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Tuesday, September 09, 2008

Palin's Tax Record: Offsides? Icing? High Sticking?

To get a sense of just how de-linked Sarah Palin's recent rhetoric is from her record, you really have to read this CBS story about Palin's plan to build a sports complex using a sales tax increase back when she was Mayor of the booming townopolis of Wasilla, AK.

According to the article, Mayor Palin advocated and secured via referendum a 25 percent increase over the existing sales tax. Now, I know what you're thinking: tax increase = heresy for Republican.


But you see, this project was different from your average government program. Different how, you ask? Well, because Mayor Palin thought it was a good idea. Mayor Palin explained in an email to city council department heads that she had "waited patiently -- for over four years now [Editor's note: !!] -- for either the private sector" or some other "public entity" (federal earmark, anyone?) to build a sports complex. You see, the private sector just hadn't done its job. Apparently it wasn't sufficiently profitable to build said complex. Indeed, from the CBS story we learn this:

One Wasilla resident who voted for the complex is Mike Edwards. He says he spends about an hour a day at the facility watching his son play. He says he’s glad government stepped in to build the new ice because privately run rinks are much more expensive, costing teams as much as $300 an hour to practice compared to $185 at the public rink.

Just for the record, the conservative economic position is supposed to be that one shouldn't raise tax revenues to pay for things that the private sector won't provide. Why? Because if the private sector won't pay for a service, it's because private business firms don't think they can make a normal profit producing said service. And if the businesses community doesn't think that, it's because folks in that community think it will cost more to provide the service than individual people are actually willing to pay for it. Seems like Mr. Edwards has confirmed that intuition among businesses.

Now, lest you get all upset over hypocrisy and that sort of thing, do note that Mayor Palin argued that public provision of the sports complex was justified because it would prevent juvenile delinquency and drug use, activities that involve negative externalities.

Well, it's fascinating to find that the Future of the Republican Party, as embodied by former-Mayor and now-Governor Sarah Palin, is so interested in government-funded social programs. I guess I worry a bit about the cost-benefit analysis of this particular program, since a price of 60% the market rate would suggest that the externalities associated with not playing hockey, soccer or other such subsidized activities must be awfully costly.

In any case, all you big-government liberals out there can rest assured that the Original Mavericks "get it" -- they're on board for taxpayer-funded provision of things that private businesses won't provide, at way below the price those businesses would charge, and especially if some other "public entity" will pay for it. Indeed, maybe this is a place where would-be Second Dude Todd Palin's pals in the Alaska Independence Party's can cash in on their UN love for some international earmarks.

One last note for the property law experts among us: according to an article in the Wall Street Journal, Mayor Palin was too busy negotiating with the Russians over Bering Sea rights* to secure an actual title to the land on which sits the Socially Necessary Sports Complex:

the city began building roads and installing utilities for the project before it had unchallenged title to the land. The misstep led to years of litigation and at least $1.3 million in extra costs for a small municipality with a small budget. What was to be Ms. Palin's legacy has turned into a financial mess that continues to plague Wasilla.

Thankfully, Sarah Palin is not a Democrat, so we won't have to hear about how this tale of Big government Love proves she is out to take all your money.

*Ok, I made up the Bering Sea thing. But that may be the next argument

Posted by Jonah Gelbach on September 9, 2008 at 07:24 PM in Current Affairs | Permalink


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I understood the purpose of your post. The purpose of my comment was to point out that it was you, not John, who "had the facts backward."

Posted by: Aaron Williams | Sep 10, 2008 3:22:17 PM


I enjoyed reading your comment, whose substance and style of argument, I think, speaks volumes. Guess I hit a nerve.

Posted by: jonah gelbach | Sep 10, 2008 1:46:49 PM

Nice hit piece, Gelbach. Goes right in hand with the story about 95% of all law profs donating to Obama.

Do you peddle this stuff in class to try to save some poor kid who might have the "wrong ideas" about what kind of government is good for them?

