Op-Ed: E Lafulafu Tama Seugogo, Part 2

Phantom budgets and deficit spending, who pays?

How well our government leaders — governor and Fono — handle government fiscal responsibilities, according to a previous Samoa News poll, concerns the people of the territory the most; hence the people would like those standing for political office in this year’s election and selection to do something about it. 

This call is being accentuated with the resumption of Fono deliberations including current budget review hearings — where it is like watching a live play in an amphitheater, with the players’ ineptness or lack of concern or respect of things fiscal being displayed for all to see and ponder; and why the people are  concerned or should be. Be it as it may, ineptness or apathy has been the way for many years; and has now reached the point where the people are or should be saying — “enough is enough”.

It is clear from media accounts of Fono hearings the administration took the annual government budget process rather lightly, as is evidenced by the long delay in submission of the 2012/ 2013 budget for Fono review and the exuberant budget revenue projections.

When asked of the budget tax revenues projections, the Tax Manager opined the figures were unreasonably optimistic given the current and forecasted economic activities in the territory; and that he wasn’t consulted when the budget was being prepared.

For the most part, the Fono was asking questions of the various government departments in the course of Fono budget hearings. When it was the Fono’s turn to present its own budget, the assistant financial officer was there to answer questions. One brave-heart representative had the testicular fortitude to lament the absence of the Fono leadership in this important hearing, and asked how the Fono’s current budget was holding up. The financial officer answered the “Fono budget is doing well”. 

Unconvinced, the Ituau representative asked the budget director about the status of the Fono budget to which Malemo, the budget director, said it was a “TKO” (technical knockout — in the red). Malemo went on to say, according to media reports, that it was by the grace of the governor and his administration and respect for the Fono that senators and representatives continue to receive their salaries and tax free allowance.

Representative Archie Soliai should have pressed on by asking Malemo how the governor’s office budget was holding up; to which Fofoga Solia, the Fono financial officer, no doubt would have chimed “It’s also aTKO… so in terms of TKOs, all is balanced between the governor and the Fono”!!

Amazingly disturbing, however, is the disagreement on how to categorize the $6.8 million tobacco settlement money. Malemo in his testimony vowed the money was a legitimate budget revenue item, citing a memo from the governor “certifying” it so. A few days later, his fellow cabinet member, the attorney general refuted Malemo’s testimony — as reported by the media — and said that the $6.8 million was obligated to pay the loan ASG owes the federal government. 

For its part, the Fono leadership would like to believe the aforementioned loan is paid off; thus seems careful in believing the governor that the $6.8 million is available as a budget revenue item. Consequently, the Fono reversed its passage of the four-month budget of last week and approved the full 12-month budget. BUT goes on to hedge their position by making budget cuts to allow for the $6.8 million uncertainty; with a supplemental budget held out like a carrot to be approved to restore funds currently being cut if the $6.8 is realized, or through some unknown source of revenue if the $6.8 million proves to be phantom money. 

So, everyone is happy — the governor gets his full year budget; the affected departments are sad then made happy again by the supplemental budget process, real or phantom; and the Fono is happy in that they made governor happy before he leaves office, and in that it gets a full year’s budget too like the happy governor. 

But is everyone happy?

Over the years, administrations and Fono have perfected this creative budgetary technique, which produces a perfect storm for deficit spending to flourish, cost of which is paid by 99-percenters (many do not know they’re being screwed); while government leaders and the 1-percenters get to enjoy the fruits of their creativity – phantom financing – year in and year out.

The collegial relationship between the governor and the Fono, shored up by the faa-Samoa principle of respect (ava fatafata) among traditional chiefs in these leadership positions, makes it difficult for the democratic mechanism of checks-and-balance to work effectively in American Samoa, for the benefit of the rest of us, the 99-percenters. 

Yes, these leaders have their “lovers’ quarrels” now and then. But when and where their interests are threatened, this partnership synchronizes poetically into a refined work of art to protect their domains. What beauty! How costly!!

It has been several years since (1998) ASG entered into a loan agreement with the federal government using the territory’s share of the tobacco settlement as collateral. One would assume that our political leaders since and to this day would be or should be keenly aware of the status of said loan at any given time. 

If they don’t know, which appears to be the case, how difficult is it to pick up the phone and call DOI to find out the necessary information, or via the internet. Or does having hard facts disrupt the smooth operation of the current system of phantom budgeting and deficit spending?

The world renowned economist, the late Milton Friedman once said, “One of the great mistakes is judging policies and programs by their intentions rather than their results“. As a government or territory, American Samoa as is does not appear to have goals or intentions, thus the “result” part of the equation is irrelevant. Perhaps our leaders are taking their literal interpretation of the territory’s “unorganized” and “unincorporated” status a bit too seriously.

Not once in these Fono budget hearings, as reported by the media, did I hear a legislator inquired about the scholarship program and its effectiveness in turning out local doctors for LBJ or other professionals in other areas of need; how effective the ARRA, DOC, and DBAS programs in assisting local business development, especially businesses without credit or good credit in the eyes of western financial institutions; how effective government programs are in reducing child poverty, child abuse including sexual abuse, and domestic violence which are rampant among the 99-percenters (especially at the lower end of the spectrum).

And no question was posed of the Department of Public Works regarding the Manu’a boat, at least as reported by the media.

The people of American Samoa through its government need to set goals for the territory; and the budget process should be taken seriously by government leaders as the implementation of the budget connects intentions to results. Without this important connectivity, we merely exist to serve government leaders and their families. In that case, who needs a government?

What do you think American Samoa?

God Bless.


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