Table of Contents
Preface
Forward
Introduction
Theory and Methodology
Chapter 1: The Role of Remittance Taxes in Economic Development
Chapter 2: Theories of Economic Development
Chapter 3: The Impact of Foreign Investment on the CNMI's Economy
Chapter 4: The Consequences of the CW-1 Visa Program Chapter
5: The Need for Transparency and Accountability
Chapter 6: The Role of the U.S. Department of Treasury in Addressing the CNMI's Economic Shortfalls
Chapter 7: The Importance of a Federal Comptroller
Chapter 8: The Theoretical Framework for Capturing Revenue
Chapter 9: The Impact of the CNMI's Economic Shortfalls on the American Taxpayer
Chapter 10: The Case for Reform
Chapter 11: The Future of the CNMI's Economy
Chapter 12: Conclusion
Epilogue: Project 2025: A Closer Look
Glossary
Bibliography
Index
Preface
The Commonwealth of the Northern Mariana Islands (CNMI) sits in the heart of the Pacific Ocean, a jewel of natural beauty with a rich cultural heritage. But beneath the surface of this idyllic paradise lies a dark and unsettling truth—an economic "sinkhole" that threatens to consume the island's future.
This book delves into the complex economic challenges facing the CNMI, revealing a troubling narrative of dependence, corruption, and the erosion of self-determination. We will explore how the CNMI's unique relationship with the United States, its reliance on foreign labor, its exemption from certain federal taxes, and its failure to address systemic corruption have created a cycle of economic vulnerability that continues to drain the island's resources and place a significant burden on American taxpayers.
"The CNMI Sinkhole" is a call for change—a plea for the CNMI government to embrace a path of reform, transparency, and economic self-sufficiency. This book aims to shine a light on the critical issues facing the CNMI, to raise awareness among policymakers and citizens alike, and to inspire a movement for a brighter and more sustainable future for this island community.
Forward
This book is dedicated to the people of the CNMI, those who have borne the brunt of the island's economic challenges and have fought for a better future. It is also dedicated to the American taxpayers who have generously supported the CNMI, often with little to show for their investment. The story of the CNMI is a cautionary tale—a reminder that economic progress is not always a straight path and that true self-determination requires a commitment to transparency, accountability, and ethical governance. I believe that the CNMI has the potential to achieve a brighter future. But this future hinges on a willingness to confront the deeply entrenched problems and to embrace the path of reform.
Introduction
The Commonwealth of the Northern Mariana Islands (CNMI) sits in the heart of the Pacific Ocean, a jewel of natural beauty with a rich cultural heritage. But beneath the surface of this idyllic paradise lies a dark and unsettling truth—an economic "sinkhole" that threatens to consume the island's future.
The CNMI, a U.S. territory, faces a complex set of economic challenges. Its economy is heavily reliant on foreign labor, particularly through the controversial CW-1 visa program, which allows employers in the CNMI to bring in temporary workers who are ineligible for other nonimmigrant work categories. However, the CNMI government has chosen to exempt remittances from taxation, creating a situation where the islands are heavily reliant on foreign labor but are unable to capture the revenue associated with that labor. This lack of revenue generation, combined with a limited tax base, has left the CNMI struggling to meet its financial obligations. The island has become increasingly dependent on federal assistance, placing a significant burden on American taxpayers. Moreover, systemic corruption, including nepotism and a lack of transparency in government operations, has siphoned off federal funds and hindered economic development.
This book aims to expose the "sinkhole" effect that is draining the CNMI's resources and to make a compelling case for reform. We will examine the underlying causes of this economic crisis, exploring the consequences of the CNMI's economic policies, the role of foreign investment and the CW-1 visa program, and the impact of corruption on the island's social fabric. Ultimately, this book will argue that the CNMI government needs to embrace a path of transparency, accountability, and economic self-sufficiency to secure a brighter future.
CHAPTER 1#
Chapter 1: The Role of Remittance Taxes in Economic Development The story of the Commonwealth of the Northern Mariana Islands (CNMI) is a story of economic paradox. Blessed with natural beauty and a strategic location in the Pacific, the CNMI has struggled to achieve sustainable economic growth and self-sufficiency.
One of the key factors contributing to this challenge is the islands' unique relationship
with the United States, specifically the "Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America." This Covenant, while granting the CNMI a significant degree of self-governance, has also exempted the islands from certain federal laws, including those relating to taxation.
This exemption has created a unique set of circumstances, where the CNMI enjoys a significant degree of autonomy but simultaneously faces limitations on its ability to generate revenue and control its economic destiny. The CNMI's reliance on foreign labor, particularly through the controversial CW-1 visa program, has contributed to this economic paradox. While foreign workers have played a critical role in the island's economy, particularly in the tourism and construction sectors, they also contribute to a significant outflow of capital in the form of remittances, money sent back to their home countries.
The CNMI government, however, has chosen not to collect taxes on these remittances, creating a situation where the islands are heavily reliant on foreign labor but are unable to capture the revenue associated with that labor. This lack of revenue generation, combined with a limited tax base, has left the CNMI struggling to meet its financial obligations, leading to an increased dependence on federal assistance and creating a strain on American taxpayers.
This chapter will examine the role of remittance taxes in promoting economic development and explore how the CNMI's exemption of remittances from taxation undermines the islands' ability to achieve genuine economic self-determination.
We will analyze the potential benefits and drawbacks of remittance taxes, explore historical precedents for their use, and delve into the critical need for the CNMI government to collect data on remittances. Ultimately, this chapter will argue that the CNMI's current policy of not taxing remittances contributes to its economic vulnerability and creates a significant burden on American taxpayers, who are inadvertently subsidizing the island's workforce.
1.1 The Theory of Remittance Taxes: Remittance taxes are levies imposed on money sent from one country to another, often by migrant workers to support their families back home. These taxes can be controversial, with arguments made both for and against their implementation. Proponents of remittance taxes often argue that they: Generate Revenue:
Remittance taxes can be a significant source of government revenue, particularly for countries that are heavily reliant on migrant worker remittances. Promote Development: The revenue generated from remittance taxes can be used to fund public services, infrastructure projects, and social programs, contributing to economic growth and development within the recipient country. Reduce Capital Outflow: Remittance taxes can help to reduce the outflow of capital from developing countries, which can have a negative impact on their economies.
Opponents of remittance taxes argue that they:
Discourage Remittances: These taxes can discourage migrant workers from sending money home, negatively impacting families and communities in the receiving country. Create a Tax Burden on the Poor: Remittance taxes disproportionately affect migrant workers, who are often already struggling to make ends meet. Difficult to Implement: Remittance taxes can be difficult to administer effectively, particularly in countries with large informal remittance sectors.
1.2 The CNMI's Remittance Tax Exemption: The CNMI government has chosen not to impose a remittance tax, exempting these flows from taxation. This decision was likely based on several factors, including:
Economic Competitiveness: Exempting remittances from taxation was seen as a way to attract foreign workers and investment by reducing the cost of living and working in the
CNMI.
Political Considerations: The CNMI government may have been hesitant to impose a tax on remittances, particularly those from the Philippines, given the large Filipino population on the island and the influence of the United Filipino Organization (UFO). Limited Resources: The CNMI government may not have the resources or infrastructure to effectively administer a remittance tax. However, the decision to exempt remittances from taxation has created a number of problems, including:
Lost Revenue: The CNMI government has forgone a significant source of potential revenue. Exacerbated Economic Challenges: The outflow of remittances has contributed to a weakening of the CNMI's economy, making it more difficult to attract investment, create jobs, and generate local revenue. Increased Dependence on Federal Aid: The lack of local revenue generation has increased the CNMI's dependence on federal assistance, creating a strain on American taxpayers.
1.3 The Missing Data: One of the most significant challenges in understanding the true impact of remittances on the CNMI's economy is the lack of data. No CNMI government agency, including the CNMI Commonwealth Development Authority, the Department of Finance, the Department of Tax and Revenue, or the Department of Registrar, collects data on remittances from foreign workers or corporations. This lack of transparency makes it impossible to accurately assess the volume of money flowing out of the CNMI and its impact on the local economy.
This absence of data makes it difficult for the CNMI government to:
Track Economic Trends: Effectively monitor the flow of capital in and out of the CNMI economy. Develop Economic Policy: Formulate policies that address the unique challenges posed by remittances. Promote Fiscal Responsibility: Make informed decisions about revenue generation and expenditure.
1.4 Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow: Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be:
Total Remittances: ($3,750 * 10,000) = $37,500,000
Using this data, we can estimate the potential lost revenue from remittance taxes:
Potential Remittance Tax Revenue (2018-2024): Year CW-1 Worker Population (estimated) Estimated Remittances Remittance Tax Revenue (5.75%)
2018 12,000 $45,000,000 = $2,587,500
2019 11,000 $41,250,000 = $2,371,875
2020 10,000 $37,500,000 = $2,156,250
2021 9,000 $33,750,000 = $1,940,625
2022 8,000 $30,000,000 = $1,725,000
2023 7,000 $26,250,000 = $1,509,375
2024 6,000 $22,500,000 = $1,293,750 Total Estimated Lost Tax Revenue (2018-2024): $15,583,425
These estimations demonstrate how much revenue the CNMI government could have potentially captured through a remittance tax. This lost revenue further exacerbates the need for federal aid and contributes to the "sinkhole" effect.
1.5 The American Taxpayer's Burden: The CNMI's reliance on foreign labor and its exemption of remittances from taxation have created a significant burden on American taxpayers. The US government has provided billions of dollars in financial assistance to the CNMI, but much of this money has been misspent or diverted. The "sinkhole" effect of lost revenue and the lack of data have made it difficult to track how federal funds are being used and to hold the CNMI government accountable.
The US government has continued to provide aid to the CNMI even as: The CNMI has failed to generate sufficient revenue to support its own economy. The CNMI has not invested effectively in infrastructure and economic development. The CNMI has struggled to address issues of corruption, nepotism, and visa fraud. The lack of transparency in the CNMI's financial system and the absence of a strong oversight mechanism have made it easier for corruption and mismanagement to take hold, placing a significant burden on American taxpayers who are effectively subsidizing the island's workforce and its economic instability.
1.6 Policy Recommendations: The CNMI's current remittance tax policies are unsustainable. To address this situation and to promote economic self-determination and transparency, the CNMI government should implement a number of key reforms:
Implement a Remittance Tax: The CNMI government should consider imposing a remittance tax on all foreign outflows. A modest tax, even at a low rate, could generate significant revenue and help to mitigate the "sinkhole" effect.
Establish a Data Collection System: The CNMI government should establish a robust data collection system to track remittances from foreign workers and corporations. This will provide a more complete understanding of the economic impact of remittances and enable the government to make more informed policy decisions.
Enhance Transparency and Accountability: The CNMI government should prioritize transparency and accountability in all of its operations. This includes:
Regular publication of financial data on remittances. Strengthening the GAO's role in overseeing federal funds allocated to the CNMI. Enacting and enforcing stricter conflict of interest laws. Creating greater transparency in government contracts and financial transactions. By implementing these reforms, the CNMI government can move towards a more sustainable and self-sufficient economic model, reducing its dependence on federal assistance and lessening the burden on American taxpayers.
Conclusion:
The CNMI's economic challenges are complex and multifaceted. However, the island's decision to exempt remittances from taxation has played a significant role in
exacerbating these problems. The outflow of capital, the lack of data, and the prevalence of corruption have created a "sinkhole" effect that has undermined the CNMI's ability to achieve sustainable growth and self-sufficiency. To address these challenges and to fulfill the promises of the Covenant, the CNMI government must embrace a path of reform that prioritizes transparency, accountability, and a more balanced economic model. The CNMI has a unique opportunity to build a prosperous future, but this future hinges on its willingness to address these core issues and to become a more responsible member of the American political family.
CHAPTER#2 Chapter 2: Theories of Economic Development
To understand the CNMI's economic challenges and to identify potential solutions, it is essential to explore various theories of economic development. These theories offer different perspectives on how economies grow, the factors that drive prosperity, and the role of government policy.
2.1 Henry George's Theory of Economic Development: Henry George (1839-1897), an American economist and social reformer, developed a groundbreaking theory of economic development that centered on the concept of land value taxation. He argued that the value of land, unlike the value of labor or capital, is not created by human effort but is derived from the community's presence and infrastructure.
Therefore, George believed that land should be taxed heavily, with the proceeds used to fund public services and to reduce the tax burden on labor and capital. George's theory has several implications for the CNMI's economic development: Increased Revenue: By imposing a substantial land value tax, the CNMI government could generate significant revenue without hindering investment or economic activity.
