paying its share is a criminal conviction, which would wreck its ability to do business. So the administration purports to worry about BP's bankruptcy while entertaining actions that would probably lead to bankruptcy.
Even if the escrow fund were justified, turning it over to the administration isn't. Instead of trying to limit payouts to the truly deserving, the people in charge would have every incentive to err on the side of generosity to anyone who claims to have been hurt.
In his Tuesday address to the nation, Obama made a point of saying that "this fund will not be controlled by BP." He didn't say how he will assure that the administrators don't fall into a jolly impersonation of Santa Claus.
David Pettit of the Natural Resources Defense Council, which is not exactly an apologist for polluters, says the pitch from Senate Democrats to BP is: "We'd like you to escrow $20 billion, with a 'b', and we'll take over claims processing. So we'll write the checks, and it will be your money that backs them up, and you're out of the loop. If I were BP, I'd have some problems with that."
Bypass longstanding legal procedures that protect everyone in favor of granting unchecked discretion to the president? BP is not the only one that should have some problems with that.