Palin's Self-Reliant Image of Alaska Is Bogus

By David Morris, AlterNet. Posted September 15, 2008.

In her latest comment on the "Bridge to Nowhere" controversy, Sarah Palin appealed to the self-reliant, individualist, rugged, anti-government image most Americans have of Alaska. "If we wanted a bridge," she declared, "we would build it ourselves."

Actually, much of Alaska long ago lost the tradition of self-help. Palin might be campaigning on an anti-government, do-it-yourself platform, but her state is the most dependent on the federal government of all 50 states. Washington sends Alaska more money per capita than any other state. Alaskans receive back from the federal government almost $2 for every $1 they send to Washington. It's a sweet deal.

And when it comes to government pork, Alaska is king. As USA Today noted back in March, Palin's state ranks number one -- no other state is even close. In 2007 Alaska received some 2.5 times as much as runner-up Hawaii and 15 times more than the national average.

Alaska has by far the most state government employees per capita as any other state and about five times as many as Obama's Illinois.

The part of Alaska not dependent on federal government largesse is dependent on big oil. Almost 90 percent of Alaska's general budget comes from royalties and taxes on oil, which explains how the state can be number one in state government spending while ranking far down the list in taxes its residents pay. Alaska has no income tax or sales tax. Recently, its legislature suspended the gasoline tax.

Up to a quarter of an Alaskan's family income comes directly from the profits of oil companies. This may need a bit of explaining.

Back in the 1970s, when liberal Republicans still roamed the earth, former Alaskan governors Walter Hickel and Jay Hammond led a movement to create a state trust fund to bank part of the revenue derived from a nonrenewable resource to be used later to ensure that Alaska would survive its inevitable disappearance.

In part to ensure the continued political support of the Alaska Permanent Fund, the legislature voted to use a portion of the fund's investment income to mail each Alaskan an annual dividend check.

Hickel and Hammond hoped the fund would be used to prepare Alaska for the day of reckoning. The day of reckoning is rapidly arriving, but contemporary Alaskan leaders like Palin aren't doing much preparing. Alaskan oil production peaked in 1988 at about 750 million barrels. In 2007 it was down to 250 million barrels, and it continues to fall. The exhaustion of its oil resources has not yet shown up in the economy or government coffers because of the fivefold increase in the price of oil since 1988 and by the relatively high returns the fund, now with more than $35 billion in assets, has earned.

Alaska has the most unbalanced and least diversified economy of all 50 states. Yet politicians like Palin do not appear to have the courage to change that imbalance. About 95 percent of the Permanent Fund is invested outside the state. Exxon Mobil Corporation is the fund's single highest valued stock holding. The state legislature has appropriated little money to diversify the economy and prepare for a new age of renewable energy.

This year Alaskans will receive a dividend check of some $2,000 for every man, woman and child. Palin requested that the legislature add another $1,200 to offset rising energy prices. Most legislators agreed. The check, to go out in a couple of weeks, will certainly boost her popularity before the presidential electioin, and Alaskan households are definitely hurting because of their high energy prices. But assuming that households use the money to pay energy bills, Alaska is sending part of the oil revenue it is receiving back to the oil companies to pay their customers' bills. That may be a short-term palliative. But Palin quickly quashed legislative proposals that money be spent in a way that might help reduce a household's reliance on oil.

Palin is the chief executive of a very unusual state. Alaska is almost completely dependent on federal government handouts and oil company profits. Of course its political leaders should try to maximize the revenue they can wring out of Washington and Exxon. But they shouldn't call that self-help.

AlterNet is a nonprofit organization and does not make political endorsements. The opinions expressed by its writers are their own.

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David Morris is co-founder and vice president of the Institute for Local Self-Reliance in Minneapolis, Minnn., and director of its New Rules project.

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