July 2, 2025 • 53 mins
Welcome to The Weekly Top 3 — our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets — for the week of June 30, 2025.
This week, our top 3 issues are these: 1) we discuss the hypocrisy of how Alaska leaders are governing at home compared to what they say at the national level (2:10 ); 2) we look at the actual returns the Permanent Fund Corporation is earning compared to its own benchmarks and other alternatives, something the PFC seldom does in its op-eds and press releases (17:00); and 3) we explain why PFD cuts should be counted as “skin in the game” in the same way as taxes (36:28).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of June 30th 2025.
The weekly top three is aregular segment on the Michael
Duke Show.
(00:28):
The show broadcasts on bothFacebook Live and YouTube Live
as well as via streaming audiofrom the show's website.
Weekdays from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6 10 to 7 am for adiscussion between the two of us
about our three issues.
We post the podcast of ourdiscussion following the show on
(00:51):
the Alaskans for SustainableBudgets Facebook, youtube,
soundcloud, spotify and Substackpages, also on the Alaskans for
Sustainable Budgets website, aswell as the projects page on
national blog site mediumcom.
You can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:16):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
This week, our top three issuesare these First, we discuss the
(01:37):
hypocrisy of what Alaska leadersare doing at home compared to
what they say at the nationallevel are doing at home compared
to what they say at thenational level.
Second, we look at the returnsthe Permanent Fund Corporation
is earning compared to its ownbenchmarks and other
alternatives, something the PFCseldom does in its op-eds and
press releases.
And third, we discuss why PFDcuts should be counted as skin
(02:03):
in the game in the same way astaxes.
And now let's join Michael.
Speaker 2 (02:10):
All right, brad.
Well, let's dive into it.
You got some good stuff today,some stuff that I just I mean, I
continue to shake my head at.
But we're going to get started,and we're going to start off
with one of our favorite topics,which is the hypocrisy that
happens in Alaska every singleday.
It's astonishing.
So get us started here.
Speaker 1 (02:31):
Well, what triggered me was the op-ed that Bryce
Edgeman and Kathy Giesel wrotein the New York Times to try to
motivate Lisa Murkowski tosupport maintaining Medicaid and
SNAP food stamps benefits asthe national bill went through.
(02:53):
And Giesel and Edgeman'seditorial was this long screed
about how Alaska couldn't livewithout Medicaid and SNAP, that
it would have all sorts of badeffects on Alaska and on Alaska
middle and lower income Alaskafamilies, non-alaska villages,
(03:15):
and that the federal governmenthad to maintain those programs
at full speed, at least forAlaska, or else Alaska would
basically just crumble and blowaway.
And as I read through this,well, there was a similar op-ed
(03:36):
in the ADN by RepresentativeMina Genevieve Mina that the
headline of which was Alaskanswill lose under proposed SNAP
and Medicaid cuts.
It was just a sort of a fullbore editorial onslaught by
those in the legislature aboutthe horrors of the federal
government cutting back on thosepayments to Alaska.
(03:56):
And as I read it I justcouldn't.
I just couldn't restrain myselfjust laughing at the hypocrisy
that that Edgman and and andGiesel and Mina and others who
have commented others from thelegislature who have commented
on this were displaying families.
(04:17):
Why are they using the revenuemeasure at home?
Why, when they're at home, whyare they using the revenue
measure that has the largestadverse impact on middle and
lower income Alaska families?
Why are they using the revenuemeasure that, of all of the
(04:38):
alternatives, is by far the mostregressive, the most costly to
Alaska families?
Why are they using what MattBerman Professor Matt Berman
from ICER calls the mostregressive tax ever proposed?
Why are they using that at homeif they're so concerned about
middle and lower income Alaskafamilies and the answer is
(05:00):
they're not, they're reallythey're not concerned about
middle and lower income Alaskafamilies.
What they're concerned they'rereally they're not concerned
about middle and lower incomeAlaska families.
What they're concerned about ismaintaining these federal
government programs that targetcertain categories of that,
certain subsets of middle andlower income Alaska families,
(05:21):
that target them for federalbenefits, and what they're
concerned about is that, ifthose federal programs are taken
away, that they are then goingto have to confront spending
state money to maintain thoseprograms and cutting state money
back from other programs thatthey favor.
(05:43):
So it is not about middle andlower income Alaska families.
It is not about maintaining thefabric of Alaska's social
system.
I think, as one of these op-edssaid, it is about maintaining
federal government programs inorder to preserve state money
for other spending elsewhere,and the hypocrisy of them
(06:08):
standing on going on the NewYork Times and talking about
this was just rich.
Now let me say this also thatthe hypocrisy isn't confined
just to one side, isn't confinedjust to the liberal side on
this, isn't confined just to theliberal side on this.
Both Governor Dunleavy andSenator Sullivan have talked
about how wonderful the One BigBeautiful Bill is and how we
(06:33):
ought to support the One BigBeautiful Bill.
In response to the op-ed in theNew York Times by Giesel and
Edgman, dunleavy posted onTwitter, issued a press release
or something, talking about howwe ought to support the
president, ought to support theone big beautiful bill.
Well, the one big beautifulbill puts the federal government
(06:54):
more in debt $3 trillionadditional in debt over the
10-year cycle and increases theamount of national debt and the
amount of the percent ofnational debt as a share of the
economy going forward.
It expands the one bigbeautiful bill expands the debt
(07:19):
limit by $5 trillion.
Put that in perspective, thecurrent debt's about $35
trillion, so it expands the debtlimit by an additional $5
trillion about a seventh of theexisting debt in one fell swoop.
That's the biggest increase inthe debt limit that we've ever
(07:41):
seen in any legislation, thedebt limit that we've ever seen
in any legislation, and it'snecessary in order to make room
for this increase in nationaldebt that's going to be caused
increase in deficits andincrease in national debt that's
going to be caused by the onebig beautiful bill.
So there's hypocrisy going on onboth sides.
Dunleavy talks about himselfbeing a rock-solid fiscal
(08:05):
conservative.
Solomon talks about himselfbeing a rock-solid fiscal
conservative, yet they'resupporting a bill that
substantially increases both thenational debt and the debt
limit.
So the hypocrisy from bothsides is just sort of astounding
.
It starts with Geisel andEdgeman railing on about how
(08:29):
this is going to destroy theAlaska social fabric, when they
themselves have done a lot todestroy the Alaska social fabric
by cutting PFDs.
But it extends over to theright as well, with the governor
and and Senator, senatorSullivan, and we'll see.
The latest rumor out of DC isSenator Murkowski's reached a
(08:51):
deal to preserve Medicaid forAlaska and then she's going to
vote for the bill.
So she's going to vote for thedebt increase as well.
So we'll see if it extends toMurkowski as well.
But the hypocrisy is justrunning rampant on both sides of
the aisle over this.
Speaker 2 (09:06):
Well, and you know, what I found most interesting is
that both in the New York Timesarticle and in the article from
Genevieve Mina, they bothreferenced the fact that you
know talking about Medicaid inAlaska and the fact that one
third of I mean they come rightout and admit it, One third, one
in three Alaskans are onMedicaid in one form or another
(09:29):
and they see absolutely nothingwrong with the fact that that's
where it's at, Like, it's, it's,it's a normal thing and we
should be a dependency state.
I mean, that's, that's a bigthing.
And then, as you said, on theother side and this has always
been my problem with Republicansin Congress, and you know this
(09:49):
is where I've said that bothparties are really to blame for
everything, at both the stateand the national level, they
have, you know, they'll say thisis the only way, while they
increase and spend us intooblivion.
There is no fiscal restraintanymore, it's.
I was talking with JD Tuchelifrom Reason Magazine last week
and we both were were the samemind, came to the same
(10:11):
conclusion they're going todrive us bus off the cliff one
way or the other and it just Imean, they're just not, they're
not slowing down.
All the warning signs are therethe klaxons, the bells and
whistles, the big billboards,you know bridge out ahead, and
it just doesn't matter.
They're just going to keepgoing until we reach the end.
It just doesn't.
It doesn't matter.
Either they don't believe it orthey just don't care, as long
(10:35):
as they get theirs between nowand then.
Speaker 1 (10:37):
That's.
That's the key, michael.
I mean as long as they gettheirs.
Between between now and then, Imean the House bill increased
the deficits, increased thelong-term deficits, increased
the national debt and so it wasproblematic when it came out of
the House, the Senate.
If you look at the Committeefor Responsible Federal Budget
(10:58):
Analysis, the Senate isincreasing deficits, the
deficits and the national debtbeyond what the House did.
It'll be interesting to see whenthis goes back to the House, if
it gets out of the Senate.
It'll be interesting when itgoes back to the House what the
response of the House FreedomCaucus is, because they have
(11:18):
said all along that they went totheir absolute limit.
They were pushed to theirabsolute limit.
Chip Roy and others said theywere pushed to their absolute
limit.
Chip Roy and others said theywere pushed to their absolute
limit in the amount of deficitsand national debt that was
coming out of the House bill.
They would not stand foranother dime.
It goes over to the Senate, getslarded up even more with more
(11:40):
tax breaks that reduce revenue,with more spending that
increases spending and withhigher deficits.
It'll be interesting to seewhen it comes back over to the
House what they do.
I mean the MO so far is thatthe fiscal conservatives have
(12:00):
talked a good game but when pushcomes to shove they wilt and
they vote for the bill.
Ron Johnson, over on the Senateside, senator Ron Johnson from
Wisconsin said you know heabsolutely would not vote for
increases, for increasing thedeficit.
He absolutely thought that thisbill was wrong and that he
(12:23):
didn't see how to get cleared byJuly 4th.
There need to be a lot of workto get the to reduce the deficit
impact of the bill.
Yep.
Last night he caved.
Speaker 2 (12:32):
Right, he reversed his vote.
Yeah, no, it's.
It's interesting to watch.
We're rapidly approaching thatpoint to where we're not going
to be able to pull out of thenosedive because we just don't
have enough glide path left todo that, which is unfortunate,
especially since we can see itcoming and we know, and it would
be one thing to be, like I'vesaid many times, not on the
(12:53):
train eating popcorn watching itgo over the tracks.
Unfortunately, we're in thesecond car right behind the
locomotive watching it go overthe tracks, and that's a whole
different, that's a wholedifferent deal.
Speaker 1 (13:03):
And it's not like.
It's not like there aren'tpeople out there sticking to
their position.
Rand Paul is sticking to hisposition.
He's a no vote.
He said he's a no vote allalong and his point is the
increase in the debt limit by $5trillion.
So it's enough to stuff thisbill in and then they continue
(13:25):
spending on top of the continueddeficits, on top of that.
So I mean, rand Paul has put astake in the ground and stands
with it.
It's people like Sullivan andDunleavy and Ron Johnson and
others who are just wanderingoff the reservation.
