by Karl Widerquist | Aug 31, 2015 | News, The Indepentarian
Alaska Dispatch News has released its estimate of Alaska’s Permanent Fund Dividend (PDF) for this year. The Alaska Dividend is the closest policy to a basic income in the world today. It has paid dividends to all Alaska residents since 1982. According to reporter Sean Doogan, the dividend is likely to be about $2,100. If so, the dividend would be technically the largest in the state’s history. The next largest amount ever paid as “the Permanent Fund Dividend” was slightly smaller, $2,069, in 2008. In that year, however, the state added $1,200 to each check as a rebate from the state’s budget surplus, making the total amount each resident received $3,269, considerably higher than any likely amount this year.
The Alaska Dividend amounts 1982-2014
The amount is large this year because the investment fund on which it is based is doing well. The amount paid each year depends on how many Alaskans apply and on a five-year average of returns to the fund. The fund has been making strong returns in recent years. It has recently reached a total value of $52.8 billion. Although the fund was created out of out revenues and is supplemented by them each year, the value of the fund and dividend is not dependent on current oil revenues, which have been declining sharply from both lower prices and fewer exports.
Sean Doogan, “Our estimate of this year’s PFD check: $2,100.” Alaska Dispatch News, August 22, 2015
Catie Quinn, “Permanent Fund Adds 4.9%.” KSRM Radio Group, August 20, 2015.
APFC, “The Permanent Fund Dividend.” The Alaska Permanent Fund Corporation website.
Credit pciture: CC Teddy Llovet
by Karl Widerquist | Aug 6, 2015 | News, The Indepentarian
Alaska’s Permanent Fund Dividend (PFD)–the closest policy to Basic Income existing in the world today–could reach over $2000 this year, but it remains under threat as Alaskan politicians seek ways to close the budget deficit.
According to KTUU TV, Bill Popp, the head of the Anchorage Economic Development Corporation predicted that this year’s PFD will reach $2,000. The PFD varies each year because it is financed by an investment fund owned by the state. It is paid each year to every Alaskan U.S. citizen who fills out a form verifying their residency in the state. Last year the PDF was $1884. A payout of $2000 would be close to the record high dividend of $2,069.00 of 2008. It will still be far below 2008’s full payment, which included a $1200 supplement from the state’s budget surplus that year.
Alaska’s Dividend is so popular that recent editorials have suggested linking the PFD application to voter registration to encourage more people to vote. However, it is under attack because declining oil exports coupled with declining oil prices have created a large budget deficit. This budget pressure does not directly affect the PFD because it is financed by its own dedicated investment fund of more than $50 billion. However, politicians have increasingly been talking about redirect money from that fund to the regular state budget to help close the deficit. One recent editorial suggests capping the dividend at $1000 and using the rest of the money for the regular state budget.
For more information see:
Kortnie Horazdovsky, “2015 Permanent Fund Dividend could hit $2000, AEDC says,” KTUU-TV, Jul 29, 2015
Dermot Cole, “Linking voter registration to PFD would create fundamental change.” Alaska Dispatch News, August 2, 2015
Elise Patkotak, “How about this? If you don’t vote, you don’t get a PFD.” Alaska Dispatch News, July 28, 2015.Brian O’Connor, “Sustainable Alaska: Tax package likely necessary to plug $2.7b budget hole.” The Mat-Su Valley Frontiersman, August 1, 2015.
Picture credit CC Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0) Timothy Wildey
by Karl Widerquist | Jul 22, 2015 | News, Opinion, The Indepentarian
Alaska’s small Basic Income, “the Permanent Fund Dividend” (PFD), has recently come under greater political pressure than — perhaps — ever before.
The PFD is a yearly dividend paid out of an investment portfolio, “the Alaska Permanent Fund” (APF), which is financed by accumulated savings from the state’s oil revenue. The fund has a principal of more than $50 billion, and it paid out a dividend of $1884 to each Alaskan in 2014. The dividend is fully funded by the APF. On its own it is financially sound. Barring a major catastrophe, as long as politicians leave the APF alone, it can continue to fund the dividend long after we are all dead.
Politicians will leave the APF alone, or so most Alaskans thought until recently. The PFD has been so popular that it was known as the “third rail of Alaskan politics,” meaning that any politician who touched it died. But political realities might be changing.
Since 1980 the Alaska state budget has been funded almost entirely by oil revenue. Now with both declining oil prices and declining oil production, the state faces a large budget shortfall. Lawmakers eventually agreed to close the deficit without tapping into the APF and PFD by cutting spending and taping into another state savings fund, but several lawmakers, including the state’s governor, Bill Walker, proposed tapping into APF earnings. The phrase “third rail of Alaskan politics” barely made the conversation.
