Prime Minister’s Question Time – Part 1

by Simon

•Simon is a young Bahamian with things on his mind who wishes to remain anonymous. His column 'Front Porch' is published every Tuesday in the Nassau Guardian. He can be reached at [email protected]

The prime minister faces some of the pricklier questions of his political career beyond the routine queries posed by the Opposition in the House of Assembly during questions to ministers.

More compelling are a boil-up of questions cum crises, including what may turn out to be the worst economic downturn in an independent Bahamas, the latest “developed world” challenge to our financial services sector, and to tweak a saying, the valley of the shadow of increasing public debt.

The PM’s judgements on these questions will determine how the country responds to and emerges from this economic crisis, how the FNM fares in the next general election and, longer-term, what legacy he bequeaths to the country and his party.

Mr. Ingraham must empathize with U.S. president Harry S. Truman who reportedly bemoaned: “Give me a one-handed economist!  All my economists say, ‘On the one hand, on the other hand’.”

As he and his ministerial colleagues digest a range of advice, the buck stops at the prime minister’s desk and at the cabinet table.  Collegially, they must, as accurately as possible, diagnose the current situation and administer the proximate combination of surgical and therapeutic intervention needed to restore the country.

STORYLINE

A current storyline suggests that though the U.S. economy is obviously still in a mess, things aren’t going downhill as fast as before, and that the economic contraction in advanced economies may have peaked.  Maybe, maybe not.

This conventional wisdom continues: towards the end of the year there should be marked signs of recovery in the U.S.  Perhaps, perhaps not. 

Meanwhile, the International Monetary Fund warns that this unprecedented global recession will likely be "unusually long and severe, and the recovery sluggish”.

Nouriel Roubini, a prominent economist who forecast the severity of the current crisis agrees that the U.S. economy isn’t contracting as fast as before and that there are positive signs germinating.

But he warns that the quality of recovery many expect towards the end of 2009 won’t come until the middle or at the end of 2010, and that initially it will be anaemic and tentative, with possible aftershocks for a period of time.

Whether or not Roubini is correct, the Ingraham administration must game a chessboard of scenarios as the improvements in the U.S. economy gradually translate into gains for private citizens and the public purse at home.

Within this horizon Mr. Ingraham, as the chief executive and minister of finance, faces a double and related challenge, one immediate, assuming his administration gets it right, and the other hopefully not too far down the road as the country recovers from the biting grip of this recession.

State Minister of Finance Zhirvago Laing was the first bearer of very bad news when he indicated that government revenues may be down by $100 million dollars for the first three months of 2009.

A CHASM

As staggering as that number is, things may get worse, quite worse.  And if Roubini is correct, we might see a chasm in public revenues in the hundreds of millions over the course of the next year and a half and perhaps beyond, even as the economy improves gradually.

While there may be some gradual improvements in public finances, how long can we sustain such deficit spending and debt multiplication? What actions need to be taken to protect our intermediate term needs and our long-term fiscal health?

These are some of the vexing questions with which Mr. Ingraham wrestles.  None of the answers are obvious or easy.  Even as some governments boost stimulus spending, others, like the Irish, recently introduced a national budget – its latest one in six months – that slashes spending and hikes taxes.

In the FNM’s upcoming 2009/10 budget we will not only get a clearer read on the state of public finances, we will also get a better idea of the government’s analysis of what they believe will be the depth and length of the downturn --  and how they intend to respond.

But even if the FNM successfully tackles this crisis, it faces a formidable, or an even more formidable challenge Dr. Roubini raises:  a responsible exit strategy out of a severe recession amidst rising public expectations – and a critical political test.

In a rare occurrence, the chief executives of The Bahamas and the U.S. will both face voters in 2012. Though Mr. Ingraham can massage the date, he must call an election prior to Mr. Obama’s fixed re-election date on November 6, 2012.

But no matter how well Mr. Ingraham may handle the economic crisis, increasing labour and wage demands, a still fragile recovery, previous manifesto promises, and the need to stabilize public finances will make for a mixed burden if he carries his party into an election, seeking a fourth term as prime minister.

PARADOX

The paradox starkly captured by Nouriel Roubini is that things might grow worse politically for many politicians even as their economies gradually improve.  “What have you done for me lately?” knows no national boundaries.