Speaker 2 (13:39):
You know this has been part of the problem, Brad.
Overall, you know we had hopedthat Doge would take a bigger
bite out of government spendingthan it has.
I mean, they did find somestuff, there's no doubt about it
but it just didn't go farenough.
It didn't go as far as theAmerican people wanted and it
was all the pushback of thepowers that be Washington, the
(14:02):
establishment, the bureaucracy.
It was a continual fightagainst it.
And again we've had all thewarnings.
We have all the warning signsthat the bridge is out and we
have to slow down.
And even now the Republicans andI know that this is drawing
some ire from the listeners whenI say that but this bill is not
(14:23):
great Let me just say that itis not great.
Is it better than somethingthat maybe Kamala Harris would
have come up with?
Absolutely, I mean.
I'm not saying that it's not,but it's not great.
And now we've even lost anyother reason, now that they
stripped out all the gun stuffand everything else.
I've lost any interest in, youknow, in this thing really
(14:45):
moving forward, because againit's $3 trillion in costs.
No matter how they try and runthe accounting on it, it's still
$3 trillion and it increasesthe debt and we're not facing
the reality that we just can'tspend what we don't have.
Speaker 1 (15:01):
Yeah, and the thing, the thing to keep to keep
focusing on and I publish thesenumbers every Sunday morning the
thing to keep focusing on iswhat's going on with the pricing
of the bonds, government bonds,Government bonds used to be 2%
or 1% or 2 and a fraction, butnow they're consistently over 4%
(15:23):
and that's an indicationagainst inflation of about 2%.
So you're pricing in asignificant premium.
These downgrades that the UShas had, they're reflective of
the problem.
They're not creating theproblem.
They're reflective of theproblem, and the problem is that
(15:44):
the risk premium that is nowbeing demanded in US government
bonds is significant, and soyou've got the fact that you're
paying that in interest.
Interest now outstrips the costof interest, now outstrips the
(16:07):
defense spending, and so whatwe're going to find is more and
more.
A not insignificant part of thereason for the $5 trillion
increase in the debt limit isnot as much spending in some of
the three point.
Whatever it is.
Trillion increase in the10-year deficit as a result of
(16:31):
this bill is not solely confinedto increased spending.
It's increased interest coststhat are coming from the jump
from 2% to 4%.
So as that continues to workthrough, costs continue to go up
.
Speaker 2 (16:45):
We're going to spend $1.2 trillion on debt service
this year.
$1.2 trillion fully almost aquarter of our revenue on debt
service.
That's when you should reallyknow that there's a problem
going on.
Brad Keithley, alaskans forSustainable Budgets, is our
guest and we are ready to jumpinto number two, which has the
(17:07):
PFC.
The Permanent Fund Corporationis now back in the news patting
themselves on their own backdoing a great job.
That's what they say.
Speaker 1 (17:19):
Brad, what do you got here for me?
So let's set the basics here,because I think it's
increasingly important tounderstand the difference here.
The permanent fund is a bunchof money, is a bunch of
investments.
That.
It is a pot of money.
The permanent fund corporation,which is what I'm going to be
(17:40):
talking about mostly here, thepermanent fund corporation is
the manager of that fund.
It's like your personalinvestment manager.
They're the ones responsiblefor managing the fund.
Permanent fund corporation isset up by the constitution.
The board members are appointedby the governor.
It is a government body, butwhat it's doing is managing the
(18:04):
fund.
The fund can be managed in alot of different ways.
That pot of money can bemanaged in a lot of different
ways, some bad, some good.
But it's the permanent fundcorporation that's making the
decisions on how to manage it,manage it.
So this past couple of weeks, orthis past week, we've had a
couple of promotional piecespublished by the permanent fund
(18:25):
corporation about how great ajob they're doing.
One appears in Must Read Alaska.
The headline is like a headlineearlier well, last month now,
since this is July 1st.
But it's another headline saysAlaska Permanent Fund sets
another new all-time high.
Second time month is themust-read piece, which basically
(18:49):
is just a regurgitation of apress release issued by the
Permanent Fund Corporation.
And then Devin Mitchell, who'sthe executive director of the
Permanent Fund Corporation, themanager of the investments made
by the Permanent Fund or how thepermanent fund is used, wrote
an op-ed piece that is appearingin all the state's papers.
(19:10):
This particular one that I'vegot up in front of me is from
the Alaska Beacon, but it's alsoin the ADN, even down in the
Ketchikan Daily News.
The title of it is the Key to aStronger Alaska Permanent Fund
is Diversification.
Is the key to a stronger Alaskapermanent fund is
diversification, and Devin alsoreferences the fact that the
(19:33):
permanent fund is at a higherlevel than it has been
previously.
But what neither of thesearticles do is talk about the
returns that the permanent fundcorporation is achieving on its
management of the permanent fundand compare those returns to
either the benchmarks that thepermanent fund corporation
itself has set up or extrinsicexternal methods of looking at
(19:58):
what the permanent fund, how thepermanent fund corporation is
performing, looking at variousmeasures in the market.
So we are doing that.
Alaskans for SustainableBudgets are doing that.
Sustainable Budgets are doingthat on an ongoing basis.
And so let's look at thosenumbers.
Let's flip to the other onefirst.
Let's take this one second.
(20:19):
Let's look at those numbers ofhow the Permanent Fund is doing.
This is a chart that we do thatlooks at the permanent fund,
the returns achieved by thepermanent fund in the left-hand
column and then the returnsachieved by the S&P 500,
(20:39):
investing in an S&P 500exchange-traded fund in the
second column.
The total fund return objectiveis the objective necessary to
produce the 5% earnings aboveinflation, the 5% earnings that
are being used to calculate thePOMB.
So it's the amount necessary togenerate the returns necessary
(21:05):
to fund the POMB and make surethe POMB is staying on the
positive side.
And then on the right-handcolumn there's other PFC
benchmarks, that, otherbenchmarks that the Permanent
Fund Corporation establishes,and they are one of those.
The passive index benchmark isone I'll talk about in a second.
(21:26):
But consistently, if you look atthese numbers, what you're
seeing is the permanent fund isearning returns that are below
not only what the marketcalculations are, own benchmarks
are telling it it should beearning and below what's
(21:49):
necessary to pay for the POMVdraw on an ongoing basis.
If you look at down toward thebottom you'll see a line that
says right above the gray thatsays FY25 fiscal year.
To date, through the end of May, you'll see the PFCs earned a
return of 6.59%.
(22:09):
Over that same period, the S&Phas earned a return of 9.39%.
The total fund return objective, the amount necessary to fund
the POMB, is 6.8989 more thanwhat the permanent fund earned.
The performance benchmark thebenchmark that the permanent
(22:30):
fund itself, permanent fundcorporation itself, has set up
to measure how it's doingcompared to its peer groups,
peer investors 6.64% more thanwhat the permanent fund's
earning.
And if you look at the passiveindex benchmark which is, what
if we just put all this onautopilot?
(22:50):
What if we just invested it inpassive investments that we
don't have to day-to-day manage,we don't have to spend a lot of
money to manage.
They just sort of work onautopilot.
Even looking at the passiveindex benchmark that the
permanent fund uses as their ownbenchmark, they get to pick
(23:11):
their benchmarks.
They use this one.
It's 9.6%, fully 3% more thanthe permanent fund's earnings.
If you look at the averages, thefive-year average, the
permanent fund's earning less.
The permanent fund corporationis earning less on the permanent
fund than the S&P 500 would.
It's earning less than what'snecessary, than the total fund
(23:34):
return objective, what'snecessary to fund the POMB on a
five-year basis.
It's earning a little bit morein the performance benchmark and
the passive index benchmark ona five-year basis.
But if you look at thethree-year average and the
one-year average, the rolling 12months to date, the Permanent
Fund Corporation is behind,seriously behind, not only the
(23:57):
Vanguard S&P 500, the ETF, butalso behind what's necessary to
fund the POMB, behind what theperformance benchmark they used
use and behind the passive indexbenchmark.
And that continues on throughthe one year average.
So what?
What they carefully, what thesepress releases carefully talk
(24:19):
about is, yes, we've hit a highand yes, we're doing great on
our, on our, on our investmentstrategy, according to Devin.
But they don't talk about thesereturn numbers and you can see
by these return numbers theyaren't doing very well.
Keep in mind the passive indexbenchmark and let's flip over to
the second slide.
This is the one that reallydrives me crazy.
(24:43):
This is a calculation of howmuch the permanent fund
corporation is spending in orderto manage the permanent fund
spending on its management andits fees compared to the passive
index benchmark, what it wouldbe earning if it wasn't managed,
(25:07):
if it wasn't engaged in thisactive management.
And you can see consistentlyover the last period of time
that the permanent fund, evenafter spending all this money,
the permanent fund is earningless than it would earn if it
put the permanent fund onautopilot, used the passive
(25:32):
index.
It's spending and thecalculations I don't have them
on here but it's spending $880million, nearly a billion
dollars, on management and fees.
1% we have the percentagesunder the column management
incentive fees is spendingnearly 1% annually, nearly 1% of
(25:54):
the funds to produce of thepermanent fund to produce
returns that are less than whatit would produce if it didn't
have management at all, if itwas using the passive index
benchmark.
So it's spending a percent toearn less.
It's spending $880 million toearn less than it would if it
(26:20):
didn't have all this managementand all this diversification
that Devin talks about.
We've calculated what that is,what the return on the fees is.
Then If you look at how muchreturn they're getting out of
these fees for the last twoyears the 2023 and 2024, and so
(26:42):
far, 11 months through the or ona rolling 12-month basis
through the end of the thirdquarter, these are numbers
through the third quarter,through March, and you look at
on a rolling 12-month basisthrough the end of March,
they're earning a negativereturn on the fees they're
(27:02):
spending.
The fees aren't even gettingthem back to break even with
what they would earn against thepassive benchmark.
They're earning less than whatthey would against the passive
benchmark.
So we're spending a ton ofmoney, spending $880 million a
year, spending a percent of thepermanent fund corpus.
However you want to measure it,however you want to measure it,
(27:29):
we're spending a ton of moneyto get substandard returns that
are less than what we would getout of a passive index approach.
So when you see these op-eds bythe permanent fund, oh, we're
higher than ever.
Well, yeah, you're higher thanever, but you would be much,
much higher.
We'd be at $120 billion if weinvested in the S&P, for example
(27:51):
.
Even a blind hog finds an acornevery once in a while, or
whatever the phrase is.
Yes, you're increasing some,but you're not increasing.
You're not producing thereturns anywhere near what you
would be producing, even if youuse your own passive index
benchmark and shut down all ofthis management that you're
(28:13):
claiming is necessary to run thefund.
What's happened is thepermanent fund corporation is
turned into a bureaucracy, aself-sustaining bureaucracy who
gets to pick what it spends,what it spends on what it does,
and whose fund managers get paidsort of regardless.
