Wednesday, November 12, 2008

With Her Eyes On Washington

Sarah Palin is obviously considering taking Ted Stevens' Senate seat if he is declared the winner of this month's election and then evicted from the chamber by members displeased by his felony conviction. When asked in an interview aired on November 12 by Wolf Blitzer of CNN's Situation Room whether she wants to serve in the U.S. Senate, Governor Palin responded

I believe that I have — I feel I have a contract with Alaskans to serve. I’ve got two more years in my term. I’m going to serve Alaskans to the best of my ability. At this point it is as governor.
Now if something shifted dramatically and if it were, if it were acknowledged up there that I could be put to better use for my state in the U.S. Senate, I would certainly consider that, but that would take a special election and everything else. I am not one to appoint myself or a member of my family to take the place of any vacancy.

Here is something Governor Earmark will surely consider to determine whether "something (has) shifted dramatically." Alaska's Clear and Equitable Share Production (ACES) Tax was (to her credit) proposed by incoming Governor Palin in November, 2006 and passed by the legislature- which increased the rate- the following month. It is a graduated tax pegged to increasing oil taxes and is described by the Seattle Times as

imposed on the net profit earned on each barrel of oil pumped from state lands, after deducting costs for production and transportation.
The tax is set at its highest rate in Prudhoe Bay, where the state takes 25 percent of the net profit of a barrel when its price is at or below $52.

The percentage then escalates as oil prices rise over that benchmark.

In fiscal year 2008, the state collected approximately $6 billion from this new windfall profits (sounds a little socialistic, dontcha think?) tax and approximately $4 billion from the existing tax on oil revenues. Each resident, adult or child, of Alaska received $2069 from the old tax and $1200 from the new tax from Mrs. Palin's government.

Uniquely, Alaska imposes no state sales or income tax, and it's not difficult to garner an approval rating of 80% when each citizen gets $3269 back from his/her government. (Governor Palin's approval ratings reportedly have now dropped below 70%.) But while on July 15, 2008 the price of a barrel of oil was $138, it was $55.84 on November 12, 2008. That's a pretty steep decline, and it spells trouble for oil revenues- and for tax revenues, even if the price does not fall below the $52 benchmark, beneath which the State of Alaska drops the tax rate.

That would cut deeply into the check received by the people of Alaska from the state government. It might even presage budget problems- and there is nothing that guts a governor's popularity more than the painful decisions necessitated by the requirement that he (or she) balance the state budget, which is required in Alasks as it is in 48 other states.

So Governor Palin could follow the lead of either: a)Hillary R. Clinton, who was encouraged to run for President in 2004 but decided to run for a second Senate term, gain additonal experience, and run for President in 2008; or b)Barack Obama, who could have run (successfully) in Indiana for a second term as U.S. Senator and run for President in 2012, but decided instead to strike while he was a hot item.

Which course would you think Sarah Palin would choose?

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