Guam at a crossroads



By Dr. Maria Claret Ruane

The positive and significant impact of federal assistance on Guam’seconomy continued in 2021. The prospects for Guam’s economic recovery would not have been as promising if not for the continued pandemic assistance, economic recovery and growth funding from the federal government.


On the one hand, one will very well be correct to declare success over the goal of maximizing federal funds for Guam as this is clearly evident.


On the other hand, one will also be correct to be cautious about the eventual phasing out of federal government funds aimed at mitigating the effects of the pandemic as well as effectuating an economic recovery. This phase-out was temporarily moderated by the passage of the $1.2 trillion Infrastructure Law on Nov. 15, 2021, with Guam’s share estimated at $193 million.


Truth be told, the economist in me is not too disappointed in the stall of the Build Back Better bill, with all indications pointing to it not receiving approval in the U.S. Senate.


While some in the U.S. and on Guam might fret over the more than $2 trillion additional funds that could have been received if the Build Back Better passed, this development represents a return to the basic principle of responsible government and a reminder that, as much as governments around the world would always prefer to be generous to their people, they are not always in the position to afford being so without imposing harm on the current generation, e.g., in the form of higher inflation and reduced purchasing power, and preventable burden on future generations by increasing an already heavy national debt.


As the Congressional Budget Office estimated, the Build Back Better bill would cost at least $4.5 trillion, which could not be paid through higher taxes imposed on a group of American taxpayers. Keep in mind that past and present federal funds allocated to Guam contribute, albeit a small share, to this national debt and, as such, highlight support to our residents’ well-being at the expense of the well-being of taxpaying residents in the U.S., including our friends and families living there, and other taxpaying entities.


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Indeed, Guam is in an enviable position to have addressed this pandemic and our ongoing state of a public health emergency on federal funds. The impending failure of the Build Back Betterbill to become law might in fact be a blessing in disguise, as it would offer the opportunity to learn and apply the basic economic lesson of living within our limited resources and ensuring that none is wasted and that all are allocated to their best uses.


Regardless of what other spending bills might or might not become U.S. law, the federal funds that have already been approved for Guam in FY2021 and those expected in FY2022, including the recently enacted NDAA FY2022 budget, are already plentiful. With these, we could create and/or finance a lot of opportunities for legitimate economic activities in the short run but, more importantly, in the long run when Guam’s economy could be better positioned toward sustainable and participatory economic growth.


On the other hand, a lot of federal funds on Guam increases the temptation to avoid or relax applicable rules and regulations, thereby distorting the basic incentive system (those who toiled should reap the rewards)and the above noted basic economic principle (resources should go to their best uses) and reducing our island’s potential for economic growth.


Having lived through a martial law regime under a corrupt government and also having studied public corruption around the world, I know that there is nothing that destroys private enterprise and personal motivation more than an unlevel playing field and arbitrary rules of economic engagement.


To mitigate these possible scenarios, there will be an increased need for transparency, accountability and overall ethical behavior for those entrusted to serve the Guam public. Certain entities such as the Guam Office of PublicAccountability, Guam Office of the Attorney General and the U.S. Attorney’s Office-Districts of Guam & the Northern Mariana Islands, will play an important role in keeping affairs in order.


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Before we know it, we will find ourselves in 2024, a very important year for several reasons. Where Guam’s economy ends up that year will depend on the balance among opposing developments as well as other developments yet to enter the large picture. It is definitely too early to make predictions, but it gives us the next two years to better position ourselves for what might come.

In a democracy like ours, we all can determine our future in the choices we make. The next two years are crucial as we once again find ourselves at a crossroads. Let us not forget that 2022 is the election year for the governor and the 37th Guam Legislature, and 2024 (that year referred to above) is the election year for the 38th Guam Legislature.


In both election years, I plan to vote as an economist, i.e., for whoever has used and will use the island’s limited resources in the best way, measured by the greatest improvement in the standard of living and, more importantly, the quality of life for the greatest number of our island’s residents. Toward this end, I call, People of Guam, unite!


Maria Claret M. Ruane is an economist who has been a resident of Guam since 200. She earned her B.S. (with Great Distinction) and M.A. in Economics from San Jose State University and her Ph.D. in Economics from the University of California-Riverside. Send feedback to ruanemcm@gmail.com




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