And it's just turned intoanother government bureaucracy
(28:35):
that's producing substandardresults, significantly
substandard results.
And so when you look at thefuture of the permanent fund, if
you listen to the PFC, oh, it'sgoing to keep going up.
Yeah, it's going to keep goingup a little bit.
I mean, even the blind hogfinds the acorn but it's not
going up at the rate the marketgenerally is going up or what it
(28:57):
would be going up even if youuse the passive index approach
and you took out all of themanagement.
So these articles are nice puffpieces.
But when you look at them andyou took out all of the
management, so these articlesare nice puff pieces.
But when you look at them andyou don't see hard numbers about
the returns that the permanentfund is achieving, that's a red
flag that something's going on.
They don't want to talk aboutit because the numbers prove
(29:20):
they aren't doing a job that'sadequate even to the passive
index benchmark.
Speaker 2 (29:27):
And I think it's interesting that the news media,
all news media, nobody isasking this question.
You know, nobody is asking thisquestion.
Nobody is looking at the S&P,the Vanguard 500, and saying,
well, sure, it's a little bitmore volatile, but in the long
run it's pulling double theaverages that the permanent fund
has been pulling.
In and of itself it may lose alittle bit more in the short
(29:50):
term, but it always gains alittle bit more in the long term
.
I mean it's doing double thenumbers that we're seeing in the
managed fund.
Why are we spending all this?
I mean we had the commentarythe other day about the Harvard
Endowment Fund.
It's pulling a nine pluspercent return and it's just
running off the S.
(30:11):
Why are we spending a billiondollars a year managing a fund
that's getting us a lesserreturn?
Speaker 1 (30:18):
And the answer is we're doing it because the
Permanent Fund Corporation hasturned into a bureaucracy and
it's really.
There's no control over thepermanent fund corporation.
The governor appoints the board.
The board members don't evenhave to be approved by the
legislature.
The government appoints, thegovernor appoints the board, and
the board members he'sappointed are political
(30:38):
appointees, not investmentspecialists that you find in
other states.
So we're producing very subparreturns on an asset that we
desperately need to be producingvery healthy returns on.
Speaker 2 (30:54):
Brian asked the question.
Is anyone in the Juneau ClownPosse raising their oversized
gloved hand to ask about the PFCquestion?
And no, nobody's talking aboutthis.
Nobody is.
Brad is the only person that Ihave seen that has talked about
the returns on the permanentfund, and you can see the
numbers right there in black andwhite folks.
(31:14):
Look at the 10-year average7.9% is what the fund has been
returning.
The S&P is almost 15% and evenwhen you look at the five-year
average, down at the bottom,nine and a half to almost 16,
five and a half to almost 14.32%that's almost three times in a
three-year average what the P ofthe Permanent Fund Corporation
(31:38):
has been returning.
But nobody's talking about this.
They kept saying oh, we want itto be $100 billion and then
everything will be okay.
Well, it could have been $120billion and yet here's where we
sit.
Speaker 1 (31:50):
Yeah, the problem, michael?
I mean, interestingly enough,we're leaving more money on the
table in the permanent fund interms of permanent fund returns.
We're leaving more money on thetable than we are with oil
taxes.
We're leaving more than, if youlook over the next 10 years,
we're going to have more moneyleft behind by inadequate
(32:16):
permanent fund returns than weare going to have left behind by
substandard oil taxes.
But the problem is you have tounderstand numbers and you have
to build a spreadsheet and youhave to look at the return,
because the permanent fundcorporation really isn't doing
that for you.
Uh, I mean, they put out amonthly report, uh, but you have
(32:37):
to sort of parse through themonthly report to understand
relative numbers and weevidently don't have anybody in
Juneau, or have few in Juneau,that will dig into the numbers
and understand.
It's easy to castigate oilcompanies oh, oil companies
aren't paying their fair share.
Oh, oil companies aren't beingfair to Alaska.
(33:00):
Oh, we need to get more out ofoil companies.
It's easy to do that on apolitical level.
It's harder on a politicallevel to actually go through the
numbers, understand the returnsand say, oh, our own permanent
fund corporation has turned intoa bureaucratic nightmare that's
producing these inadequatereturns, and so you have to
understand the numbers to beable to say that, and people, as
(33:23):
you know, just aren't digginginto the numbers.
Speaker 2 (33:30):
Yeah, and that's a real problem.
I mean, we're, like you said,leaving tons of money on the
table with no other answers andnobody else is bothering to
bring this up.
I brought it up.
I brought it up to BridgetWilson's campaign people I don't
know if they've reached out toyou or not, I don't know if
they've reached out to you ornot, but I mean I why?
(33:53):
Why aren't more people askingit?
Why isn't Suzanne Dowlingasking it?
Why isn't it, you know, natHerz or or James Brooks or
somebody at the?
You know, why aren't thesepeople asking this question?
I mean, you've been out theretalking about it long enough.
We've been talking about thisfor 10 months now, I think is
when you first brought this up10 months, a year ago.
We've been talking about it thewhole time.
Why are we?
(34:13):
You know, why is nobody elseasking this question?
Speaker 1 (34:17):
Cause you have to dig into the numbers and people you
know it's easier to numbers.
Speaker 2 (34:22):
I'm just going to say you've done the math for them.
They can look at that and workbackwards from that.
They don't have to spend 15hours pulling the numbers out.
They could spend an hourconfirming the numbers that you
pulled out, right?
I mean, you've already done thehard work.
I just don't understand this.
Speaker 1 (34:37):
Yeah.
Well, it's a mystery to me too.
But you get the op-eds that sayI mean they're able to say, oh,
it's higher now than it's everbeen.
Well, yeah, it's higher nowthan it's ever been.
It could have been 50% higherif you would have invested it
right, yes, it is higher.
Blind hog finds an acorn.
You've struggled up a littlebit but you could be much higher
(35:00):
.
It's easy to say these thingsthat Suzanne picks up on.
Or it's easy to write the op-edthat Devin wrote about oh,
we've diversified the funds toprotect against risk and we
wouldn't want to do anythingthat's risky, even has a little
bit of risk.
We want this solid, secure.
It's solid mediocrity.
(35:21):
What they've made permanent,what they've done is make sure
they're mediocre on a permanentbasis.
This broad diversificationinvestment program they've been
on makes sure that everythingcancels out everything else and
it just stays.
You know, sort of flat lines interms of, in terms of returns
(35:42):
over time Doesn't, doesn't evenkeep up with the with the POMV
draw over time, doesn't keep upwith their own passive index
over time.
But, but you know it, it's notvery variable, it just sort of
flatlines across time.
And so he writes this op-edthat talks about oh you know, we
just diversify our protectionagainst risk.
Tell me about your returns.
(36:03):
Tell me about your returnscompared to even your own
passive index.
Tell me about your returnscompared to the OMB draw.
Tell me about the returnscompared to the OMV draw.
Tell me about the returnscompared to market measures like
S&P 500.
Nobody asked him to do that.
They just all sort of accept.
Oh yeah, diversification.
Okay, we accept being mediocre.
Speaker 2 (36:25):
It's like more buzzwords.
That's all it is is morebuzzwords.
Brad Keithley is our guest.
The Weekly Top Three continues.
Final segment for today.
Um, and uh, it's uh all about,uh, some of these articles, brad
.
Uh well, you gotta have skin inthe game, you know, you gotta.
You gotta put up or shut up,you gotta.
(36:46):
You know all these kind ofphrase phrases that we see here,
um, and and of course, theynever account for.
Uh like, tell me how thecutting the pfd isn't skin in
the game.
Tell me how losing out on theeconomy isn't skin in the game.
Tell me how all this stuffworks, but this is the
phraseology that's being used.
What uh give me?
(37:06):
Your, your thoughts here onskin in the game here.
Speaker 1 (37:09):
Well, charles bettisworth, who's a?
Who's a well-known fairbanks uh, and well-respected for good
reason, a Fairbanks businessman,wrote an op-ed in the Fairbanks
News Minor, the title of whichis if you want to invest in the
business of Alaska, you betterhave skin in the game.
And basically what the articleis is we need people who are
(37:35):
actively involved in themanagement of Alaska and to get
their attention.
Basically, we need taxes togenerate the revenues and to
have them start following what'sgoing on in Alaska and start
pushing back on Alaska and startarticulating where they want
(37:57):
better, articulating where theywant Alaska to go, because they
have skin in the game and it'simportant to have skin in the
game to make these investments.
I'm not going to argue withthat point.
I sometimes make the same pointin a different way.
I sometimes make the same pointin a different way when I talk
about if we want to push back onspending, we need to have all
Alaskans, including the top 20percent and the oil companies
(38:21):
and non-resident industries,tourism and fishing.
We need all of them pushingback on spending as well to
achieve that.
And that's sort of a variationon the argument that everybody
needs to have skin in the game.
Skin in the game does cause youto push back in a way that you
haven't before.
But here's where I get offtrack with Bettisworth.
I mean, he talks about thepermanent fund dividend and
(38:44):
essentially says that cuts inthe permanent fund dividend
don't count the skin of the game, um, and and so that's not
generating the type of of ofactivity, that's not generating
the type of of involvement, uh,that he envisions we should be
(39:04):
doing, uh, uh, in order to, inorder to help, uh, help, guide
government, guide government.
If you're, if you're in the top20%, which Bettisworth is,
that's your perspective.
Pfds don't mean much to me.
Cutting them doesn't affect memuch, um, and so they shouldn't
really count as skin in the game.
I need something more real, uh,to get me involved, to make me
(39:28):
involved in government.
I need something more tangible.
I need more of my income atrisk, uh, by what's going on in
government to make me.
To make me involved ingovernment.
I need something more tangible.
I need more of my income atrisk by what's going on in
government to make me getinvolved.
Pfds, cutting PFDs don't reallycount.
Well, that's the top 20%perspective, non-resident
industry perspective, oilcompany perspective.
(39:49):
But when you get to middle andlower income Alaska families,
cutting PFDs takes a significantmaterial share of their income
and does count as skin in thegame.
They are pushing back All thesepeople we hear about, oh you
got to cut government spending.
They're seeing it.
Middle and lower income Alaskafamilies are seeing it, seeing
(40:09):
the impact of not controllinggovernment spending by the
dollars not reaching theirpocket as a result of PFDs being
diverted to pay for government.
The ultimate concern I have isthis Once we sort of use up the
PFD and government consumes allof it, if we get to that point,
(40:34):
then we're going to be facingtaxes and the concern I have is
that government will say well,pfd cuts didn't count for
anything, so you need to paytaxes.
Middle and lower income Alaskafamilies need to pay taxes on
top of that because you haven'thad any skin in the game so far.
You really haven't had anyinvolvement or any impact out of
(40:57):
government spending, so we needto charge you taxes on top of
eliminating your PFD.
