Another Example of Oil And Accuracy Not Mixing on Rachel Maddow Show

May 25th, 2010 8:25 PM
What is it about oil spills that make liberals so slippery?

Come to think of it, this isn't fair. What is it about oil spills that make liberals more slippery than usual? There, that's better.

The fact that oil companies receive federal subsidies doesn't sit well with Chris Hayes, Washington editor of The Nation magazine and occasional guest host on Rachel Maddow's MSNBC show. Sitting in for Maddow on May 21, Hayes lambasted libertarian GOP Senate candidate Rand Paul for not condemning subsidies to the fossil-fuels industry --
HAYES: The very idea of government subsidies runs counter to the libertarian governing philosophy. And yet when they're in power, when conservatives are in power, reflexively pro-business conservatives have no problem with them. They chuck their supposedly principled free-market ideals right under the wagon the first time BP comes calling.

In 2005 the Republican-controlled Congress voted to increase tax breaks for oil companies. In 2008 President Bush threatened to veto a Democratic effort to roll back these tax breaks. Republicans right now, as I speak to you, are blocking the effort to lift the cap on what oil companies are liable for when a spill happens. Currently, the money that pays for the cleanup comes from an oil spill fund set up by Congress, another subsidy to the oil industry.

Later in the same broadcast, Hayes -- to his credit -- criticized the New York Times for misquoting Paul from his interview with Maddow two nights earlier. (As described here by NewsBusters blogger Noel Sheppard).

The Times's quoting of Rand was "technically right and totally misleading if you haven't done your homework," Hayes pointed out -- as can be said of his description of the oil spill fund as a government "subsidy" to oil companies.

Here is how the Coast Guard describes the sources of funding for the Oil Spill Liability Trust Fund, created by Congress in 1986 and authorized for use four years later by President George H.W. Bush --

The Principal Fund of the OSLTF has several recurring and nonrecurring sources of revenue.

  • Barrel Tax. The largest source of revenue has been a 5-cent-per-barrel tax, collected from the oil industry on petroleum produced in or imported to the United States. The tax was suspended in July 1993 because the Fund reached its statutory limit. It was reinstated in July 1994, when the balance declined below $1 billion, but expired at the end of 1994 because of the sunset provision in the law. The 2005 Energy Policy Act again reinstated the tax (effective April 2006).
  • Transfers. A second major source of revenue has been transfers from other existing pollution funds listed above. Total transfers into the Fund since 1990 have exceeded $550 million. No additional funds remain to be transferred to the OSLTF.
  • Interest. A recurring source of OSLTF revenue is the interest on the Fund principal from U.S. Treasury investments. As a result of historically low interest rates, interest income declined in 2003 and 2004, but has rebounded in recent years as Treasury rates have risen with the economic recovery.  The Department of the Treasury serves as the OSLTF’s investment manager.
  • Cost Recoveries. Another source is cost recoveries from responsible parties (RPs); those responsible for oil incidents are liable for costs and damages. NPFC bills RPs to recover costs expended by the Fund. As these monies are recovered, they are deposited into the Fund.
  • Penalties. In addition to paying for clean-up costs, RPs may incur fines and civil penalties under OPA, the Federal Water Pollution Control Act, the Deepwater Port Act, and the Trans-Alaska Pipeline Authorization Act. Penalty deposits into the OSLTF are generally between $4 million and $7 million per year.

... Sources of funding that do not include taxpayers, as implied by Hayes in deriding the fund as "another subsidy to the oil industry."

Hayes's description of the fund as a subsidy also doesn't make sense in the context of his remarks. Recall how he criticized Republicans for "blocking the effort to lift the cap on what oil companies are liable for when a spill happens."

You'd prefer to raise the cap on this, uh, "subsidy," Mr. Hayes? How about to $10 billion from the current $75 million, as proposed by Sen. Robert Menendez? 

Later in the same segment, Hayes interviewed Danielle Brian, executive director of the non-profit Project On Government Oversite, who said this about royalties paid by oil and gas companies --

BRIAN: This is one of the single biggest source of revenues to the federal government after taxes, after the taxes that we pay, are those royalties paid by the oil and gas industry for the ability to drill offshore as we're seeing here and on public lands ...

... Royalties that don't exist, at least according to Maddow on her show May 12, as seen in the third and final part of the embedded video. Here, Maddow refers to the so-called "climate change bill" filed by senators Kerry and Lieberman that calls for increased subsidies to oil companies --

MADDOW: These oil companies already don't pay federal royalties on anything that they drill out there, but how about expanded taxpayer subsidies for them to do it too, to do it more? This is, not to put too fine a point on it, our oil and yet we're paying them to drill it and then we're not collecting a percentage from it, even though it's ours and even though we bear the environmental disaster risk whenever anything goes wrong.

Got that? Aside from "one of the single biggest source of revenues" after taxes, hardly any royalties at all.

Maddow did get something correct in this equation, however -- the ease with which she juxtaposed "taxpayer" with "subsidies." If only her guest hosts would follow suit.