An Educated Look at the 'Bridge to Nowhere' Controversy

Since the Alaska Bridge to Nowhere debate has been raging the past several days as the Democrats try anything to derail the freight train that is Sarah Palin, let's have a look at what an economics professor has to add on the subject. So as not to attempt to boil down and excerpt this item from UCSD Professor Garey Ramey, here it is in its entirety. It's worth the read as it cuts through the political rhetoric.

Just so the readers know, the author has an impressive list of publications to his credit and offers a fair analysis of the subject.

Republican Vice Presidential nominee Sarah Palin has been criticized for lying in connection with terminating Alaska's "Bridge to Nowhere" project. This charge, however, reflects widespread misunderstanding as to the nature of the infrastructure budgeting process. While the U.S. Congress did reverse its 2005 decision that had earmarked $223 million for the bridge project, the project itself was not removed from the state's capital budget. A total of $113 million was budgeted to the bridge when Governor Palin assumed office in 2007.

Among budgetary options, Palin could have drawn on Federal and State moneys to fund the project fully and move ahead with construction. Alternatively, Palin could have deferred the project to future years, possibly changing the funding allocation. In the end, she chose the radical option of removing the project from the capital budget, precluding any future funding allocations or construction. Her claim to have "stopped the bridge" is entirely truthful.

To justify her decision, she argued that the bridge project had become too expensive, and that the state should investigate more cost-effective alternatives. In political terms, her decision was viewed as a blow to the state's Republican establishment, which had strongly championed the project. Without question, the episode buttresses Palin's reputation as an executive who "stands up to her own party."

Palin has offered a bit of misleading rhetoric, however, in discussing the bridge episode. She has stated that terminating the project amounted to telling Congress "thanks, but no thanks." This suggests that Congress was attempting to force the project on Alaska, when in fact it had given the state discretion. Her decision should instead be viewed as conveying the message "thanks, but no thanks" to Alaska's Republican Congressional delegation.

Palin's rhetoric also gives the impression that terminating the project was tantamount to rejecting a Federal funding offer. The Federal contribution to the bridge budget actually amounted to only $36 million, or less than ten percent of the projected cost of the bridge. By terminating the project, Palin freed these funds for use in other projects, thereby reducing to some extent the need for future earmarks. In this limited sense the money was indeed returned to Washington.

It is important to note that Palin has worked to overhaul the earmark process, in parallel with Congressional efforts to limit the practice. Alaska's earmark requests have fallen from 54 last year to 31 this year, with only four new requests. Total requested funding has dropped from $550 million to $200 million. Clearly, Governor Palin has made strong progress in reducing the use of earmarks in Alaska.