Alaska
Opinion: A plea to Alaska’s congressional delegation for responsible economic policy
The Trump Administration’s unilateral imposition of tariffs, tax cuts for the rich and elimination of cabinet departments and federal employees invite U.S. economic calamity.
The trade war tariffs will neither reduce U.S. trade deficits nor bring about a renaissance in American manufacturing. Federal government revenue generated by these tariffs will cover only a fraction of the revenue lost to tax cuts proposed in the federal budget bill. The oppressive, indiscriminate federal workforce reductions brought about by the Department of Government Efficiency raise deep concerns about the delivery of immediate critical health, safety and welfare services and longer-term agency function. One would be hard pressed to craft a more irresponsible economic policy. It punishes the poor today and future generations of Americans.
The Trump fiscal plan is corrosive for the U.S. as a whole and disastrous for Alaska in particular. Consider each of these fiscal plan elements in turn:
Trade war
The Trump administration’s heavy-handed tariffs on steel, aluminum, automobiles and other raw materials and finished goods are illegal and will raise the costs of imported cars, equipment, machinery and supplies to American manufacturing firms and ultimately result in higher costs passed through to intermediate goods and end-product consumers. In general, a tariff on imported goods and services amounts to a sales tax levied on domestic, U.S. businesses and consumers. It’s a highly regressive form of taxation, hitting low- and middle-income households the hardest. Right now, the blended ‘sales tax’ rate on all imported goods stands at 17.8 percent, up 15 points from its pre-2025 levels. Since imports are more than 11 percent of GDP, it’s a huge pending inflation uptick to consumer prices, which can already be seen in the recent, steep decline in consumer sentiment. Beyond this, the chaotic, haphazard implementation of tariff policy is acutely counterproductive to business investment because trade policy predictability is the cornerstone of well-managed fiscal policy. This is why federal law does not authorize the president to impose tariffs without congressional approval.
For Alaska commerce, which lies at the very edge of the global logistics, the impact from this hurtful cost structure and supply chain disruption has already fueled business network chaos and American brand destruction. Other damages include 1) weakened crude oil price impacts on state royalty and tax revenue, on Permanent Fund earnings, and on oil company capital project optics; 2) time-critical Alaska seafood market disruption from China and other Asia-Pacific counter-tariff policies; 3) falling tourism bookings and 4) disastrous cost increases on the already budget-stressed Alaska LNG energy lifeline. The ultimate outcome of this trade war for Alaska and American business is higher structural inflation, investment contraction, business slowdown, rising unemployment, climbing interest rates, and widening housing and stock market implosion – all tipping the U.S. and especially Alaska toward a recessionary downward spiral. And all entirely unwarranted and unnecessary.
Federal budget and tax cuts. The proposed “big beautiful” budget bill passed on May 22 by the House of Representatives will deepen federal debt to $40 trillion or to 125 percent of GDP by 2035. In response to this nightmare scenario, Moody’s rating agency lowered the U.S. government’s credit score. The U.S. bond market reacted; yields on medium- and long-term US Treasury bonds spiked yet again. According to CBO estimates, the proposed tax cuts will lower after-tax income to the bottom 40% and raise after tax-income to the richest 10%. In addition to tariff shocks, Alaska household disposable income and business earnings will be impaired by the combined impacts of regressive income taxation and higher interest costs.
Beyond these disturbing policy and market dislocations, the proposed budget bill imposes unconscionable safety net impairment to America’s most vulnerable population, including added work requirements and cuts to healthcare spending ($715 billion), SNAP/food stamps ($300 billion), and Medicare ($500 billion). Alaska’s 279,000 Medicaid recipients (including 109,000 children) would face about $3 billion in uncovered healthcare costs for which no safety net alternative exists.
Department of Government Efficiency actions. Over the past 90 days, DOGE has carried out indiscriminate layoffs of about 280,000 federal employees and contractors without consideration for organizational structure and job function; all in the quest to save money by eliminating waste. The layoffs have extended beyond federal agencies, affecting contractors and nonprofit organizations that rely on federal funding. The ripple effect has led to additional job losses, with over 4,400 positions eliminated in related sectors.