Reduced Reliance on Foreign Labor: A land value tax could reduce the need for the CNMI to rely on imported labor to finance development. More Equitable Distribution of Wealth: By shifting the tax burden from labor and capital to land value, George's theory could lead to a more equitable distribution of wealth within the CNMI. However, George's theory has also been criticized. Some argue that: Difficult to Implement: Land value taxation can be difficult to administer and that there are practical challenges in determining fair land values.
Potential Negative Impacts: A heavy land value tax could deter real estate investment and development, hindering economic growth.
2.2 The Neoclassical Model of Economic Development: The neoclassical model of economic development is based on the principles of free markets and the efficient allocation of resources. It emphasizes the importance of:
Individual Choice: Individuals are seen as rational actors who make choices to maximize their own utility. Market Efficiency: Competitive markets are considered the most efficient way to allocate resources and to generate economic growth.
Government Intervention: Government intervention in the economy should be limited and focused on protecting property rights, enforcing contracts, and providing a stable macroeconomic environment. The neoclassical model has had a significant influence on economic policy around the world.
However, it has also been criticized for:
Ignoring Inequality: The neoclassical model can lead to a widening gap between the rich and the poor. Market Failure: Markets can fail to provide public goods and to adequately address issues of externalities, such as pollution and environmental damage.
2.3 Keynesian Economics: Keynesian economics, developed by British economist John Maynard Keynes, argues that government spending can play a vital role in stimulating economic activity, particularly during periods of recession. Keynes believed that: Government Spending: Government spending can increase aggregate demand, leading to higher levels of employment, production, and economic growth.
Fiscal Policy: Governments can use fiscal policy, through changes in taxes and spending, to influence the level of economic activity.
The Multiplier Effect: Government spending can have a multiplier effect, meaning that each dollar spent by the government can generate more than one dollar of economic activity. Keynesian economics has been widely used to address economic downturns and has been influential in shaping government policy in many countries.
However, it has also been criticized for:
Government Debt: Increased government spending can lead to higher levels of government debt, potentially creating a burden for future generations.
Inflation: Excessive government spending can fuel inflation.
2.4 The "Resource Curse" Theory: The "resource curse" theory argues that countries rich in natural resources often experience slower economic growth and greater inequality than countries with fewer natural resources.
This theory suggests that:
Dependency: Countries that rely heavily on natural resources can become dependent on these resources for revenue, making it difficult to diversify their economies.
Corruption: Natural resource wealth can lead to corruption and rent-seeking behavior, as individuals and groups seek to control these resources for personal gain.
Dutch Disease: The discovery of large natural resource deposits can lead to a "Dutch disease" effect, where the appreciation of a country's currency makes its other exports less competitive. The "resource curse" theory has implications for the CNMI, which is a small island economy with limited natural resources. While the CNMI has sought to diversify its economy, it remains heavily reliant on tourism and the garment industry, which are both susceptible to external shocks.
2.5 Remittances and Economic Development: A Complicated Relationship While the CNMI has relied heavily on the CW-1 program to fill labor shortages, this has led to a significant outflow of capital through remittances.
Remittances can play a complex role in economic development. They can: Benefit Recipient Countries: Remittances represent a significant source of income for many developing countries, supporting families and driving economic activity.
Create Opportunities: Remittances can provide capital for small businesses and entrepreneurship.
Hinder Local Development: However, large remittance outflows can hinder local economic development by reducing investment in domestic businesses and infrastructure.
The CNMI's lack of remittance data further complicates this situation, making it impossible to accurately assess the economic impact of remittances.
2.6 Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow:
Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000
Using this data, we can estimate the potential lost revenue from remittance taxes:
Potential Remittance Tax Revenue (2018-2024): Year CW-1 Worker Population (estimated) Estimated Remittances Remittance Tax Revenue (5.75%)
2018 * 12,000 - $45,000,000 = $2,587,500
2019 * 11,000 - $41,250,000 = $2,371,875
2020 * 10,000 - $37,500,000 = $2,156,250
2021 * 9,000 - $33,750,000 = $1,940,625
2022 * 8,000 - $30,000,000 = $1,725,000
2023 * 7,000 - $26,250,000 = $1,509,375
2024 * 6,000 - $22,500,000 = $1,293,750 Total Estimated Lost Tax Revenue (2018-2024): $15,583,425
These estimations demonstrate how much revenue the CNMI government could have potentially captured through a remittance tax. This lost revenue further exacerbates the need for federal aid and contributes to the "sinkhole" effect.
2.7 Alternative Economic Development Models: In addition to the theories discussed above, there are a number of alternative economic development models that have been proposed. These models often focus on:
Sustainable Development: Emphasis on environmental protection and social equity.
Community-Based Development: Prioritizing local participation and empowerment.
Microfinance and Small Business Development: Supporting small and medium-sized enterprises.
Tourism Development: Harnessing tourism as a sustainable driver of economic growth. The CNMI government needs to carefully consider these various theories and models as it seeks to develop a more sustainable and self-sufficient economy.
Conclusion: Understanding economic development theories is essential for the CNMI government as it seeks to address its economic challenges.
This chapter has provided a brief overview of some of the key theories and models. The CNMI must move beyond unsustainable economic models that rely heavily on foreign labor and embrace theories that prioritize self-sufficiency, transparency, and a more equitable distribution of wealth.
CHAPTER#3 Chapter 3: The Impact of Foreign Investment on the CNMI's Economy
3.1 Overview of Foreign Investment in the CNMI The CNMI has attracted significant foreign investment, particularly from Japan, South Korea, and China. This investment has helped to:
Develop Tourism: Foreign investors have built hotels, casinos, and other tourism-related infrastructure, boosting the CNMI's tourism industry and creating jobs.
Expand the Garment Industry: Foreign companies have established garment factories, which have been a major source of employment in the CNMI.
Provide Infrastructure: Foreign investment has also contributed to the development of the CNMI's infrastructure, including roads, ports, and utilities.
3.2 Benefits of Foreign Investment Capital Inflow: Foreign investment provides much-needed capital, which can be used to finance new businesses, infrastructure projects, and economic development initiatives.
Job Creation: Foreign investment often leads to the creation of new jobs, boosting employment opportunities and increasing economic activity.
Technological Transfer: Foreign investors can bring advanced technologies and expertise, which can help to improve productivity and innovation.
Access to International Markets: Foreign investors can help local companies to access international markets, expanding their customer base and increasing export opportunities.
3.3 Drawbacks of Foreign Investment However, foreign investment can also come with a number of drawbacks:
Economic Dependence: Heavy reliance on foreign investment can make a country's economy vulnerable to external shocks. For example, a decline in foreign investment or a change in global economic conditions could have a significant negative impact on the CNMI's economy. Exploitation of Labor: Foreign investors may seek to minimize their costs by exploiting workers, paying low wages, and offering poor working conditions. The CNMI's garment industry, which has relied heavily on foreign labor, has been plagued by allegations of worker abuse.
Erosion of Local Control: Foreign investment can erode local control over economic decision-making. The CNMI has been criticized for its lack of transparency in awarding government contracts and for its susceptibility to foreign influence.
Environmental Degradation: Foreign investment projects, particularly those in industries like tourism and mining, can lead to environmental degradation, damaging natural resources and harming the environment.
3.4 Case Study: Imperial Pacific International (IPI) One of the most prominent examples of foreign investment in the CNMI is the Imperial Pacific International (IPI) casino project on Saipan. This project, which is funded by a Chinese company, has been marked by controversy and has had a mixed impact on the CNMI economy.
The Benefits: Job Creation: The IPI project has created thousands of jobs, including construction jobs and positions in the casino and hotel.
Economic Stimulus: The project has generated significant economic activity in the CNMI, boosting tourism and retail spending.
The Drawbacks: Labor Exploitation: The IPI project has been plagued by allegations of labor exploitation, including low wages, poor working conditions, and the importation of undocumented workers.
Environmental Concerns: The project has raised environmental concerns, including damage to coral reefs and the potential for pollution.
Corruption: The IPI project has been entangled in a number of allegations of corruption and political influence.
Economic Dependence: The CNMI's economy has become increasingly reliant on this one project, making it vulnerable to potential setbacks or changes in the global gaming market.
3.5 The CNMI's Response to Foreign Investment The CNMI government has been both a proponent and a critic of foreign investment. While the government has actively sought to attract foreign investment, it has also faced pressure to address concerns about the potential for exploitation and corruption.
The CNMI government has implemented a number of policies to attract foreign investment, including:
Tax Incentives: The CNMI offers a number of tax incentives to foreign investors, including tax breaks and exemption from certain taxes.
Visa Programs: The CNMI has implemented visa programs, such as the CW-1 program, to make it easier for foreign companies to bring in workers.
Infrastructure Development: The CNMI government has invested in infrastructure projects, such as new airports and ports, to improve the island's attractiveness to foreign investors. However, the CNMI government has also faced challenges in managing foreign investment effectively, including:
Lack of Transparency: The CNMI government has been criticized for a lack of transparency in awarding government contracts.
Susceptibility to Influence: The government has faced allegations that it has been susceptible to pressure from foreign investors, potentially compromising its ability to act in the best interests of the CNMI's citizens.
Limited Resources: The CNMI government has limited resources to effectively monitor and oversee foreign investment projects.
3.6 Policy Recommendations To manage foreign investment more effectively and to mitigate potential drawbacks, the CNMI government should consider the following policy recommendations:
Enhance Transparency and Accountability: The CNMI government should implement measures to increase transparency in its dealings with foreign investors.
This includes: Public disclosure of government contracts and financial transactions. Strengthening the GAO's role in overseeing federal funds allocated to the CNMI.
Enacting and enforcing stricter conflict of interest laws to prevent government officials from benefiting from foreign investment decisions.
Prioritize Sustainable Development: The CNMI government should prioritize sustainable development projects that balance economic growth with environmental protection and social equity.
This includes: Conducting environmental impact assessments for all major foreign investment projects. Ensuring that foreign investment projects meet local labor standards and do not exploit workers. Encouraging investments in industries that are less reliant on foreign labor and that have a long-term potential for growth.
Strengthen Oversight Mechanisms: The CNMI government should establish stronger oversight mechanisms to manage foreign investment effectively.
This includes: Creating a dedicated agency to monitor and oversee foreign investment projects. Developing a clear set of guidelines for attracting and managing foreign investment. Promote Economic Diversification: The CNMI government should take steps to diversify its economy, reducing its dependence on tourism and the garment industry.
This could involve: Investing in new industries, such as agriculture, renewable energy, or technology. Supporting local businesses and entrepreneurs. Developing new export markets. Collaborate with the US Government: The CNMI government should work more closely with the U.S. Department of Treasury and other relevant agencies to: Ensure that federal funds are used responsibly and effectively. Address concerns about corruption and financial mismanagement.
3.7 "The Monopolization of the Marianas" Article and Tan Holdings: The "The Monopolization of the Marianas" article, published on CNMIGA.ORG, (Link: https://www.cnmiga.ORG/post/the-monopolization-of-the-marianas) highlights a troubling pattern of influence and potential corruption within the CNMI government.
The article examines the significant influence of Tan Holdings, a CNMI-based conglomerate, and its subsidiary, GPPC Construction, within the CNMI's economy. The article makes several accusations about Tan Holdings, alleging that it has used its close relationships with CNMI officials, some of whom have family ties to the Tan family, to gain preferential treatment and secure government contracts. "Tan Holdings, with its vast influence in the CNMI, has leveraged its connections to government officials, securing contracts that benefit its bottom line while leaving a trail of questionable spending.
The systemic nature of this arrangement—where a single entity holds a monopoly over critical infrastructure projects—undermines fair competition and contributes to the economic "sinkhole" effect that has plagued the CNMI."
"Tan Holdings' success can be traced back to its close relationships with CNMI officials, some of whom have family ties to the Tan family. These connections create an atmosphere of favoritism and influence peddling, where merit is often overlooked in the awarding of government contracts."
"The monopolization of infrastructure projects by Tan Holdings, often through sole-sourcing arrangements, has had a devastating impact on the CNMI's economy. It has hindered fair competition, contributing to higher costs, and has potentially led to the misappropriation of federal funds."
3.8 Review of Vital Statistics and Family Connections: To further support these claims, we need to look at the CNMI's vital statistics and cross-reference family names of key government officials with business ownership records. This will help determine if there are any familial connections that may suggest potential nepotism or conflict of interest. These family names: (Guerrero, Torres, Manglona, Sablan, Camacho, Pangelinan, Falig, Ada) are commonly found among influential individuals in the CNMI government.
By comparing these names with business ownership records, we can potentially reveal if there are any family members holding key positions in government who are also connected to Tan Holdings or GPPC Construction.
3.9 The United Filipino Organization (UFO) and Political Influence: The United Filipino Organization (UFO), ostensibly a humanitarian group dedicated to helping Filipino workers in the CNMI, has been accused of more sinister practices. It has been alleged that the UFO extorts "dues" from CW-1 workers, often under the guise of membership fees or services, and uses those funds to influence CNMI politics. government, allowing it to advance its agenda, potentially favoring Tan Holdings and
Chinese interests.
