The thought of being saddled with more huge fees and taxes as a result of the new power plant deal is a bit too hard to chew no matter how you dice or splice it.
Why am I consistently and persistently addressing this issue? Simple: Nobody in this administration has the coconuts to tell the truth and nothing but the truth about a financial monstrosity it has created that would follow our kids from cradle to grave.
It’s known as institutional myopia that simply neglects the needs and future of posterity, not to mention uncertainty, fanned by the lack of a plan that defines policy matters.
Imagine the day you start paying $40,000 in additional fees and taxes coming from a $2.3-billion power plant contract signed by the governor. It doesn’t leave much room for young people to plan for their future, does it? It’s hopelessness for generations to come.
In the absence of honest and clear explanation, it leaves the issue with piles of questions. I could only surmise four reasons for this deafening silence. Here are issues you would face under the new deal:
1. No matter who you are you will feel the crushing pain of heavier taxes when you begin paying $40K more per year of your share in the new power plant deal.
2. It would trigger the final exodus of foreign capital from the islands because the cost of doing business here would be prohibitively costly. The economic climate is bad enough as it is under deepening cataclysmic conditions.
3. It would permanently ruin the economic freedom of our future generations for several generations.
4. It would force the relocation of many people to greener pasture elsewhere because job opportunities here has consistently contracted heavily too.
The new fees and taxes would be the steepest in CNMI developmental history. The shock to working families here would be so huge most would be repeating what a fellow citizens said about the punishing utility bills: “When I was young I was afraid of the dark. Now that I am an adult I am afraid of the light.”
Referendum on governor
For all intent and purposes, the Voice for the Future has spoken loudly too. The recent mid-term elections is seen as a referendum on the governor. No doubt he received his trophy in crushing defeat and rebuke. It was clearly about his failure to improve the lot of the multitude.
With more than $2.6 billion in cumulative debt, it’s equally unsettling the simultaneous significant decline or contraction of revenue generation. It means budgetary shortfall paralyzing more services in the near-term. The CNMI is chronically incapable of paying its debts. It could only blindly spend and watch another mountain of debt pile up. Now, is there any chance to secure a bailout from somewhere or would declaring bankruptcy the next best and only option? It’s unsettling!
In simple terms, “economics entails the study of scarcity and its final disposition.” In our case, scarcity is our woefully limited and fast declining financial resources. Economists define a recession as two quarters of economic contraction. In our case, it’s a matter of persistent depression, a condition far worse than recession.
Now, “fiscal policy is how government manages its budget.” How do we manage a budget when more than half of total collection would be earmarked to pay off the new power plant debt of over $7 million annually? There’s hardly anything left for other services and obligations. How do we divvy up anemic revenue collection?
A government uses expansionary fiscal policy to stimulate the economy and create more growth. This is most critical at the contraction phase of the business cycle when people are clamoring for relief from, in our case, a depression. With utility cost forcing the closure of more businesses, it’s actually contractionary rather than expansionary. There’s no room for growth, is there?
The issues before us are significant and daunting. It obviates the question: How do we address our current crises that require rigorous and deliberative debate? Disagreement, rather than sheer inconvenience, is an essential reflection of the public mood. Hard-nosed bargaining is necessary in a democracy. Leadership and compromise are essential.
The governor has been averse to either but takes preference lecturing his nemesis about “milk” and “stupidity” as he kicks the can down the hill, stunned and disoriented at the voters’ conclusive and decisive verdict against him recently.
The issues before us will require unprecedented economic insight, policy vision and very skilled political leadership—all qualities in short supply in this administration.
If the administration resorts to pension obligation bond, would there be enough revenue to cushion the impact of repaying the loan? Governments are known to run out of gas—repayment ability—some years down the road, incurring higher interest rates in the process. This necessitates a plan to use as a guide.
The defeated impeachment resolution jarringly reveals how Republicans have drifted from the laws and constitution of the CNMI. Combine these with the economy under a respirator and it doesn’t leave much room for optimism for anything at all. Too, the year 2013 isn’t a banner year for the local economy either. In fact, the slow descent to the abyss of the most egregious hardship has begun. Brace for it!
John DelRosario Jr. is a former publisher of the Saipan Tribune and a former secretary of the Department of Public Lands.