Part 9: “OIL COMPANY” WALKER, “OIL CAN” ORTIZ, AND OIL COMPANY SOCIALISM
By David G Hanger
May 20, 2016
Say you find a friend or a spouse fast bleeding to death from a serious injury, and they have less than five minutes to live. By putting on a constriction band you extend their longevity out to eight minutes. That’s HB247.
There is no reduction at all to the tax credits due this year, about a billion dollars. This money will have to be borrowed according to the most recent report. There is no increase to the tax, nor reduction to the tax credits. These investment credits allowed under ACES permit a 15% investment by marginal producers, from Tennessee to Italy and God knows where else in between, and the remaining 85% will be paid by the State of Alaska, something like $775 million this year with hundreds of millions of dollars every year well into the 2020s. These credits have been slightly, only slightly, moderated, and this package has to pass the State Senate to become law.
WHAT “OIL COMPANY” WALKER WANTS YOUR PERMANENT FUND DIVIDEND FOR IS TO PAY THESE MARGINAL PRODUCERS TO STEAL OUR OIL AND LOSE MONEY DOING IT. He does not want the State to pay these guys their 85% credit for losing money hand over fist, oh no; he wants you to pay them $775+ million a year for losing all that money. USING YOUR PERMANENT FUND DIVIDEND.
I can assure you within five years that won’t be anywhere near enough.
As has been confirmed by other recent reports, at this juncture the oil companies are in a position already where they will be paying no tax to the State of Alaska for the next ten years under the provisions of the “Coghill Abomination.” (My 30-year number is in process of materializing before your eyes.)
“When the current system was created, we didn’t study what happened below $60 per barrel,” State Representative Gena Tarr (D) said recently. This is typical of Alaska thinking: Don’t ever address the possible down-side. Oh sure, the Permanent Fund is going to finance State government from now until hell freezes over. That is their bet. The Permanent Fund will finance the State government at a very limited level until the next major recession, at which point it will be unable to finance anything. The next major recession may be as soon as 2019.
What has happened below $60 a barrel is a taxing system that is recognized internationally as the most generous in the world, also the most insane. Lose money and get paid by the State government to lose it; the more you lose, the more you make. We are all in the wrong business, folks. If you produce and make money from our oil, we give you tax credits and “worldwide apportionment” which allows you to write off all your worldwide net operating losses, etc., and thereby you pay no tax. If you lose money, no problem. The State pays even more to do that. You get cash credits for losing money.
If you lose a dollar, you need another dollar to pay what that lost dollar could have paid. So your net negative change in financial condition is not one dollar, but two. This simple point works even more fundamentally with a corrupt financial fiasco like this mess. Sixteen billion dollars in general reserve funds as of January 2014 will be zero within 18 to 24 months max. In the meantime no taxes of any consequence will be collected from the oil companies. Our change in financial condition merely by the loss of our general reserve funds totals a negative $32 billion by the beginning of 2019. Lost revenues that should have been collected under a rational royalty and taxing policy for this five-year period constitutes no less than $15 billion, a change in financial condition of a negative $30 billion. Next they want your Permanent Fund Dividend at a rate of approximately $750 million a year to start. (They will want it all in short order.) For four years that is $3 billion, or a change in financial condition of a negative $6 billion. Add it all together (there is actually some overlap.) and you get a negative change in financial condition by 2019 of no less than $68 billion.
THIS IS THE PRICE YOU AND I ARE EXPECTED TO PAY FOR A BULLSHIT “JOBS” PROGRAM FOR ANCHORAGE AND FAIRBANKS.
State Senator Cathy Gilliland, a tea partier and passionate oil company sympathizer from the Anchorage area, made a recent speech before the State Senate extolling the virtues of the “Coghill Abomination” and its consequences that demonstrates emphatically not only what a nut job she is but also what a nut job the “Coghill Abomination” is. I encourage every one of you to go listen to it on the internet.
All of this insipid crap is designed to keep Anchorage and Fairbanks in the clover. Imagine this, the extreme right wing has first brought us economic socialism for the oil companies because they hate taxes, so instead of the oil companies paying taxes we give them money to steal our oil. Then they bring us a political dictatorship which tells us that all of us off the road network, i.e. the Anchorage-Fairbanks corridor, are mere sheep to be fleeced to finance their beloved Anchorage and Fairbanks and their goddamned oil company workers.