These practices have potentially given the UFO a powerful voice in the CNMI The "Persona Non Grata" article raises concerns about the UFO's alleged ties to the Chinese Communist Party (CCP) See (https://cfbci.ph/ ): "The UFO's influence in CNMI politics is a cause for concern, especially given the organization's potential connections to the CCP. The CCP's strategic interests in the region, including its desire to expand its influence in the Pacific, could be advanced through the UFO's influence over CNMI politics. This raises serious questions about the potential for the CNMI to become a "satellite state" for the CCP, undermining U.S. interests and regional stability."
3.10 Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow: Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker
This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000
Using this data, we can estimate the potential lost revenue from remittance taxes: Potential Remittance Tax Revenue (2018-2024): Year CW-1 Worker Population (estimated) Estimated Remittances Remittance Tax Revenue (5.75%)
2018 12,000 $45,000,000 $2,587,500
2019 11,000 $41,250,000 $2,371,875
2020 10,000 $37,500,000 $2,156,250
2021 9,000 $33,750,000 $1,940,625
2022 8,000 $30,000,000 $1,725,000
2023 7,000 $26,250,000 $1,509,375
2024 6,000 $22,500,000 $1,293,750 Total Estimated Lost Tax Revenue (2018-2024): $15,583,425
These estimations demonstrate how much revenue the CNMI government could have potentially captured through a remittance tax. This lost revenue further exacerbates the need for federal aid and contributes to the "sinkhole" effect. Conclusion: The CNMI's economy is heavily reliant on foreign investment, but this has not led to a sustainable economic model. The island is plagued by a lack of transparency and accountability, corruption, and a heavy dependence on federal aid. The CNMI government needs to implement comprehensive reforms to address these problems and create a more just and equitable society.
Chapter 4# Chapter 4: The Consequences of the CW-1 Visa Program
The CNMI-Only Transitional Worker (CW-1) visa program, established in 2011, has been a cornerstone of the CNMI's economy, but it has also become a symbol of economic exploitation and the misappropriation of American taxpayer funds. This program, allowing employers in the CNMI to bring in temporary workers who are ineligible for other nonimmigrant work categories, has been a "one-way street," with American taxpayers footing the bill for a system that has enriched foreign businesses, fueled chain migration, and ultimately weakened the CNMI's economy.
4.1 The "One-Way Street" of the CW-1 Program: For years, the CW-1 program has operated like a "one-way street," draining resources from the U.S. economy and transferring them to the CNMI and ultimately to foreign countries. This has happened in two main ways: Remittances: A significant portion of the wages earned by CW-1 workers are sent back to their home countries as remittances, particularly to the Philippines and China.
This outflow of capital, exacerbated by the CNMI government's exemption of remittances from taxation, deprives the CNMI of valuable resources that could be invested in local businesses and infrastructure.
The Missing Data: Adding to the problem is the CNMI government's failure to collect data on remittances. This lack of transparency hinders the ability to accurately assess the scale of the outflow and to formulate effective economic policies. This intentional lack of data collection underscores the CNMI government's lack of transparency and its commitment to obscuring the true cost of its immigration policies.
Chain Migration: The presence of CW-1 workers has fueled chain migration, as workers bring in family members, including spouses and children, under the CW-2 visa category. This influx of additional residents has placed a significant strain on the CNMI's social services, healthcare system, and housing market, further burdening the island's resources.
4.2 The Need for a Shift in Policy: The Trump administration, with its "America First" agenda, recognized the need for a fundamental shift in immigration policy. It argued that the CW-1 program had created an unsustainable system that was harming American workers and taxpayers. The Trump administration advocated for a stricter approach to immigration and for a more rigorous vetting process for foreign workers. This book argues that the Trump administration's perspective on the CW-1 program is valid. The program has failed to achieve its intended goals, and it has become a drain on the U.S. economy. It's time to abolish this program and implement more sustainable and equitable immigration policies.
4.3 A Path Forward: Abolishing the CW-1 Program and Implementing Stricter Visa Regulations: The Trump administration, while advocating for change, did not go far enough. Instead of simply tweaking the CW-1 program, the U.S. government should fully abolish it and replace it with a more rigorous system based on the principles of:
American Workers First: Prioritizing U.S. workers for employment opportunities in the CNMI.
Stricter Visa Requirements: Mandating that all foreign workers entering the CNMI do so under the H1/H2 visa program. This will subject them to more stringent vetting procedures. American Educational Credentials: Requiring that all educational accreditations for foreign workers be from American institutions. This will help to curb the use of fake or bogus educational credentials.
Ending Visa Fraud: Strengthening the process for reviewing visa applications to combat fraud and ensure that foreign workers are coming to the CNMI for legitimate reasons. This includes focusing on addressing the flow of immigration fraud coming from the Philippines, a major source of CW-1 workers.
4.4 H.R. 2 and its Relevance to the CNMI The principles outlined in H.R. 2, the "Secure the Border Act of 2023," are directly relevant to the CNMI's situation. This bill proposes a comprehensive set of reforms to address immigration and border security in the U.S. Border Security: H.R. 2 emphasizes the importance of securing the nation's borders to prevent illegal immigration. Immigration Reform: The bill proposes a system of merit-based immigration, prioritizing skilled workers and those with family ties to the U.S. Visa Reform: H.R. 2 aims to reduce visa fraud and to strengthen the vetting process for foreign workers. The book argues that the principles of H.R. 2 should be applied to the CNMI. This will help to create a more secure and sustainable immigration system for the island, addressing the problems of visa fraud, chain migration, and the exploitation of foreign workers.
4.5 The Impact of the CW-1 Program: The CNMI's reliance on the CW-1 program has had a number of consequences that have detrimentally impacted the island's economy and social fabric.
Economic Dependence: The CNMI has become increasingly dependent on foreign labor, making it vulnerable to economic shocks and fluctuations in the global labor market. Exploitation of Workers: The CW-1 program has created a system where foreign workers are often exploited, paid low wages, and subject to poor working conditions. The garment industry, in particular, has been plagued by allegations of labor abuse.
Lost Revenue: The CNMI government's exemption of remittances from taxation has resulted in a significant outflow of capital from the island's economy. This lost revenue has hindered the CNMI's ability to invest in infrastructure, education, and other essential services. Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow:
Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000 These are just estimations, but they show that the outflow of remittances could be substantial, further weakening the CNMI's economy.
Chain Migration: The CW-1 program has fueled chain migration, as workers bring in family members, including spouses and children, under the CW-2 visa category. This influx of additional residents has placed a significant strain on the CNMI's social services, healthcare system, and housing market, further burdening the island's resources.
The "Sinkhole" Effect: The CW-1 program has created a "sinkhole" effect, where capital is constantly being pulled out of the local economy, hindering growth and increasing dependence on federal aid.
Impact on American Taxpayers: The CW-1 program has placed a significant burden on American taxpayers, who are effectively subsidizing the CNMI's workforce and economic instability.
4.6 Addressing the Concerns of the CNMI Government: The CNMI government has expressed concerns about the potential impact of abolishing the CW-1 program and implementing stricter visa regulations. They fear that such changes could harm the economy and make it difficult to staff businesses.
However, the book argues that the CNMI's current economic model is unsustainable. The island needs to move away from its dependence on foreign labor and to invest in local training and workforce development. This will require a commitment to more balanced and sustainable economic policies.
4.7 The Need for Comprehensive Solutions: The book argues that addressing the problems with the CW-1 visa program requires a comprehensive approach. It's not just about stricter enforcement; it's about creating a more just and equitable system. This involves: Transparency: The CNMI government must be more transparent in its operations, particularly regarding visa approvals and the use of federal funds.
Accountability: The CNMI government must be held accountable for its role in the problems outlined in the book.
Investment in Local Workers: The CNMI government should prioritize investment in training and education programs for its citizens.
Diversifying the Economy: The CNMI needs to diversify its economy, reducing its dependence on industries that are heavily reliant on foreign labor.
4.8 A Call for Action: The CNMI has the potential to achieve a bright and prosperous future. But this future is threatened by the "sinkhole" effect of lost revenue and the exploitation of foreign workers. The U.S. government must act to abolish the CW-1 program and to implement more sustainable and equitable immigration policies.
The CNMI government has a responsibility to:
Embrace Reform: Implement a comprehensive set of reforms that address corruption, nepotism, and the issues of foreign labor exploitation.
Promote Transparency: Ensure that its operations are open and accountable to the public. Invest in Local Workers: Prioritize investments in training and education programs to prepare local citizens for skilled jobs.
Diversify the Economy: Seek to diversify the island's economy to reduce reliance on any single industry or investor.
Conclusion:
The CNMI's reliance on the CW-1 visa program has created a system that is unfair, unethical, and ultimately unsustainable. It's time to move beyond this "one-way street" and to create a more just and equitable future for the CNMI, its people, and the American taxpayers.
This requires the U.S. government to take a leadership role in
enforcing immigration laws and in fostering a more sustainable and self-sufficient economic model.
Chapter 5# Chapter 5: The Need for Transparency and Accountability
The CNMI's economic crisis is deeply rooted in a lack of transparency and accountability in its government. This has allowed corruption, nepotism, and the abuse of foreign workers to flourish, undermining the island's ability to manage its finances effectively and to create a just and equitable society. This chapter examines the critical importance of transparency and accountability in the CNMI government. It explores the role of the Government Accountability Office (GAO), analyzes the current state of transparency in the CNMI, and makes recommendations for enhancing government accountability.
5.1 The Importance of Transparency and Accountability
Transparency and accountability are essential for good governance and for promoting economic development. They ensure that:
Public Trust: The public trusts that the government is acting in their best interests and that they are not being misled or abused.
Fair Competition: Businesses operate on a level playing field and that government contracts are awarded fairly and transparently.
Effective Oversight: Government agencies are accountable for their actions and that their activities are monitored to ensure effectiveness and efficiency.
Economic Stability: Investors and creditors have confidence in the government's financial management, promoting economic growth and stability.
5.2 The Government Accountability Office (GAO):
The "Congressional Watchdog" The Government Accountability Office (GAO), often called the "congressional watchdog," is an independent, non-partisan agency that works for Congress. GAO examines how taxpayer dollars are spent and provides Congress and federal agencies with objective, non-partisan, fact-based information to help the government save money and work more efficiently.
The GAO plays a crucial role in ensuring transparency and accountability in the use of federal funds. It conducts audits, investigations, and evaluations of government programs and agencies, identifying areas of waste, fraud, and abuse.
The GAO's findings and recommendations can help to improve government performance and to hold agencies accountable for their actions.
5.3 The Current State of Transparency in the CNMI
The CNMI's government has been criticized for a lack of transparency in its operations. This lack of transparency is evident in a number of areas:
Government Contracts: There is limited public access to information about government contracts, including those for infrastructure projects, making it difficult to monitor the awarding of contracts and to assess the potential for corruption.
Financial Data: The CNMI government has been reluctant to disclose detailed financial data, making it challenging for the public to track government spending and to hold agencies accountable.
Remittance Data: No CNMI government agency, including the CNMI Commonwealth Development Authority, the Department of Finance, the Department of Tax and Revenue, or the Department of Registrar, collects data on remittances from foreign workers or corporations. This lack of transparency makes it impossible to accurately assess the volume of money flowing out of the CNMI and its impact on the local economy.
Public Records: Access to public records in the CNMI is often restricted or difficult, making it challenging to obtain information about government activities.
5.4 The Impact of Lack of Transparency on the CNMI
The CNMI's lack of transparency has contributed to its economic crisis in several ways: Misappropriation of Federal Funds: The CNMI government has been accused of misappropriating and mismanaging federal grants, with a significant portion of these funds potentially ending up in the Philippines and China.
Lack of Data on Remittances: The absence of remittance data makes it impossible to accurately assess the financial drain on the CNMI's economy and to determine how much revenue the government is losing.
Inefficient Use of Resources: The lack of transparency and accountability hinders the CNMI's ability to make sound investments in infrastructure and economic development, leading to an inefficient use of resources.
Erosion of Public Trust: The lack of transparency creates a lack of public trust in the government, hindering its ability to implement essential reforms and to build a stronger economic future.
5.5 Recommendations for Enhancing Government Accountability
To address the CNMI's lack of transparency and accountability, a number of reforms are needed:
Strengthen the Role of the GAO: The CNMI government should actively collaborate with the GAO to ensure that federal funds are used responsibly and effectively.
This includes: Inviting the GAO to conduct comprehensive and independent audits of government operations. Granting the GAO access to all relevant financial data and records. Cooperating fully with GAO investigations and providing the necessary information.