Cuts to the PFD could be coming in the next few years. Discussing the future of the budget, Governor Walker said, “At this point I don’t see a scenario that doesn’t involve some of the earnings from the permanent fund.”
by Will Wachtmeister | Jun 22, 2015 | News
Lawyer Joseph Chloupek has put forward a proposal for a US sovereign wealth fund that would provide a basic income of US$25,000 a year. The proposed approach aims to establish a political-economic modus vivendi between liberals and conservatives by giving each side something “they say they desire”.
The proposal’s starting point would be to “eliminate all tax exemptions secretly written into the tax code” whereupon the proceeds would be invested into a national trust account paying out an inflation-adjusted $25,000 a year at intervals chosen by the recipient. Alternatively, new legislation could direct the Fed to deposit US$10 trillion directly into the fund, according to Chloupek.
Chloupek also advocates that all income-based taxes for individuals and organizations are replaced with a 5% tax on all transactions cleared through the banking system, echoing the automated payment transaction tax advocated by Wisconsin professor Edgar Feige. Chloupek argues that this would help the supply of products and services match the increased demand generated by the BIG. This in turn mitigates inflationary and business-cycle pressures, both sources of current economic problems in the United States.
In this way, Chloupek’s plan explicitly aims to provide “non-paternalistic help for people’s income fluctuations for liberals, and real incentives to invest and work for conservatives.”
The mechanism of Chloupek’s trust-fund proposal is based on Alaska’s permanent fund dividend program, where state-owned oil revenue is invested in a diversified worldwide portfolio.
Chloupek’s proposal also shares characteristics with the theoretical pragmatic market socialism analysis put forward by Professor James A. Yunker in 1993. Last year, the trust fund approach joined the intellectual mainstream when Foreign Affairs ran an essay entitled “Print less but transfer more”.
Chloupek also references British economist James E. Meade’s “topsy-turvy nationalization” idea whereby government takes a 50% share of all publicly traded stocks and pays a social dividend from earnings to all citizens. The “pension-fund socialism” feared by corporate thinker Peter Drucker can be avoided by “the government being prohibited from exercising voting rights control of the businesses invested in, similar to the Federal Reserve’s employee pension fund,” according to Chloupek.
For further reading on this topic see:
Mark Blyth and Eric Lonergan, “Print less but transfer more,” Foreign Affairs, September-October 2014
James A. Yunker, “Capitalism versus Pragmatic Market Socialism,” Springer Science+Business Media New York , 1993
by Karl Widerquist | Apr 29, 2015 | Opinion, The Indepentarian
Alaska’s Permanent Fund Dividend is the closest thing to a Basic Income that exists in the world today. It gives every U.S. Citizen who fills out a form verifying Alaska residency a check for a share of the revenue from the Alaska Permanent Fund each year. The fund and dividend—on their own—are on solid financial footing. Left alone, they can continue as long as there is a State of Alaska. But the same can’t be said for the rest of Alaska’s budget. Most of it is financed by revenue from the state’s oil exports. Oil reserves are finite, and therefore, the revenue they provide temporary; and oil exports have been gradually dropping for years. The world oil market is volatile, and prices are down right now leaving the state with a substantial budget deficit, in the order of $3.9-4.0 billion this year and yet.
Alaska Dispatch News
The state has no income or sales tax, making those the obvious sources of revenue for, but Alaskans are notoriously skeptical of personal taxes. The state has budget reserves (also funded out of oil revenue), but at current deficit rates, it could spend through those in a matter of three to five years. If oil prices don’t bounce back or if oil exports continue to decline, this strategy would merely put off the day of reckoning and put the state in a worse financial position when that day comes.
With all this issues, Alaska’s $54 billion Permanent Fund is a tempting target for legislators. The constitution protects the fund’s principal, but not it’s earnings. Almost all of the fund’s earnings have been dedicated to supporting the dividend since the dividend’s inception in 1982. The dividend has been protected by its enormous popularity, but with greater financial pressure on the state budget the political balance might change and the dividend—or its future growth—could be at risk.
Several proposals have been put forward, some involving the introduction of new taxes, some involving borrowing against the state’s funds, some involving slowing the growth of the fund and dividend, and some involve lower dividends at present without necessarily slowing the rate of increase of the fund.
To read some of these proposals, go to:
Scott Goldsmith. “Alaskans, we better wise up before we burn through our savings.” Alaska Dispatch News, April 9, 2015.
Alex DeMarban, “Permanent Fund can lower deficit while checks keep coming, economist says.” Alaska Dispatch News, April 23, 2015.
Alice Rogoff, “Alaska need not suffer; let’s leverage our wealth to thrive.” Alaska Dispatch News, April 11, 2015
Fairbanks Daily News-Miner, “Editorial: Time to talk new revenue: Legislature’s focus on cuts has avoided other half of funding equation.” Fairbanks Daily News-Miner, Sunday, April 12, 2015.
Alaska Business Monthly, “New Bill Creates Up to $2 Billion in State Revenue While Protecting Future Permanent Fund Dividends.” Alaska Business Monthly, April 20, 2015
Picture CC Travis
