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Palin gets Atlantic makeover, but did the magazine get her right?

  • Author: Craig Medred
  • Updated: September 27, 2016
  • Published May 11, 2011

Finally a major publication comes along with a lengthy analysis on the Good Sarah. It's about time. There were reasons Alaskans adored their Gov. Palin for those few, brief, halcyon months after the VECO-Alaska Legislature corruption investigation and before the Troopergate scandal, and it's rare to hear anything in the national press about those reasons.

"As governor, Palin demonstrated many of the qualities we expect in our best leaders,'' Joshua Green writes in an lengthy profile in June's The Atlantic magazine.'' "She set aside private concerns for the greater good, forgoing a focus on social issues to confront the great problem plaguing Alaska, it's corrupt oil-and-gas politics. She did this in a way that seems wildly out of character today -- by cooperating with Democrats and moderate Republicans to raise taxes on Big Business.''

Yes, yes, she did. But why did she do it and was it ultimately good for Alaska?

Fighting over oil taxes for decades

She picked the biggest, choicest, richest target in Alaska -- the oil industry -- and went after it. This is not something new for Alaska politicians. Many of them recognize Alaskans live in a love-hate relationship with the oil industry. Forget Green's nonsense about "corrupt oil-and-gas politics.'' Corruption in Alaska politics has been more about public funding -- Lew Dischner and North Slope Borough construction; Sen. George Hohman of Bethel and Canadian firefighting planes -- than about oil and gas. This state is like the 49 others in that regard. The main role oil-and-gas has played is in providing the wealth to finance the predictable sort of government corruption.

An oil-and-gas scandal really only arose in the end because Bill Allen, the head of the major oil-field services company known as VECO, went way overboard in trying to keep the big, bad, Alaska tax man of the backs of his cronies in the "oil bidness.'' The oilmen and the state of Alaska have been in a long-running tax fight that traces its roots all the way back to statehood in 1959. Alaska's founding fathers wrote a constitution granting all Alaskans a share in the state's resource wealth.

The late Gov. Jay Hammond, the late Democratic Rep. Hugh Malone and some other lawmakers leveraged that into a universal Alaska belief that any oil found beneath the ground and permafrost in the 49th state belonged not to the businesses that worked hard to find it, but to the people of Alaska, by God.

Oil eventually took on the status of the lifeblood of the Alaska people. It was not something to be given up easily. The oil companies shouldn't be expected to pay taxes merely to support government services required to oversee oil development and the people who came with it. Oh no, the oil companies should be expected to pay for almost all government services in Alaska and more. The state created Alaska Permanent Fund Dividend to start salting oil money away in the bank, and then came the Permanent Fund dividend payment, an annual handout to Alaskans. The PFD is every Alaskan's annual compensation for allowing his or her oil to be pumped out of the ground and shipped to America. Paying the proletariat a chunk of the income associated with the sale of this resource isn't so much socialist as it is Marxist.

There is no indication Palin ever studied Marx. But she well understood how Alaskans feel about oil. Palin grew up in the north. Like others of her generation, she was immersed in the idea that "it's our oil!'' What she tried to do with BP, ConocoPhillips and Exxon Mobil as governor wasn't all that different from what the Fuads and the Saudi Arabian Oil Co. did to Standard Oil way back when. Palin tried to wrest control of the state's natural gas out of the hands of oil companies that held the leases for it by end running them with the Alaska Gasline Inducement Act (AGIA), and she imposed near-Venezuela size taxes on the oil with Alaska's Clear and Equitable Share to gain, well, the title of the legislation says it all -- Alaska's Clear and Equitable Share.

AGIA and ACES are Palin's legacy, the crowning and only real achievements of her two years as governor.

Green casts them both in the best light. "Four years later, Palin's gas line hasn't gotten going, but it's not really her fault. Plunging natural-gas prices have made the project uneconomical.''

Funny, that's exactly what her predecessor -- former Gov. Frank Murkowksi -- warned of before he was booted from office. The markets, Murkowski said, were teaming up to sink the long-held dream of a gas pipeline. The oil companies weren't about to spend the money to build a gas pipeline if they were going to lose money on the deal. Murkowski negotiated an agreement designed to backstop them in order to get the gasline started.

