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Sunday, September 20, 2020

$10 Billion Add-on

Whoo hoo!  More money for Guam!  Actually, more money for the people of the United States of America.  The idea here is to make sure that the money used for the Guam buildup is used on US citizens instead of outsourcing jobs to Japan and the Philippines.  This is good news for Hawaii and California.  I might be one of those looking for jobs on Guam.

currencyTucked away in the 2010 Defense Authorization Bill just passed by the House is a provision that should give senators — and taxpayers — pause. Over the next five years, 17,000 U.S. troops and dependents will relocate from Okinawa to a new base on Guam. This project will require billions of dollars to build the base itself, as well as billions more to repair and add to Guam’s infrastructure. The $10 billion projected cost is to be split by Japan and the United States: Japan would supply $2.8 billion directly and an additional $3.2 billion in third-party funds while the United States would contribute $4.2 billion.

That was the plan. But the provision inserted by Rep. Neil Abercrombie (D-Hawaii) changed all that. It has more than doubled the cost of the relocation by requiring that at least 70 percent of the construction force be U.S. citizens and that construction workers be paid at the Hawaiian prevailing wage rate, which is double to triple Guam’s. The ostensible rationale is that Guam does not have a large enough workforce to meet the demand, and it is necessary to bring wage levels into a competitive range to attract U.S. workers. But the initial estimate for construction expenses was near $300 million, while the change would drive construction worker compensation costs to more than $10 billion.

If giving U.S. workers jobs on Guam is a priority, this could be accomplished without driving wages up artificially to such a high level. You could, for example, keep the 70 percent restriction on foreign workers and let the market determine their wages. But given that Japan is paying for much of the relocation, does it make sense to limit the participation of Japanese construction firms and their workers?

These provisions will complicate a process already fraught with challenges. Guam’s overburdened infrastructure will be sorely taxed by the new arrivals, who will amount to a 14 percent population increase, requiring an estimated $6.1 billion of work on roads, water, sewerage, waste processing and the power grid. Since Guam’s annual budget is less than $1 billion, this money will have to come from outside. Why add to the burden on taxpayers with these unnecessary provisions? It is tempting to seize on any plan that tries to offer Americans jobs, but this cost is too great.

References:
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/05/AR2009070501782.html
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/29/AR2009062904119.html

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Edel Alonhttp://edelalon.com
Edel-Ryan Alon is a starving musician, failed artist, connoisseur of fine foods, aspiring entrepreneur, husband, father of two, geek by day, cook by night, and an all around great guy.

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