You're deeply cutting your PFDto get you involved.
That's not right.
Pfd cuts need to count, shouldcount as skin in the game by
middle and lower income Alaskafamilies.
They are taking, they arediverting enough of the income
of middle and lower incomeAlaska families to make them
(41:20):
involved.
If you talk to middle and lowerincome Alaska families, as I do
a lot, they talk about the factthat PFD cuts have hurt them and
they talk about you knowwhere's that money going.
Is it going to the oil companies?
Is it going to you know, allthese government programs that
have gotten set up?
Is it going to you know all ofthe construction contracts that
(41:41):
have been?
What is it in the AlaskaAirlines Center, at UAA?
I mean, they talk about theskin in the game that they've
given up and where it'stranslated into government.
So I'm going to say, charles,that when lower income families
do have skin in the game, theyhave been talking about these
(42:03):
issues.
You in the top 20 percenthaven't, because it hasn't
affected you.
And yes, I agree that if weneed more revenues, that it
should come out of your hide.
It should come out of your hide, it should come out of the oil
company, it should come out ofthe non-residents, as opposed to
continuing to take more out ofmiddle and lower income Alaska
(42:23):
families, because they'vealready given a significant
share Right.
Speaker 2 (42:27):
They've already given enough blood.
You guys have all the bloodthat's left at this point as a
percentage of your income,because you've run that chart.
I mean the percentage of incomethat the PFD takings have been
in the lower, you know, 40% ofincome earners is anywhere from
you know, 11 to 25% right oftheir full and total income.
(42:47):
It's a huge number compared to1% or less in the upper 5% or
10%.
I mean it's a huge difference.
Speaker 1 (42:56):
It's 0.2% in the top 1% income bracket.
The impact of PFD cuts?
It's not noticeable.
It's like a variation in thestock market didn't go up quite
as high today as we anticipatedthat it would.
But you're right, it ismaterial over 10% when you get
(43:17):
to the middle and lower incomebracket.
So it is.
I guess another way to say it ismiddle and lower income Alaska
families are motivated.
They're ready.
It's the top 20%.
They're ready to get governmentunder control.
It's the top 20%, the donorclass and the oil companies and
(43:40):
the non-resident industries whoare paying either a negligible
amount in the case of the top20%, or none in terms of
increased cost to government inthe case of the oil companies
and the non-resident industries.
They're the ones who are justsort of looking the other way
while government continues togrow and spending continues to
(44:00):
increase.
They need to be motivated.
I agree with that.
But middle and lower incomeAlaska families, they're already
motivated and to discount PFDcuts as a motivation, to
discount that as skin in thegame, I think does a tremendous
disservice to what's going onwith the middle and lower income
Alaska families in that segmentof the Alaska economy.
Speaker 2 (44:24):
It's frustrating to watch because we've been beating
the same drum for so long onthis, and it's just frustrating
to watch.
And the governor has not beenmuch of a help, Although I don't
know if you've watched the lastcouple, the last week or so,
the governor's put out now asecond, like so, two strongly
worded letters where he takespeople to task.
If we'd had a strong governorthis whole time, maybe we could
(44:46):
have helped steer the ship in alittle bit of a different
direction.
Right, it's like all of asudden he's found his anger
switch and he can say thingsthat he wasn't saying before.
I don't know what's going on,but give us we're down to 90
seconds here.
Give us your final thoughts onthis.
Speaker 1 (44:59):
Everything that Dunleavy does is geared toward
his race two years from nowagainst Lisa.
I mean, it has nothing to dowith being a strong governor.
He's gone into campaign modefor his Senate run against Lisa.
So I really I mean, yeah, mike,nice thanks, but it's not
effective and it's not movingthe legislature in the right
(45:20):
direction.
It's just positioning himselfto claim to be something he's
not, which is a fiscalconservative.
It's positioning himself tohave these claims when he runs
against Lisa.
Speaker 2 (45:34):
Well, that's sad.
Thank you for giving me thatpiece of yeah, I mean, it's the
truth, but it is sad to seeYou're right.
I mean I spent all this timeyesterday and I really didn't
even get to that point.
But I mean, here's the governor, you know, railing against all
these things that are going onand I'm like, where has this guy
been for the last four years?
(45:55):
Right, I mean, where's this guybeen?
That's had, it's, it's full offire and brimstone.
Uh, you know, he took theteachers, uh organizations, on
in this latest letter that justcame out, uh, uh, yesterday.
Uh, you know, where was thisguy over the last four years?
Uh, you know, know, taking hisstand and being strong and
everything else.
And you're right, it's sad.
(46:16):
This is all you know.
I didn't look at it through thelens of this is posturing for
the next big race.
I just thought, okay, maybe hejust finally found, you know,
some oomph or something.
It's kind of crazy.
Speaker 1 (46:28):
You may remember, after the last election, when
Governor, when Dunleavy gotreelected you and I had a
conversation about Dunleavy isgoing to come to a decision
point.
Is he going to want to cementhis legacy as governor and do
some hard things to get thestate back on the right
direction, or is he going tostart looking at his next race
(46:52):
and posturing himself for thenext race and not really being
governor but sort of positioninghimself in what he says and
what he does for the next race,which was which elected, to
start positioning himself to goHollywood in a way, to go to
(47:15):
deep, to go DC, if you will, andstart spending a lot of time
out of state?
You know talking about thingsthat that would get him national
recognition and get a nationalfundraising, and not spending
time in the state.
And not spending time.
Try to govern, try to governthe state.
So everything you're seeing nowin these last two years is all
(47:36):
about positioning himself to getto further run against Lisa.
It's not.
He's not trying to govern.
I mean, if he was trying togovern, if he was trying to
establish a legacy, he wouldhave.
He would have handled things alot differently these last two
years.
He's just trying to positionhimself to run against Lisa.
Speaker 2 (48:00):
That's damn it.
I mean, it just is.
So it's just, it's.
It's so tough.
I mean he there was such agolden opportunity here and, and
, and I think he could have.
In my opinion, he could havedone both.
He could have been a stronggovernor and come away with a
legacy and still had strongsupport going into a race
against lisa, but he choseinstead to kind of pander and
play this quiet game in thismiddle ground, maybe in the
(48:22):
hopes of picking up some of themore moderate votes against lisa
or whatever.
But I don't know.
It's just, it's so frustratingto watch.
Speaker 1 (48:31):
I think I think, looking back, the recall scarred
him.
The recall that he had after the, the 2019 budget proposal, uh,
I think the recall scarred himin a way that he, looking back,
he never really wanted to governAlaska from that point forward
because governing it was tootough and he got too much
pushback and he got too many, hegot too much negative response.
(48:53):
So I think I think at that pointhe gave up governing, he ran
for reelection because you knowhe could run for reelection and
he said some things during thatreelection campaign that said,
well, maybe, maybe he's going towant to establish legacy, maybe
he'll come back in and actuallyactually govern.
Turns out, not Turns out.
(49:15):
It was all positioning to goHollywood, to get to DC, to
position himself for nationalfundraising, and that's the way
he's governed ever since therecall.
He's not going to takepositions that get him involved
in another recall, anotherpushback for the recall, because
that's too scarring on his onhis future aspirations.
(49:37):
He wants to sound tough, hewants to write letters that look
tough, but he doesn't want todo the things that are necessary
to get the state's fiscalsituation under control, its
fiscal situation under control.
Speaker 2 (49:52):
Damn it, brad.
I'm just.
You know I'm so hopeful andthen you know, but it's the
truth and that's the worst part.
Go ahead, I'm sorry.
Speaker 1 (50:02):
Well, if you can convince him that actually being
tough improves his odds againstLisa, that might work.
But it's all built around thatcalculus, and that calculus
isn't being made by Alaskans, itisn't being made by anybody in
the governor's office Right.
It's being made by the advisorsthat he's bringing on to run
the Senate race Right AgainstLisa.
(50:24):
So it's not, and they don'tknow much about Alaska.
So it's like you know, mike,sound tough, sound like a fiscal
conservative, but don't doanything.
That gets the pushback like arecall again, yeah, again.
Speaker 2 (50:36):
Yeah, we see what's happening at the national level.
We just spent a whole segmenttalking about.
You know the kind of themadness that's happening there.
We see what's going on at thestate level.
(50:57):
One point, I mean you kind ofsaid, well, if the permanent
fund goes, I mean if we have abillion dollar deficit, brad,
there is no permanent fund.
Right, I mean that's a bigchunk of that billion dollars is
what's left of the permanentfund?
This is what we're facing inthe near future.
We're facing, basically,financial catastrophe for both.
We got about a minute here aminute and a half.
Speaker 1 (51:06):
Well, you're talking about the permanent fund
dividend.
There won't be a permanent funddividend.
There'll still be a permanentfund, unless Devin and his crowd
managed to run it into theground, but there won't be a
permanent fund dividend.
And so the legislature hasfigured out the legislature, who
also doesn't want to make hardchoices the legislature's
figured out that they won't getpushback from the top 20%.
(51:27):
They won't get pushback fromtheir donor class.
Zach Fields is a perfect exampleof this.
They won't get pushback as longas they take all the money from
the permanent fund dividend, aslong as they take it from
middle and lower income Alaskafamilies, because those are
people who don't have voices,they don't have money to give to
a campaign, so they'll continuetaking it from them as opposed
to taking it from the donorclass.
(51:48):
And so, yeah, that'll, that'llbe, that'll be what goes Um, and
we'll see what happens beyondthat.
Uh, uh.
But Bettisworth has alreadytried to set up the argument
that, oh, permanent funddividend cuts don't count.
So we can have, you know, avery regressive sales tax, for
example, to raise revenue thatcontinues to shove the burden
(52:09):
off on middle and lower incomeAlaska families.
That's one of the next fights.
Speaker 2 (52:14):
This is what you and I have been worrying about for
so long is that if we don't talkabout the type of taxation,
they're going to force it downour throat and say now it's time
for you to pay your fair share.
We know the PFD is gone, butthat doesn't count right.
Speaker 1 (52:25):
That's what's happening, that's right.
Speaker 2 (52:27):
Brad Keithley, Alaskans for Sustainable Budgets
.
My friend, I wish you a veryhappy week of music and fun.
Enjoy yourself, okay.
Speaker 1 (52:33):
You deserve it.
Thank you, michael, Iappreciate it.
I'll see you next week.
Speaker 2 (52:37):
All right, thanks so much.
Speaker 1 (52:39):
Well, that's a wrap for another week's edition of
the Weekly Top Three fromAlaskans for Sustainable Budgets
.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
SoundCloud, Spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
This has been Brad Keithley,Managing Director of Alaskans
(53:01):
for Sustainable Budgets.
We look forward to you joiningus again next week on the Weekly
Top Three.
Thank you.
Hi, this is Brad Keithley, managing Director of
Alaskans for Sustainable Budgets.
