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Tuesday, June 29, 2010

Will the US Government take over BP?

By Kevin J. Price

The Obama administration's imagination as to what the government should be doing is without limits. Obama, and those who surround him, seem to honestly believe that the government is the solution to most (if not all) problems. Over the last two years the government has taken over insurance companies, financial institutions, and even auto companies, so why not an energy company? Especially an energy company that is in the process of destroying our Gulf Coast. That is the exact argument being used by former Secretary of Labor (under Clinton) Robert Reich. Reich is also an adviser to President Barack Obama and is the administration's point person for promoting bizarre government agendas. In this situation, Reich is proposing a policy approach Hugo Chavez used in Venezuela of taking over foreign companies in order to meet "national interests." I wonder what BP and the United Kingdom will have to say about this.

Reich seems to be the official tester of strange ideas for the Administration. He comes out with odd policy approaches and writes articles or give speeches in order to see what type of reaction he gets. What a job, but he relishes it. A great example was his comments on the health care reform debate. While speaking at the University of California, Reich talked about what an "honest" politician would say when running for President, if "that candidate did not care about becoming president." Reich, acting as the "sound" leader stated, "Thank you so much for coming this afternoon. I'm so glad to see you and I would like to be president. Let me tell you a few things on health care. Look, we have the only health care system in the world that is designed to avoid sick people. And that's true and what I'm going to do is that I am going try to reorganize it to be more amenable to treating sick people but that means you, particularly you young people, particularly you young healthy people...you're going to have to pay more." This is definitely the case, especially if the government is going to be the one behind the "reorganization." This is also true if it is going to be a government run system, because the only hope for price containment is in competition and there will be none of that in a national health care program. He goes on to say, "By the way, we're going to have to, if you're very old, we're not going to give you all that technology and all those drugs for the last couple of years of your life to keep you maybe going for another couple of months. It's too expensive...so we're going to let you die." Finally he said "I'm going to use the bargaining leverage of the federal government in terms of Medicare, Medicaid---we already have a lot of bargaining leverage---to force drug companies and insurance companies and medical suppliers to reduce their costs. What that means, less innovation and that means less new products and less new drugs on the market which means you are probably not going to live much longer than your parents. Thank you." Nut job? Maybe, but he is also the typical policy type that comes from this administration.

People were not particularly surprised by Reich's speech on health care and I am beginning to question if they will be shocked by what he has to say about BP. In a recent article he wrote, "It's time for the federal government to put BP under temporary receivership, which gives the government authority to take over BP's operations in the Gulf of Mexico until the gusher is stopped. This is the only way the public will know what's going on, be confident enough resources are being put to stopping the gusher, ensure BP's strategy is correct, know the government has enough clout to force BP to use a different one if necessary, and be sure the President is ultimately in charge."

I believe that there is no role for the federal government to own any business. I also believe that it is extremely dangerous for the government to get in the business of taking companies that are from foreign countries. That has a certain "petty dictator" feel to it. I must say, I like Reich's use of the expression "temporary receivership." These words remind me of the late economist, Milton Friedman, who reminded us that "Nothing is so permanent than a temporary government program." A thought to ponder when we contemplate getting the government out of the many businesses it has found itself in.

Kevin Price
Host, Price of Business, M-F at 11 am on CNN 650 and CBS Radio
Frequently found on Strategy Room at FoxNews.com
Syndicated columnist whose articles appear on a variety of media outlets.
His http://BizPlusBlog.com/ is ranked in the top 1 percent of all blogs by Technorati.
Kevin Price's Profile: http://www.google.com/profiles/PriceofBusiness

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