Joe Barton and the Big Big Debate

Representative Joe Barton’s apology to Tony Hayward for what he termed a “shakedown” of BP plc (BP) by the White House in order to get BP’s agreement to a $20 billion escrow fund, was the best thing to happen to BP since April 20, and the best boost for the White House in months. What ever possessed Barton, the ranking Republican on Energy and Commerce?

Adding to the mystery is the fact that just four years ago, Barton, as the committee’s chair, excoriated BP’s top brass (who were then appearing before the Committee to explain the firm’s negligence in allowing 270,000 gallons of oil to spill on Alaska’s North Slope, the worst spill ever recorded in that fragile territory) for a “corporate culture of seeming indifference to safety and environmental issues … And this comes from a company that prides itself in their ads on protecting the environment. Shame, shame, shame.”

How did Barton go from BP as shameful villain to BP as shakedown victim? And how did he fail to sense the dimensions of the public’s outrage at BP this time around?

Is it because Barton is virtually owned by Texas oil money? This can’t explain Barton’s turnaround because he was owned by oil four years ago, too.

Is it old-fashioned partisan politics?  Four years ago Republicans were in charge of Congress and the White House, and now Democrats are. But this can’t be the reason either because Barton’s bizarre apology to BP yesterday so embarrassed congressional Republicans they pushed him into retracting it hours later.

Stupidity? Barton was smart enough four years ago to deliver one of the most scathing criticisms of BP by any member of Congress. His “shame, shame, shame” line was repeated on the evening news and in the following day’s headlines.

I think something else is going on. Barton’s view that the White House overreached in forcing BP to put aside $20 billion has been voiced elsewhere in the netherworld of the Republican right, on Fox News, and among Tea Partiers.

Unlike four years ago, this country is now having the sharpest and most emotional debate it’s had in more than a century over a deceptively simple question: Which do you trust less – Big Business (including Wall Street) or Big Government?

The crash of Wall Street and subsequent Great Recession has impassioned both sides. The Street can’t be trusted because its recklessness almost wrecked the economy; big business can’t be trusted because it’s laid off millions of Americans with scant regard for their welfare.

On the other hand, government is on the loose because of the giant stimulus package; the yawning budget deficit and hair-raising national debt; the “takeovers” of General Motors, Chrysler, and AIG, along with the firings of several executives; and the huge health-care bill.

Until six months ago, the latter narrative, emanating from the Republican right, seemed to be winning the hearts and minds of an ever more angry electorate. Democrats (including the incumbent of the Oval Office) were reluctant to criticize Wall Street and Big Business with nearly the force and consistency of the Republican offensive against Big Government.

But then came the tidal wave of revelations about the rapacity of business. Investigators linked the near-meltdown of the Street to questionable accounting practices at several of the big banks. Goldman Sachs was shown to have been double-dealing with investors for its own profits.

Heath insurers, most notably WellPoint, yanked up their rates — thereby showing themselves to be less interested in the health care of Americans than their own bottom lines. A terrible mine explosion revealed the recklessness and indifference of one of America’s biggest mining companies, Massey Energy.

And now the worst environmental disaster in American history, courtesy of BP.

In light of all this, the “I trust Big Business (and Wall Street) more than I trust Big Government” story line seems bizarre to most Americans – as did Joe Barton’s apology to BP yesterday.

The political question of the moment is whether the Barton moment finally convinces the President and Democratic leaders it’s safe to fully embrace the other story line. The problem for many of them, of course, is that a large percent of their campaign money is coming from big business and Wall Street.

But fundamentally, the debate is absurd.

It’s not the purpose of the private sector to protect the public. Companies like Goldman Sachs, Massey Energy, WellPoint, and BP will do everything they can to make money. They owe allegiance to their shareholders. Hopefully along the way they also make great products and provide terrific services. If the market is competitive, both consumers and investors gain.

The purpose of government is to protect and enhance the well-being of Americans.  Its job is to protect the public from corporate excesses — enacting laws that bar certain actions that may hurt or endanger the public, and fully enforcing those laws.

We get into trouble when the two sets of responsibilities are confused – when big business and Wall Street spend vast amounts of money trying to influence government, and when government officials (including the officials of regulatory agencies) pull their punches because they’re aiming for lucrative jobs in the private sector.

The real challenge of our time has nothing to do with whether one trusts Big Business and Wall Street more or less than Big Government. The challenge is to keep the two apart, each focused on what they’re supposed to be doing. (That’s why, for example, I still think it unwise to have BP run the operation to plug the hole in the bottom of the Gulf.)

• Become A Funded Futures Trader