Free enterprise be damned. Capitalism be damned. We are going to bring in losers from all over the world to lose money here, to bankrupt our state government with these insane 85% credits for losing money while stealing our oil, all of this to provide jobs for Anchorage and Fairbanks.
IN EFFECT AN ADMISSION THAT ANCHORAGE AND FAIRBANKS HAVE FOR SOME YEARS NOW BEEN INCAPABLE OF MAKING IT ON THEIR OWN, SO IT IS UP TO THE REST OF US TO FINANCE THEM UNTIL WE RUN OUT OF MONEY, TOO.
I am trying to figure out, right wingers, how any of this crap has anything to do with your silly-ass Republican politics. What do you believe in, if anything??? The negative consequences of free enterprise are apparently so frightening you will steal from the poorest of us just to prop up losers.
What the hell are you people all about? With this crap you do not begin to be consistent with your own beliefs. Instead of liberty you give us dictatorship. Instead of less tax, it’s tax us to the max. In every possible way. And you expect me and everybody else to finance a bunch of losers with my real money because a bunch of jerks in Anchorage refuse to permit free enterprise to function as it should have. The lay-offs in the oil industry should have commenced several years ago, and nothing in these giveaway programs has increased Alaska oil production one iota despite any and all claims to the contrary. It is an acknowledged fact that all of the current oil production is a consequence of things done before both ACES and SB21. All these billions have been wasted for nothing.
BUT CATHY GILLILAND ASSURES US, IT IS WORKING AS PLANNED. LOOK AT THE JOBS IN ANCHORAGE AND FAIRBANKS, ALL THE LANDLORDS COLLECTING RENTS. IT IS NOT LIKE NORTH DAKOTA WHERE EVERYONE SHUT DOWN. NOT LIKE TEXAS OR LOUISIANA OR ANY NUMBER OF OIL PATCHES WORLDWIDE. HERE WE GO INTO COMPLETE PANIC MODE AND BURN DOWN THE WHOLE STATE FOR A FEW JOBS IN ANCHORAGE AND FAIRBANKS.
I am serious. Go listen to this crazy woman. What she completely fails to comprehend is that Texas, North Dakota, Louisiana, and oil patches worldwide did not go into panic mode and run away. They capped their wells to wait until the price goes up. The marginal producers elsewhere could not sustain their payments and were compelled to shut down. It is a high-risk business where if you leverage yourself with credit, you usually lose. The system flushed the losers there.
BUT NOT HERE. Instead of a wise old man parking his gold in safe deposit boxes and waiting for the price to rise this bunch of idiots is spewing our oil all over everything for nothing.
Their logic is premised on a series of false linkages and connections. It is all right, you see, to bankrupt the State, to bankrupt its citizens, to literally steal from people a thousand miles away, to provide for the well-being of Anchorage and Fairbanks because there is a higher purpose at hand (and, yes, it is not surprising that a fair number of these right wingers in the state legislature are waiting for the rapture to beam them up at any moment, and thereby find it that much easier to believe this moronic nonsense), a higher purpose that all must be compelled to believe (I am not making this crap up.), and that purpose has a name.
For the fact is these mad fools are blowing us all up in preparation for “THE BEGINNING.”
(If that sounds Messianic to you, that is because I am pretty sure it is.)
Oh yeah, stay tuned, and otherwise you know what to do.
Next, “The Beginning.”
-FLASH- IN A DRAMATIC 13th HOUR MOVE, DESIGNED, AS IS SO MUCH DESIGNED BY THIS BUNCH, TO BE UNTHWARTABLE, THE ALASKA STATE LEGISLATIVE MAJORITY IS PLANNING TO RAID NOW THE EARNINGS RESERVE FUND OF THE PERMANENT FUND FOR PURPOSES OF FINANCING THE STATE GOVERNMENT, WITHOUT DEBATE, ON THEIR VOTE ONLY. THE PERMANENT FUND RAID BEGINS, AND UNLESS YOU START HOWLING NOW IT WILL BE GONE BEFORE YOU CAN MAKE A DIFFERENCE.
David G Hanger
Received May 18, 2016 - Published May 20, 2016
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