Chris Nyman: Inflation, national debt, suspending the dividend - Must Read Alaska
Connect with:
Saturday, July 24, 2021
HomeColumnsChris Nyman: Inflation, national debt, suspending the dividend

Chris Nyman: Inflation, national debt, suspending the dividend

By CHRIS NYMAN

As I reflect on our situation post-pandemic and wonder “what the heck just happened? Was it worth all this suffering to defeat President Trump?” I also see that inflation is now an undeniable statistic.

We’ve been told that it didn’t exist before due to the new way they measure it – even though prices were increasing for average Americans. It is great that the stock market has been performing so well for investors, but it may also portend increases in consumer prices.

Which brings me to the subject of the national debt. It has always seemed to me that the only way out of this massive debt is inflation is to make the money we owe worth less. But in theory inflation causes interest rates to rise, which would increase the interest on the national debt to horrific levels and perhaps cause taxes to rise in order to sustain the federal kleptocracy. Alternatively, interest rates can never rise due to this conundrum and inflation will eat us alive. This is the downside of not balancing the budget and printing “money” at will.

The politicians always say, “Future growth will pay our way out of this.” That might be true only if the economy grows faster than the rate of government growth.

Which brings me to our own fiscal situation: the State of Alaska budget.

I read the opinion letter from Speaker Louise Stutes. She seems sensible and in touch with our fiscal reality (although I will never forget she once supported income taxes to continue paying deficit dividends). I do appreciate the House’s position on this to not over-draw the Permanent Fund Earnings Account. So the usual range of options is there for us: Reduce the dividend, impose new income and/or sales taxes, or increase taxes on our most valuable industry. We are fortunate that oil prices have recovered somewhat so the situation is not as bad as it could be.

Nonetheless, the choice could not be more clear: The dividend must be ”suspended” until our fiscal accounts are in order. For instance, we have depleted our emergency reserve account the Constitutional Budget Reserve. The Alaska Constitution requires that we repay those borrowed funds. Do you think the Alaska Supreme Court will allow us to continue borrowing money from any source to continue dividends?

Regarding new taxes the ultimate issue would be whether the dividend is a legitimate “public purpose” (Re: Alaska Constitution Article 9 Paragraph 6: Public Purpose) on a par with basic services such as public safety and economic development, I don’t think so.

The reality is the Legislature will likely figure out some way to pay a reduced “dividend” by sleight of hand or an honest assessment of what we can actually afford.

In the long run, suspending the dividend for a few years would be best. We are not that far away from getting our accounts in order and having sustainable revenue from our oil-derived  trust fund (the Permanent Fund) to have surplus funds for a dividend of some type again.

Read: Chris Nyman It’s time to suspend the dividend

Donations Welcome

Share

Latest comments

  • ???
    And while “suspending” the PFD we will be allowing the clowns in Juneau to continue to support the overpaid government employees and the unions that support the Rinos that have mistakenly been elected.

  • Chris, are you just blind, or ignorant? “Reduce the dividend, impose new income and/or sales taxes, or increase taxes on our most valuable industry.’ How about CUT SPENDING? When you are in a hole trying to get out, you should first stop digging. This socialist experiment, mostly imposed on us by Walker and Palin, has FAILED! Socialism only works until you run out of other peoples’ money and the state has reached that point. To remain fiscally viable the weaning process must start with lowering entitlement and other programs to return people to independence from the government and impose a sustainable budget. For example, I just returned from Seattle and while lost on the UW campus wondered if we might partner with them for more programs in order to shudder some of our overhead at UA? Giving the legislature more money only defers the problem until the time comes when we are in so deep and subgroups are so dependent that the collapse will be catastrophic.

  • Do you really trust the the idiots who put us in this mess in the first place to be fiscally responsible from here on out, if they implement what you say? You are either ignorant or part of the problem. We need to elect people who are not interested in being reelected to make the right decisions for this state. When the people in power create enough bureaucracies and enough unfunded liabilities, which is where we as a state and as a country we are not correcting the problem without a lot of PAIN. The savers will suffer the most as they have in every other country. You cannot establish sound security on borrowed money and you cannot keep out of trouble by spending more than you earn!

