AD Header Dropdowns

AD Main Menu

Murkowski to Congress: Don't leap off fiscal cliff

Jill Burke
Loren Holmes photo

Lisa Murkowski, Alaska's senior U.S. senator, isn't confident her congressional colleagues and President Barack Obama will successfully avert the nation's looming financial crisis. Coined the “fiscal cliff,” the event, due to hit in January, is an impending collision of several financial impacts, including the end of Bush-era tax cuts and a hundred billion dollars in automatic federal spending cuts. It adds up to $600 billion to be loped off government balance sheets.

On Tuesday, Murkowski told reporters Alaska may feel the fiscal pinch deeper than other states because of its heavy dependence on federal revenue.

A return to pre-Bush era tax rates would mean Alaskans will collectively pay an estimated $647 million more to the IRS – or an average of $1,749 per person.

'Lost jobs, lower wages'

In 2010, federal contracts and wages amounted to 13 percent of the Alaska economy. Federal land ownership in Alaska (Bureau of Land Management, National Parks, Fish and Wildlife Service refuges), Native funding streams (Bureau of Indian Affairs, Indian Health Service), and the state's large number of veterans and active military members only up the ante.

“Failing to address this cliff will result in lost jobs, lower wages, negative growth and a generally weakened economy,” Murkowski warned.

Describing a “gloomy atmosphere” on Capitol Hill, Murkowski worried “that there are some (leaders) who believe the best thing we can do is just drive this thing right over the edge. As a lawmaker I feel that it's my job to keep us from that calamity. Tough decisions need to be made for the good of the country.”

According to the Institute of Social and Economic Research at the University of Alaska-Anchorage, federal spending accounts for one third of all jobs and household incomes in Alaska. While federal spending rose during the recent stimulus era, ISER argues that pre-stimulus numbers from 2008 offer a better gauge of where Alaska truly stands. In 2008, the state pulled in $9.4 billion in total federal spending. Most of the money, $3.42 billion, went to defense, followed by grants to state and local governments as well as nonprofits, civilian agencies and direct payments.

Heavy federal spending in Alaska 

Also in 2008, federal per-capita spending for Alaska was $13,700 -- 52 percent above the U.S. average. The biggest grants go to health care, transportation projects, housing and education.

Among the key players in the gridlock separating Democrats and Republicans are President Obama and House Speaker John Boehner, neither of whom are impressed by the other’s proposal. Boehner has described the standoff as a “stalemate.”

Murkowski isn't alone in her trepidation. The Washington Post reports that Sen. Lindsey Graham, R-S.C., believes the first offer from the White House isn't serious, and that the fiscal cliff will not be averted. In its report on Tuesday, the Washington Post included this comment Graham made during an appearance on "Face the Nation," a popular political talkshow: “I think we’re going over the cliff. It’s pretty clear to me they made a political calculation. This offer doesn’t remotely deal with entitlement reform in a way to save Medicare, Medicaid and Social Security from imminent bankruptcy. It raises $1.6 trillion on job creators that will destroy the economy and there are no spending controls.”

Begich seeks spending cuts

For her part, Murkowski agrees that spending controls – particularly on automatic, mandatory spending – should be in place. And while Obama believes more spending will stimulate the economy, Murkowski feels an even better economic stabilizer is financial certainty. Businesses and job creators are adverse to growth when they can't predict what's ahead, she said.

“We have to have spending cuts, there's no question about it,” U.S. Sen. Mark Begich, Alaska's Democratic senator, told television station KTUU late last week. His take on the situation is that a lot of politicians are still in campaign mode, delivering catchy “bumper sticker” one-liners but not getting at the heart of the issue. The budget must be cut. Revenues must be dealt with. And there must be some investment in infrastructure. Those three priorities are interdependent, and can't be effectively dealt with as separate items, he said.

Contact Jill Burke at jill(at)alaskadispatch.com