There was widespread opposition to the Murkowski plan because the state of Alaska, which has lived on oil industry revenues for decades, wouldn't get fat, bureaucracy-supporting revenues out of the gasline deal. Palin thought she had a better way. She'd get a pipeline construction company to build the line and then somehow force the oil companies to pump their gas south in that line. The plan hasn't worked, and no one thinks it's going to work. Forget Green's reference to how the line "hasn't gotten going.'' The line isn't going. Period.

Just ask the oil companies how they feel

"Her oil tax is a different story,'' Green writes. And indeed it is. The tax scheme Palin and state Democrats cooked up has earned the state billions.

"It's no exaggeration to say that ACES has made the state one of the fiscally strongest in the union,'' Green writes. "While other states reel under staggering deficits, budget cuts and protests, Alaska has built up a $12 billion surplus, most of it attributable to Palin's has raised $8 billion more than Murkowski's tax would have.''

So let's see here. Under Murkowski's oil-tax scheme, the state would have taken in only $4 billion more than it needed; and instead it has taken in $12 billion more than it needs. "Alaska's Clear and Equitable Share" is $12 billion more in tax revenue than the government needs?

Everyone is supposed to rejoice about this because...? How would residents of income-tax-funded states feel if they woke up tomorrow to learn their governments were using their income-tax dollars to run up surpluses of billions of dollars? Probably about like oil industry executives feel in Alaska.

Be that as it may. What is really more interesting is Green's contention that AGIA and ACES are examples of how the Good Sarah could have saved -- or wait, could still save -- America. This is a journey into a revisionist Never-Never-Land.

"What if history had written a different ending?'' Green asks. "What if she had tried to do for the nation what she did for Alaska? The possibility is tantalizing and not hard to imagine. The week after the Republican convention, Lehman Brothers collapsed, and the whole economy suddenly seemed poised to go down with it. Palin might have been the torchbearer for reform....''

Reform? What reform? Palin didn't reform anything in Alaska. She raised revenues the simple, old-fashioned way. She found a business with a lot of money and taxed the snot out of it. The possibility she could have done this on a national level is, in Green's revisionist view, "tantalizing and not hard to imagine.''

OK, where was the cash cow into which Palin could stick the spear when the country was teetering on the edge of another Great Depression? Her two great achievements are an economic development plan that didn't work, and a big, fat tax. How do those translate into a national solution to a debt crisis, a faltering economy, rising unemployment and a growing deficit?

"Where true Palinism could be most productively applied is on the issues consuming Washington right now: debt and deficits,'' Green writes. "Palin's achievement was to pull Alaska out of a dire, corrupt, enduring systemic crisis and return it to fiscal health and prosperity when many people believed that such a thing was impossible.''

Funny, I must have missed this because I was living here when it supposedly happened.

Green, on the other hand, learned all about it during a week-long visit. Unfortunately he has to overlook his own reporting to get to his conclusion. As his story accurately notes, even the Petroleum Profits Tax approved by Murkowski and that VECO-influenced legislature that was part of Alaska's "dire, corrupt, enduring, systemic crisis'' would have produced a $4 billion state budget surplus. That's $4 billion with a "B,'' like in big.

Palin didn't return Alaska "to fiscal health and prosperity when many people believed such a thing was impossible." Even before she was elected, fiscal health was in view on Alaska's horizon in the form of Moby Dick-size increases in global crude oil prices. All Palin did was help Alaska Democrats sharpen the harpoon to put in the whale.

More a reactionary than a pragmatist

What followed wasn't about Palin "setting a pragmatic course,'' as Green claims, or "applying a rigorous practicality to a set of problems.'' There are many good things to be said about Palin; that she could apply a "rigorous practicality'' to anything is not one of them. She is and always has been more a reactionary than a pragmatist. The situation in 2006 lined up such that her reactions worked in her favor. She lashed out against the oil industry because it was getting rich off the oil that belongs to all Alaskans, and because her husband, Todd, and his union buddies on Alaska's North Slope had been angry at BP for a long time and were looking to get even.