Welcome to the weekly top threethe top three things on our
mind here at Alaskans forSustainable Budgets for the week
of June 30th 2025.
The weekly top three is aregular segment on the Michael
Duke Show.
(00:28):
The show broadcasts on bothFacebook Live and YouTube Live
as well as via streaming audiofrom the show's website.
Weekdays from 6 to 8 am.
I join Michael weekly in thefirst hour of Tuesday's show
from 6 10 to 7 am for adiscussion between the two of us
about our three issues.
We post the podcast of ourdiscussion following the show on
(00:51):
the Alaskans for SustainableBudgets Facebook, youtube,
soundcloud, spotify and Substackpages, also on the Alaskans for
Sustainable Budgets website, aswell as the projects page on
national blog site mediumcom.
You can find past episodes ofthe weekly top three also at the
same locations.
Keep in mind that, in additionto these podcasts during the
(01:16):
week, you can also follow andparticipate in the discussion
with us of these and otherissues affecting Alaska's fiscal
and economic condition byfollowing us on the Alaskans for
Sustainable Budgets Facebookpage and through our posts on
Twitter.
This week, our top three issuesare these First, we discuss the
(01:37):
hypocrisy of what Alaska leadersare doing at home compared to
what they say at the nationallevel are doing at home compared
to what they say at thenational level.
Second, we look at the returnsthe Permanent Fund Corporation
is earning compared to its ownbenchmarks and other
alternatives, something the PFCseldom does in its op-eds and
press releases.
And third, we discuss why PFDcuts should be counted as skin
(02:03):
in the game in the same way astaxes.
And now let's join Michael.
Speaker 2 (02:10):
All right, brad.
Well, let's dive into it.
You got some good stuff today,some stuff that I just I mean, I
continue to shake my head at.
But we're going to get started,and we're going to start off
with one of our favorite topics,which is the hypocrisy that
happens in Alaska every singleday.
It's astonishing.
So get us started here.
Speaker 1 (02:31):
Well, what triggered me was the op-ed that Bryce
Edgeman and Kathy Giesel wrotein the New York Times to try to
motivate Lisa Murkowski tosupport maintaining Medicaid and
SNAP food stamps benefits asthe national bill went through.
(02:53):
And Giesel and Edgeman'seditorial was this long screed
about how Alaska couldn't livewithout Medicaid and SNAP, that
it would have all sorts of badeffects on Alaska and on Alaska
middle and lower income Alaskafamilies, non-alaska villages,
(03:15):
and that the federal governmenthad to maintain those programs
at full speed, at least forAlaska, or else Alaska would
basically just crumble and blowaway.
And as I read through this,well, there was a similar op-ed
(03:36):
in the ADN by RepresentativeMina Genevieve Mina that the
headline of which was Alaskanswill lose under proposed SNAP
and Medicaid cuts.
It was just a sort of a fullbore editorial onslaught by
those in the legislature aboutthe horrors of the federal
government cutting back on thosepayments to Alaska.
(03:56):
And as I read it I justcouldn't.
I just couldn't restrain myselfjust laughing at the hypocrisy
that that Edgman and and andGiesel and Mina and others who
have commented others from thelegislature who have commented
on this were displaying families.
(04:17):
Why are they using the revenuemeasure at home?
Why, when they're at home, whyare they using the revenue
measure that has the largestadverse impact on middle and
lower income Alaska families?
Why are they using the revenuemeasure that, of all of the
(04:38):
alternatives, is by far the mostregressive, the most costly to
Alaska families?
Why are they using what MattBerman Professor Matt Berman
from ICER calls the mostregressive tax ever proposed?
Why are they using that at homeif they're so concerned about
middle and lower income Alaskafamilies and the answer is
(05:00):
they're not, they're reallythey're not concerned about
middle and lower income Alaskafamilies.
What they're concerned they'rereally they're not concerned
about middle and lower incomeAlaska families.
What they're concerned about ismaintaining these federal
government programs that targetcertain categories of that,
certain subsets of middle andlower income Alaska families,
(05:21):
that target them for federalbenefits, and what they're
concerned about is that, ifthose federal programs are taken
away, that they are then goingto have to confront spending
state money to maintain thoseprograms and cutting state money
back from other programs thatthey favor.
(05:43):
So it is not about middle andlower income Alaska families.
It is not about maintaining thefabric of Alaska's social
system.
I think, as one of these op-edssaid, it is about maintaining
federal government programs inorder to preserve state money
for other spending elsewhere,and the hypocrisy of them
(06:08):
standing on going on the NewYork Times and talking about
this was just rich.
Now let me say this also thatthe hypocrisy isn't confined
just to one side, isn't confinedjust to the liberal side on
this, isn't confined just to theliberal side on this.
Both Governor Dunleavy andSenator Sullivan have talked
about how wonderful the One BigBeautiful Bill is and how we
(06:33):
ought to support the One BigBeautiful Bill.
In response to the op-ed in theNew York Times by Giesel and
Edgman, dunleavy posted onTwitter, issued a press release
or something, talking about howwe ought to support the
president, ought to support theone big beautiful bill.
Well, the one big beautifulbill puts the federal government
(06:54):
more in debt $3 trillionadditional in debt over the
10-year cycle and increases theamount of national debt and the
amount of the percent ofnational debt as a share of the
economy going forward.
It expands the one bigbeautiful bill expands the debt
(07:19):
limit by $5 trillion.
Put that in perspective, thecurrent debt's about $35
trillion, so it expands the debtlimit by an additional $5
trillion about a seventh of theexisting debt in one fell swoop.
That's the biggest increase inthe debt limit that we've ever
(07:41):
seen in any legislation, thedebt limit that we've ever seen
in any legislation, and it'snecessary in order to make room
for this increase in nationaldebt that's going to be caused
increase in deficits andincrease in national debt that's
going to be caused by the onebig beautiful bill.
So there's hypocrisy going on onboth sides.
Dunleavy talks about himselfbeing a rock-solid fiscal
(08:05):
conservative.
Solomon talks about himselfbeing a rock-solid fiscal
conservative, yet they'resupporting a bill that
substantially increases both thenational debt and the debt
limit.
So the hypocrisy from bothsides is just sort of astounding
.
It starts with Geisel andEdgeman railing on about how
(08:29):
this is going to destroy theAlaska social fabric, when they
themselves have done a lot todestroy the Alaska social fabric
by cutting PFDs.
But it extends over to theright as well, with the governor
and and Senator, senatorSullivan, and we'll see.
The latest rumor out of DC isSenator Murkowski's reached a
(08:51):
deal to preserve Medicaid forAlaska and then she's going to
vote for the bill.
So she's going to vote for thedebt increase as well.
So we'll see if it extends toMurkowski as well.
But the hypocrisy is justrunning rampant on both sides of
the aisle over this.
Speaker 2 (09:06):
Well, and you know, what I found most interesting is
that both in the New York Timesarticle and in the article from
Genevieve Mina, they bothreferenced the fact that you
know talking about Medicaid inAlaska and the fact that one
third of I mean they come rightout and admit it, One third, one
in three Alaskans are onMedicaid in one form or another
(09:29):
and they see absolutely nothingwrong with the fact that that's
where it's at, Like, it's, it's,it's a normal thing and we
should be a dependency state.
I mean, that's, that's a bigthing.
And then, as you said, on theother side and this has always
been my problem with Republicansin Congress, and you know this
(09:49):
is where I've said that bothparties are really to blame for
everything, at both the stateand the national level, they
have, you know, they'll say thisis the only way, while they
increase and spend us intooblivion.
There is no fiscal restraintanymore, it's.
I was talking with JD Tuchelifrom Reason Magazine last week
and we both were were the samemind, came to the same
(10:11):
conclusion they're going todrive us bus off the cliff one
way or the other and it just Imean, they're just not, they're
not slowing down.
All the warning signs are therethe klaxons, the bells and
whistles, the big billboards,you know bridge out ahead, and
it just doesn't matter.
They're just going to keepgoing until we reach the end.
It just doesn't.
It doesn't matter.
Either they don't believe it orthey just don't care, as long
(10:35):
as they get theirs between nowand then.
Speaker 1 (10:37):
That's.
That's the key, michael.
I mean as long as they gettheirs.
Between between now and then, Imean the House bill increased
the deficits, increased thelong-term deficits, increased
the national debt and so it wasproblematic when it came out of
the House, the Senate.
If you look at the Committeefor Responsible Federal Budget
(10:58):
Analysis, the Senate isincreasing deficits, the
deficits and the national debtbeyond what the House did.
It'll be interesting to see whenthis goes back to the House, if
it gets out of the Senate.
It'll be interesting when itgoes back to the House what the
response of the House FreedomCaucus is, because they have
(11:18):
said all along that they went totheir absolute limit.
They were pushed to theirabsolute limit.
Chip Roy and others said theywere pushed to their absolute
limit.
Chip Roy and others said theywere pushed to their absolute
limit in the amount of deficitsand national debt that was
coming out of the House bill.
They would not stand foranother dime.
It goes over to the Senate, getslarded up even more with more
(11:40):
tax breaks that reduce revenue,with more spending that
increases spending and withhigher deficits.
It'll be interesting to seewhen it comes back over to the
House what they do.
I mean the MO so far is thatthe fiscal conservatives have
(12:00):
talked a good game but when pushcomes to shove they wilt and
they vote for the bill.
Ron Johnson, over on the Senateside, senator Ron Johnson from
Wisconsin said you know heabsolutely would not vote for
increases, for increasing thedeficit.
He absolutely thought that thisbill was wrong and that he
(12:23):
didn't see how to get cleared byJuly 4th.
There need to be a lot of workto get the to reduce the deficit
impact of the bill.
Yep.
Last night he caved.
Speaker 2 (12:32):
Right, he reversed his vote.
Yeah, no, it's.
It's interesting to watch.
We're rapidly approaching thatpoint to where we're not going
to be able to pull out of thenosedive because we just don't
have enough glide path left todo that, which is unfortunate,
especially since we can see itcoming and we know, and it would
be one thing to be, like I'vesaid many times, not on the
(12:53):
train eating popcorn watching itgo over the tracks.
Unfortunately, we're in thesecond car right behind the
locomotive watching it go overthe tracks, and that's a whole
different, that's a wholedifferent deal.
Speaker 1 (13:03):
And it's not like.
It's not like there aren'tpeople out there sticking to
their position.
Rand Paul is sticking to hisposition.
He's a no vote.
He said he's a no vote allalong and his point is the
increase in the debt limit by $5trillion.
So it's enough to stuff thisbill in and then they continue
(13:25):
spending on top of the continueddeficits, on top of that.
So I mean, rand Paul has put astake in the ground and stands
with it.
It's people like Sullivan andDunleavy and Ron Johnson and
others who are just wanderingoff the reservation.
Speaker 2 (13:39):
You know this has been part of the problem, Brad.
