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Fmr. Labor Secretary Robert Reich: US Should Put BP Under Temporary Receivership During Gulf Coast Recovery

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We get reaction to BP CEO Tony Hayward’s appearance on Capitol Hill from Robert Reich, the former Secretary of Labor under the Clinton administration and now a professor of public policy at the University of California at Berkeley. Reich says BP should be put under temporary receivership, which would allow the US to take over its operations until the spill is stopped. We’re also joined by Tyson Slocum, the director of Public Citizen’s Energy Program. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We turn now for more on BP and the worst environmental catastrophe in US history to two guests. Robert Reich is with us, the former Secretary of Labor under President Clinton, now a professor of public policy at the University of California, Berkeley. And joining us from Washington, DC, Tyson Slocum, the director of Public Citizen’s Energy Program.

We welcome you both to Democracy Now! Let’s turn to Robert Reich.

TYSON SLOCUM: Good morning.

AMY GOODMAN: You’re calling for the — well, putting BP into temporary receivership. Can you explain what you think should happen now?

ROBERT REICH: Well, Amy, to me, it is simply impermissible to have the rescue operation, the operation that is trying to plug the hole at the bottom of the Gulf of Mexico and contain the oil spill, under the direct control of the same company, BP, that was responsible, whose recklessness and negligence seems to have generated all of this, to begin with, a company that has a history of cutting corners. You know, five years ago, the North Slope of Alaska, one of the worst oil spills we’ve ever experienced up there, the same company. BP should not be doing this. BP should be paying for it. But actually, the operation ought to be under the direct control of the United States, the commander-in-chief of the United States, the President, has got to know what’s going on, summon the right resources, whether it’s the Navy, the Marines. Certainly BP’s expertise should be used, but that expertise needs to be under the direct and direct control of the President.

JUAN GONZALEZ: But what about the President’s repeated statements that BP is in charge, and it’s their responsibility to clean up the mess they made?

ROBERT REICH: Well, Juan, certainly it’s their responsibility to pay for it, and we need to use whatever expertise they have. If Tony Hayward’s testimony yesterday is any evidence of their expertise, there isn’t very much expertise. I mean, Tony Hayward seemed like he didn’t know what was going on. But my point is not so much in the payment. Yes, BP should pay for it. But in terms of the actual execution of the whole job of stopping this leak and containing the spill and cleaning everything up, it should not be under the direct control of BP. There’s no reason to trust BP. BP has continuously lied to us with regard to the amount of oil that was being generated from that hole. BP has continually failed to balance the public interest accurately against corporate interests. BP is under the direct financial and legal requirement that it maximize shareholder returns, not that it protect the United States, not that it guarantee the security of American citizens and the environment. BP should not be in control of this operation.

JUAN GONZALEZ: I’d like to ask you, we played the clip of Representative Joe Barton calling President Obama’s meeting with BP executives a “shakedown,” but I want to quote to you from a prior hearing, a congressional hearing four years ago on BP, what Joe Barton said then. He said — this was in dealing with the spill that occurred in Alaska, and Barton said, “If one of the world’s most successful oil companies can’t do simple basic maintenance needed to keep the Prudhoe Bay field operating safely without interruption, maybe it shouldn’t operate the pipeline.” Barton went on to say, “I am even more concerned about BP’s corporate culture of seeming indifference to safety and environmental issues. And this comes from a company that prides itself in its ads on protecting the environment. Shame, shame, shame.” That was Joe Barton four years ago, but now he’s saying that President Obama is shaking down the company. Your response?

ROBERT REICH: Yeah, well, look, Representative Barton, the senior ranking Republican on the Energy and Commerce Committee there, he has a view — I don’t share it, obviously, but some Republicans, most Republicans, and a lot of apparently Tea Partiers and others share the view that if it comes down to who you trust least, big government or big corporations and Wall Street, they trust big government less than they trust big corporations and Wall Street. And frankly, when we have seen what’s happened, Wall Street’s near meltdown and Goldman Sachs depredations, when we’ve looked at Massey Energy and what’s happened to the miners in that terrible explosion, when we’ve looked at what the oil companies, BP has done, or the insurance companies, such as WellPoint, the last five months have been a kind of a lesson to a lot of Americans in what corporations will do in pursuit of profits if they are not checked by government. We need not only appropriate regulation, but we need to go beyond appropriate regulation.

I mean, what we should have done with Wall Street is to cap the size of those firms, use the antitrust laws, make sure that no big Wall Street bank is too large to fail. What we should have done with healthcare is make sure that there was a public option or Medicare for all, rather than continuing to allow the entire healthcare system of America to be under the control of private, for-profit insurance companies that are not in the interest and are not acting in the interest of the public. What we needed to do in the Gulf and what we need to do right now is to put the President directly in charge of the cleanup effort, because, again, it’s not that these big companies are totally untrustworthy, they are very trustworthy in one very narrow respect, and that is maximizing the returns to their shareholders. That’s what they are set up to do. They are not set up to respond to the public interest.