Promote Transparency in Government Operations: The CNMI government should:
Mandate public disclosure of all government contracts, including those awarded to foreign-owned companies. Publish detailed financial data on a regular basis, including information on government revenue, expenditures, and remittances. Streamline the process for accessing public records, making it easier for citizens and journalists to obtain information about government activities.
Address Systemic Corruption: The CNMI government should take concrete steps to address the systemic corruption that has been exposed in the book, including: Enacting and enforcing stricter conflict of interest laws to prevent government officials from using their positions for personal gain.
Establishing a system of independent oversight for the awarding of government contracts. Holding individuals and agencies accountable for their actions, including the possibility of criminal charges for those involved in fraud or abuse.
5.6 The United Filipino Organization (UFO): A Case Study in Lack of Transparency
The United Filipino Organization (UFO), ostensibly a humanitarian group dedicated to helping Filipino workers in the CNMI, has been accused of more sinister practices. It has been alleged that the UFO extorts "dues" from CW-1 workers, often under the guise of membership fees or services, and uses those funds to influence CNMI politics. These practices have potentially given the UFO a powerful voice in the CNMI government, allowing it to advance its agenda, potentially favoring Tan Holdings and Chinese interests. The "Persona Non Grata" article raises concerns about the UFO's alleged ties to the Chinese Communist Party (CCP): "The UFO's influence in CNMI politics is a cause for concern, especially given the organization's potential connections to the CCP. The CCP's strategic interests in the region, including its desire to expand its influence in the Pacific, could be advanced through the UFO's influence over CNMI politics. This raises serious questions about the potential for the CNMI to become a "satellite state" for the CCP, undermining U.S. interests and regional stability."
5.7 The "Sinkhole" Effect: The lack of transparency and accountability in the CNMI government has been a major contributor to the "sinkhole" effect of lost revenue. This is evident in: Misappropriation of Federal Funds: The CNMI government has been accused of
misappropriating and mismanaging federal grants, with a significant portion of these funds potentially ending up in the Philippines and China.
Lack of Data on Remittances: The absence of remittance data makes it impossible to accurately assess the financial drain on the CNMI's economy and to determine how much revenue the government is losing. Inefficient Use of Resources: The lack of transparency and accountability hinders the CNMI's ability to make sound investments in infrastructure and economic development, leading to an inefficient use of resources.
5.8 A Call for Action: The CNMI government must prioritize transparency and accountability to restore public trust, to promote a more equitable society, and to attract the investment needed for economic growth. The island's future depends on a government that is accountable to its citizens and that operates in an open and transparent manner. This chapter has highlighted the crucial role of transparency and accountability in fostering good governance and sustainable development. As the CNMI embarks on a path of reform, it must take concrete steps to address these fundamental challenges.
The U.S. government also has a role to play in promoting transparency and accountability in the CNMI, especially in its oversight of federal funding and assistance programs.
Chapter #6 Chapter 6: The Role of the U.S. Department of Treasury in Addressing the CNMI's Economic Shortfalls The CNMI's economic crisis is a stark reminder of the importance of robust oversight mechanisms for managing federal funds, especially in U.S. territories with limited resources and a history of corruption. This chapter will examine the need for the U.S. Department of the Treasury to play a more active role in overseeing all federal funds, grants, and investments in the CNMI.
6.1 The Need for Enhanced Oversight The CNMI has long been a recipient of significant federal aid, but the island's government has struggled to effectively manage these funds. The "sinkhole" effect of lost revenue, fueled by corruption, nepotism, and the lack of transparency, has highlighted the need for more robust oversight mechanisms. The U.S. Department of the Treasury currently plays a role in overseeing federal funds. However, its authority is limited, and it often lacks the resources and tools necessary to conduct comprehensive audits and to identify instances of mismanagement or fraud.
6.2 The Benefits of a More Active Treasury Role A more active role by the U.S. Department of the Treasury could help to address the CNMI's financial challenges and promote greater transparency and accountability. The Treasury could:
Strengthen Oversight Mechanisms: The Treasury could work with the CNMI government and other federal agencies to strengthen oversight mechanisms, such as:
Establishing a Federal Comptroller: Creating a mandatory federal grant comptroller specifically for the CNMI, who would have the authority to conduct independent audits of all federal funds, grants, and investments, identify instances of misuse or fraud, and issue public reports on their findings.
Enhancing the GAO's Role: Increasing the GAO's oversight capacity and granting it greater access to information about federal funding programs in the CNMI, particularly regarding the disbursement and utilization of federal funds.
Promote Transparency and Accountability: The Treasury could work to increase transparency in the CNMI's financial operations by:
Mandating Public Disclosure: Requiring the CNMI government to publicly disclose all government contracts, including those awarded to foreign-owned companies, as well as detailed financial data on government revenue, expenditures, and remittances.
Streamlining Access to Public Records: Working with the CNMI government to make it easier for citizens and journalists to access public records.
Support Sustainable Economic Development: The Treasury could work with the CNMI government to promote economic diversification and sustainable growth by:
Encouraging Responsible Investments: Encouraging investments in industries that are less reliant on foreign labor and that have a long-term potential for growth.
Promoting Environmental Sustainability: Encouraging the CNMI to develop eco-friendly tourism initiatives and to adopt sustainable development practices.
Address Systemic Corruption: The Treasury could assist the CNMI government in addressing systemic corruption by: Enforcing Conflict of Interest Laws: Working with the CNMI government to enforce stricter conflict of interest laws to prevent government officials from using their positions for personal gain.
Establishing Independent Contract Oversight: Working with the CNMI government to establish a system of independent oversight for the awarding of government contracts.
Holding Officials Accountable: Working with the U.S. Department of Justice and other relevant agencies to hold CNMI officials accountable for their actions, including the possibility of criminal charges for those involved in fraud or abuse.
6.3 Case Studies The success of similar oversight mechanisms in other U.S. territories and programs illustrates the potential benefits of a more active Treasury role for the CNMI. U.S. Virgin Islands: After a period of significant financial mismanagement, the U.S. Virgin Islands established a Financial Recovery Oversight Board with independent authority to oversee the territory's finances. This board has helped to restore fiscal stability and to promote transparency and accountability.
Federal Program Examples: The Department of Housing and Urban Development (HUD) has a strong Office of Inspector General (OIG) that conducts audits and investigations of HUD programs. The OIG's work has helped to identify and address instances of fraud, waste, and abuse in HUD programs, promoting accountability and ensuring that these programs are effectively meeting their goals.
6.4 Addressing Concerns: Some might raise concerns about the feasibility of a more active Treasury role. These might include:
Potential for Bureaucracy: A more active Treasury role could create additional bureaucracy and delay the disbursement of funds. Conflicts of Interest: The Treasury could be vulnerable to conflicts of interest or political influence, potentially undermining its independence. Addressing these concerns:
Streamlined Operations: The Treasury's approach could be designed to be streamlined and efficient, minimizing bureaucracy and maximizing impact. Strong Independence: The Treasury should operate independently, free from political pressure, to ensure that its audits and investigations are conducted impartially.
6.5 The "Sinkhole" Effect and Remittances: The CNMI's lack of a remittance tax and the "sinkhole" effect of capital outflow through remittances are significant issues that the Treasury should consider. Remittances, particularly from foreign workers who are often paid low wages, represent a major drain on the CNMI's economy. The Treasury should work with the CNMI government to:
Establish a Remittance Tax: Imposing a remittance tax on all foreign outflows could generate significant revenue for the CNMI government, helping to offset the financial drain caused by capital outflow and potentially reduce the need for federal aid.
Data Collection: Encourage the CNMI government to establish a robust data collection system to track remittances from foreign workers and corporations. This will provide a more complete understanding of the economic impact of remittances and enable the government to make more informed policy decisions.
6.6 A Call for Action: The CNMI's economic crisis is a stark reminder of the dangers of unchecked corruption and the importance of ensuring that federal funds are used responsibly. The U.S. government has a moral obligation to protect the American taxpayers and to ensure that federal funds are used to benefit the CNMI's people. A more active role for the U.S. Department of the Treasury in the CNMI is a critical step in this direction. It would provide the necessary oversight, transparency, and accountability to ensure that federal funds are used effectively and that the CNMI's economic future is secured.
Conclusion:
This chapter has highlighted the importance of a more active Treasury role in overseeing federal funds allocated to the CNMI. By establishing a strong and independent oversight mechanism, the U.S. government can help to ensure that these funds are used responsibly and that the CNMI can move towards a more sustainable and self-sufficient economic model.
CHAPTER 7# Chapter 7: The Importance of a Federal Comptroller
The CNMI's economic crisis is a stark reminder of the importance of robust oversight mechanisms for managing federal funds, especially in U.S. territories with limited resources and a history of corruption. This chapter will examine the need for a federal comptroller to oversee all federal funds, grants, and investments in the CNMI.
7.1 The Need for Enhanced Oversight
The CNMI has long been a recipient of significant federal aid, but the island's government has struggled to effectively manage these funds. The "sinkhole" effect of lost revenue, fueled by corruption, nepotism, and the lack of transparency, has highlighted the need for more robust oversight mechanisms. The U.S. Department of the Treasury currently plays a role in overseeing federal funds.
However, its authority is limited, and it often lacks the resources and tools necessary to conduct comprehensive audits and to identify instances of mismanagement or fraud.
7.2 The Benefits of a Federal Grant Comptroller A dedicated federal comptroller specifically for the CNMI could dramatically improve oversight, transparency, and accountability.
Here's how:
Independent Oversight: A federal grant comptroller would provide a layer of independent oversight and scrutiny over all federal funds allocated to the CNMI. This would help to ensure that these funds are used appropriately and effectively.
Increased Transparency: The comptroller would conduct regular audits of federal funds, generating public reports on spending, allocation, and compliance with regulations. This transparency would help to deter corruption and to expose any instances of wrongdoing.
Enhanced Accountability: The comptroller would be responsible for investigating allegations of fraud, waste, or abuse of federal funds. This would hold both CNMI government agencies and recipients accountable for their actions.
Improved Efficiency: The comptroller could help to streamline the process for allocating and disbursing federal funds, making it more efficient and ensuring that these funds are used to achieve their intended goals.
Preventing Future Mismanagement: By establishing a strong and independent oversight mechanism, the comptroller could help to prevent future instances of corruption and mismanagement, building trust and confidence in the use of federal funds.
7.3 Case Studies The success of similar oversight mechanisms in other U.S. territories and programs illustrates the potential benefits of a federal grant comptroller for the CNMI. U.S.
Virgin Islands: After a period of significant financial mismanagement, the U.S. Virgin Islands established a Financial Recovery Oversight Board with independent authority to oversee the territory's finances. This board has helped to restore fiscal stability and to promote transparency and accountability.
Federal Program Examples: The Department of Housing and Urban Development (HUD) has a strong Office of Inspector General (OIG) that conducts audits and investigations of HUD programs. The OIG's work has helped to identify and address instances of fraud, waste, and abuse in HUD programs, promoting accountability and ensuring that these programs are effectively meeting their goals.
7.4 Addressing Concerns: Some might raise concerns about the feasibility of implementing a federal grant comptroller. These might include: Potential for Bureaucracy:
A new office could create additional bureaucracy and delay the disbursement of funds.
Conflicts of Interest: The comptroller could be vulnerable to conflicts of interest or political influence, potentially undermining its independence.
Addressing these concerns: Streamlined Operations: The comptroller's office could be designed to be streamlined and efficient, minimizing bureaucracy and maximizing impact. Strong Independence: The comptroller should be appointed by Congress and have a clear mandate to operate independently, free from political pressure.
This will ensure that its audits and investigations are conducted impartially.
7.5 A Call for Action: The CNMI's economic crisis is a stark reminder of the dangers of unchecked corruption and the importance of ensuring that federal funds are used responsibly. The U.S. government has a moral obligation to protect the American taxpayers and to ensure that federal funds are used to benefit the CNMI's people. Establishing a mandatory federal grant comptroller for the CNMI is a critical step in this direction. It would provide the necessary oversight, transparency, and accountability to ensure that federal funds are used effectively and that the CNMI's economic future is secured.
7.6 Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow: Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000 These are just estimations, but they show that the outflow of remittances could be substantial, further weakening the CNMI's economy. Conclusion: This chapter has highlighted the importance of a federal grant comptroller in overseeing federal funds allocated to the CNMI. By establishing a strong and independent oversight mechanism, the U.S. government can help to ensure that these funds are used responsibly and that the CNMI can move towards a more sustainable and self-sufficient economic model.