Overall, you know we had hopedthat Doge would take a bigger
bite out of government spendingthan it has.
I mean, they did find somestuff, there's no doubt about it
but it just didn't go farenough.
It didn't go as far as theAmerican people wanted and it
was all the pushback of thepowers that be Washington, the
(14:02):
establishment, the bureaucracy.
It was a continual fightagainst it.
And again we've had all thewarnings.
We have all the warning signsthat the bridge is out and we
have to slow down.
And even now the Republicans andI know that this is drawing
some ire from the listeners whenI say that but this bill is not
(14:23):
great Let me just say that itis not great.
Is it better than somethingthat maybe Kamala Harris would
have come up with?
Absolutely, I mean.
I'm not saying that it's not,but it's not great.
And now we've even lost anyother reason, now that they
stripped out all the gun stuffand everything else.
I've lost any interest in, youknow, in this thing really
(14:45):
moving forward, because againit's $3 trillion in costs.
No matter how they try and runthe accounting on it, it's still
$3 trillion and it increasesthe debt and we're not facing
the reality that we just can'tspend what we don't have.
Speaker 1 (15:01):
Yeah, and the thing, the thing to keep to keep
focusing on and I publish thesenumbers every Sunday morning the
thing to keep focusing on iswhat's going on with the pricing
of the bonds, government bonds,Government bonds used to be 2%
or 1% or 2 and a fraction, butnow they're consistently over 4%
(15:23):
and that's an indicationagainst inflation of about 2%.
So you're pricing in asignificant premium.
These downgrades that the UShas had, they're reflective of
the problem.
They're not creating theproblem.
They're reflective of theproblem, and the problem is that
(15:44):
the risk premium that is nowbeing demanded in US government
bonds is significant, and soyou've got the fact that you're
paying that in interest.
Interest now outstrips the costof interest, now outstrips the
(16:07):
defense spending, and so whatwe're going to find is more and
more.
A not insignificant part of thereason for the $5 trillion
increase in the debt limit isnot as much spending in some of
the three point.
Whatever it is.
Trillion increase in the10-year deficit as a result of
(16:31):
this bill is not solely confinedto increased spending.
It's increased interest coststhat are coming from the jump
from 2% to 4%.
So as that continues to workthrough, costs continue to go up
.
Speaker 2 (16:45):
We're going to spend $1.2 trillion on debt service
this year.
$1.2 trillion fully almost aquarter of our revenue on debt
service.
That's when you should reallyknow that there's a problem
going on.
Brad Keithley, alaskans forSustainable Budgets, is our
guest and we are ready to jumpinto number two, which has the
(17:07):
PFC.
The Permanent Fund Corporationis now back in the news patting
themselves on their own backdoing a great job.
That's what they say.
Speaker 1 (17:19):
Brad, what do you got here for me?
So let's set the basics here,because I think it's
increasingly important tounderstand the difference here.
The permanent fund is a bunchof money, is a bunch of
investments.
That.
It is a pot of money.
The permanent fund corporation,which is what I'm going to be
(17:40):
talking about mostly here, thepermanent fund corporation is
the manager of that fund.
It's like your personalinvestment manager.
They're the ones responsiblefor managing the fund.
Permanent fund corporation isset up by the constitution.
The board members are appointedby the governor.
It is a government body, butwhat it's doing is managing the
(18:04):
fund.
The fund can be managed in alot of different ways.
That pot of money can bemanaged in a lot of different
ways, some bad, some good.
But it's the permanent fundcorporation that's making the
decisions on how to manage it,manage it.
So this past couple of weeks, orthis past week, we've had a
couple of promotional piecespublished by the permanent fund
(18:25):
corporation about how great ajob they're doing.
One appears in Must Read Alaska.
The headline is like a headlineearlier well, last month now,
since this is July 1st.
But it's another headline saysAlaska Permanent Fund sets
another new all-time high.
Second time month is themust-read piece, which basically
(18:49):
is just a regurgitation of apress release issued by the
Permanent Fund Corporation.
And then Devin Mitchell, who'sthe executive director of the
Permanent Fund Corporation, themanager of the investments made
by the Permanent Fund or how thepermanent fund is used, wrote
an op-ed piece that is appearingin all the state's papers.
(19:10):
This particular one that I'vegot up in front of me is from
the Alaska Beacon, but it's alsoin the ADN, even down in the
Ketchikan Daily News.
The title of it is the Key to aStronger Alaska Permanent Fund
is Diversification.
Is the key to a stronger Alaskapermanent fund is
diversification, and Devin alsoreferences the fact that the
(19:33):
permanent fund is at a higherlevel than it has been
previously.
But what neither of thesearticles do is talk about the
returns that the permanent fundcorporation is achieving on its
management of the permanent fundand compare those returns to
either the benchmarks that thepermanent fund corporation
itself has set up or extrinsicexternal methods of looking at
(19:58):
what the permanent fund, how thepermanent fund corporation is
performing, looking at variousmeasures in the market.
So we are doing that.
Alaskans for SustainableBudgets are doing that.
Sustainable Budgets are doingthat on an ongoing basis.
And so let's look at thosenumbers.
Let's flip to the other onefirst.
Let's take this one second.
(20:19):
Let's look at those numbers ofhow the Permanent Fund is doing.
This is a chart that we do thatlooks at the permanent fund,
the returns achieved by thepermanent fund in the left-hand
column and then the returnsachieved by the S&P 500,
(20:39):
investing in an S&P 500exchange-traded fund in the
second column.
The total fund return objectiveis the objective necessary to
produce the 5% earnings aboveinflation, the 5% earnings that
are being used to calculate thePOMB.
So it's the amount necessary togenerate the returns necessary
(21:05):
to fund the POMB and make surethe POMB is staying on the
positive side.
And then on the right-handcolumn there's other PFC
benchmarks, that, otherbenchmarks that the Permanent
Fund Corporation establishes,and they are one of those.
The passive index benchmark isone I'll talk about in a second.
(21:26):
But consistently, if you look atthese numbers, what you're
seeing is the permanent fund isearning returns that are below
not only what the marketcalculations are, own benchmarks
are telling it it should beearning and below what's
(21:49):
necessary to pay for the POMVdraw on an ongoing basis.
If you look at down toward thebottom you'll see a line that
says right above the gray thatsays FY25 fiscal year.
To date, through the end of May, you'll see the PFCs earned a
return of 6.59%.
(22:09):
Over that same period, the S&Phas earned a return of 9.39%.
The total fund return objective, the amount necessary to fund
the POMB, is 6.8989 more thanwhat the permanent fund earned.
The performance benchmark thebenchmark that the permanent
(22:30):
fund itself, permanent fundcorporation itself, has set up
to measure how it's doingcompared to its peer groups,
peer investors 6.64% more thanwhat the permanent fund's
earning.
And if you look at the passiveindex benchmark which is, what
if we just put all this onautopilot?
(22:50):
What if we just invested it inpassive investments that we
don't have to day-to-day manage,we don't have to spend a lot of
money to manage.
They just sort of work onautopilot.
Even looking at the passiveindex benchmark that the
permanent fund uses as their ownbenchmark, they get to pick
(23:11):
their benchmarks.
They use this one.
It's 9.6%, fully 3% more thanthe permanent fund's earnings.
If you look at the averages, thefive-year average, the
permanent fund's earning less.
The permanent fund corporationis earning less on the permanent
fund than the S&P 500 would.
It's earning less than what'snecessary, than the total fund
(23:34):
return objective, what'snecessary to fund the POMB on a
five-year basis.
It's earning a little bit morein the performance benchmark and
the passive index benchmark ona five-year basis.
But if you look at thethree-year average and the
one-year average, the rolling 12months to date, the Permanent
Fund Corporation is behind,seriously behind, not only the
(23:57):
Vanguard S&P 500, the ETF, butalso behind what's necessary to
fund the POMB, behind what theperformance benchmark they used
use and behind the passive indexbenchmark.
And that continues on throughthe one year average.
So what?
What they carefully, what thesepress releases carefully talk
(24:19):
about is, yes, we've hit a highand yes, we're doing great on
our, on our, on our investmentstrategy, according to Devin.
But they don't talk about thesereturn numbers and you can see
by these return numbers theyaren't doing very well.
Keep in mind the passive indexbenchmark and let's flip over to
the second slide.
This is the one that reallydrives me crazy.
(24:43):
This is a calculation of howmuch the permanent fund
corporation is spending in orderto manage the permanent fund
spending on its management andits fees compared to the passive
index benchmark, what it wouldbe earning if it wasn't managed,
(25:07):
if it wasn't engaged in thisactive management.
And you can see consistentlyover the last period of time
that the permanent fund, evenafter spending all this money,
the permanent fund is earningless than it would earn if it
put the permanent fund onautopilot, used the passive
(25:32):
index.
It's spending and thecalculations I don't have them
on here but it's spending $880million, nearly a billion
dollars, on management and fees.
1% we have the percentagesunder the column management
incentive fees is spendingnearly 1% annually, nearly 1% of
(25:54):
the funds to produce of thepermanent fund to produce
returns that are less than whatit would produce if it didn't
have management at all, if itwas using the passive index
benchmark.
So it's spending a percent toearn less.
It's spending $880 million toearn less than it would if it
(26:20):
didn't have all this managementand all this diversification
that Devin talks about.
We've calculated what that is,what the return on the fees is.
Then If you look at how muchreturn they're getting out of
these fees for the last twoyears the 2023 and 2024, and so
(26:42):
far, 11 months through the or ona rolling 12-month basis
through the end of the thirdquarter, these are numbers
through the third quarter,through March, and you look at
on a rolling 12-month basisthrough the end of March,
they're earning a negativereturn on the fees they're
(27:02):
spending.
The fees aren't even gettingthem back to break even with
what they would earn against thepassive benchmark.
They're earning less than whatthey would against the passive
benchmark.
So we're spending a ton ofmoney, spending $880 million a
year, spending a percent of thepermanent fund corpus.
However you want to measure it,however you want to measure it,
(27:29):
we're spending a ton of moneyto get substandard returns that
are less than what we would getout of a passive index approach.
So when you see these op-eds bythe permanent fund, oh, we're
higher than ever.
Well, yeah, you're higher thanever, but you would be much,
much higher.
We'd be at $120 billion if weinvested in the S&P, for example
(27:51):
.
Even a blind hog finds an acornevery once in a while, or
whatever the phrase is.
Yes, you're increasing some,but you're not increasing.
You're not producing thereturns anywhere near what you
would be producing, even if youuse your own passive index
benchmark and shut down all ofthis management that you're
(28:13):
claiming is necessary to run thefund.
What's happened is thepermanent fund corporation is
turned into a bureaucracy, aself-sustaining bureaucracy who
gets to pick what it spends,what it spends on what it does,
and whose fund managers get paidsort of regardless.
