Yes, I know it’s Larry Kudlow, so I apologize for that. But just skip to the 3:35 mark, which is where Palin’s populism comes out in droves. “The oil and gas resources that the Alaskan people own?” “We have to make sure that an appropriate value is placed on these resources and that the people who own these resources are able to benefit from them.” I’m sorry, but why does “the people own these resources?” That sounds pretty Venezuelan to me, which is NOT very conservative. She also avoids the deregulation question, but that’s because the blowhard Kudlow asked a 30 second question about three different things.
As most people know, Sarah Palin is now the VP nominee for the Republican Party. Everyone knows the obvious stuff: she’s a woman with 5 kids, current governor of Alaska, former mayor, elected on an anti-corruption kick.
But there’s not so much that people know about her policies and her accomplishments. So I’m going to try and fill in the blanks, especially on energy (It’ll be tougher to get her policy ideas on transportation, but they’re there in the land of the Bridge to Nowhere). I first had my antennae up when both McCain and Palin in this afternoon’s rally mentioned that she had fought against “Big Oil.” It might just be cover to make sure that she doesn’t get politically attacked for being cozy to oil interests or attacking her as “continuing Bush’s presidency.” Referring to the oil industry as “Big Oil” is not something the Bush presidency was known for.
So I found this website, run by a lawyer named Beldar, who jumped on the Palin bandwagon early and often, as shown in the link. As for what she’s done in office:
She’s spoken out against putting polar bears on the endangered species list. While only tangentially related to energy, putting the polar bear on the list would enable federal regulation of pretty much the entire economy, as the specious reasoning for putting the polar bear on the list as “threatened” is due to global warming climate change. If anything makes climate change worse for the polar bears, it can be regulated by the feds, according to the Endangered Species Act. This is a no-brainer, but it’s a politically risky action to take, for fear of being labeled a “Big Oil” supporter, or anti-green. But she makes up for it with…
She signed onto the punitive damages case that was eventually brought to the Supreme Court. This case, stemming from the Exxon Valdez oil spill, was about the $5 billion in punitive damages that were sought against Exxon (now ExxonMobil). Exxon thought that this was excessive and fought all the way to the Supreme Court to have them lowered. Exxon won in a 5-3 verdict to lower the damages, though the 4-4 split meant that there could actually be punitive damages under maritime law. The actual Court decision can be found here (warning, lots and lots of legalese). Funny thing, Palin found herself on the side of Breyer, Ginsberg and Stevens, and against Thomas, Scalia, Roberts, Kennedy and Souter. But as you can see in the video below, this is mostly a populist action, since there were 33,000 people, businesses, and associations impacted by this. It’d be political suicide to not support this, but the populism still remains:
In another populist move, she signed onto a tax increase. On oil companies (scroll to see discussion on “serverance” tax vs. “income” tax vs. “windfall” profits tax.) Here are the details of the actual tax. Key points:
Increases base rate on all oil from 22.5% to 25%.
Adds surtax on value of oil between $30 to $92.50 of .04%
Adds surtax of .1% on all value above $92.50
Whether you want to call it a windfall profits or a severance tax, she raised taxes on oil output, and made them progressive instead of flat. That’s pretty counter intuitive to pretty much all conservative tax thought, as we would like taxes lower and flatter.
(As a side note, it CAN be argued that this is a windfall profits tax as this tax is increased as the value of the oil increases. The value of the oil increases NOT on the production capabilities of the oil company but on factors outside their concern, making additional profits prohibitively “windfall”. A flat tax would not be a windfall tax, as the tax would not increase as prices increase, but because of the progressive nature of the tax, it becomes a windfall profits tax. This makes any progressive tax a windfall profits tax, though it’s worse for income, because presumably, the increased income is through increased work, which is not a windfall to the user. Arguments against the windfall profits tax should be the same as arguments against progressive income taxes. It also increases the incentives for oil companies to increase their production costs (or more accurately, persuade the government to increase the production costs allowance) to avoid paying higher taxes, a perverse economic incentive.)
