egislators were
again up to their old tricks when they "cut" appropria-tions for debt payments
and realigned the "savings" into a mini-economic stimulus package subject to
their control. This time around, we doubt, however, they would ever see the
color of the P50 billion given the runaway deficit the government faces.
The trick went this way. The original debt payment service
proposed by Malacañang was P302 billion. This was slashed to P252 million. The
"savings" were then farmed out to various departments which are in the forefront
of pump-priming efforts. The understanding was the line departments would pour
their additional budget into projects identified by legislators.
The key to the trick is the Marcos-era presidential decree
which provides for automatic appropriation for debt service. If the payment
schedule this year calls for P302 billion, that much will be paid, regardless of
the cuts made by the legislators. So the effect of the "realignment" is to
increase the total budget by P50 billion, without violating the constitutional
prohibition on Congress from increasing the budget as originally proposed by
Malacañang, in this case, P1.4 trillion.
Last year, Malacañang vetoed a similar attempt. This year it
did not, despite clear signs the budget deficit could go through the roof
because of poor revenue collections. The obvious reason is that there are
elections coming in 2010; Gloria Arroyo must buy all the support she could get
to make her anointed win. Or, if Gloria is bent on staying beyond 2010, which is
the more probable scenario, she needs the cash hoard to pay off legislators in
order to press Charter Change.
With the global contagion now lapping Philippine shores,
overly optimistic growth forecasts have given way to a more tempered, but still
probably optimistic, expectations of a low of 3.1percent and a high of 4.1
percent. Slower growth will necessarily lead to lower revenues. This is
compounded by the new tax breaks for low-income earners and the reduction in the
maximum corporate income tax rate from 35 percent to 32 percent.
The long and short of it is that the government will have
lower revenues accompanying bigger spending in the pursuit of pump priming. And
where will the cuts in spending come? That’s a no-brainer. First to go will be
the legislators’ P50 micro-stimulus package simply because its release is
subject to the availability of funds. Meantime, Gloria will certainly ensure her
own "pork barrel" in the form of lump-sum program appropriations gets adequate
funding.
The legislators again get the short end of the stick, which they probably
deserve for believing Gloria would keep her side of the bargain.