  • I’m not sure who this guy is but I can guess. He’s a politician or paid by one. As the other comments stated. Options 1,2,3 but dont look at me.
    CUT the size of government.
    Its a choice big strong government or big strong residents. You can not have both. We can do more with less government. The government can not do more with less citizens. I vote for option FOUR.

  • Chris,
    This is putting the cart before the horse. Until we get a handle on our out of whack government spending, this can not be an option. Tough decisions need to be made and made now. Obviously we, the people of Alaska, do not have the elected officials that have the cojones to make these decisions
    This is so wrong at so many levels.
    Just a thought, what would our state government look like if they didn’t have the PFD parachute/cookie jar.

  • Global debt is four times global GDP right now.. who had that much money to loan anyhow? God frowns upon usury.

  • We’ve had a slew of oil related workers laid off not to mention other private sector workers in various fields. How about state employees? I’m not saying I want to see lay offs but when it happens in the private sector we hear about it but its kind of expected when revenues are down. But government employees…well thats unthinkable. They are somehow shielded. If we did have Gov layoffs and service cuts then I might agree. But we don’t. And we are still running 3 main University campuses in a state with a small population and declining oil industry. So I’m having problems accepting this argument.

  • The state budget increased over the last 15 years by an amount far greater than the rate of inflation. Time to review every program added or increased over that period and reduce or eliminate accordingly. We got through tough times with low oil prices, housing market collapses, the 2008-9 recession, etc. without messing with the statutory dividend, which rose and fell depending on the five year market average. Recipients trusted the process and took the good with the bad. That trust has been eroded and that is a big part of the problem. This trust could be restored by letting the people vote on the Governor’s proposed Constitutional amendment.

  • “So the usual range of options is there for us: Reduce the dividend, impose new income and/or sales taxes, or increase taxes on our most valuable industry.”

    You missed one: CUT SPENDING!!!

  • There are none so blind as those who refuse to see! The Alaska State budget has become so bloated & insatiable that it has blinded politicians to the reality that it must be cut or we the people will be irreparably harmed. At least the PFD gives the local Alaska economy a once yearly shot in the arm, whereas, for instance , adding more money to the already bloated & failed education budget is sending good money down a rat hole!

  • AK, the reason I omitted cutting the State budget is the the Legislature has painstakingly attempted to cut for the past 7 years and succeeded? in cutting 40% from the budget. For better or worse, the Legislative body is the voting voice of Alaskans in our representative form of government. Your opinion that it should be massively cut further runs into a brick wall against the opinion of other Alaskans. I too believe it could be cut further but not at the level that would be required to afford paying out Billions to fund a statutory Dividend. No need to be so vituperative.

  • There is simply NOT a single agency or department of State Government that could not stand an25% reduction and in doing do would find itself operating better than they currently do….and in many cases the State would run much better if they completely closed down or combined services

  • Alaska had an “outgo” problem, not an income problem.
    .
    Sheesh!

  • Unfortunately, the government has not solved the spending problem,i.e. balance a budget; so what makes you think giving them more fund money will solve this? For a state of 700k people we spend way too much per capita.

  • Sure suspend the PFD. Right after we rework the state budget with a red crayon and the legislature quits spending money like its a drunk sailor on liberty.

  • And Chris Nyman says he’s a conservative. Hahaha

  • Chris isn’t blind or ignorant, Chis is a devoted member of the cult of big government dependency. The big government cult simply believes the average Alaskan isnt smart enough or virtuous enough to be trusted with spending a full dividend on themselves or their families.

  • “Mo’ Moolah” they whined.
    “The cupboards’ bare” they cried.
    “Horse Paducah” I replied.
    Just how much does the flirty texter make at the PFD board Mr. Nyman?
    You can’t butter your bread with horse paducah Mr.Nyman, so who’s buttering your bread?

  • Chris Nyman, I do believe that the dividend should go before any taxes are implemented, but even with the ‘cuts’ (from what I have studied they are mostly ‘cuts’ in projected spending growth as opposed to actual decreased spending) the spending has grown. When the budget exploded, under Palin when money was flush, I opposed it. Now too many are addicted to public money which is unsustainable. Now is the time to begin the weaning process. Sadly, these constituencies on the receiving end will kick and scream to a colluding media and I see the budget continuing to balloon in an unsustainable way until we become California, which spends about half per capita compared with Alaska.