Alaska’s 15,000 federal employees, including about 8,000 military, play a disproportionate role in our economy, both in public service delivery and in disposable income. Alaska’s federal workforce serve in mostly year-round jobs, are among the state’s highest paid workers and, critically, they spend locally. Setting aside diminished quality-of-life, public safety and security, a 15% reduction in Alaska’s federal workforce — well below DOGE 20-30% federal reduction target — would result in direct, devastating $250 million in lost wages to local business spending, based on $1.6 billion in reported Alaska federal workforce earnings in 2024 from Alaska Department of Labor and Workforce Development. Add to this further indirect, additional multiplier losses that would follow in step.
Taken together, the Trump Administration’s tariffs and tax cuts will cause economic chaos and destruction. So far, global tariffs — even those recently scaled back — have resulted in trillions of dollars in U.S. capital market destruction, enormous financial market instability, and the promise of rising inflation with slowing economic growth. President Trump’s faulty perception of tariff ‘medicine’ to fix bilateral trade deficits and to generate new federal revenue is analogous to a physician prescribing heavy chemo doses to a perfectly healthy patient. Furthermore, giving gigantic tax cuts to the wealthiest households is like to prescribing steroids to the now-ailing patient — due entirely to unnecessary and irresponsible tariff poisoning! And DOGE’s reckless efforts have brought disruption and dysfunction to all levels of the federal government’s responsibility for: protecting individual rights, overseeing infrastructure and commerce, and providing a safety net lifeline.
Bottom Line: The Alaska congressional delegation must continue to build the congressional coalitions to accomplish three critical things:
• Assert congressional tariff-making authority and oversight to reign in the president,
• Restore congressional authority for federal program formation and spending, and
• Craft a budget that protects the safety net and keeps guard rails on federal deficit expansion.
Will Nebesky is an economist and pilot who lives in Anchorage.
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Anchorage is commemorating Juneteenth with dancing, music and celebrations of Black excellence and culture this weekend.
The citywide Juneteenth celebration also includes opportunities for education, community gathering and reflection, and features vendors and guest speakers. The event kicked off Friday and continues from 1 to 6 p.m. Saturday and Sunday on the Delaney Park Strip.
Tragil Wade, an entrepreneur, author and inspirational speaker who is the big sister of former NBA great Dwyane Wade, was Friday’s special guest.
Saturday’s festivities, spotlighting the theme “Community and Culture,” kicked off with a freedom rally and parade. Saturday also features a youth segment, hip-hop dancing, community line dancing, multiple DJs and a performance from Soul Society.
“Faith and Family” is the theme for Sunday’s festivities. There will be a special Father’s Day opening at 1 p.m., a praise cardio session on the grass and an HBCU gospel segment. The afternoon will close with a community praise dance.
Juneteenth commemorates the day that the last slaves in the Confederacy were informed of their freedom following the Emancipation Proclamation on June 19, 1865. Long celebrated by Black Americans, Juneteenth became a federal holiday in 2021. In 2023, the Anchorage Assembly made Juneteenth an official city holiday, and in 2024, the Alaska Legislature passed a bill to designate Juneteenth as a state holiday.
A pilot was killed in a plane crash in mountainous terrain near Cordova, Alaska State Troopers said Friday.
The agency was notified of the overdue Piper Pacer around 8 p.m. Thursday, troopers said in an online post. The pilot was believed to be the sole person on board the aircraft, which was thought to be flying between Yakutat and Fairbanks, troopers said.
Aircraft from the Alaska Air National Guard and Alaska Wildlife Troopers started searching for the plane, and a Guard helicopter crew found the overdue Piper Pacer around 4 p.m. Friday where it had crashed near Kanak Island, about 40 miles southeast of Cordova, troopers said.
The pilot, whom troopers did not identify, was found dead in the crashed plane, troopers said. His body was take to the State Medical Examiner Office in Anchorage for autopsy and positive identification, according to troopers.
Troopers said the pilot’s next of kin and the National Transportation Safety Board were notified.
The Alaska Senate plans to vote today on a new draft of a bill that would reduce taxes on the Alaska LNG project. It’s the last day of a special session Gov. Mike Dunleavy called to consider the issue.
Dunleavy and pipeline developer Glenfarne, which owns a 75% stake in the project, say a measure replacing a 2% annual property tax with a much smaller tax on gas throughput is essential to allowing the project to attract investors and court lenders. Dunleavy and Glenfarne applauded the version of the bill that passed the House a week ago.