AMY GOODMAN: So what’s stopping President Obama from doing this, doing what you’re calling for in the Gulf and on the other issues you’re talking about? Many people feel that they voted for him because they thought he would do these things.

ROBERT REICH: Amy, I think that there are a couple of things. And, you know, I scratch my head to try to figure it out. I mean, one is that he is confronted with a requirement in the Senate of getting sixty votes, and he barely can summon sixty votes. Now, that raises another interesting question: why doesn’t he and why don’t the Democrats and the leadership say, “Look, the sixty-vote supermajority is not in the Constitution, there is no reason we have to continue to subscribe by it”? But let’s just take, for at least now, the stipulation that he’s got to get sixty votes.

Also, the big corporations, you know, have never, never, in my experience — and I’ve been in and out of Washington for thirty years — have never had the clout, the power, that they have right now. I mean, they are inundating Congress and members of Congress, Senate and representatives, with money, campaign money. They’re distributing campaign money all over the place. Their lobbyists are all over the place. There is not counterveiling power in Washington of a sort that we saw, let’s say, forty years ago, when you had big corporations, but you also had very powerful unions, when you had very powerful environmental groups that really could take on big corporations, head to head, toe to toe. Right now, you’ve got a situation in Washington such as I have never seen, I think that probably we’ve not seen since the late nineteenth century, when the robber barons of oil and finance and the great trusts ran roughshod over democracy.

JUAN GONZALEZ: I’d like to bring in Tyson Slocum of Public Citizen into the conversation. You’ve called for the federal government to suspend its contracts with BP. Could you talk about what those contracts are and also about BP’s record, which, if we were talking about street crime, we’d call them a predicate felon?

TYSON SLOCUM: Right. Public Citizen researched and found that BP has over $2 billion in outstanding contracts to deliver oil and fuel to the Department of Defense, and we believe that BP’s habitual corporate criminal record — two of the company’s US subsidiaries are currently on criminal probation and were actually debarred by the Environmental Protection Agency under its authority under the Clean Air Act and the Clean Water Act, the two statutes that the company pled guilty to to federal criminal violations. And we feel that BP — that providing services to the federal government is a privilege, not a right, and that taxpayers should not be spending over $2 billion to give to a company while it destroys the ecosystem and the livelihoods of millions of people in the Gulf of Mexico.

You have to remember that what’s happened here in the Gulf is not an isolated incident in BP’s history. BP has the worst track record of any oil company operating in America. They’ve paid more than $700 million to settle allegations of wrongdoing in the last couple of years. But we also have to recognize that problems in ultra-deepwater drilling are not just isolated with BP, as we learned when the five major oil companies testified before Congress earlier this week that none of the oil companies operating in the deep Gulf of Mexico have an adequate response plan. None of them have a contingency plan to deal with a catastrophic blowout. So the corporate irresponsibility extends far beyond BP to the entire petroleum industry. How on earth can you have an industry that is focused on extracting oil from deep in the ocean in the Gulf of Mexico and not a single company has a plan drawn up to deal with the kind of catastrophic blowout that we’re experiencing today? This justifies calls to stop all deepwater drilling, because we simply do not have a plan by these giant oil companies.

And I agree completely with Robert here, that we’ve got a culture where corporations have been allowed to take over energy policy. The deregulation movement that was pushed by a large number of members of Congress, who were doing those tough questions yesterday of BP’s CEO, Tony Hayward, you have to remember that whether we’re talking about Wall Street, whether we’re talking about big oil companies, it was radical elements in Congress that removed consumer protections and government oversight over these powerful industries, and these industries have been free to operate without concern to the safety of workers, without concern to the American economy, and without concern to the environment. And we need to undo this radical era of deregulation and understand that these powerful corporations are committing crimes and doing great harm against the people.

And I wish that Barack Obama was taking more of a lead, because I think that he has been timid, and he has been compromised by the fact that on March 31st, just a couple of weeks before this explosion and blowout, he called for a huge expansion of offshore oil drilling. Barack Obama made a political calculation that he needed the oil industry’s support to further climate change legislation, and when Barack Obama called for that expansion of oil drilling, he never said that we needed to completely restructure the broken regulator, he never said we needed to rein in the power of the oil companies. And I think that has really compromised Barack Obama to be able to be a leader on this, because he doesn’t have legitimacy because of his strong support for offshore drilling — a moratorium, by the way, that was imposed back in 1982 by the Republican president, Ronald Reagan.

AMY GOODMAN: And the relationship between BP and the Pentagon, Tyson Slocum?