  • Upon entering office Governor Dunleavy pointed out the rapid acceleration in government spending following the last spike in oil price. The lion’s share of state spending is medicaid and education. Both have ballooned and what do we have to show for it? Poorly educated kids that require remedial classes and a medical fee system that hides the cost. School vouchers and full disclosure of medical billing are simple ways to save big money and improve results.

  • Chris Nyman, perhaps I am wrong, perhaps the current trajectory can continue, perhaps socialist policies will work this time. But history shows that when too many politicians use the power and wealth of government to placate the people keeping them in power, and in turn too many people become dependent upon government, that the decline only accelerates to a bad ending. I recall the joy among the masses when Palin frittered away the one time bonus from high oil. ‘Lord please just give us one more boom, we promise not to piss it away this time.’ Well that came crashing down but the spending did not. Even if we see $150 oil again soon, a likely possibility, we need for the state to be frugal, but more importantly we need to move people (all of us) off the public dole and decide which services are truly essential for funding. Do we really need three UA campuses, especially when UAA can’t maintain its certifications? Can we do all of education smarter, especially rural schools (do they all need an expensive superintendent)? Can we do Medicaid smarter? Housing assistance? Alaska Heating Assistance Program? Other entitlements? We do people no favor by teaching from birth to turn to the government with an open hand first, now for generations in some cases. Can we make corrections smarter? Do we still have Corrections Industries? I remember when they used to rebuild state trucks up in Sutton, teaching skills to prisoners while saving maintenance funds. And we won’t even talk about the legislature-keep the capital in Juneau but move the legislature to Anchorage and Fairbanks in alternating years, while contracting low bidder for housing and food, eliminating per diem. The gravy train throttle got stuck fully on, and until we start to see some real cuts (not cuts in growth), people like me will resist any and all revenue increases not because we are greedy or cold hearted, but because we know that the key to stable society is sustainability and current spending and policies are not sustainable.
    Give a toddler a five pound jar of M&Ms and tell him (or her) to ration them out for a month. Our legislators seem about as effective.

  • Chris Nyman always goes on about how he’s a conservative, how he’s against the Permanent Fund Divided, and how we should support bloated government. I’m still waiting for Chris Nyman to suggest we cut spending. Instead he say our only choices are “the usual range of options is there for us: Reduce the dividend, impose new income and/or sales taxes, or increase taxes on our most valuable industry.” Why wouldn’t someone who claims, and frequently so, to be a conservative ever offer a conservative option? Is it because Chris Nyman isn’t a conservative and does not hold conservative beliefs? If you read what Chris Nyman writes the only conclusion is that he isn’t a conservative and does not believe in the conservative cause of small government, but believes in big bloated government at all costs.

  • Chris, you are blind and out of touch with reality – if you give the govt money, they will spend it and then some and continually cry for more. There will be no “just until we get caught up,” because we will continue to grow govt until we find a way to stop it. THAT TIME IS NOW. The PFD is NOT the State’s money – it belongs to the people. Stop stealing the PFD. Let’s have some real budget cuts: a reduction in force, and pay and benefit CUTS for every State employee. We just cannot support bureaucracy of this size and expense. Why should State employee’s average salary and benefits package be in excess of $150,000/year? I live well on a lot less than that in an expensive village. Tell the public employee unions: “massive layoffs or cuts in pay and benefits in exchange for a level of job security that you currently enjoy.” We should consider program elimination starting with Bill Walker’s expansion of Medicaid. We should sue the feds for their failure to live up to the Statehood Compact. Yes cuts hurt, but cut we must. Fill the pipeline, and remind the State Supreme Court that they are not a legislative body.

  • BTW Chris, reducing the amount of increase is NOT a budget cut.

  • Alaska is top heavy in government workers, we can’t continue to support them, their yearly cost of living increases or their cushy retirements. How about we start whacking there instead of stealing the PFD. Politicians need to stop slavering over the permanent fund and focus on decreasing their enormous appetites.