And with these new tax revenues, she gave them back to the state already flush with government handouts. From the Seattle Times: Alaska’s oil windfall by the numbers
$6 billion – Estimated revenue collected by state of Alaska from new tax on oil profits this fiscal year.
$10 billion – Estimated total oil revenue collected by state this year (old plus new oil taxes).
$1,200 – Special payment to each Alaskan resident this year from new oil tax.
$2,000 – Estimated annual dividend each Alaskan will receive this year from oil-wealth savings account, not counting the new oil tax.
So Gov. Palin raised taxes by more than 100%. Though to say this is on profits is somewhat disingenous, as it’s just on oil price above production and transport costs, which means that this isn’t even a tax on profits, as it ignores other costs (R&D, maintenance, marketing, etc.). So it’s even worse than a profits tax.
But the revenues at least went straight back to the populace instead of funneled through all sorts of government programs. That would be even more wasteful and economically illiterate. First she wanted to create a debit card system for energy payments but instead settled on a straight check to “help with rising gas prices” although the money will probably be spent on things other than energy (like the stimulus checks). The straight check at least is good that it doesn’t increase government any more than it already does (the creation of a government check card bureaucracy), since they already have a system in place for doling out the money that they had already received.
So this tax was in essence a populist ploy to get more oil money redistributed to the citizens of the state. It smacks me of being a little on the road to nationalizing the oil fields there (state-izing?). What happens when the citizenry wants more of it’s $1,200 dollars. The tax goes up. No surprise there.
Lest I seem too negative on Palin, there are some points that I do like about her. She supports drilling in ANWR and completed the natural gas pipeline to the US through Canada. The natural gas pipeline will be an immense help to the US natural gas market, even if you have to travel through Canada to get there. I don’t know enough about the pipeline as to whether the gas will be intermingled with Canadian gas or not, which would be an interesting trade issue, at least statistically.
So overall, I would peg Palin as a conservative populist on energy. This seems to fit with her overall philosophy, as so far as it can be determined by ontheissues.org:
But we’ll get a closer idea of what she brings to the table as the campaign unfolds.
I heard this on the Sean Hannity Show this afternoon and I couldn’t believe my ears, so I had to look it up myself. What I found was quite possibly the dumbest piece of legislation ever created.
It supposed to do a little of everything in order to appeal to everyone. And all this is going to do is increase the size of government at the expense of taxpayers. Going through the list of goodies for everyone includes:
Allowing the drilling on the Outer Continental Shelf (no later than… 2010)
Drilling in the Arctic National Wildlife Refuge
Extending the current tax credits for alternative energy (which T. Boone was arguing for in Congress a few days ago)
Extending the tax credits for energy efficient appliances
The creation of a new “home energy audit” tax credit
Creating a new “American Renewable and Alternative Trust Fund” slush fund/piggy bank to be funded out of the proceeds from the off-shore and ANWR lease sales
The creation of the Prizes that John McCain stumped for on the campaign trail.
Basically, this is an attempt by the Republicans to graft off-shore drilling onto proposals that would pass without a problem. It’s a me-too bill. The new parts are the Trust Fund (which Congress has shown that it cannot handle, see the Highway and Social Security Trust Funds), and the prizes. The prizes have been touted by economists, such as George Mason professor Tyler Cowen. From that post:
One drawback of prizes is that they tend to be awarded in the interests of the prizegiver, and not necessarily to stimulate maximum scientific output… Still, prizes make the most sense when you cannot predict where new innovation is coming from, and thus you do not know who should get the grants. As our world becomes more complex, less hierarchical, and more decentralized, I predict a greater reliance on prizes to stimulate science.
I agree entirely with this, and is an example of why government should not give out prizes. Government knows exactly where the research will come from and that this will not necessarily stimulate scientific output, but manage it to the best of a government bureaucrat. The fact that for at least one of the prizes, the conditions for winning are codified is good, but that can be changed down the road as seen fit, especially if someone offers up a good enough campaign contribution (A couple million for $500 million is a pretty good investment).