In any case, let's put something out here: Republicans have consistently held that government spending is good for some things. Usually, that is transportation projects, such as the interstates (created by Ike, a Republican). Utah, that quintessentially Republican state, is funding all sorts of public transit via local sales tax. The difference? People use it there! Our local Dems, though, have contributed mightily to pollution by stalling a new road so traffic jams can be bigger.

Perhaps you might recall the "taxation without representation" bit from the Revolution. Some local projects make sense to be supported by tax dollars. Most don't. And certainly lots of federal ones don't!

But then, your guy is on record for such deals as "Lessee.... let's spend lots of government dough raised by people outside of this taxing area and give it to people who will donate to me or give my wife a raise. Great idea!"

I eagerly await your post on the hypocrisy of Barak Obama and earmarks.

Posted by: Vanceone | Sep 10, 2008 1:41:13 PM


The article to which you link reports, under the heading "BUDGET SHORTFALL", the following:

The facility continues to draw about $150,000 a year from the city's general fund to fill out its $850,000 operating budget, according to city finance director Susan Colligan.

Whatever you think about whether the half-cent sales tax increase has succeeded in its objective to "*pay-off*" the bond, a project that requires continuing operations funding is not in any relevant sense already paid for. And I could point out the continuing operating budget deficit in Wasilla, the increased debt after Mayor Palin's term, etc.

In any case, the point of my original post was simply the impressive plasticity of conservatives' ideas for what projects should be funded by the government. Turns out that answer is, whichever ones they personally like--or, perhaps, whichever ones were previously personally liked by the candidates whom they now support. Not exactly the neutralist of economic policy principles.

Posted by: jonah gelbach | Sep 10, 2008 12:48:14 PM

"Palin's sales tax increase wasn't enough to pay for the sports complex, for which Mayor Palin took out $14.7 million in bonds."

The bond came first; then, the half-cent sales tax increase was used to *pay-off* that bond.

You can't claim that both, combined, were used for "buying something."

At least not if you want to be treated as a serious person.


Posted by: Aaron Williams | Sep 10, 2008 11:27:45 AM

Have you looked into the "train to nowhere"? I'd love to know what we taxpayers are getting for that route and what the social benefits are.

Posted by: Andy Mott | Sep 9, 2008 10:24:20 PM


I'm glad you liked the snarkiness

I don't have time to address all the points you raise, esp on federalism. I'll just note that you've got the facts backward. Palin's sales tax increase wasn't enough to pay for the sports complex, for which Mayor Palin took out $14.7 million in bonds. (see this story for details: http://www.politico.com/news/stories/0908/13084.html)

Isn't that what conservatives usually call "buying something with money you don't have, creating a deficit"? You can claim that this is a fine policy because people want it, and you can claim that it's a bad policy because it's the govt doing something the private sector would do if there were demand.

But you can't claim both, at least not if you wish to be treated as a serious person.


Posted by: jonah gelbach | Sep 9, 2008 9:22:59 PM

Perhaps tax increases are heresy for a Republican nowadays, but I don't think basic conservative theory requires it. In fact, I think it would be more correct to say that heresy for a conservative is buying something with money you don't have, creating a deficit. Seems as if that exact opposite happened here.

Moreover, there's a distinct difference between top down policies from a federal government captured by special interests and a local referendum on a tax increase that locals can vote on, you know, locally. Sort of falls back on that whole federalism thing (only more so because this wasn't even a state decision), that us silly conservatives like so much.

I wouldn't argue that Palin thought about this when she did it, or that either McCain or Palin understand basic conservatism (they're both clearly populists), but that doesn't change the fact that painting what she did as hypocritical is incorrect. Being conservative doesn't automatically equate to holding beliefs based in some virulent form of austrian economics coupled with objectivism, it just means that you'd prefer the federal government to stay the hell out of peoples lives. I'm pretty sure that most conservatives would be ok with everyone in a small town getting together and voting on whether to build an ice rink for kids though.

The snarkiness was funny though. Thumbs up for that.

Posted by: john | Sep 9, 2008 8:48:04 PM

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