Date: Tue, Sep 7, 2010 at 8:30 PM
Subject: Kick Ass?
How our Bright Young President should get wise advice before he starts
bragging about kicking Ass. I hope he has wised up and shuts up.
New Definition of 'Kick'
Astute business and accounting folks ought to really get a laugh out
of this one.
It seems like a miracle 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; he had to resort to
But let's take a closer look at the effect on BP's 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 which 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 the Bush tax cuts will survive
through 2010, the US Treasury will lose another $450 million in taxes
on that amount. We won't even discuss the effect on the US economy.
Let's 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 $0.45 billion
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
In reality, BP executives are laughing at him and 'kicked his ass". Oh
well, what's new with this "President" anyway? He's in over his head
when he starts dealing with "business people".
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