And it's just turned intoanother government bureaucracy
(28:35):
that's producing substandardresults, significantly
substandard results.
And so when you look at thefuture of the permanent fund, if
you listen to the PFC, oh, it'sgoing to keep going up.
Yeah, it's going to keep goingup a little bit.
I mean, even the blind hogfinds the acorn but it's not
going up at the rate the marketgenerally is going up or what it
(28:57):
would be going up even if youuse the passive index approach
and you took out all of themanagement.
So these articles are nice puffpieces.
But when you look at them andyou took out all of the
management, so these articlesare nice puff pieces.
But when you look at them andyou don't see hard numbers about
the returns that the permanentfund is achieving, that's a red
flag that something's going on.
They don't want to talk aboutit because the numbers prove
(29:20):
they aren't doing a job that'sadequate even to the passive
index benchmark.
Speaker 2 (29:27):
And I think it's interesting that the news media,
all news media, nobody isasking this question.
You know, nobody is asking thisquestion.
Nobody is looking at the S&P,the Vanguard 500, and saying,
well, sure, it's a little bitmore volatile, but in the long
run it's pulling double theaverages that the permanent fund
has been pulling.
In and of itself it may lose alittle bit more in the short
(29:50):
term, but it always gains alittle bit more in the long term
.
I mean it's doing double thenumbers that we're seeing in the
managed fund.
Why are we spending all this?
I mean we had the commentarythe other day about the Harvard
Endowment Fund.
It's pulling a nine pluspercent return and it's just
running off the S.
(30:11):
Why are we spending a billiondollars a year managing a fund
that's getting us a lesserreturn?
Speaker 1 (30:18):
And the answer is we're doing it because the
Permanent Fund Corporation hasturned into a bureaucracy and
it's really.
There's no control over thepermanent fund corporation.
The governor appoints the board.
The board members don't evenhave to be approved by the
legislature.
The government appoints, thegovernor appoints the board, and
the board members he'sappointed are political
(30:38):
appointees, not investmentspecialists that you find in
other states.
So we're producing very subparreturns on an asset that we
desperately need to be producingvery healthy returns on.
Speaker 2 (30:54):
Brian asked the question.
Is anyone in the Juneau ClownPosse raising their oversized
gloved hand to ask about the PFCquestion?
And no, nobody's talking aboutthis.
Nobody is.
Brad is the only person that Ihave seen that has talked about
the returns on the permanentfund, and you can see the
numbers right there in black andwhite folks.
(31:14):
Look at the 10-year average7.9% is what the fund has been
returning.
The S&P is almost 15% and evenwhen you look at the five-year
average, down at the bottom,nine and a half to almost 16,
five and a half to almost 14.32%that's almost three times in a
three-year average what the P ofthe Permanent Fund Corporation
(31:38):
has been returning.
But nobody's talking about this.
They kept saying oh, we want itto be $100 billion and then
everything will be okay.
Well, it could have been $120billion and yet here's where we
sit.
Speaker 1 (31:50):
Yeah, the problem, michael?
I mean, interestingly enough,we're leaving more money on the
table in the permanent fund interms of permanent fund returns.
We're leaving more money on thetable than we are with oil
taxes.
We're leaving more than, if youlook over the next 10 years,
we're going to have more moneyleft behind by inadequate
(32:16):
permanent fund returns than weare going to have left behind by
substandard oil taxes.
But the problem is you have tounderstand numbers and you have
to build a spreadsheet and youhave to look at the return,
because the permanent fundcorporation really isn't doing
that for you.
Uh, I mean, they put out amonthly report, uh, but you have
(32:37):
to sort of parse through themonthly report to understand
relative numbers and weevidently don't have anybody in
Juneau, or have few in Juneau,that will dig into the numbers
and understand.
It's easy to castigate oilcompanies oh, oil companies
aren't paying their fair share.
Oh, oil companies aren't beingfair to Alaska.
(33:00):
Oh, we need to get more out ofoil companies.
It's easy to do that on apolitical level.
It's harder on a politicallevel to actually go through the
numbers, understand the returnsand say, oh, our own permanent
fund corporation has turned intoa bureaucratic nightmare that's
producing these inadequatereturns, and so you have to
understand the numbers to beable to say that, and people, as
(33:23):
you know, just aren't digginginto the numbers.
Speaker 2 (33:30):
Yeah, and that's a real problem.
I mean, we're, like you said,leaving tons of money on the
table with no other answers andnobody else is bothering to
bring this up.
I brought it up.
I brought it up to BridgetWilson's campaign people I don't
know if they've reached out toyou or not, I don't know if
they've reached out to you ornot, but I mean I why?
(33:53):
Why aren't more people askingit?
Why isn't Suzanne Dowlingasking it?
Why isn't it, you know, natHerz or or James Brooks or
somebody at the?
You know, why aren't thesepeople asking this question?
I mean, you've been out theretalking about it long enough.
We've been talking about thisfor 10 months now, I think is
when you first brought this up10 months, a year ago.
We've been talking about it thewhole time.
Why are we?
(34:13):
You know, why is nobody elseasking this question?
Speaker 1 (34:17):
Cause you have to dig into the numbers and people you
know it's easier to numbers.
Speaker 2 (34:22):
I'm just going to say you've done the math for them.
They can look at that and workbackwards from that.
They don't have to spend 15hours pulling the numbers out.
They could spend an hourconfirming the numbers that you
pulled out, right?
I mean, you've already done thehard work.
I just don't understand this.
Speaker 1 (34:37):
Yeah.
Well, it's a mystery to me too.
But you get the op-eds that sayI mean they're able to say, oh,
it's higher now than it's everbeen.
Well, yeah, it's higher nowthan it's ever been.
It could have been 50% higherif you would have invested it
right, yes, it is higher.
Blind hog finds an acorn.
You've struggled up a littlebit but you could be much higher
(35:00):
.
It's easy to say these thingsthat Suzanne picks up on.
Or it's easy to write the op-edthat Devin wrote about oh,
we've diversified the funds toprotect against risk and we
wouldn't want to do anythingthat's risky, even has a little
bit of risk.
We want this solid, secure.
It's solid mediocrity.
(35:21):
What they've made permanent,what they've done is make sure
they're mediocre on a permanentbasis.
This broad diversificationinvestment program they've been
on makes sure that everythingcancels out everything else and
it just stays.
You know, sort of flat lines interms of, in terms of returns
(35:42):
over time Doesn't, doesn't evenkeep up with the with the POMV
draw over time, doesn't keep upwith their own passive index
over time.
But, but you know it, it's notvery variable, it just sort of
flatlines across time.
And so he writes this op-edthat talks about oh you know, we
just diversify our protectionagainst risk.
Tell me about your returns.
(36:03):
Tell me about your returnscompared to even your own
passive index.
Tell me about your returnscompared to the OMB draw.
Tell me about the returnscompared to the OMV draw.
Tell me about the returnscompared to market measures like
S&P 500.
Nobody asked him to do that.
They just all sort of accept.
Oh yeah, diversification.
Okay, we accept being mediocre.
Speaker 2 (36:25):
It's like more buzzwords.
That's all it is is morebuzzwords.
Brad Keithley is our guest.
The Weekly Top Three continues.
Final segment for today.
Um, and uh, it's uh all about,uh, some of these articles, brad
.
Uh well, you gotta have skin inthe game, you know, you gotta.
You gotta put up or shut up,you gotta.
(36:46):
You know all these kind ofphrase phrases that we see here,
um, and and of course, theynever account for.
Uh like, tell me how thecutting the pfd isn't skin in
the game.
Tell me how losing out on theeconomy isn't skin in the game.
Tell me how all this stuffworks, but this is the
phraseology that's being used.
What uh give me?
(37:06):
Your, your thoughts here onskin in the game here.
Speaker 1 (37:09):
Well, charles bettisworth, who's a?
Who's a well-known fairbanks uh, and well-respected for good
reason, a Fairbanks businessman,wrote an op-ed in the Fairbanks
News Minor, the title of whichis if you want to invest in the
business of Alaska, you betterhave skin in the game.
And basically what the articleis is we need people who are
(37:35):
actively involved in themanagement of Alaska and to get
their attention.
Basically, we need taxes togenerate the revenues and to
have them start following what'sgoing on in Alaska and start
pushing back on Alaska and startarticulating where they want
(37:57):
better, articulating where theywant Alaska to go, because they
have skin in the game and it'simportant to have skin in the
game to make these investments.
I'm not going to argue withthat point.
I sometimes make the same pointin a different way.
I sometimes make the same pointin a different way when I talk
about if we want to push back onspending, we need to have all
Alaskans, including the top 20percent and the oil companies
(38:21):
and non-resident industries,tourism and fishing.
We need all of them pushingback on spending as well to
achieve that.
And that's sort of a variationon the argument that everybody
needs to have skin in the game.
Skin in the game does cause youto push back in a way that you
haven't before.
But here's where I get offtrack with Bettisworth.
I mean, he talks about thepermanent fund dividend and
(38:44):
essentially says that cuts inthe permanent fund dividend
don't count the skin of the game, um, and and so that's not
generating the type of of ofactivity, that's not generating
the type of of involvement, uh,that he envisions we should be
(39:04):
doing, uh, uh, in order to, inorder to help, uh, help, guide
government, guide government.
If you're, if you're in the top20%, which Bettisworth is,
that's your perspective.
Pfds don't mean much to me.
Cutting them doesn't affect memuch, um, and so they shouldn't
really count as skin in the game.
I need something more real, uh,to get me involved, to make me
(39:28):
involved in government.
I need something more tangible.
I need more of my income atrisk, uh, by what's going on in
government to make me.
To make me involved ingovernment.
I need something more tangible.
I need more of my income atrisk by what's going on in
government to make me getinvolved.
Pfds, cutting PFDs don't reallycount.
Well, that's the top 20%perspective, non-resident
industry perspective, oilcompany perspective.
(39:49):
But when you get to middle andlower income Alaska families,
cutting PFDs takes a significantmaterial share of their income
and does count as skin in thegame.
They are pushing back All thesepeople we hear about, oh you
got to cut government spending.
They're seeing it.
Middle and lower income Alaskafamilies are seeing it, seeing
(40:09):
the impact of not controllinggovernment spending by the
dollars not reaching theirpocket as a result of PFDs being
diverted to pay for government.
The ultimate concern I have isthis Once we sort of use up the
PFD and government consumes allof it, if we get to that point,
(40:34):
then we're going to be facingtaxes and the concern I have is
that government will say well,pfd cuts didn't count for
anything, so you need to paytaxes.
Middle and lower income Alaskafamilies need to pay taxes on
top of that because you haven'thad any skin in the game so far.
You really haven't had anyinvolvement or any impact out of
(40:57):
government spending, so we needto charge you taxes on top of
eliminating your PFD.
You're deeply cutting your PFDto get you involved.
That's not right.
