Josh Green at the Atlantic points out an inconvenient fact for Sarah Palin and the Tea Party crowd — Palin boosted Alaska’s bond rating to AAA for the first time by raising taxes. On oil companies.
Like nearly every fact about Palin that shows the wide gulf between rhetoric and reality, this will do nothing at all to diminish the enthusiasm of her followers. They are entirely averse to reality, preferring the fictional surroundings Palinville, a city on Planet Wingnuttia. On earth, you see, Palin’s state government received more federal funding per capita than any other state and she reacted with great enthusiasm to each new bundle thrown on the gravy train; in Palinville, she was the scourge of earmarks. In the real world, Palin actively sought funding for the infamous bridge to nowhere and only canceled it when she concluded that Congress wouldn’t pony up enough cash to finish it; in Palinville, she turned down hundreds of millions of dollars in federal funding for the useless project, telling them “thanks but no thanks.” Any similarity between Palinville and reality is highly unlikely.
In light of Friday’s decision by Standard and Poor’s to downgrade the United States’ credit rating to AA+, it’s worth mentioning again — as I first did in this Atlantic piece — that Alaska recently had its bond rating raised to AAA for the first time in the state’s history, largely due to fiscal improvements brought about by Sarah Palin while she was governor. The state currently enjoys a $12 billion budget surplus. I was reminded of this fact over the weekend by Ian Lazaren, the indefatigable supporter-cultist behind Conservatives4Palin.com.This is unquestionably a good thing for the people of Alaska, just as the country’s downgrade is a bad thing. The state enjoys lower borrowing costs as a result. But especially in light of the current dysfunction in Washington, it’s important to understand why Alaska’s fiscal situation improved: It was largely because Palin raised taxes. Specifically, the state oil tax. Her central achievement as governor was signing a law, Alaska’s Clear and Equitable Share (ACES), that dramatically increased the state’s share of oil profits just as oil prices began to take off. There’s a direct line between increased revenue and improved fiscal health. (Alas, the good folks at Conservatives4Palin have posted a gloating item about Alaska’s credit-rating that both attacks Obama for raising taxes and neglects to mention that Palin’s own tax increase was the basis for the improvement.)
And by the way, Mitt Romney did the same thing, actually lobbying the ratings agencies to raise Massachusetts’ credit rating by telling them he had raised taxes to put the state’s fiscal house in order.