The Emperor Has No Clothes -- May 6, 2016

This was the headline just a few days ago: White House struggles to explain weak economy as Obama boasts of job growth.

Job growth? What job growth. For the archives: April, 2016, jobs report was simply awful. Anything less than 200,000 = "economic stagnation." The number for April: 165,000.

Economic stagnation.

"Job seekers dropping out in droves." [Their report, not mine.]

Expectation: 202,000 (some suggested 200,000).

******************************

The Party Is Over In Alaska: For The Archives

Already An Old Story

This has been reported for several months now. I guess Bloomberg was looking for a different angle.

America’s Last Frontier is in trouble. The 40-year oil boom that turned Alaska from a frigid backwater into one of the nation’s richest states is over. Not only have petroleum prices crashed, but Alaska’s supply of crude is running out.

Thirty years ago the state was pumping 2 million barrels a day, a quarter of all U.S. output. But over the past decade, the Prudhoe Bay oil field, once the largest in North America, has started to reach the end of its life. Alaska’s output has fallen to 500,000 barrels a day, enough to fill only one-quarter of the capacity of the state’s main economic artery, the 800-mile Trans-Alaska Pipeline System.

With 90 percent of the general fund revenue tied to oil, the collapse has been devastating. Alaska, facing a $4 billion budget deficit, is one of four energy states that have slid into recession over the past year because of cheap oil. The state’s rainy day fund is burning through $11 million a day. If that keeps up, it will be out of emergency funds within two years.

The unenviable task of fixing this mess rests with Walker, a 65-year-old former carpenter who won the governor’s office by about 6,000 votes in 2014 as an independent after leaving the Republican Party. Walker came in with big plans that included expanding Medicaid and building a natural gas pipeline, all without raising taxes. He’s since had to switch to a proposal that rewrites the social compact at the heart of Alaska since it achieved statehood in 1959: Its 738,000 residents enjoy the country’s lowest tax burden and highest per capita rate of state spending.

Let's keep paying out $2,000/resident, but institute a state income tax. Say what?

Walker is pushing lawmakers to impose an income tax for the first time in 35 years. He wants to double the gasoline tax and slash the generous subsidies that energy companies get. He’s also proposing going after the earnings of the $53 billion Alaska Permanent Fund.

Established in 1976 by a constitutional amendment, the fund collects a quarter of the state’s oil royalties and each year redistributes a portion of the earnings from its investments to Alaskans. Last year every man, woman, and child got a check for $2,072. Walker wants to cut that in half. The whole idea of the Permanent Fund was that it would be used to fund government when the oil fields ran dry. Lawmakers can’t touch the principal. But its investment earnings are fair game.