THE CNMI government’s current (and latest) financial crisis is rooted, as usual, in its overspending ways that can no longer be fully funded because of a declining economy.
But as economics professor Donald J. Boudreaux has noted, most voters are “oblivious to the indescribable complexity and unfathomable interrelatedness of modern economic phenomena.” And many of them believe that the economy was “created by — and is maintained by — the [government].”
Hence, during difficult times, the usual “remedy” is to elect “new” and “better” leaders with the “proper” educational and/or professional background, and “integrity,” and “political will.” Like many of their counterparts in other jurisdictions and other countries, local voters have been electing such leaders in every election year since the Trust Territory era.
But “political will” is not enough to implement badly needed reforms. You must also have adequate political support for those measures. A majority of voters — or more — must be fully behind you.
Right now, basic arithmetic dictates that the CNMI government’s expenses must match the revenue it can realistically collect. That means not only work-hour reductions and paycuts, but also the elimination of redundant departments, divisions, agencies, offices, programs and services — and their personnel. Moreover, the retirees’ 25% benefit, which is not required by the settlement agreement, may have to be “suspended.”
These measures would result in a dramatic decrease in government expenditures thereby “solving” its insolvency. But is there anyone on Capital Hill who will introduce specific cost-cutting bills? So far, crickets.
Incidentally, since at least the early years of the Commonwealth, politicians have been complaining about “big government” and “overspending.” Now here’s some news for you. The government is still big, and it is still overspending — even if it can’t.
The preferred “solution” of the administration and lawmakers is to squeeze water from a rock by imposing higher taxes on already struggling taxpayers. As a lawmaker would put it, the only alternative is layoffs. “I think we all agree that we don’t want to lay off anybody,” the lawmaker said. Finally. Honesty.
There are, in any case, more government employees who vote in CNMI elections than the number of taxpayers targeted for robbery, er, higher taxes.
To be sure, the economically literate may point out that raising taxes in this bad economy will not necessarily result in more tax revenue. But the politically astute will reply that raising taxes allows the government to continue spending based on a higher revenue projection — regardless of actual revenue collections.
Most politicians are concerned about the future, but for many of them the future is the next election year.
You say: Politicians should listen to experts!
Please. Three years ago, financial experts from the federal government sat down with CNMI government officials, including lawmakers, and local business leaders to come up with a long-term fiscal response to the economic crisis triggered by the global pandemic restrictions. They proposed reduction in personnel, professional services, “all other” categories, medical referral costs, and the cancelation/postponement of the retirees’ 25% benefit. They also recommended the consolidation of departments and programs: merging the Office of Youth Affairs with the Division of Youth Services; Fire, Public Safety and Corrections; the Office of Grant Management and the Department of Finance; the Department of Public Works and the offices of the mayors; the Departments of Commerce and Labor; Finance and Commerce; the Division of Parks and Recreation and the Department of Public Lands; the Northern Marianas Technical Institute and Northern Marianas College; the Department of Lands and Natural Resources and DPL; the elimination of all non-federal positions in Agriculture and Fish & Wildlife; the elimination of zoning; and the reduction in the size of the Legislature — from 20 representatives to 10, and from nine senators to six.
Many CNMI officials who participated in that summit and in drafting the recommendations are now in top leadership positions. Back then, one of them said, “This is something that our Commonwealth should have done a long time ago. Will it happen tomorrow? No. Some of the initiatives are going to have to be initiated through the legislative process and the congressional process. But, we need to keep our eye on the ball.”
Where’s the ball?
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