When his wife got the power to do something about these things, the Palins acted. It's funny how little attention Todd gets in all of this, given the clear indications are he was far more a co-governor during Sarah Palin's reign in Alaska than the oft-based Hillary Clinton was ever a co-president during President Bill Clinton's years in Washington, D.C.

Thanks to the Palins, and Alaska House Democrats, Alaskans ended up awash in oil riches.

Looking back now, and in fairness to Sarah, it's probably no wonder she eventually got mad that such a big deal was made of her collecting per diem payments from the state while living at home in Wasilla. Didn't the state owe her something? The oil tax tweaks that carried the day thanks to her political power netted the state an extra $8 billion. Think of what the commission would have been if she'd raised an extra $8 billion for a business.

ACES made Alaska's bank account bulge. But it didn't, as Green argues, fix the Alaska economy.

Oil prices are what fixed the Alaska economy. The Alaska economy struggled through the 1990s, with oil prices at one point dropping under $10 a barrel. It's a lot harder to tax struggling businesses than thriving businesses. World oil prices started up at the beginning of the new millennium, but they were still only $30 in 2003 when the Alaska Legislature started talking about raising oil taxes. It's easy to understand the oil industry wanting to try to hang onto its profits then after the lean years the industry had endured. It's equally obvious that with oil prices going up the way they were that just wasn't going to happen.

By the time Palin was elected, world oil prices had exploded. They hit $70 a barrel in 2006. The oil companies were by then, in the Alaska view, "getting rich with our oil.'' The political mood of the state could easily have been summarized in a tweet, one of Palin's favorite forms of communication: "Oilies sell R oil; where's R $$$$? Time for a change.''

"LET'S STOP HERE and go back for a moment to the convention speech -- the alchemic moment of excitement and fantasy when Sarah Palin becomes the star of national politics,'' Green writes. "Listening to it today, you can practically hear her shift registers, the state figure morphing into a national one, the old Palin becoming the new. She touches on the pipeline, the corruption, how she broke the oil companies' 'monopoly on power' and ended a 'culture of self-dealing.' But all of that is overshadowed by the full-throated assault on Barack Obama, rooted in a deep cultural resentment that became the campaign's ethos and remains Palin's identity."

Green somehow believes this could have turned out different. It's a hugely questionable conclusion. "A deep cultural resentment'' is, after all, a key part of Palin's identity, just as it is a key part of the identify of many in Alaska. One of the favorite sayings among Alaskans is "we don't care how they do it Outside.'' Except maybe when they get it wrong Outside, and we have to straighten them out as I plead guilty to doing here.

This is the Alaskan thing to do. We are all a little like Sarah Palin in that regard. We don't mince words. We get in your face.

It's all about Sarah

Green got Sarah Palin about half right in The Atlantic, but what he missed is more important than what he got. Sarah Palin was never a noble public servant striving to do magnanimous good works, and she was never going to be that. Sarah Palin was largely always about Sarah Palin, and there is absolutely nothing wrong with that. Most of us are capitalists at heart, be it with a big "C'' or a little "c." We owe both American democracy and American economic success to the capitalist system, too. Palin is a product of this. And the one thing she has done repeatedly and successfully throughout her life is seize her opportunities with a cunning animal instinct of which Alaskans should be proud.

Sarah Palin sold Alaskans a governor who did a pretty good job for a couple of years. She wasn't going to sell that governor to America, however, and she understood that. "Common-sense conservative" is a lot better label to put on the package of a politically hopeful Republican than "reactionary socialist.'' And no one could ever sell Americans on the idea that both of these labels could describe the contents of the same package.

To understand how that could be, you really have to live in Alaska where the recipients of the government's socialist largesse are largely Libertarians, and where Sarah Palin, now among the state's least popular politicians, was only a few years ago the most popular. Will she rise again? Who knows. Things change often and sometimes quickly in a land known for its long, cold, dark winters and short, lush, bright glorious summers.

Contact Craig Medred at craig(at) Alaska Dispatch encourages a diversity of opinion and community perspectives. The opinions expressed herein are those of the contributor and are not necessarily endorsed or condoned by Alaska Dispatch.

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