Pfd cuts need to count, shouldcount as skin in the game by
middle and lower income Alaskafamilies.
They are taking, they arediverting enough of the income
of middle and lower incomeAlaska families to make them
(41:20):
involved.
If you talk to middle and lowerincome Alaska families, as I do
a lot, they talk about the factthat PFD cuts have hurt them and
they talk about you knowwhere's that money going.
Is it going to the oil companies?
Is it going to you know, allthese government programs that
have gotten set up?
Is it going to you know all ofthe construction contracts that
(41:41):
have been?
What is it in the AlaskaAirlines Center, at UAA?
I mean, they talk about theskin in the game that they've
given up and where it'stranslated into government.
So I'm going to say, charles,that when lower income families
do have skin in the game, theyhave been talking about these
(42:03):
issues.
You in the top 20 percenthaven't, because it hasn't
affected you.
And yes, I agree that if weneed more revenues, that it
should come out of your hide.
It should come out of your hide, it should come out of the oil
company, it should come out ofthe non-residents, as opposed to
continuing to take more out ofmiddle and lower income Alaska
(42:23):
families, because they'vealready given a significant
share Right.
Speaker 2 (42:27):
They've already given enough blood.
You guys have all the bloodthat's left at this point as a
percentage of your income,because you've run that chart.
I mean the percentage of incomethat the PFD takings have been
in the lower, you know, 40% ofincome earners is anywhere from
you know, 11 to 25% right oftheir full and total income.
(42:47):
It's a huge number compared to1% or less in the upper 5% or
10%.
I mean it's a huge difference.
Speaker 1 (42:56):
It's 0.2% in the top 1% income bracket.
The impact of PFD cuts?
It's not noticeable.
It's like a variation in thestock market didn't go up quite
as high today as we anticipatedthat it would.
But you're right, it ismaterial over 10% when you get
(43:17):
to the middle and lower incomebracket.
So it is.
I guess another way to say it ismiddle and lower income Alaska
families are motivated.
They're ready.
It's the top 20%.
They're ready to get governmentunder control.
It's the top 20%, the donorclass and the oil companies and
(43:40):
the non-resident industries whoare paying either a negligible
amount in the case of the top20%, or none in terms of
increased cost to government inthe case of the oil companies
and the non-resident industries.
They're the ones who are justsort of looking the other way
while government continues togrow and spending continues to
(44:00):
increase.
They need to be motivated.
I agree with that.
But middle and lower incomeAlaska families, they're already
motivated and to discount PFDcuts as a motivation, to
discount that as skin in thegame, I think does a tremendous
disservice to what's going onwith the middle and lower income
Alaska families in that segmentof the Alaska economy.
Speaker 2 (44:24):
It's frustrating to watch because we've been beating
the same drum for so long onthis, and it's just frustrating
to watch.
And the governor has not beenmuch of a help, Although I don't
know if you've watched the lastcouple, the last week or so,
the governor's put out now asecond, like so, two strongly
worded letters where he takespeople to task.
If we'd had a strong governorthis whole time, maybe we could
(44:46):
have helped steer the ship in alittle bit of a different
direction.
Right, it's like all of asudden he's found his anger
switch and he can say thingsthat he wasn't saying before.
I don't know what's going on,but give us we're down to 90
seconds here.
Give us your final thoughts onthis.
Speaker 1 (44:59):
Everything that Dunleavy does is geared toward
his race two years from nowagainst Lisa.
I mean, it has nothing to dowith being a strong governor.
He's gone into campaign modefor his Senate run against Lisa.
So I really I mean, yeah, mike,nice thanks, but it's not
effective and it's not movingthe legislature in the right
(45:20):
direction.
It's just positioning himselfto claim to be something he's
not, which is a fiscalconservative.
It's positioning himself tohave these claims when he runs
against Lisa.
Speaker 2 (45:34):
Well, that's sad.
Thank you for giving me thatpiece of yeah, I mean, it's the
truth, but it is sad to seeYou're right.
I mean I spent all this timeyesterday and I really didn't
even get to that point.
But I mean, here's the governor, you know, railing against all
these things that are going onand I'm like, where has this guy
been for the last four years?
(45:55):
Right, I mean, where's this guybeen?
That's had, it's, it's full offire and brimstone.
Uh, you know, he took theteachers, uh organizations, on
in this latest letter that justcame out, uh, uh, yesterday.
Uh, you know, where was thisguy over the last four years?
Uh, you know, know, taking hisstand and being strong and
everything else.
And you're right, it's sad.
(46:16):
This is all you know.
I didn't look at it through thelens of this is posturing for
the next big race.
I just thought, okay, maybe hejust finally found, you know,
some oomph or something.
It's kind of crazy.
Speaker 1 (46:28):
You may remember, after the last election, when
Governor, when Dunleavy gotreelected you and I had a
conversation about Dunleavy isgoing to come to a decision
point.
Is he going to want to cementhis legacy as governor and do
some hard things to get thestate back on the right
direction, or is he going tostart looking at his next race
(46:52):
and posturing himself for thenext race and not really being
governor but sort of positioninghimself in what he says and
what he does for the next race,which was which elected, to
start positioning himself to goHollywood in a way, to go to
(47:15):
deep, to go DC, if you will, andstart spending a lot of time
out of state?
You know talking about thingsthat that would get him national
recognition and get a nationalfundraising, and not spending
time in the state.
And not spending time.
Try to govern, try to governthe state.
So everything you're seeing nowin these last two years is all
(47:36):
about positioning himself to getto further run against Lisa.
It's not.
He's not trying to govern.
I mean, if he was trying togovern, if he was trying to
establish a legacy, he wouldhave.
He would have handled things alot differently these last two
years.
He's just trying to positionhimself to run against Lisa.
Speaker 2 (48:00):
That's damn it.
I mean, it just is.
So it's just, it's.
It's so tough.
I mean he there was such agolden opportunity here and, and
, and I think he could have.
In my opinion, he could havedone both.
He could have been a stronggovernor and come away with a
legacy and still had strongsupport going into a race
against lisa, but he choseinstead to kind of pander and
play this quiet game in thismiddle ground, maybe in the
(48:22):
hopes of picking up some of themore moderate votes against lisa
or whatever.
But I don't know.
It's just, it's so frustratingto watch.
Speaker 1 (48:31):
I think I think, looking back, the recall scarred
him.
The recall that he had after the, the 2019 budget proposal, uh,
I think the recall scarred himin a way that he, looking back,
he never really wanted to governAlaska from that point forward
because governing it was tootough and he got too much
pushback and he got too many, hegot too much negative response.
(48:53):
So I think I think at that pointhe gave up governing, he ran
for reelection because you knowhe could run for reelection and
he said some things during thatreelection campaign that said,
well, maybe, maybe he's going towant to establish legacy, maybe
he'll come back in and actuallyactually govern.
Turns out, not Turns out.
(49:15):
It was all positioning to goHollywood, to get to DC, to
position himself for nationalfundraising, and that's the way
he's governed ever since therecall.
He's not going to takepositions that get him involved
in another recall, anotherpushback for the recall, because
that's too scarring on his onhis future aspirations.
(49:37):
He wants to sound tough, hewants to write letters that look
tough, but he doesn't want todo the things that are necessary
to get the state's fiscalsituation under control, its
fiscal situation under control.
Speaker 2 (49:52):
Damn it, brad.
I'm just.
You know I'm so hopeful andthen you know, but it's the
truth and that's the worst part.
Go ahead, I'm sorry.
Speaker 1 (50:02):
Well, if you can convince him that actually being
tough improves his odds againstLisa, that might work.
But it's all built around thatcalculus, and that calculus
isn't being made by Alaskans, itisn't being made by anybody in
the governor's office Right.
It's being made by the advisorsthat he's bringing on to run
the Senate race Right AgainstLisa.
(50:24):
So it's not, and they don'tknow much about Alaska.
So it's like you know, mike,sound tough, sound like a fiscal
conservative, but don't doanything.
That gets the pushback like arecall again, yeah, again.
Speaker 2 (50:36):
Yeah, we see what's happening at the national level.
We just spent a whole segmenttalking about.
You know the kind of themadness that's happening there.
We see what's going on at thestate level.
(50:57):
One point, I mean you kind ofsaid, well, if the permanent
fund goes, I mean if we have abillion dollar deficit, brad,
there is no permanent fund.
Right, I mean that's a bigchunk of that billion dollars is
what's left of the permanentfund?
This is what we're facing inthe near future.
We're facing, basically,financial catastrophe for both.
We got about a minute here aminute and a half.
Speaker 1 (51:06):
Well, you're talking about the permanent fund
dividend.
There won't be a permanent funddividend.
There'll still be a permanentfund, unless Devin and his crowd
managed to run it into theground, but there won't be a
permanent fund dividend.
And so the legislature hasfigured out the legislature, who
also doesn't want to make hardchoices the legislature's
figured out that they won't getpushback from the top 20%.
(51:27):
They won't get pushback fromtheir donor class.
Zach Fields is a perfect exampleof this.
They won't get pushback as longas they take all the money from
the permanent fund dividend, aslong as they take it from
middle and lower income Alaskafamilies, because those are
people who don't have voices,they don't have money to give to
a campaign, so they'll continuetaking it from them as opposed
to taking it from the donorclass.
(51:48):
And so, yeah, that'll, that'llbe, that'll be what goes Um, and
we'll see what happens beyondthat.
Uh, uh.
But Bettisworth has alreadytried to set up the argument
that, oh, permanent funddividend cuts don't count.
So we can have, you know, avery regressive sales tax, for
example, to raise revenue thatcontinues to shove the burden
(52:09):
off on middle and lower incomeAlaska families.
That's one of the next fights.
Speaker 2 (52:14):
This is what you and I have been worrying about for
so long is that if we don't talkabout the type of taxation,
they're going to force it downour throat and say now it's time
for you to pay your fair share.
We know the PFD is gone, butthat doesn't count right.
Speaker 1 (52:25):
That's what's happening, that's right.
Speaker 2 (52:27):
Brad Keithley, Alaskans for Sustainable Budgets
.
My friend, I wish you a veryhappy week of music and fun.
Enjoy yourself, okay.
Speaker 1 (52:33):
You deserve it.
Thank you, michael, Iappreciate it.
I'll see you next week.
Speaker 2 (52:37):
All right, thanks so much.
Speaker 1 (52:39):
Well, that's a wrap for another week's edition of
the Weekly Top Three fromAlaskans for Sustainable Budgets
.
Thank you again for joining us.
Remember that you can find pastepisodes on our YouTube,
SoundCloud, Spotify and Substackpages, and keep track of us
during the week on Facebook andTwitter.
This has been Brad Keithley,Managing Director of Alaskans
(53:01):
for Sustainable Budgets.
We look forward to you joiningus again next week on the Weekly
Top Three.
Thank you.
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