First, the Guam Legislature has no choice but to get involved when the governor acted recklessly by helping to pick a winner in the private sector, in this case IT&E.
If the federal monies reach IT&E, then it has the adverse effect of crowding out private money in the telecommunications industry and Guam will be reverting to the old days where the government ran this business.
Second, the very argument that the stimulus funds are disruptive to the free markets is not entirely correct either.
The stimulus was put into place only after the U.S. economy collapsed as a result of the financial meltdown necessitating the government to step into the void of the battered private sector, which did not want to place private capital at risk. But on Guam, the adverse effect of that recession was not felt in this particular industry. One could make the argument, however, that private businesses would be less hesitant to borrow money and make investments which prompted the federal government to jump start the broadband business, in particular, in this region. But I do not believe this to be the case because IT&E recently underwent an ownership change and no one would put new money into this business if the risk-reward ratio was too steep.
If IT&E, on the other hand, accessed $100 million in the capital markets to make infrastructure upgrades in this region or even just Guam, GTA TeleGuam would not be in any position to say that their business prospects have been harmed.
Third, on the stimulus itself, it was not done at the expense of the taxpayers as many Republicans (and some Democrats and Independents) have argued from day one. The stimulus keeps the taxpayers afloat, props them up, actually, until the economy grows again to the point that the private sector begins to have the confidence to invest here in the U.S. again and not just in emerging markets, which they are primarily doing so now.
President Obama is trying to reconfigure the U.S. economy by putting government stimulus money and offering tax breaks to private industries to help use green technology, for instance, to drive the new economy, something the world’s number three economy, China, is doing as well. If the United States instead opted not to have a stimulus, then many states would be shutting down now, something which may still happen as the damaging effects of the financial meltdown begin to reverberate systematically. For example, banks are tighter on credit lending to small businesses and individuals as their business model has changed to a more conservative one.
That means the economy will be slow to grow and will be hard-pressed to create new jobs and new taxpayers in the process which is why some argued that the stimulus was not large enough in the first place to jump-start — and sustain — the world’s largest economy as it is undergoing an economic transformation unseen in modern times.
MATT PHILIPS
Mangilao, Guam
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