Even if The Bahamas is in the midst of a recovery in 2012, that electoral contest may be decided mainly on which party only a slim majority of voters needs to believe will quickly refill their checking accounts.

For some, the winning theme song for the campaign may be: “I can see clearly now, the rain is gone/ I can see all obstacles in my way/ Gone are the dark clouds that had me blind/ It’s gonna be a bright(bright), bright (bright)/ Sun-shiny day.

“I think I can make it now, the pain is gone/ All of the bad feelings have disappeared/ Here is the rainbow I’ve been prayin for/ It’s gonna be a bright (bright), bright (bright)/ Sun-Shiny day. / Look all around, there’s nothing but blue skies.”

The Consumer Confidence Index in the U .S. will have a direct impact on the voter confidence index at home.  With the next General Election fast approaching, the incumbent administration must put in place now various policy and political strategies they want to come into fuller effect by the run-up to 2012.

Comments

[C.Lowe]

"Simon",
I think expectations of a "fix" from any political faction is akin to asking the hole in the bucket to stop the leak.
"As he and his ministerial colleagues digest a range of advice"
Advice from whom? I think you are patronizing someone to suggest that they seek advice from, or take advice from anyone if it is offered.
"the buck stops at the prime minister’s desk and at the cabinet table. Collegially, they must, as accurately as possible, diagnose the current situation and administer the proximate combination of surgical and therapeutic intervention needed to restore the country".

When will we ackowledge the fact that Government is the problem, and will continue to be as long as we hoist them up as some sort of oracle to be listened to where it concerns any competent response to life in these fair Isles?
To assume that their priorities are actually geared to the actual problems faced by the citizenry rather than their own fiscal and personal comfort of position concerns would be to give them far too much credit.
If you doubt this, simply watch the disgraceful banter and sniggering schoolboy antics totally lacking any compassion for peoples plight displayed by the clueless idiots in the House from top to bottom.
Their own pathetic offer to the E.U for the EPA was rejected as pathetic, the only action we will see from them will be in July in the form of increased taxation,
A pure self preservation move if there ever was one, some angry outbursts no doubt for any dissent, and total shock and surprise when we are listed as an offender under the pending U.S. legislation which is in itself a move by U.S. politicians to secure their own comfort. control and revenue stream.
As for Mr. Laing, he is hunting around frantically for any as yet untapped revenue streams he can conjure up, lest our equally desperate Prime Minister replace him, but with whom or what would be any intelligent persons guess.

There is no reasoned thought that can be applied by any governmental persons or entity.
They are ill equiped for the job.

[Erasmus Folly]

And those are the 'good' guys...

The basket case of so called 'opposition' members would be even worse than the 'enlightened' [sic] ones currently in office. The sad truth in the Bahamas is, as bad as the FNM is, the PLP is still worse. The politicians in this 'democracy' are a drain on the people's finances. Sadly, they have so many ignorant people to manipulate and extract their power base from. Pindling made sure of that.

I agree with Chris here, the government is ill equipped, on either side of the aisle, to tackle a REAL problem like this. Neither side has been honest and explained to the people that austerity is needed on their part - that a recalibration of priorities is needed on their part and that things will be more difficult. Neither side has spoken of seriously cutting government spending and finally reforming the bloated bureaucracies. Instead, they both pander to the people and offer pie in the sky. Taxes need to be reduced in the Bahamas - not increased. We are making ourselves uncompetitive vis a vis other destinations (for tourists) and vis a vis Miami (for locals). Growth can only occur if we get more tourists to come and bring their foreign reserves and convince more Bahamians to spend those dollars locally. We are doing a below par job on both. Time is running out. Instead of providing 'welfare', the government should be investing in infrastructure programs, lowering taxes wherever possible and incentivizing tourism, investment and business.

I once asked Laing the following: 'Don't you think more Bahamians would buy things in Nassau if the government lowered the duties vis a vis Miami?' Instead of discussing the matter frankly, he offered this, 'Are you suggesting that Bahamians are lying to customs agents and bringing in items without paying the duty on them?'