CHAPTER 8# Chapter 8: The Theoretical Framework for Capturing Revenue The CNMI's economic crisis has brought into sharp focus the need for a more robust revenue generation strategy. The "sinkhole" effect, fueled by a reliance on foreign labor, the exemption of remittances from taxation, and systemic corruption, has dramatically weakened the island's financial foundation. To achieve true economic self-sufficiency and reduce its dependence on federal aid, the CNMI government must develop a more effective approach to capturing revenue. This chapter explores the various theoretical approaches to revenue generation, focusing on how they could be applied to the CNMI's unique situation. We will examine the strengths and weaknesses of different tax systems, discuss strategies for attracting foreign investment, and explore other potential revenue sources. The goal is to identify practical solutions that could help the CNMI government create a more sustainable economic future.
8.1 Taxation Theory: Principles and Approaches Taxation theory explores the various ways that governments can levy taxes to raise revenue. Here are some of the key principles and approaches:
Ability to Pay: This principle suggests that taxes should be levied based on an individual's or a company's ability to pay. This means that those with higher incomes or greater wealth should contribute a larger share of taxes.
Benefit Principle: The benefit principle suggests that those who benefit from public services should pay for them. This principle is often used to justify taxes on gasoline, which funds road construction and maintenance.
Horizontal Equity: This principle suggests that individuals or companies with similar incomes or wealth should pay a similar amount of taxes.
Vertical Equity: This principle suggests that individuals or companies with higher incomes or greater wealth should pay a greater share of taxes.
Progressive Taxation: This system uses higher tax rates for higher incomes and lower tax rates for lower incomes. This system is designed to distribute the tax burden more equitably. Regressive Taxation: This system uses a higher tax burden on lower-income earners.
This system can exacerbate inequality and can disproportionately impact those who can least afford it.
8.2 Remittance Taxes: A Critical Opportunity for the CNMI
The CNMI's exemption of remittances from taxation has been a major contributor to the "sinkhole" effect. A significant percentage of the wages earned by CW-1 workers are sent back to their home countries as remittances, primarily to the Philippines and China. This outflow of capital weakens the CNMI's economy, making it harder to create jobs, generate local revenue, and attract investment. Implementing a remittance tax in the CNMI could offer several benefits:
Revenue Generation: A remittance tax could generate significant revenue for the CNMI government, helping to offset the financial drain caused by capital outflow.
Reduced Capital Outflow: A remittance tax could help to retain capital within the CNMI, supporting local businesses and investments.
A More Equitable System: Remittance taxes could create a more equitable tax system, as they would place a burden on foreign workers and corporations who are benefiting from the CNMI's economy.
8.3 Attracting Foreign Investment: A Balanced Approach
The CNMI government has actively sought to attract foreign investment. While foreign investment can be a powerful engine for economic growth, it's crucial to implement strategies that:
Promote Transparency: Transparency in the process for awarding government contracts, allocating resources, and approving investment projects will build confidence among foreign investors.
Prioritize Sustainable Development: The CNMI should prioritize projects that promote long-term economic growth and environmental protection.
Ensure Fair Labor Practices: Investors should be required to adhere to local labor standards and to avoid exploiting workers.
8.4 Exploring Other Revenue Sources
The CNMI government should consider exploring other revenue sources to diversify its revenue base and reduce its dependence on federal aid.
This could involve:
Tourism Taxes: The CNMI government could increase taxes on tourism, such as hotel occupancy taxes and visitor fees.
Property Taxes: The CNMI government could impose property taxes, which are currently not levied in the CNMI.
Excise Taxes: The CNMI government could expand excise taxes on goods and services, such as tobacco products, alcohol, and luxury goods.
8.5 Policy Recommendations: The CNMI government needs to implement a comprehensive tax reform strategy that prioritizes:
Fairness: The tax system should be fair and equitable, ensuring that all individuals and companies contribute a reasonable share of taxes based on their ability to pay.
Efficiency: The tax system should be efficient, minimizing tax evasion and fraud and ensuring that taxes are collected effectively.
Simplicity: The tax system should be simple and easy to understand, reducing compliance costs and promoting voluntary compliance. Specific recommendations include:
Implementing a Remittance Tax: Imposing a mandatory remittance tax on all foreign outflows, such as those from CW-1 workers and corporations.
Enhancing Tax Administration: Strengthening the CNMI Department of Tax and Revenue to improve the collection and administration of taxes. Establishing Independent Oversight: Creating a dedicated and independent agency to oversee the CNMI's tax system and to prevent tax evasion and fraud. Promoting Transparency: Ensuring that all government financial data, including remittance information, is made publicly available.
8.6 The "Sinkhole" Effect and Remittances: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow: Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000 Using this data, we can estimate the potential lost revenue from remittance taxes: Potential Remittance Tax Revenue (2018-2024): Year CW-1 Worker Population (estimated) Estimated Remittances Remittance Tax Revenue (5.75%)
2018 * 12,000 - $45,000,000 = $2,587,500
2019 * 11,000 - $41,250,000 = $2,371,875
2020 * 10,000 - $37,500,000 = $2,156,250
2021 * 9,000 - $33,750,000 = $1,940,625
2022 * 8,000 - $30,000,000 = $1,725,000
2023 * 7,000 - $26,250,000 = $1,509,375
2024 * 6,000 - $22,500,000 = $1,293,750 Total Estimated Lost Tax Revenue (2018-2024): $15,583,425 These estimations demonstrate how much revenue the CNMI government could have potentially captured through a remittance tax. This lost revenue further exacerbates the need for federal aid and contributes to the "sinkhole" effect. Conclusion: The CNMI's economic future hinges on its ability to generate sufficient revenue to support its government and to invest in its people. This chapter has explored various theoretical frameworks for capturing revenue, highlighting the potential benefits and drawbacks of different approaches. The CNMI government must embrace a bold and comprehensive tax reform strategy that prioritizes fairness, efficiency, and transparency. This will help the island to secure a more sustainable and self-sufficient economic future.
CHAPTER 9# Chapter 9: The Impact of the CNMI's Economic Shortfalls on the American Taxpayer
The CNMI's economic crisis is not just a local problem. It has created a significant burden on American taxpayers, who are effectively subsidizing the island's unsustainable economic model. This chapter will examine the impact of the CNMI's economic shortfalls on the American taxpayer, highlighting the financial strain caused by federal aid and the consequences of unchecked corruption.
9.1 The Growing Burden on American Taxpayers
The U.S. government has provided billions of dollars in financial assistance to the CNMI, through a variety of programs, including:
Covenant Section 702 Grants: These grants, originally established in 1976, were meant to help the CNMI achieve self-sufficiency and a higher standard of living for its citizens.
Capital Improvement Projects (CIP): These grants are intended to fund infrastructure projects in the CNMI, such as roads, ports, schools, and hospitals.
Other Federal Programs: The CNMI also receives funds from other federal programs, such as the American Rescue Plan Act (ARPA) and the CNMI Boost program. However, much of this federal aid has been misspent or squandered. The CNMI government's failure to effectively manage its finances, its lack of transparency and accountability, and its reliance on foreign labor have resulted in a "sinkhole" effect, draining the island's resources and increasing its dependence on federal aid. The American taxpayer has been left footing the bill for the CNMI's economic woes.
9.2 The Cycle of Dependence
The CNMI's dependence on federal aid has created a vicious cycle:
Increased Funding: As the CNMI's economic challenges worsen, it continues to seek more federal aid.
Lack of Accountability: The CNMI government has often failed to demonstrate accountability for how these funds are spent, leading to continued requests for aid.
Erosion of Self-Sufficiency: This cycle of dependence has hindered the CNMI's ability to develop a more sustainable and self-sufficient economy.
9.3 The Consequences of Corruption and Mismanagement: The CNMI's economic shortfalls are exacerbated by rampant corruption and mismanagement. This has been evident in: Misappropriation of Federal Funds: Federal funds have been diverted from their intended purposes, used for personal gain, or wasted through inefficient practices.
Nepotism: Government contracts and jobs have been awarded to individuals based on family ties rather than merit. This practice, known as nepotism, has been a long-standing issue in the CNMI. Families with significant political influence, including those with the surnames Guerrero, Torres, Manglona, Camacho, Pangelinan, Falig, Benevete, Sablan and Ada, have often been accused of using their connections to secure lucrative government contracts, jobs, and other benefits. This systemic nepotism has undermined the CNMI's ability to effectively manage its resources and to promote a more equitable society.
Visa Fraud: The CW-1 visa program has been plagued by fraud, with employers making false representations and workers obtaining visas through deception.
Remittance Outflow: A significant portion of the federal funds and remittances from foreign workers and corporations have flowed out of the CNMI, further hindering the island's economic development.
9.4 The Impact on American Taxpayers: The CNMI's economic shortfalls are creating a significant financial strain on American taxpayers. The billions of dollars in federal aid provided to the CNMI have often not yielded the intended results. American taxpayers are essentially subsidizing an unsustainable economic model.
9.5 Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow: Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000 Using this data, we can estimate the potential lost revenue from remittance taxes: Potential Remittance Tax Revenue (2018-2024): Year CW-1 Worker Population (estimated) Estimated Remittances Remittance Tax Revenue (5.75%) 2018 12,000 $45,000,000 $2,587,500 2019 11,000 $41,250,000 $2,371,875 2020 10,000 $37,500,000 $2,156,250 2021 9,000 $33,750,000 $1,940,625 2022 8,000 $30,000,000 $1,725,000 2023 7,000 $26,250,000 $1,509,375 2024 6,000 $22,500,000 $1,293,750
Total Estimated Lost Tax Revenue (2018-2024): $15,583,425 These estimations demonstrate how much revenue the CNMI government could have potentially captured through a remittance tax. This lost revenue further exacerbates the need for federal aid and contributes to the "sinkhole" effect.
9.6 The "Sinkhole" Effect:
The lack of transparency and accountability in the CNMI government has been a major contributor to the "sinkhole" effect of lost revenue. This is evident in:
Misappropriation of Federal Funds: The CNMI government has been accused of misappropriating and mismanaging federal grants, with a significant portion of these funds potentially ending up in the Philippines and China.
Lack of Data on Remittances: The absence of remittance data makes it impossible to accurately assess the financial drain on the CNMI's economy and to determine how much revenue the government is losing. Inefficient Use of Resources: The lack of transparency and accountability hinders the CNMI's ability to make sound investments in infrastructure and economic development, leading to an inefficient use of resources.
9.7 Policy Recommendations:
To mitigate the burden on American taxpayers and to ensure that federal aid is used responsibly, the following policy recommendations should be considered: Strengthen Oversight Mechanisms: The U.S. government should establish more rigorous oversight mechanisms for federal funds allocated to the CNMI. This could involve:
Federal Comptroller: Creating a mandatory federal grant comptroller to oversee all federal funds allocated to the CNMI, conducting independent audits, investigating allegations of fraud, and ensuring that funds are used effectively.
Strengthening the GAO's Role: Increasing the GAO's oversight capacity and granting it greater access to information about federal funding programs in the CNMI.
Increase Transparency and Accountability: The U.S. government should demand greater transparency and accountability from the CNMI government. This could include: Requiring the CNMI government to publish detailed financial data on a regular basis. Mandating the CNMI government to conduct independent audits of its operations. Holding CNMI officials accountable for their actions, including the possibility of criminal charges for those involved in fraud or abuse.
This could include:
Requiring the CNMI to demonstrate how federal funds will be used to promote economic self-sufficiency. Placing restrictions on the use of federal funds, such as prohibiting their use for projects that are not aligned with the goals of sustainable development.
Conclusion:
The CNMI's economic shortfalls are a major concern for the American taxpayer. The U.S. government must take a leadership role in addressing these challenges to protect taxpayers and to ensure that federal funds are used responsibly. This requires a commitment to greater transparency, accountability, and more effective oversight of federal aid programs. The CNMI government also has a responsibility to embrace a more balanced and sustainable economic model, reducing its dependence on federal assistance and investing in its own people.
CHAPTER 10# Chapter 10: The Case for Reform The CNMI's economic crisis is a result of a deeply entrenched pattern of corruption, nepotism, and a lack of transparency. This has undermined the island's ability to manage its finances responsibly, to attract investment, and to create a just and equitable society. This chapter presents a compelling case for reform in the CNMI government. It will examine the need for change, discuss potential reforms, and analyze successful reform initiatives from other regions.
10.1 The Need for Change: The CNMI's economic challenges are not just a matter of bad luck or poor economic conditions. The island's problems are rooted in systemic failures within the government. These failures have been evident in:
Corruption: The CNMI government has been plagued by widespread corruption, including the misappropriation of federal funds, the awarding of contracts based on nepotism rather than merit, and the exploitation of foreign workers.
Nepotism: The island's political system has been dominated by a small number of families, who have often used their positions to benefit their own interests. This has resulted in a lack of accountability and a concentration of power in the hands of a select few.
Lack of Transparency: The CNMI's government has been opaque in its operations, making it difficult for citizens to track government spending, to hold officials accountable, and to participate in the political process.
Visa Fraud: The CNMI's CW-1 visa program has become a vehicle for fraud, allowing foreign workers to enter the island under false pretenses and be exploited.
Remittance Outflow: The "sinkhole" effect of remittances flowing out of the CNMI has further weakened the island's economy, making it difficult to attract investment, create jobs, and fund essential services.
These systemic problems have resulted in a loss of public trust, a lack of economic stability, and a diminished standard of living for the CNMI's citizens.
10.2 Potential Reforms: To address these deep-seated problems, the CNMI government must embark on a path of comprehensive reform. Key areas of focus should include:
Transparency and Accountability: Strengthen the GAO: The CNMI government should actively collaborate with the GAO to ensure that federal funds are used responsibly and effectively. This includes inviting the GAO to conduct comprehensive and independent audits of government operations, granting the GAO access to all relevant financial data, and cooperating fully with GAO investigations.
Public Disclosure: The CNMI government should mandate public disclosure of all government contracts, including those awarded to foreign-owned companies. Financial Data Transparency: The CNMI government should publish detailed financial data on a regular basis, including information on government revenue, expenditures, and remittances. Streamlined Access to Public Records: The CNMI government should make it easier for citizens and journalists to access public records. Addressing Corruption and Nepotism: Conflict of Interest Laws: The CNMI government should enact and enforce stricter conflict of interest laws to prevent government officials from using their positions for personal gain. Independent Contract Oversight: The CNMI government should establish a system of independent oversight for the awarding of government contracts, ensuring that bids are evaluated fairly, and that contracts are awarded based on merit rather than political influence. Accountability for Fraud: The CNMI government should hold individuals and agencies accountable for their actions, including the possibility of criminal charges for those involved in fraud or abuse of public funds. Restoring Integrity to the CW-1 Visa Program: Abolish the CW-1 Program: The CNMI government should abolish the CW-1 program, which has been a major driver of the "sinkhole" effect. Implement Stricter Visa Requirements: All foreign workers entering the CNMI should be required to do so under the H1/H2 visa program, subjecting them to more stringent vetting procedures. American Educational Credentials: All educational accreditations for foreign workers
should be required to come from American institutions, to curb the use of fraudulent credentials. Ending Visa Fraud: The CNMI government should strengthen the process for reviewing visa applications to combat fraud. Strengthen Enforcement: The CNMI Department of Labor and the U.S. Department of Labor should increase enforcement efforts to combat visa fraud and ensure that employers are complying with the terms of the visa program. This includes conducting more frequent audits and investigations of employers and imposing stricter penalties for violations.
Promoting Economic Diversification: Support Local Businesses: The CNMI government should prioritize investments in local businesses and entrepreneurs, helping them to create jobs and to generate local revenue.
Invest in New Industries: The CNMI government should invest in new industries that are less reliant on foreign labor and that have a long-term potential for growth.
Develop New Export Markets: The CNMI should look to develop new export markets to reduce its dependence on any single industry or investor.
10.3 Tan Holdings, GPPC Construction, and the Dominance of Infrastructure Projects: Tan Holdings, a CNMI-based conglomerate, has gained a dominant position in the island's construction industry. Through its subsidiary, GPPC Construction, Tan Holdings has secured access to almost all CNMI infrastructure projects, often through sole-sourcing arrangements. This raises significant concerns about potential corruption and the misappropriation of federal funds. The "Persona Non Grata" article, published on CNMIGA.org, sheds light on these practices: "Tan Holdings, with its vast influence in the CNMI, has leveraged its connections to government officials, securing contracts that benefit its bottom line while leaving a trail of questionable spending. The systemic nature of this arrangement—where a single entity holds a monopoly over critical infrastructure projects—undermines fair competition and contributes to the economic "sinkhole" effect that has plagued the CNMI." "Tan Holdings' success can be traced back to its close relationships with CNMI officials, some of whom have family ties to the Tan family. These connections create an atmosphere of favoritism and influence peddling, where merit is often overlooked in the awarding of government contracts." "The monopolization of infrastructure projects by Tan Holdings, often through sole-sourcing arrangements, has had a devastating impact on the CNMI's economy. It has hindered fair competition, contributing to higher costs, and has potentially led to the misappropriation of federal funds."
10.4 The United Filipino Organization (UFO) and Political Influence: The United Filipino Organization (UFO), ostensibly a humanitarian group dedicated to helping Filipino workers in the CNMI, has been accused of more sinister practices. It has been alleged that the UFO extorts "dues" from CW-1 workers, often under the guise of membership fees or services, and uses those funds to influence CNMI politics. These practices have potentially given the UFO a powerful voice in the CNMI government, allowing it to advance its agenda, potentially favoring Tan Holdings and Chinese interests. The "Persona Non Grata" article raises concerns about the UFO's alleged ties to the Chinese Communist Party (CCP): "The UFO's influence in CNMI politics is a cause for concern, especially given the organization's potential connections to the CCP. The CCP's strategic interests in the region, including its desire to expand its influence in the Pacific, could be advanced through the UFO's influence over CNMI politics. This raises serious questions about the potential for the CNMI to become a "satellite state" for the CCP, undermining U.S. interests and regional stability."
10.5 Family Connections and Nepotism: The CNMI's political system has been dominated by a small number of families, who have often used their positions to benefit their own interests. This has resulted in a lack of accountability and a concentration of power in the hands of a select few. The names you provided (Guerrero, Sablan, Torres, Manglona, Camacho, Pangelinan, Falig, Ada) are commonly found among influential individuals in the CNMI government, raising concerns about potential nepotism and favoritism in the awarding of government contracts and jobs.
10.6 The Need for a Collaborative Approach: Reform in the CNMI requires a collaborative approach, involving the CNMI government, the U.S. government, and the island's citizens. The U.S. government has a responsibility to: Provide Support: The U.S. government should provide financial and technical assistance to help the CNMI implement reforms. Strengthen Oversight: The U.S. government should strengthen its oversight of federal funds allocated to the CNMI and should consider establishing a mandatory federal grant comptroller. Demand Accountability: The U.S. government should hold the CNMI government accountable for its actions and should take appropriate steps to address any instances of corruption or mismanagement.
10.7 The CNMI's Future The CNMI has the potential to achieve a bright and prosperous future. But this future hinges on the island's willingness to embrace a path of reform and to break the cycle of corruption and dependence.
This chapter has highlighted the need for comprehensive reform in the CNMI government. It has examined potential reforms, analyzed successful reform initiatives from other regions, and presented a call for action. The CNMI's journey towards self-sufficiency and a more equitable society requires a determined commitment to change from both the CNMI government and the U.S. government.
CHAPTER 11# Chapter 11: The Future of the CNMI's Economy
The CNMI stands at a crossroads. The island's economic model, built on a foundation of cheap foreign labor, tax exemptions, and a lack of transparency, has proven unsustainable. The consequences – a "sinkhole" effect of lost revenue, a growing burden on American taxpayers, and widespread corruption – have left the CNMI in a precarious position. This chapter will explore the potential future of the CNMI's economy. It will analyze various economic scenarios, considering the impact of global economic trends and offering policy recommendations to ensure sustainable growth and a brighter future for the island.
11.1 The Consequences of Inaction
If the CNMI government fails to address its current challenges, the island's economic future will likely be bleak. Here are some potential consequences: Further Economic Decline: The CNMI's economy could continue to spiral downwards, with a decline in tourism, investment, and employment. Increased Dependence on Federal Aid: The CNMI's reliance on federal aid could escalate, placing a heavier burden on American taxpayers and potentially leading to a loss of autonomy. Social and Political Instability: The economic downturn could lead to social unrest and instability, as the island struggles to provide essential services and address the needs of its citizens. Environmental Degradation: Without a shift towards sustainable economic development, the CNMI's fragile environment could suffer further damage.
11.2 Potential Economic Scenarios
The CNMI's economic future will depend on a number of factors, including: Global Economic Trends: The island's economy is susceptible to global economic fluctuations. Tourism: The tourism industry remains a crucial driver of the CNMI's economy. However, the industry faces a number of challenges, including the rise of competing destinations and the impact of climate change.
Foreign Investment: The CNMI's ability to attract foreign investment will be critical for economic growth. However, investors will need to be assured of a stable and transparent investment environment. Labor: The CNMI government must address the issue of foreign labor and create a more sustainable system that prioritizes local hiring and workforce development. Here are three potential economic scenarios for the CNMI:
Scenario 1: Continued Decline: If the CNMI government fails to address its challenges, the island's economy could continue to decline. This could lead to a loss of investment, increased unemployment, and a greater reliance on federal aid.
Scenario 2: Stagnation: The CNMI could remain in a state of economic stagnation, with minimal growth and limited opportunities for its citizens. This would be a scenario of continued decline in the standard of living for the CNMI's people.
Scenario 3: Sustainable Growth: If the CNMI government implements comprehensive reforms, embraces a more balanced and sustainable economic model, and attracts responsible foreign investment, the island has the potential to achieve sustainable growth. This scenario would involve:
Economic Diversification: Investing in new industries, such as agriculture, renewable energy, or technology.
Investment in Local Workers: Prioritizing investments in training and education programs for its citizens. Environmental Sustainability: Developing a more sustainable tourism sector and promoting eco-friendly development practices.
Increased Transparency: Ensuring that government operations are open and accountable.
11.3 Policy Recommendations
To achieve sustainable growth, the CNMI government must implement a number of key policy changes: Tax Reform: The CNMI should implement a comprehensive tax reform strategy that includes a remittance tax and a more equitable distribution of the tax burden. Attracting Responsible Foreign Investment: The CNMI government should seek to attract foreign investment that promotes sustainable economic growth and environmental protection. This includes: Developing a clear set of guidelines for attracting and managing foreign investment. Conducting rigorous environmental impact assessments for all major investment projects. Establishing a dedicated agency to monitor and oversee foreign investment projects.
Labor Market Reform: The CNMI should phase out the CW-1 program and transition to a more sustainable system that prioritizes local hiring and workforce development. This could involve: Investing in training programs to prepare CNMI citizens for skilled jobs. Offering incentives for businesses to hire local workers. Exploring alternative visa programs, such as the H-2B program for temporary non-agricultural workers. Strengthening Governance: The CNMI government should embrace a culture of transparency and accountability. This includes: Mandating public disclosure of all government contracts and financial transactions. Strengthening the GAO's role in overseeing federal funds allocated to the CNMI. Holding officials accountable for their actions, including the possibility of criminal charges for those involved in corruption or abuse of public funds.
11.4 The Role of the United States
The U.S. government has a critical role to play in supporting the CNMI's economic development. The U.S. should: Provide Financial Assistance: The U.S. should continue to provide financial assistance to the CNMI, but this aid should be conditional on the CNMI's commitment to reform and to implementing sustainable economic policies. Strengthen Oversight: The U.S. government should strengthen its oversight of federal funds allocated to the CNMI and should consider establishing a mandatory federal grant comptroller. Promote Transparency and Accountability: The U.S. government should work with the CNMI government to promote greater transparency and accountability in government operations. 11.5 The 'Persona Non Grata' Issue:
The "Persona Non Grata" article, published on CNMIGA.org, highlights a troubling pattern of influence and potential corruption within the CNMI government. The article examines the significant influence of Tan Holdings, a CNMI-based conglomerate, and its subsidiary, GPPC Construction, within the CNMI's economy. The article makes several accusations about Tan Holdings, alleging that it has used its close relationships with CNMI officials, some of whom have family ties to the Tan family, to gain preferential treatment and secure government contracts. "Tan Holdings, with its vast influence in the CNMI, has leveraged its connections to government officials, securing contracts that benefit its bottom line while leaving a trail of questionable spending. The systemic nature of this arrangement—where a single entity holds a monopoly over critical infrastructure projects—undermines fair competition and contributes to the economic "sinkhole" effect that has plagued the CNMI." "Tan Holdings' success can be traced back to its close relationships with CNMI officials,
some of whom have family ties to the Tan family. These connections create an atmosphere of favoritism and influence peddling, where merit is often overlooked in the awarding of government contracts." "The monopolization of infrastructure projects by Tan Holdings, often through sole-sourcing arrangements, has had a devastating impact on the CNMI's economy. It has hindered fair competition, contributing to higher costs, and has potentially led to the misappropriation of federal funds." The "Persona Non Grata" article also highlights the alleged influence of the United Filipino Organization (UFO) in CNMI politics. The UFO, a quasi-humanitarian organization, has been accused of using its political power to advance the interests of Tan Holdings and potentially the Chinese Communist Party (CCP).
11.6 Addressing the CNMI's Unique Challenges: The CNMI faces unique challenges due to its island geography, limited resources, and its history of dependence on federal aid. A sustainable economic model for the CNMI must take these factors into account. Developing Local Expertise: The CNMI should invest in education and training programs to build a skilled workforce that can meet the needs of a diversified economy. Promoting Entrepreneurship: The CNMI government should support small and medium-sized businesses, encouraging entrepreneurship and innovation. Harnessing Tourism: The CNMI should develop a more sustainable tourism sector that promotes eco-tourism and cultural experiences. Infrastructure Development: The CNMI government must continue to invest in critical infrastructure, including ports, airports, roads, and communication systems. Conclusion: The CNMI's economic future is not predetermined. The island has the potential to achieve a bright and prosperous future, but this future will require a determined commitment to reform. The CNMI government must embrace a more balanced and sustainable economic model, reduce its dependence on federal aid, and invest in its own people. The U.S. government also has a responsibility to support the CNMI's efforts, especially by ensuring that federal funds are used responsibly and by promoting greater transparency and accountability.
CHAPTER 12# Chapter 12: Conclusion
The story of the Commonwealth of the Northern Mariana Islands (CNMI) is a cautionary tale—a stark reminder of the consequences of unchecked corruption, a lack of transparency, and an unsustainable economic model. The island, once a promising paradise, has fallen victim to a "sinkhole" effect that has drained its resources and left it dependent on the American taxpayer.
This book has explored the complex and intertwined challenges facing the CNMI, demonstrating how the island's unique relationship with the United States, its reliance on foreign labor, and its failure to address systemic corruption have led to a cycle of economic vulnerability and a diminished standard of living for its citizens.
12.1 The "Sinkhole" Effect: A Drain on Resources The CNMI's economy has been plagued by a "sinkhole" effect, a constant outflow of capital, leaving the island deprived of the resources needed to grow and thrive. This outflow is driven by several factors:
12.1.1 Remittances: A significant portion of the wages earned by foreign workers, particularly those admitted under the CW-1 visa program, are remitted back to their home countries, mainly the Philippines and China. The CNMI's lack of a remittance tax has exacerbated this outflow, further depleting the island's resources.
12.1.1.1 The Missing Data: Adding to the problem is the CNMI government's failure to collect data on remittances. This lack of transparency hinders the ability to accurately assess the scale of the outflow and to formulate effective economic policies. This intentional lack of data collection underscores the CNMI government's lack of transparency and its commitment to obscuring the true cost of its immigration policies.
12.1.2 Federal Aid Mismanagement: Billions of dollars in federal aid have been allocated to the CNMI over the years, but a significant portion of these funds have been misappropriated, wasted, or squandered through corruption and mismanagement. This has further contributed to the CNMI's economic instability and increased its dependence on federal assistance.
12.1.3 Foreign Investment: While foreign investment has played a role in the CNMI's economic development, the IPI casino project on Saipan highlights how these investments can also lead to a drain on resources. The project's profits are often remitted back to China, further contributing to the "sinkhole" effect.
12.2 The Consequences for American Taxpayers: The CNMI's economic woes have created a significant burden on American taxpayers. The billions of dollars in federal aid provided to the CNMI have often not yielded the intended results, leaving American taxpayers footing the bill for an unsustainable economic model. The American taxpayer has been forced to subsidize the CNMI's reliance on foreign labor, its lack of transparency, and its systemic corruption. 12.3 The Case for Reform: To address the CNMI's deeply entrenched problems and to break the cycle of dependence, a comprehensive reform effort is urgently needed. Key areas of focus should include:
12.3.1 Transparency and Accountability:
12.3.1.1 Strengthening the GAO: The CNMI government should actively collaborate with the GAO to ensure that federal funds are used responsibly and effectively. This includes inviting the GAO to conduct comprehensive and independent audits of government operations, granting the GAO access to all relevant financial data, and cooperating fully with GAO investigations.
12.3.1.2 Public Disclosure: The CNMI government should mandate public disclosure of all government contracts, including those awarded to foreign-owned companies. 12.3.1.3 Financial Data Transparency: The CNMI government should publish detailed financial data on a regular basis, including information on government revenue, expenditures, and remittances. 12.3.1.4 Streamlined Access to Public Records: The CNMI government should make it easier for citizens and journalists to access public records.
12.3.2 Addressing Corruption and Nepotism:
12.3.2.1 Conflict of Interest Laws: The CNMI government should enact and enforce stricter conflict of interest laws to prevent government officials from using their positions for personal gain. 12.3.2.2 Independent Contract Oversight: The CNMI government should establish a system of independent oversight for the awarding of government contracts, ensuring that bids are evaluated fairly, and that contracts are awarded based on merit rather than political influence.
12.3.2.3 Accountability for Fraud: The CNMI government should hold individuals and agencies accountable for their actions, including the possibility of criminal charges for those involved in fraud or abuse of public funds.
12.3.3 Restoring Integrity to the CW-1 Visa Program:
12.3.3.1 Abolish the CW-1 Program: The CNMI government should abolish the CW-1 program, which has been a major driver of the "sinkhole" effect.
12.3.3.2 Implement Stricter Visa Requirements: All foreign workers entering the CNMI should be required to do so under the H1/H2 visa program, subjecting them to more stringent vetting procedures.
12.3.3.3 American Educational Credentials: All educational accreditations for foreign workers should be required to come from American institutions, to curb the use of fraudulent credentials.
12.3.3.4 Ending Visa Fraud: The CNMI government should strengthen the process for reviewing visa applications to combat fraud.
12.3.3.5 Strengthen Enforcement: The CNMI Department of Labor and the U.S. Department of Labor should increase enforcement efforts to combat visa fraud and ensure that employers are complying with the terms of the visa program. This includes conducting more frequent audits and investigations of employers and imposing stricter penalties for violations. 12.3.4 Promoting Economic Diversification:
12.3.4.1 Support Local Businesses: The CNMI government should prioritize investments in local businesses and entrepreneurs, helping them to create jobs and to generate local revenue.
12.3.4.2 Invest in New Industries: The CNMI government should invest in new industries that are less reliant on foreign labor and that have a long-term potential for growth.
12.3.4.3 Develop New Export Markets: The CNMI should look to develop new export markets to reduce its dependence on any single industry or investor.
12.3.5 Curtailing the Influence of the UFO:
12.3.5.1 Transparency and Disclosure: The CNMI government should require the UFO to disclose its funding sources, its expenditures, and its membership.
12.3.5.2 Independent Oversight: The CNMI government should establish a system of independent oversight for political organizations, ensuring that they are not using their resources to engage in corrupt or illegal activities.
12.3.5.3 Enforcement: The CNMI government should enforce existing laws that prohibit extortion and influence peddling.
12.3.5.4 Educating Workers: The CNMI government should launch a public education campaign to inform foreign workers about their rights and to warn them about the dangers of extortion and exploitation.
12.4 The Role of Tan Holdings, GPPC Construction, and the Dominance of Infrastructure Projects: Tan Holdings, a CNMI-based conglomerate, has gained a dominant position in the island's construction industry. Through its subsidiary, GPPC Construction, Tan Holdings has secured access to almost all CNMI infrastructure projects, often through sole-sourcing arrangements. This raises significant concerns about potential corruption and the misappropriation of federal funds. The "Persona Non Grata" article, published on CNMIGA.org, sheds light on these practices:
"Tan Holdings, with its vast influence in the CNMI, has leveraged its connections to government officials, securing contracts that benefit its bottom line while leaving a trail of questionable spending. The systemic nature of this arrangement—where a single entity holds a monopoly over critical infrastructure projects—undermines fair competition and contributes to the economic "sinkhole" effect that has plagued the CNMI." "Tan Holdings' success can be traced back to its close relationships with CNMI officials, some of whom have family ties to the Tan family. These connections create an atmosphere of favoritism and influence peddling, where merit is often overlooked in the awarding of government contracts." "The monopolization of infrastructure projects by Tan Holdings, often through sole-sourcing arrangements, has had a devastating impact on the CNMI's economy. It has hindered fair competition, contributing to higher costs, and has potentially led to the misappropriation of federal funds."
12.5 The American Taxpayer's Burden: The CNMI's economic woes have created a significant burden on American taxpayers. The billions of dollars in federal aid provided to the CNMI have often not yielded the intended results, leaving American taxpayers footing the bill for an unsustainable economic model. The American taxpayer has been forced to subsidize the CNMI's reliance on foreign labor, its lack of transparency, and its systemic corruption.
12.6 Remittance Outflow Calculations: To illustrate the potential scale of this problem, let's use some estimated data. According to the Asian Development Bank (ADB), the average remittance rate for Filipinos working abroad is around 25% of their earnings. In the CNMI, the average salary for a CW-1 worker is estimated to be around $15,000 per year. Using these figures, we can calculate a theoretical remittance outflow:
Estimated Remittances: (25% * $15,000) = $3,750 per year, per worker
This means that if there are 10,000 CW-1 workers in the CNMI, the estimated annual remittance outflow would be: Total Remittances: ($3,750 * 10,000) = $37,500,000 Using this data, we can estimate the potential lost revenue from remittance taxes: Potential Remittance Tax Revenue (2018-2024): Year CW-1 Worker Population (estimated) Estimated Remittances Remittance Tax Revenue (5.75%) 2018 12,000 $45,000,000 $2,587,500
2019 11,000 $41,250,000 $2,371,875
2020 10,000 $37,500,000 $2,156,250
2021 9,000 $33,750,000 $1,940,625
2022 8,000 $30,000,000 $1,725,000
2023 7,000 $26,250,000 $1,509,375
2024 6,000 $22,500,000 $1,293,750
Total Estimated Lost Tax Revenue (2018-2024): $15,583,425
These estimations demonstrate how much revenue the CNMI government could have potentially captured through a remittance tax. This lost revenue further exacerbates the need for federal aid and contributes to the "sinkhole" effect.
12.7 The CNMI's Failed Tourism Strategy: While the CNMI boasts a beautiful tropical environment, its tourism sector has struggled to attract a diverse and sustainable visitor base. The island has relied heavily on Chinese and Filipino tourists, many of whom are seeking to overstay illegally in the U.S., contributing to the CNMI's immigration problems and its reliance on federal aid. The CNMI lacks several key elements that would propel it amongst the top Asian travel destinations: Endemic Corruption: The CNMI's reputation has been tarnished by ongoing allegations of corruption, which deter legitimate tourists and investors. Limited Historic Sites: The CNMI has few well-known historical sites or cultural attractions that appeal to a broad tourist audience. Lack of Natural Beauty: While the CNMI has some natural beauty, it does not have the same wide range of diverse landscapes, beaches, or attractions as other popular Asian tourist destinations. Unattractive to Youth Markets: The CNMI lacks the nightlife, amusements, and activities that appeal to younger travelers. Limited Amenities: The CNMI's infrastructure, including its airports, ports, roads, and hotels, is often inadequate or outdated, further deterring tourists. Negative Reputation: The CNMI's reputation has been damaged by media reports of corruption, visa fraud, and labor exploitation, making it less attractive to tourists.
12.8 The United Filipino Organization (UFO) and Political Influence: The United Filipino Organization (UFO), ostensibly a humanitarian group dedicated to helping Filipino workers in the CNMI, has been accused of more sinister practices. It has been alleged that the UFO extorts "dues" from CW-1 workers, often under the guise of membership fees or services, and uses those funds to influence CNMI politics. These practices have potentially given the UFO a powerful voice in the CNMI government, allowing it to advance its agenda, potentially favoring Tan Holdings and Chinese interests. The "Persona Non Grata" article raises concerns about the UFO's alleged ties to the Chinese Communist Party (CCP): "The UFO's influence in CNMI politics is a cause for concern, especially given the organization's potential connections to the CCP. The CCP's strategic interests in the region, including its desire to expand its influence in the Pacific, could be advanced through the UFO's influence over CNMI politics. This raises serious questions about the
potential for the CNMI to become a "satellite state" for the CCP, undermining U.S. interests and regional stability."
12.9 Family Connections and Nepotism: The CNMI's political system has been dominated by a small number of families, who have often used their positions to benefit their own interests. This has resulted in a lack of accountability and a concentration of power in the hands of a select few. These names: (Guerrero,Sablan, Torres, Manglona, Camacho, Pangelinan, Falig, Ada,and Benevente) are commonly found among influential individuals in the CNMI government, raising concerns about potential nepotism and favoritism in the awarding of government contracts and jobs.
12.10 The Need for a Collaborative Approach: Reform in the CNMI requires a collaborative approach, involving the CNMI government, the U.S. government, and the island's citizens. The U.S. government has a responsibility to:
12.10.1 Provide Support: The U.S. government should provide financial and technical assistance to help the CNMI implement reforms.
12.10.2 Strengthen Oversight: The U.S. government should strengthen its oversight of federal funds allocated to the CNMI and should consider establishing a mandatory federal grant comptroller.