  • Chris, do you truly think giving spend happy legislators more money will somehow balance the budget? You are truly one living in a unicorn world, complete with rainbows and lollypops. If you can show one instance where giving the fiscally irresponsible more money has made them fiscally responsible, then you have a point here. Otherwise, you’re just in dreamland. I want my PFD for one reason…. so they can’t spend it. A $3k PFD for me is $3k they won’t spend in this year’s budget.

  • Conflating inflation, the National Debt and the PFD does not make any sense whatsoever.

  • Our government’s overly heavy handed response to the housing market failure and Covid issues were just small peeks at the response it will have to a major economic meltdown. Every communist or totalitarian takeover came on the heels of one. very few of the politicians who let an economic meltdown and leadership revolution happen, survived to tell about it.

  • No, Mr. Nyman, you are peddling Walker/Democrat propaganda; the Operating Budget has not been cut one dime. The Capital Budget has been cut to only that necessary to retain federal matches, and that is where the touted 40% comes from. That cut comes almost entirely from what passes for a private sector in Alaska.

    The size of the Executive Branch in employee count terms is little changed from thirty years ago; 17-18K employees depending on how and when you count. State employee wages and salaries in that period, and especially in the last 15 years have increased dramatically and program costs have increased almost exponentially, especially the costs for healthcare and education.

    My career with the State was ’87 to mid- ’06. If you look at the CAFR, you’ll find the State’s GF budget during that period was pretty much flat, with a bit of an uptick beginning in ’05. I’ll take responsibility for some of that uptick as I offered State employee unions the first consequential general wage increases they’d had since ’91-’92 with 3-3-3% or 4-3-3% three year contracts because we were beginning to have serious recruitment and retention difficulties. After I retired on July 1, 2006, wages and salaries spiralled up. In my last years Labor Relations and Personnel were separate divisions. They’ve now been folded back together, foolishly, I think, under one director, but the current director makes almost as much as the two of us together made back in the early 2000s, and currently has three deputies whereas neither of us even had a deputy.

    My career track is somewhat unique in that I worked my way up from Labor Relations Analyst I to Director of Labor Relations, with a mid-tenure detour to three years working on collective bargaining issues for the Legislature since I despised the Knowles Administration and quit. So, I’ve seen government from both the 10th Floor of the Juneau SOB and the 5th Floor of the Capitol, not a common experience.

    My impression from the outside looking in is that there has been little or no adult supervision in the last decade and a half in either the Executive Branch or the Legislative Branch. Neither Palin, Parnell, nor Dunleavy has posed an effective opposition to the spend it all crowd in the Legislature. Walker was merely a tool of the public employee union racket. Alaska is run by three rackets; the public employee union racket, the healthcare racket, and the education racket, and they’ve been able to keep enough legislators loyal to the rackets to pick our pockets with impunity.

  • Chris
    What don’t you get: It’s the law.
    It’s our money, not the the government’s.

  • I have to echo here. CUT THE BUDGET! The Governor tried, and the lynch mobs emerged (figuratively speaking, of course). Just because they make a lot of noise, and a few big threats (RECALL) it doesn’t make them the majority, nor does it mean that the opposition’s position was reasonably or logically thought through. How far in debt and overspent do we have to get before there is no longer any revenue or profit to be made by keeping the supply lines open? You think no tourist ships coming aport caused financial hardship? Wait until the barges from Seattle and Portland decide not to make any more deliveries.

  • Might be workable if “suspend the dividend” means restoring mineral rights to every Alaskan…

  • Once it’s been “suspended for a “few” years” – it is gone forever.

  • You’re a broken record with this lefty, bloated government nonsense of yours, Chris.

    So is it you and/or one or more of your family who’s riding the gravy train?

  • I’m glad Suzanne hasn’t got the reply feature fixed on this site. Saves me hours of time responding to the nonsense that surfaces in comments. I do have to admit that Art Chance’s word salads are always momentarily interesting. I wonder when he will awake from his coma and realize that the State of Alaska, which he is so quick to despise, paid him for lo, his many years of service.
    Not to mention his pension. First tier, I would guess.

%d bloggers like this: