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Editorials | It’s time / Go for it

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THE extent of the economic mayhem that is still unraveling — in the U.S., China and the rest of the world — is mind-boggling. These are some of the headlines of the past few days:

“Jobless-Claims Tsunami Tops 22 Million for a Single Month” (As of Wednesday, the figure was 26 million.)

“States Burn Through Cash for Unemployment Payments”

“Shutdown Pounds Stores, Factories; Retail Sales Plunge a Record 8.7%, Industrial Output Falls at Steepest Rate Since the 1940s”

“Shutdown Pushes Poorest to Brink”

“New Round of Layoffs Hits White-Collar Workers”

“Oil Takes Historic Dive Below $0; Producers Face Prospect of Paying Buyers….”

“China GDP Falls 6.8%, First Drop on Record”

“Japan Widens State of Emergency”

“Economic Toll Sweep Globe. The International Monetary Fund said the world economy is expected to contract by 3% in 2020, with virtually every nation affected, because of fallout from the pandemic.”

Around the world, Covid-19 has paralyzed not only tourism, but many other industries as well — among them, trade, oil, finance and manufacturing.

This is not an “economic decline” — that was what the CNMI experienced in the early 1990s following the Japan-fueled boom years in the late 1980s. And what we’re experiencing now is much worse than the slow-motion economic slump that started in 1998 in the wake of the Asian currency crisis. That downturn got worse as garment factories shut down one after the other and as the local economy finally hit bottom in 2012. Today, the post-Mangkhut-Yutu economic shambles in 2019 appear more tolerable compared to what is staring us in the face: a full-blown depression.

In the CNMI, there are no more deck-chairs left to rearrange on the Titanic. It’s time to re-think some of the government’s major obligations, its ability to meet them, and propose specific measures that could prevent total collapse.


Go for it


THE administration, with a big help from Graduate School USA, is currently conducting, by video conference, a “Fiscal Response Summit.” The primary goal is to “build upon the findings of the governor’s Fiscal Response Task Force, which is composed of members from the CNMI Department of Finance, Office of Management and Budget, and Graduate School USA.”

The task force’s key findings are not encouraging. They include:

• “The projected deficit directly attributed to the coronavirus outbreak is…$65 million. [This is the] size of the fiscal challenge faced by the CNMI…in FY 2020…with only half of the fiscal year remaining to make the adjustment.” FY 2020 ends on Sept. 30, 2020.

• It “is estimated that the impact through FY 2021 will be a 25-30% decline in GDP on top of the 18% decline measured by the U.S. Bureau of Economic Analysis for FY 2018 (the last year for which GDP is reported).” Take note: by 1933, during the Great Depression, America’s real GDP had fallen by over 25%.

As in other democracies around the world, fault-finding in the CNMI is ongoing, and the volume of the shrill/scream factor in much of what passes as public discussion will continue to increase until the November elections.

But right now, we hope that the islands’ policy-makers, especially lawmakers, would consider some of the most urgently needed fiscal measures — many of which are unpopular. These include more spending cuts, fee increases and tax hikes (which the task force’s briefing paper calls “reform”).

We remain opposed to tax hikes and/or fee increases, especially if their sole justification is to fund the continued existence of redundant government offices/programs, extravagant perks or white elephants such as the judicial building.

However, spending cuts may not be enough to pay for the CNMI government’s most pressing obligations (retirees’ pensions, bond payments, payments to vendors, etc.) and truly essential services: healthcare/medical referrals, utilities, public safety, education. In other words, much depends on the actual specific measures that should be introduced in the Legislature as soon as possible.

So. Appalled by “government overspending”? (As if there’s another kind.)

Too much government-funded travels and too many politically hired government employees?

Government salaries too high and government benefits too much?

But PSS, which spends over 90 percent of its budget on personnel, should get more funding?

Well.

The administration says it is willing to work with the opposition/minority members in the Legislature and other critics to identify possible solutions to the worst crisis the NMI is facing since World War II.

Here then is our chance to be the ones we’ve been waiting for.

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