12.10.3 Demand Accountability: The U.S. government should hold the CNMI government accountable for its actions and should take appropriate steps to address any instances of corruption or mismanagement.
12.11 The CNMI's Future The CNMI has the potential to achieve a bright and prosperous future. But this future hinges on the island's willingness to embrace a path of reform and to break the cycle of corruption and dependence. This book has highlighted the need for comprehensive reform in the CNMI government. It has examined potential reforms, analyzed successful reform initiatives from other regions, and presented a call for action. The CNMI's journey towards self-sufficiency and a more equitable society requires a determined commitment to change from both the CNMI government and the U.S. government.
EPILOGUE Epilogue: Project 2025: A Closer Look The Commonwealth of the Northern Mariana Islands (CNMI) stands at a critical juncture in its economic development. After years of grappling with a reliance on foreign labor, the consequences of the CW-1 visa program, and a lack of transparency in government, the CNMI is seeking a new path toward economic sustainability and self-sufficiency. Project 2025, launched by the CNMI government, represents a comprehensive plan to achieve these goals.
Project 2025: A Framework for Change Project 2025 aims to transform the CNMI's economy through a multifaceted approach: Diversification Beyond Tourism: The initiative emphasizes diversifying the CNMI's economy beyond its traditional reliance on tourism. It seeks to attract investment and develop new industries in sectors like renewable energy, agriculture, and technology, promoting job creation and economic resilience. Infrastructure Enhancement: Project 2025 recognizes the importance of a modern and efficient infrastructure to support economic growth. It prioritizes investments in ports, airports, roads, and communication systems to facilitate trade, tourism, and business development. Workforce Development: The project acknowledges the need to build a skilled workforce to meet the demands of a diversified economy. It invests in education and training programs to prepare CNMI citizens for higher-paying jobs in emerging sectors. Responsible Tourism: Project 2025 emphasizes sustainable tourism practices, seeking to balance economic growth with environmental conservation and cultural preservation. It promotes eco-tourism and niche tourism experiences. Transparency and Accountability: The project emphasizes good governance, recognizing that a transparent and accountable government is essential to build investor confidence and to attract responsible foreign investment. It aims to strengthen oversight mechanisms and to improve public access to information. Analysis of Project 2025: The Promise of Transformation: Project 2025 has the potential to transform the CNMI's economy, creating a more sustainable and prosperous future for its people. The initiative's focus on diversification, infrastructure, and workforce development could lead to significant economic growth and reduced reliance on federal aid. Potential Challenges: However, Project 2025 also faces significant challenges: Financial Resources: Funding the ambitious initiatives of Project 2025 will require substantial financial resources. The CNMI government must secure funding sources, potentially through private investment, local taxes, or continued federal aid, while navigating the delicate balance between attracting investment and maintaining control over its economy. Political Will: The CNMI government must demonstrate a strong commitment to implementing the project's reforms, overcoming potential resistance from entrenched interests and navigating the political landscape.
Labor Market Challenges: The CNMI faces ongoing challenges in its labor market, including the need to develop a skilled workforce and to address the legacy of the CW-1 visa program. Integrating the project's workforce development initiatives with these challenges will be crucial. The "Sinkhole" Effect: Project 2025 must address the ongoing "sinkhole" effect of capital outflow, ensuring that the island's economic gains are not drained away through remittances. International Considerations: Project 2025 will also need to consider the island's geopolitical position in the Pacific and the influence of external actors, such as China, which could impact the success of its development strategy. Conclusion: Project 2025 represents an ambitious vision for the CNMI's economic future. The initiative offers a path to a more sustainable and prosperous island economy, but it will require a strong commitment to reform, effective governance, and a prudent approach to foreign investment. The success of Project 2025 will be a test of the CNMI's ability to manage its economy effectively, to build a stronger future for its people, and to reduce its dependence on external aid.
Authors’ Profile:
Zaji "Persona Non Grata" Zajradhara: A Voice for the Voiceless Zaji "Persona Non Grata" Zajradhara isn't just an author; he's a force of nature. A staunch advocate for American workers and Indigenous rights in the CNMI, Zaji's life reads like a gritty urban novel, filled with struggle, resilience, and an unwavering commitment to justice. Labeled "persona non grata" by the CNMI government for his relentless pursuit of truth and his outspoken criticism of corruption, Zaji has become a symbol of resistance against those who seek to exploit the islands and its people. As an unemployed Afro-American father, he knows firsthand the sting of the CNMI's dysfunctional labor market, its rigged political system, and the exploitation of vulnerable communities. His experiences fuel his activism, driving him to file numerous legal claims against companies for violating labor laws and discriminating against American workers. Zaji's voice, though silenced by the establishment, resonates through his writing, exposing the harsh realities faced by those on the margins. But Zaji's compassion extends far beyond the shores of the CNMI.
As Program Director of CNMIGA.org, a non-profit dedicated to providing humanitarian assistance in Myanmar, he leads a team committed to delivering essential support and resources to communities in need.
Zaji's story is a testament to the power of one person to make a difference. He is a writer, an activist, a humanitarian – a true urban warrior fighting for a more just and equitable world.
Glossary
ADB: Asian Development Bank, an international financial institution that supports economic development in Asia and the Pacific.
ARPA: American Rescue Plan Act, a U.S. federal economic stimulus bill passed in 2021 to address the economic impact of the COVID-19 pandemic.
CNMI: Commonwealth of the Northern Mariana Islands, a U.S. territory located in the western Pacific Ocean.
CNMI Boost: A federal economic stimulus program specifically for the CNMI, created to address the economic impact of the COVID-19 pandemic.
CPA: Commonwealth Ports Authority, the CNMI government agency responsible for managing the island's ports and harbors.
CW-1: CNMI-Only Transitional Worker, a nonimmigrant visa category that allows employers in the CNMI to bring in temporary workers who are ineligible for other nonimmigrant work categories.
CW-2: A nonimmigrant visa category for the spouses and minor children of CW-1 workers. DCCA: Department of Community and Cultural Affairs, the CNMI government agency that administers a number of social services, including the Nutrition Assistance Program.
DEA: Drug Enforcement Administration, a U.S. federal agency responsible for enforcing drug laws.
DHS: U.S. Department of Homeland Security, a U.S. federal agency responsible for national security, border control, and immigration enforcement.
DOLI: Department of Labor and Immigration, the CNMI government agency that oversees labor and immigration matters.
EOIR: Executive Office for Immigration Review, an agency within the U.S. Department of Justice that handles immigration court cases. E-Verify: A web-based system that allows employers to confirm the employment eligibility of their workers.
FAS: Freely Associated States, a collective term for the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau, which have compacts of free association with the United States.
FBI: Federal Bureau of Investigation, a U.S. federal agency that investigates crimes.
GAO: Government Accountability Office, an independent, non-partisan agency that works for Congress.
GDP: Gross Domestic Product, the total value of goods and services produced in a country. GPPC Construction: A CNMI construction company that is a subsidiary of Tan Holdings.
H-1B: A nonimmigrant visa category for specialty occupation workers.
H-2B: A nonimmigrant visa category for temporary non-agricultural workers.
HSUS: Harmonized System Nomenclature (HS), a standardized system for classifying traded goods.
HUD: U.S. Department of Housing and Urban Development, a U.S. federal agency responsible for housing programs.
IPI: Imperial Pacific International, a Chinese company that developed the casino project in the CNMI.
INS: U.S. Immigration and Naturalization Service, formerly an agency within the U.S. Department of Justice responsible for immigration enforcement.
IRS: Internal Revenue Service, a U.S. federal agency responsible for collecting taxes.
LIIDS: Labor and Immigration Identification System, a computerized immigration tracking system used by the CNMI government.
MOU: Memorandum of Understanding, a formal agreement between two or more parties. NLRB: National Labor Relations Board, a U.S. federal agency that oversees labor relations. NMIEEA: Northern Mariana Islands Economic Expansion Act, a U.S. federal law that affected the CNMI's immigration and labor policies.
NMTIT: Northern Marianas Territorial Income Tax, the CNMI's local income tax.
NPWC: National Prevailing Wage Center, an agency within the U.S. Department of Labor that determines prevailing wages for certain visa categories.
OFLC: Office of Foreign Labor Certification, an agency within the U.S. Department of Labor that issues Temporary Labor Certifications (TLCs).
OIA: Office of Insular Affairs, an agency within the U.S. Department of the Interior responsible for overseeing U.S. territories.
OSHA: Occupational Safety and Health Administration, a U.S. federal agency responsible for enforcing workplace safety regulations.
POEA: Philippines Overseas Employment Agency, a Philippine government agency that oversees overseas employment for Filipino citizens.
PRC: People's Republic of China, the official name for China.
PSS: Public School System, the CNMI government's education system. RFA: Regulatory Flexibility Act, a U.S. law that requires federal agencies to consider the impact of regulations on small businesses.
RICO: Racketeer Influenced and Corrupt Organizations Act, a U.S. federal law that targets organized crime.
SCC: Saipan Chamber of Commerce, a business organization in the CNMI.
SOC: Standard Occupational Classification, a U.S. federal system for classifying jobs and occupations.
SNAP: Supplemental Nutrition Assistance Program, a U.S. federal program that provides food assistance to low-income families.
TLC: Temporary Labor Certification, a certificate issued by the U.S. Department of Labor that confirms that an employer has met certain requirements to hire a foreign worker.
UMRA: Unfunded Mandates Reform Act, a U.S. law that restricts the ability of the federal government to impose unfunded mandates on state and local governments.
USCIS: U.S. Citizenship and Immigration Services, an agency within the U.S. Department of Homeland Security that handles immigration applications and naturalization.
VGS: Variable Grade Sewer, a type of sewage system used in the CNMI.
W-2CM: The CNMI version of the Form W-2 Wage and Tax Statement.
WIOA: Workforce Innovation and Opportunity Act, a U.S. federal law that provides funding for workforce development programs.
1. US Congressional Hearings: "To Authorize Financial Assistance for the Northern Mariana Islands" (1993): This document provides valuable insights into the early history of federal funding for the CNMI, the arguments for and against that funding, and early concerns about corruption and the impact of foreign labor. "Marianas Political Status" (1975): This document captures the negotiations between the CNMI and the United States that led to the Covenant establishing the CNMI as a Commonwealth. It provides important context for understanding the CNMI's unique relationship with the United States and the promises made during that time.
"Oversight Hearing on the Enforcement of Federal Laws and the Use of Federal Funds in the Northern Mariana Islands" (1999): This document provides detailed information on the controversy surrounding labor and immigration practices in the CNMI, highlighting the role of the GAO, the U.S. Department of Labor, the Department of Justice, and the Department of Treasury. It also covers allegations of corruption and the concerns of American workers.
2. CNMI Government Documents: "Commonwealth of the Northern Mariana Islands: Ratio of United States Workers to Other Workers in the Commonwealth of the Northern Mariana Islands for Tax Year 2019": This report provides data on the CNMI workforce, identifying the numbers of U.S. workers, foreign workers, and those with unknown visa status.
**"Summary of Nutrition Assistance Program - Commonwealth of Northern Mariana Islands (NAP)": ** This document outlines the structure and operation of the CNMI's Nutrition Assistance Program (NAP), which is similar to the federal SNAP program.
**"Commonwealth of the Northern Mariana Islands: Fiscal Year 2024 Commonwealth Worker Fund Plan": ** This document outlines the CNMI's plan to use funds from the CW-1 program to support workforce training programs.
3. Other Documents: **"The CNMI Sinkhole: A Theoretical Examination of Lost Revenue and the American Taxpayer's Burden":
** "The Monopolization of the Marianas" (CNMIGA.org): This article, by "Persona Non Grata," presents allegations of corruption and influence peddling by Tan Holdings and its connections to CNMI government officials.
"2025 Presidential Transition Project": This document outlines the conservative movement's efforts to prepare for the 2025 presidential transition, highlighting the need for a stronger and more accountable government.
4. Data Sources: Asian Development Bank (ADB): data from the ADB to estimate average remittance rates for Filipinos working abroad.
U.S. Department of Commerce’s Bureau of Economic Analysis (BEA): I data from BEA to gather GDP information for the CNMI.
U.S. Census Bureau: data from the Census Bureau on the CNMI's population, as well as business patterns and economic data.
Bibliography Congressional Hearings United States House of Representatives, Committee on Natural Resources, Subcommittee on Insular and International Affairs. To Authorize Financial Assistance for the Northern Mariana Islands: Hearing Before the Subcommittee on Insular and International Affairs of the Committee on Natural Resources, House of Representatives, One Hundred Third Congress, First Session on H.R. 1092 to Authorize Financial Assistance for the Northern Mariana Islands, and for Other Purposes, Serial No. 103-12 (Washington: U.S. Government Printing Office, 1993).
