GAO stands by impact report

The Government Accountability Office stands by the report it issued this week on the prospective impact of the pending federal takeover of local immigration and foreign labor rules, the agency said Wednesday, in the face of stern criticism from Gov. Benigno Fitial’s administration.

“The GAO stands by the facts, conclusions, and all aspects of the agency’s August 4 report on the Commonwealth of the Northern Mariana Islands,” agency spokesman Charles Young said in response to questions. “The report is consistent with government auditing standards, GAO’s consistent record of integrity, and its reporting requirements to Congress and the public.”

The 133-page report details a range of potential economic outcomes that could result due to the so-called “federalization” of the local government’s immigration and labor system, some more damaging to the Commonwealth than others. The report recommends that federal agencies “identify” an interagency process to implement the recently signed federalization bill and develop a strategy for gathering data on the CNMI’s workforce and foreign businesses.

On Tuesday, Fitial and members of his staff blasted the report, saying some of its findings would foster uncertainty in the business community and frighten investors such as data that suggests under one scenario that federalization could cut the CNMI’s gross domestic product in half.

However, GAO takes issue with the suggestion that its report forecasts a major economic fallout from federalization.

“GAO makes no predictions at all about what specific ramifications may or may not occur, but rather lays out a range of possibilities based on the best available data,” Young said. “The report does not predict a substantial decline in the CNMI economy as a result of the legislation. Rather, it reflects the key decisions facing federal agencies and illustrates a range of potential impacts those decisions could have on the CNMI economy, ranging from minimal to substantial.”

The potential 50 percent loss in the local GDP, he adds, is just one scenario among many detailed in the report.

“The scenario producing this outcome is neither unrealistic nor the most favorable; rather, it is based on the steepest decline in CNMI-only work permits of the scenarios illustrated,” Young said. “The actual extent of the legislation’s impact on the CNMI economy will depend on the key federal decisions related to foreign workers, tourists, and foreign investors identified in our report, as well as other factors in the economy.”

Moreover, Young said, the report should not be taken as a prediction of GDP losses as it stops short of accounting for other changes in the CNMI over time that could also impact the economy.

“As the report also states, the impact of applying federal immigration law will depend on how the Department of Labor, the Department of Homeland Security, and other relevant federal agencies choose to implement the recently enacted legislation and how they coordinate that implementation,” Young said. “The federal agencies that reviewed a draft of this report generally agreed with GAO’s findings and recommendations and said that the report was useful. Fully informed and coordinated federal agencies will be best capable of making decisions that minimize adverse consequences for the CNMI’s economy.”