


How Sarah Palin Got a AAA
Credit Rating for Alaska
The former governor has a lot to teach
Washington about earning a strong credit
rating. Her secret: raise taxes
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 <SPAN style="BACKGROUND-COLOR: #ffff00">Palin raised taxes</span>. 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.
But, the good folks at Conservatives4 Palin 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.)
This chart from the Alaska Department of Revenue nicely illustrates the
result. For purposes of comparison, ACES is best measured against EFL,
since the intervening tax (PPT) was tarnished by corruption and ultimately
replaced by ACES, a story recounted in my piece:
http://www.theatlantic.com/politics...in-got-a-aaa-credit-rating-for-alaska/243206/
Hope you don't have any investments...