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Alaska editorial: In a bind federal dollars made Alaska soar - and set it up to sour

Posted: March 14, 2012 - 12:03am

This editorial originally ran in the Fairbanks Daily News-Miner:

The state Department of Labor and Workforce Development recently issued a summary of federal spending in Alaska, based on data reported by the U.S. Census Bureau. It’s a sobering document.

During the decade between the 2000 and 2010 censuses, federal spending in Alaska more than doubled. It went from $6 billion in 2000 to $12.6 billion in 2010. That followed a near-doubling from the previous decade as well.

This rapid increase in spending has delivered economic prosperity to many sectors of the Alaska economy. With that prosperity has come a growing risk.

This spending was based on an unsustainable national model. Much of the money was simply borrowed. Now, a growing number of Americans demand the federal government blow up that model.

It’s easy to sympathize in the abstract with such a demand. The federal debt is an outrage. The financial mismanagement of our government during the past several decades is a national disgrace. The two main political factions like to blame each other, but they were complicit in ignoring the implications of their policies for the national debt. Now it’s so enormous it can’t be ignored.

What is the responsible path in the face of this financial disaster, though?

The federal spending figures for Alaska illustrate the difficulty. If Congress were to simply balance the budget with cuts, and if those cuts fell proportionately on Alaska, it would devastate the state’s economy.

“The U.S. government spent $17,762 for every man, woman and child in Alaska in 2010, putting the state at No. 1 for per capita federal expenditures — 69.8 percent above the national average,” according to the summary written by economist Neal Fried in the February 2012 edition of the state publication, Alaska Economic Trends.

One cannot spend money on this scale without inducing vast changes in the economy. And Alaska’s economy is not made of money alone. It’s made of people, families with kids and mortgages and cars and aging parents and debts. It’s made of businesses owned by people who have taken on obligations, because the money has been there.

What if the money weren’t there? Huge pieces of it would come crashing down, that’s what. That’s why our federal leaders must deal with the debt in a responsible fashion. The process will be painful — it must be painful to be meaningful — but we should try to avoid a sudden economic massacre. Alaskans, more than residents of any other state, should understand this.

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