2 US senators question McPhee’s impact report

The U.S. Senate’s Committee on Energy and Natural Resources have raised questions regarding the “sources and assumptions” in the federally funded report on the economic impact of the federalization law.

Sen. Jeff Bingaman, who chairs the committee, and Sen. Lisa Murkowski told Malcolm McPhee in a letter dated Dec. 17, 2008, that his study contains useful information and recommendations, but “it also raises some questions regarding sources and assumptions.”

McPhee of the Washington D.C.-based Malcom D. McPhee and Associates and Dick Conway co-wrote the study titled Economic Impact of Federal Laws on the CNMI. The study was funded by the Interior Department and was released in October 2008.

The senators attached in their letter some questions in order for them understand the scope of work assigned to McPhee’s firm as well as the methodology and process used in completing the report. They expect McPhee’s response by Jan. 15, 2009.

Bingaman and Murkowski said the economic impact report assumes that all permanent alien workers will be deported by 2014.

The senators said the basis for this assumption were the sentences: “It is imprudent to assume that the implementing agencies will interpret the will of Congress as permitting an indefinite transition period and regulatory flexibility” and “the practice of federal agencies to use this flexibility to the CNMI’s advantage is highly speculative.”

“This report is presented as an economic study, but this non-economic assumption effectively determines its conclusions,” the senators said.

Bingaman and Murkowski noted that Section 701 of Public Law 110-229 (federalization law) states that the intention of Congress is “to maximize, to the greatest extent practicable, potential adverse economic and fiscal effects of phasing-out the Commonwealth’s nonresident contract worker program and to maximize the Commonwealth’s potential for future economic growth and business growth by…providing a mechanism for the continued use of alien workers.”

The senators asked McPhee to identify the political expert(s) who were consulted in reaching the assumption and detail their basis for making it.

They pointed out that the report, which was funded by the U.S. Department of the Interior, has been used to support the CNMI’s lawsuit against federalization.

The senators asked McPhee as to when he first learned that the CNMI or its lawyers intended to use, or might be considering using, the report in this way.

“Were any CNMI officials or representatives given a draft copy of this report before the final copy was released to the public and, if so, were any changes made as a result of comments, corrections, or criticisms made by CNMI officials or representatives? If so, what were the changes?” the senators asked.

The senators also asked, among other things, to provide an estimate of the number of Freely Associated States citizens currently employed in the CNMI and an estimate of those potentially available from the FAS as workers in the CNMI.

The report examines how new federal laws, especially those relating to labor and immigration, will affect the CNMI’s ability to produce jobs, revenue and a private sector tax base.

One of the major conclusions in the report states that “under a federalized immigration system, the CNMI will lose approximately 44 percent of its gross domestic product, 60 percent of its jobs, and 45 percent of its personal income by 2015.”

The report listed eight recommendations for the CNMI to achieve economic recovery.

McPhee and co-author Conway are the same persons who wrote the CNMI’s economic study released in 1999 by the Northern Marianas College.