TYSON SLOCUM: Well, yeah, I mean, you’ve got a situation where BP has at least six outstanding contracts, where taxpayers are paying more than $2 billion to BP to deliver fuel to the Pentagon, mainly to the Air Force, for fuel deliveries. And we feel that this contract ought to be revoked. I don’t think that revoking this contract is going to inhibit the ability of BP to pay what is owed to the people of the Gulf. This is $2 billion, which is a lot of money to taxpayers. But for a company that’s got $235 billion in assets, they’ve got plenty of money to set aside to pay for the damage that it’s caused.

And I have a criticism of the White House’s settlement of a $20 billion escrow account, because it’s not enough. That is just the tip of the iceberg of the costs that are going to come to the loss of economic damage to fishermen, to tourism. And how on earth do we put a price tag on the permanent destruction of the Gulf of Mexico marine and coastal ecosystems? We’re talking about permanent damage to one of the richest and most diverse marine life on the planet, and that damage was caused by negligence on the part of BP. So we need a lot more than $20 billion. And my concern is that BP is a global operation, and I feel that — or I fear that BP America might try to shelter itself from the valuable assets outside of the United States by the parent company headquartered in London.

JUAN GONZALEZ: I’d like to bring back Robert Reich, and we’ve only got a couple of minutes before your feed goes down there, but I’d like to ask you about another issue: NAFTA. Many years ago, back in the early '90s, when you and other members of the Clinton administration were going around trying to convince the editorial boards of newspapers to back NAFTA, we had a spirited debate at the Daily News editorial board meeting over the issue. I'm wondering your assessment. Did Mexico benefit from NAFTA that the Clinton administration pushed? And in retrospect, what do you think was good or bad about the deal?

ROBERT REICH: Juan, in retrospect, I think both sides, those who were very concerned about loss of jobs due to NAFTA in the United States and also those in Mexico and also in the United States, such as the Clinton administration, who thought that NAFTA was the best thing since sliced bread, both of those sides were proven wrong. Those jobs didn’t go to Mexico. They went to China. But the one winner in NAFTA, and a big winner, was Mexico in terms of the peso crisis. I think that peso crisis, you may remember, in 1998, would have been much worse, were it not for NAFTA.

But let me just — I just want to wind back, because, as you said, my feed is going to go in a second, and I want to say one more thing with regard to the Gulf. And that is that if we do not use this and if the President doesn’t use this as a teachable moment to put a price on carbon, I think he is missing a huge opportunity here. The American public is notoriously short on attention span, but this is going on and on and on. It’s been, what, sixty days already, and there is no telling how long this is going to go. If there’s a silver lining on this disaster — and I don’t think there is — but if there is a silver lining here, it may be that right now is an opportunity to get the American people behind the idea of putting a price on carbon. And that means that what the President has got to do is, maybe in conference committee, go to the — you know, get this energy bill, whatever he can out of the Senate, in the conference committee between the House and Senate, then put in a very specific provision to price and put a price on the carbon, on all carbon, not just oil, but on coal and all carbon fuels, and then use the lame-duck session of Congress after the election to actually get this enacted.

AMY GOODMAN: Secretary Reich, Professor Reich, you’re sitting at the University of California, Berkeley, where you’re now a professor of public policy. It’s interesting that you had this controversy at the university over the last few years about BP, itself, giving the University of California, Berkeley, half-a-billion dollars. And that whole effort was headed up by, well, at the time, Steven Chu, professor at Berkeley, now of course the Energy Secretary, who’s heading up a lot of dealing with BP. What is the assessment now, at your university or your own assessment, of this relationship that many were deeply concerned about, the privatization of public education and this being BP itself?

ROBERT REICH: Amy, there’s a question mark hanging over this. First of all, I hope that the university — and I don’t have any information on this — but I hope the university has got BP to set up its own escrow account here for the University of California, because BP may be in trouble. As your other guest was saying, $20 billion is not going to go nearly far enough. There are going to be a lot of civil complaints and a lot of litigation. It may be that BP starts — you know, has to pay out hundreds of billions of dollars over the next couple of years. If Berkeley is going to get anything out of BP, it’s got to move very quickly and get an escrow fund. And number two, the administration here has reassured the faculty — and the faculty was not unanimously in favor of this by any means — but the administration has reassured the faculty that there is an iron curtain between academic freedom and what BP wants out of the university. Well, we will see.

AMY GOODMAN: Well, Robert Reich, we want to thank you very much for being with us, professor of public policy at the University of California, Berkeley, was Secretary of Labor during the Clinton administration.

And Tyson Slocum, a last question, and that is the issue of the hundreds of wells that BP continues to operate in the Gulf of Mexico, as the CEO told Eliot Engel of New York and a number of congressmen who asked him, among them, Atlantis, which dwarfs the Deepwater Horizon, with many complaints, with whistleblowers speaking out about the dangers of Atlantis.

Looks like we lost Tyson Slocum, but we’ll take that up next week. We are going to go to a break. And then, when we come back, we’re going to look at not only President Obama’s longest war, the war in Afghanistan, but the longest war in the United States. We’ll be speaking with Tom Engelhardt. Stay with us.

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