Obama draws criticism for cap-and-trade push, strong-arming BP into escrow account

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President Obama faced criticism in the lead-up to his first-ever Oval Office address to the nation over whether he is using the oil spill in the Gulf of Mexico to push a cap-and-trade bill and whether the government has the legal authority to force BP to create an escrow account for claims to be handled by a third party.

The White House pushed back on the matter of the escrow account, saying it was needed and appropriate because of BP’s “recklessness” that precipitated the spill, which has now leaked an estimated 142 million gallons of oil into the Gulf since the pipe first ruptured nearly two months ago.

Senate Minority Leader Mitch McConnell, Kentucky Republican, said Obama was using the crisis to promote an energy bill with a price on carbon, an idea that was considered dead in the water until the spill occurred nearly two months ago.

“Now is not the time to push ideology. It is time to fix the problem,” McConnell said in a speech on the Senate floor.

Obama’s Oval address follows the president’s two-day trip to the Gulf region to oversee response and recovery efforts.

McConnell said the president wanted to “use the justifiable public outrage over an explosion that killed 11 people and the oil spill that followed as a tool for pushing a divisive new climate change policy even as hundreds of thousands of gallons of oil continue to spill into the Gulf each day.”

The White House declined to respond directly to McConnell’s charge. And in fact, a senior White House official told reporters that the president “absolutely” believes that putting a price on carbon is the only way to make progress on climate legislation.

“Some will argue that the costs are too high, that we can’t afford to do this right now,” she said. “[But] we can’t afford not to because the long term costs to our economy, our national security and our environment are far greater.”

Some on Tuesday also questioned whether the government has — as the White House claimed Monday — the legal authority to force BP into handing over as much as $20 billion to a third party for payment to claimants harmed by the spill.

“The escrow proposal is designed to cover political damages, not economic damages. Congress can’t manage its own budget, let alone BP’s budget,” said John Hart, spokesman for Sen. Tom Coburn, Oklahoma Republican.

The Wall Street Journal editorial page said the play was pure political bullying.

“The White House knows it has no legal authority to demand such a corporate ATM card, but it is counting on public anger to coerce BP to go along,” the Journal wrote.

The man who led the Pentagon’s response to the Exxon Valdez spill in 1989, retired Air Force Lt. Gen. Thomas McInerney, also said he doubts the government can force BP to set up an escrow fund.

“If I was running the company I wouldn’t let them. The U.S. government can’t handle its own money,” McInerney said.

The White House refused to cite specific statutes that gave it authority to force BP into acting but maintained that it does have such powers.

“The president has authority under existing law to assure that the legal obligations of the responsible party have been satisfied,” said a White House official who spoke about the matter with The Daily Caller on the condition he not be identified.

“We are satisfied that should it be necessary, the president can use this authority to accomplish the purposes served by an escrow fund and independent claims payment procedure. The best and efficient course is to achieve a full, speedy and cooperative agreement with BP to the same effect, which is what we intend to,” the official said.

A separate senior White House official told reporters on a conference call that the escrow account is required to compensate “workers and businesses that have been harmed as a result of the company’s recklessness.”

Obama is set to meet with BP officials at the White House Wednesday, at which point the administration hopes to reach an agreement on the escrow account. White House deputy press secretary Bill Burton on Monday said that BP has “seemed willing to move forward with an escrow account.”

However, the senior White House official indicated that an agreement had not yet been reached on Tuesday evening.

“I’m not going to get into where we are,” he said.

The reality is that even if the law does not explicitly permit the government to strong-arm BP into acting, the oil company is in no position politically at the moment to make such an argument, a fact that a source inside BP acknowledged.

As for the energy bill, that has been revived in large part by Obama’s regular focus since the leak occurred on the need for breaking the nation’s dependence on fossil fuels.

Sens. John Kerry, Massachusetts Democrat, and Joe Lieberman, Connecticut Independent, on Tuesday said that their energy legislation, which would cap emissions and require large emitters to buy carbon credits from the government, would decrease energy bills for consumers. Most conservatives argue that increasing costs for energy companies would simply result in costs being passed on to consumers.

Sen. Richard Lugar, Indiana Republican, introduced legislation last week that would encourage the country toward alternative fuels without putting a price on carbon. But a senior Democratic leadership aide told Politico this week that any energy bill effort “must include some serious effort to price carbon as a way to slow climate.”

Senate Majority Leader Harry Reid will meet with the Democratic caucus on Thursday to discuss how to move forward with legislation.

The idea of another tax-heavy piece of legislation in an election year has many Democrats concerned. A National Public Radio poll released Tuesday won’t help their anxieties. The poll of 70 competitive House districts showed strong advantages for the GOP in these districts, especially among voters who are most enthusiastic about voting this November.

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