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The Obama Administration Bullies Business Again

Obama and congressional Democrats have become accustomed to badgering, bullying, and berating business. They see nothing wrong with suing and excoriating Goldman Sachs for shorting the housing market. They thought it was fine to force AIG to take away bonuses from executives who were contractually entitled to receive them. And now this:

BP faced demands Tuesday that it withhold its first-quarter dividend, which it committed to pay in April, in the early days of the Deepwater Horizon crisis. A confirmation of the payment date Tuesday drew a letter of condemnation from 32 members of Congress. … The dilemma comes as BP faces tremendous heat over the issue. Last week, President Barack Obama warned the company against “nickel and diming” people affected by the spill and said BP had “moral and legal obligations” to Gulf Coast residents that may supersede its obligations to shareholders.

You do wonder whether any of these politicians understand that stock price reflects expected cash flow — including dividends. Are they trying to crash BP’s stock? Surely investors will start dumping the stock if the dividend is taken away.

The larger point, however, is this: what gives lawmakers the right to boss around a private company (one that never took a bailout) and pull the rug out from shareholders, who are entitled to and may be financial dependent on dividend checks? It’s not as if there were any economic justification for nixing the dividend:

Today, analysts say there is no reason from a business standpoint for the company to cut the dividend, as few people are questioning BP’s financial strength despite the crisis brought on by the Deepwater Horizon disaster. “If they do something with the dividend, they’re not doing it for financial reasons … it’s because of the political battle of wills,” said [former BP CEO Bob] Morton.

It is one more instance of liberals attempting  to blur the distinction between the public and private and to force businesses to make economic decisions based on political considerations. Politicians with little economic expertise and no respect for the rule of law are systematically distorting business decisions and thereby forcing executives to become political operatives and lobbying gurus rather than expert wealth creators. It is what comes from electing people with zero experience in or respect for profiting-making ventures.


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