That is not a serious response from a Minister of Finance and we were not in a casual setting. It was a forum hosted by the Bahamas Chamber of Commerce - not a religious studies event. The question is not one of morals or ethics, it is one of economics. An economist doesn't answer an economics question with a moral or ethical response, he answers according to simple economic principles. In this case, barring some form of sanction, consumers will buy where it is cheapest and 'smuggle' in hard to detect items if it is to their advantage. They don't do it because it is immoral or illegal, they do it because it is to their economic advantage. It isn't about morals or ethics, it is about predicting ECONOMIC behaviour! Economic behaviour happens at the mass/societal level; moral/ethical behaviour happens at the individual/choice level. They are not to be conflated. Bahamian politicians love to talk about morals and ethics, but talk very little about economics. Sadly, morals and ethics are shaped by economic forces - that is often the reality. Allow those forces to get out of control and morals and ethics go out the window as far as being relevant to the political situation. Human societies in collapse are neither pretty nor ethical, just take a look at Haiti or one of the poorer African nations. The grim legacy of harsh economic reality is there for all to see.

[Rick]

Chris and Erasmus Folly:
I'm with you both on this one!

[C.Lowe]

Agreed Erasmus, well put!

I have tried for the last 20 years of my business life to help, give and assist my governments, both parties, with well researched documented outlines, oportunities that I stood back from in order to not appear self serving.
I think most were so far above their respective heads they couldn't fathom the potential for the country, nor could they understand the possibility that I was not out for myself.
The rediculous part is, I keep trying, in spite of the fact that they most often treat any approach with contempt.
Would it surprise you to know that our police force are without helicopters today because our government administrations refused them? When governments refuse the funding and help of its citizenry, you know you're in trouble.
Perhaps Larry could do that story, he may well know it.
They are berift of any moral or ethical stance, thereby undermining their own authority and are devoid of any honest answers or solutions.
What now? Wait for them to apropriate more and more of our individual assets in order to fund their folly?

[Erasmus Folly]

Please tell the helicopter story. That sounds too good to pass on.

EBC

[C.Lowe]

Quick and dirty version.
When B.K. Bonamy was Commisioner of Police, he gave an address at C.O.B. addressing the increases in crime, and stating that resources were scarce, and that what they really needed was a helicopter for fast response to bank robbery, etc
This was pre 1992:
Private citizens, business people started feasability and found that they could fund it, Rotary members were involved, suport was rallied, even the P.I helicopter tour company gave free rides to police officers to demonstrate the value.
The P.M. and Deputy claimed funding not available, back and forth, it would be supplied at arms length by private sector, and no response.
Govt change, 1992, same story.
My father tried every avenue he could to get the political leadership to see the possibilities, with successive Comissioners from B.K on supporting and hoping silently but no dice.
There was no profit motive or special benefit to any of the private sector proponents, all business people who had committed to fund it ongoing for public benefit and security.
When the P.M. was confronted face to face about it, out of pure frustration, by chance at the Nassau Beach Hotel the look of contempt was all that was recieved.
In the face of that attitude, they gave up, and walked away.
Another project was cameras on Bay ST. for tourist safety. Again, homework done, funds available, Cable Bah, infrastructure newly installed, but no.
Stonewalled.
What are they doing on Bay St. today 15 years later? Installing Cameras.
I wonder who got the Job.

[Erasmus Folly]

The question is: will the cameras really work? If run by government alone... the answer is no and we all know why.

[Erasmus Folly]

Thanks for the helicopter story. That is madness, but expected. Perhaps they will review it now? We could use 2 or 3 at this point. One for the east and one for Carmichael. The other just to catch Haitian sloops at night... wait, can't we just subcontract the US government to do that for us... I mean they have more helicopters in the Bahamas than we do...

[C.Lowe]

What about the cameras on the BTC tower at Inagua to watch the sloops pass.......Also offered.
At this point, while Helo's would certainly help, as you cannot escape them, but the ground traffic being so horrendous would still hinder the ground units.
Bottom line is they don't want to stop crime, or fix the courts, or build out a prison with capacity I just cannot figure out what it is they do want to do, either bunch of 'em.

[Sean Rolle]

I couldn't agree more. I don't think anyone would ever accuse these elected guys of beings visionary!!