1. You can’t borrow your way out of debt. This “solution” is not a solution but a masquerade that will only disguise the real problem. And it could make the CNMI’s debt worse, as it removes the constitutional protection that limits public debt to 10 percent and allows bonds to an unknown and unfixed amount.
2. It is foolish to think this is a tool “just in case.” If we approve pension obligation bonds, the government will issue them. This is not just a back-up plan — it is the crutch that the government is looking for — while it refuses to look for other solutions. Give it this crutch, and the government will stop trying to fix the problem.
3. There are other choices. The government’s debt to the NMIRF is growing every day by 9 percent interest on the judgment. That interest rate is set by CNMI law! Why haven’t our legislators reduced the post-judgment interest rate? This simple change would easily save the government hundreds of thousands of dollars a year. Of course, we must still come up with revenue-generating measures to pay the NMIRF — but borrowing money is not a revenue-generating measure, because that money must be repaid.
4. There is no plan or thought for how pension obligation bonds would be repaid. When they must be paid in thirty years from now, those holders of the bonds will be able to collect their debts by taking over our public land and other government resources. The CNMI’s land and public assets will be owned by the bond-holders, not the people of the CNMI.
5. Pension Obligation Bonds do nothing to fix the causes of the NMIRF problem — and that means the problems will continue to worsen.
What caused the problem is a retirement plan that did not have enough contributions to support it and allowed for greater withdrawals and benefits than it could afford. What contributed to the problem is a government that did not pay what it was supposed to pay and that even borrowed the NMIRF money for other purposes like the Guma Hustitia.
If you vote for the Pension Obligation Bonds, we can expect the Legislature will again try to increase benefits to retirees (themselves in particular); will again propose to allow people to withdraw from the system without penalty. The pension obligation bonds will not fully fund the retirement system, and the CNMI government will continue to not pay what it is supposed to pay. The NMIRF will continue to flounder. The government will raid the money it generates with the pension obligation bonds. And in thirty years, our children and our grandchildren will see the bond holders take over the CNMI.
If we’re going to owe money (which we do), it’s better we owe the retirees themselves, while we make our government look for real solutions.
JANE MACK
San Vicente, Saipan
