National conservative leaders are pushing for President Trump to take an ax to federal spending if he is reelected. This year’s ongoing Alaska budget crisis shows how politically unpopular that would be.
Alaska has been spending beyond its means for years. The state levies no statewide personal income or sales tax and instead relies mainly on revenue from oil production to finance its state government. In prior years, the oil riches were so great that the state could both afford to fund a standard array of services and to give each resident a check — “the dividend” — from earnings off of a $65 billion “permanent fund” created from decades of excess oil wealth.
That all unraveled this decade. Declining oil prices and production severely reduced state revenue. For the past few years, legislators and an independent governor have trimmed the dividend and drained the state’s budget reserve account to keep spending up. But the account is now running low, and state revenue has not yet recovered. Something had to give.
Enter the new Republican governor, Mike Dunleavy, who was elected last November. Dunleavy campaigned on a promise to restore the annual dividend check to its statutorily required level. Doing that in the face of stagnant revenue required him to submit the most draconian budget in years. His proposal would have cut state spending by nearly 25 percent.
Legislators predictably balked. A coalition of moderate Republicans, independents and Democrats controls the House, and they worked with the Republican-controlled Senate to produce a budget that cut state spending by only a modest amount. In a separate bill, the legislature approved a $1,600-per-person dividend, only a bit more than half the $3,000 per person the law would have otherwise required.
Dunleavy struck back, as any small-government conservative would, by line-item vetoing more than $400 million from the budget. The University of Alaska was hit hardest, losing almost 41 percent of its state support — a $131 million cut. Legislators were unable to summon the three-fourths majority of both houses needed to override the vetoes. It looked as though Dunleavy and small government had won.
Now, there’s a “Recall Dunleavy” effort afoot. Dunleavy opponents obtained more than 29,000 signatures on recall petitions in less than a month. If certified by Alaska’s secretary of state, that’s enough to trigger a second phase of signature-gathering. If recall proponents can gather 71,252 voters on the second set of petitions — 25 percent of registered voters at the time of the most recent general election — then a special election will be called to remove Dunleavy from office.
Dunleavy has started to retreat from his absolutist position now that his political future is at stake. He has canceled the $131 million cut to the University of Alaska budget, replacing it with a negotiated accord cutting $70 million over three years. He has also replaced more than $30 million in other previously vetoed spending and could replace even more by the time he signs a final state budget on Aug. 19. But this logically requires him to backtrack on his pledge to restore the annual dividend to its full, statutorily required amount.
The lesson for small-government conservatives could not be clearer: Alaska is a deep-red state. Its budget does not include popular entitlements such as Social Security and Medicare, nor does it include national defense. The existence of the per capita dividend also meant working-class and middle-class Alaskans had a direct, personal stake in the budget fight, as they would get to keep the money that government cut. Yet only a fraction of Dunleavy’s budget cuts is likely to get through, and the governor still faces a recall effort.
Trying to close the federal budget gap through budget-cutting alone, as conservative groups want, would be infinitely harder. Federal income taxes barely touch working-class and many middle-class Americans. Federal budget cuts would be all pain and little-to-no gain for the majority of voters. Any rational Republican member of Congress would have to ask how he or she could succeed where Dunleavy and Alaskan conservatives failed.
The writing on the wall is clear: The United States has a large government because a supermajority of Americans wants it that way. That doesn’t mean the size of government can’t be cut on the margin. But it does mean the annual $1 trillion federal budget deficit will not be significantly reduced or closed without large tax increases, reductions in spending Republicans value, or both.
Conservatives who want to compromise with the political facts can make progress on deficit reduction and the size of government. Those who don’t, however, are like the legendary King Canute, whose command to stop the ocean tides had no effect. Such conservative obstinacy would instead likely lead them to be swept out to sea, never to be heard from again.