An Interesting Analysis
SHORT & SWEET... BUT, IT IS A GREAT EXAMPLE OF Obama's SKILL....
...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 (GAAP), 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 .... minus $7.5 billion
o BP Shareholders ..... minus $450 million
o Net unfavorable tax receipts ..... minus $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???
It's all for show to those that do not understand what really happened, now you do.
He is in over his head when he starts dealing with real business people.
"In God We Trust" |
