SHORT & SWEET... BUT, IT IS A GREAT EXAMPLE OF obama’s SKILL...as a finance manager.....He truly is the dumbest person in any room he enters.
It seems like 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 BPs 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 US but only about 30% of its income is derived from the US.
3. By Generally Accepted Accounting Principles (GAP), BP must book the entire $20 billion expense in the year accrued. Therefore, they will book a $20 billion expense in 2010, reducing their US 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 3 quarters of 2010. This reduces their outward cash flow by about $7.5 billion, including approximately 40% of that amount to US citizens. Assuming that the Bush tax cuts will survive through 2010, the US Treasury will lose another $450 million in taxes on that amount. We wont even discuss the effect on the US economy.
Let us put the results into a table easily understood by the small people (including me):
BP Cash Flow:
o Escrow funding ($7 billion)
o Dividend saving $7.5 billion
o Tax savings $7 billion
o Net favorable cash flow : $7.5 billion
US Treasury Tax Receipts:
o BP Corporate income tax ($7.5 billion)
o BP Shareholders ($0.45 billion)
o 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 enters.
Now tell me Did the enlightened one Kick Ass, or did he get Sucker Punched?
This is just one more reason why a community organizer should NOT be negotiating anything dealing with money and finances!
Bottom line: The $20 Billion BP is putting up will create a $7.5 Billion positive cash for BP flow this year. But, Obama actually thinks he really did something special and kicked ass (in his own words).
In reality, BP executives are laughing at him and kicked his ass. Oh well .whats new with this President anyway??? He is in over his head when he starts dealing with business people.
Your answer is the reason why I preferred Romney over McCain.
I could see what was coming down the pike, and knew that it would be critical to have someone who understood finance at the top.
But if McCain had been elected, I do believe he would have turned to Romney for advice.