The Alaska LNG project, estimated by the developer to cost up to $54.5 billion, includes an 807-mile pipeline, a conditioning facility on the North Slope to remove gas impurities such as carbon dioxide, and a liquefaction plant on the shores of Cook Inlet to export the gas to Asia. The project would be split into two phases: first, a shorter in-state pipeline to provide gas to Alaskans, and then the much more expensive — and much more lucrative — export infrastructure.
The Senate’s new draft retains many of the House’s provisions with some important changes.
Perhaps the most significant changes are to the project’s timeline: to be eligible for tax relief, the developer must commit to a final investment decision for the first phase by Jan. 1, 2028, and construction of the in-state pipeline would need to be complete by the end of 2032.
The House’s version required only that construction begin by Jan. 1, 2032.
The faster timeline is an effort to address Southcentral’s looming shortage of natural gas, said Sen. Bert Stedman, a Sitka Republican and a co-chair of the Senate Finance Committee. The Department of Natural Resources’ production forecast envisions demand outstripping Cook Inlet gas production by 2032, requiring producers to dip into storage.
“There’s been a lot of concern out of the Railbelt with the declining volume in Cook Inlet,” Stedman said.
But the more aggressive timeline sparked concerns from minority Republicans on the committee; it increases the risk on an already risky, marginal project, they said.
“That’s very damaging,” said Sen. Mike Cronk, a Tok Republican and the Senate minority leader. “There’s so many factors that we don’t control.”
Putting a “hard construction date” in the bill may be a “poison pill,” Cronk said.
Glenfarne and Gov. Mike Dunleavy did not immediately respond to requests for comment on the new version of the bill.
Stedman suggested future legislatures could revise the date to account for “unforeseen black swan events.”
“We can change these and modify these going forward,” Stedman said. “This is not in the Constitution, so I think there’d be some consideration under good faith trying to get the project constructed.”
The tax rate at the heart of the bill — the so-called alternative volumetric tax on gas flowing through the pipeline from the North Slope to Southcentral Alaska — would be fixed, rather than a weighted average tied to the cost of each component of the project.
The Senate draft sets the tax initially at 6.2 cents per 1,000 cubic feet of gas throughput, starting five years after gas begins to flow through the pipeline. The tax would take effect sooner if throughput reaches 500 million cubic feet per day, which is more than double what Southcentral Alaska uses now.
The tax would rise to 10.6 cents per 1,000 cubic feet once Phase 2 of the project, which includes the liquefied natural gas export facility, is up and running. The tax revenue from that mirrors what the Department of Revenue estimates the weighted tax that passed the House would yield.
The rates would rise between 1% and 3% each year, depending on inflation.
The House backed 30-plus years of tax breaks. Some senators were skeptical of that, so their version doubles the tax rate ten years after exports begin, then doubles them again in 2060.
The new bill retains key conditions for the tax relief included in the House’s version: the developer must commit to building a spur line to Fairbanks and negotiate project labor agreements with unions. It also includes up to $80 million in community impact funding for municipalities: $40 million due shortly after the final investment decision for each project phase.
It also includes House-passed price controls on in-state gas. Utilities would pay no more than $16 per million British thermal units, adjusted for inflation. That’s roughly $16.60 per 1,000 cubic feet, substantially higher than current Southcentral gas rates — about $10 — but likely cheaper than imported gas, according to Southcentral’s gas utility.
Also notable is an omission from the bill. It does not include a measure that had been under discussion that would subject large so-called S corporations and other pass-through entities in the oil and gas business, like LLCs, to the state’s corporate income tax.
Glenfarne, in its only comments so far on the new bill, urged lawmakers not to include that tax in the final version.
“If the Senate passes a bill with the proposed S Corp tax, it will introduce major hurdles for Alaska LNG to secure the right financing to build the project,” the company said in a statement provided by spokesperson Tim Fitzpatrick.
Senators are due to amend the bill and take a final vote later today.
The special session expires at midnight tonight, but Gov. Mike Dunleavy has already signed a proclamation calling another special session to begin Saturday.
Asked whether the new special session represented a contingency plan in an event the bill failed to pass, Dunleavy spokesperson Jeff Turner declined to say.
“We will see what happens,” Turner said.
This is a developing story. Check back for updates.
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