Sunday, December 16, 2007

Spontaneous Market 6: Removing Pork Barrel

More than three years ago, we were discussing in MG yahoogroups the crafting of a statement about removing pork barrel. Here are our raw exchanges then. This is 8 pages long.

Removing Pork Barrel

September 2004

Guys, see the draft that I made below:

Why Legislators' Pork Barrel Should be Cut, Eliminated over the Long-Term

The job of governments is to improve their citizens' and taxpayers' well-being, not the politicians and bureaucrats' well-being. If governments can help the citizens with efficient delivery of social and economic services through efficient taxation, so be it. If governments can help the citizens with lower taxes because of inefficient and corruption-tainted services, so be it.

Philippine legislators and politicians, including presidents, past and present, are largely to blame for those perennial budget deficits and ballooning of the public debt. Even when taxpayers were unwilling to part with their hard-earned money because of perceived malfeasance in governance, politicians' spending spree continued. Even when tax collectors were diverting many collections into their pockets and padrinos, politicians' unsustainable subsidy policies continued. Even when interest rates were going up because of the expanding public debt, politicians' penchant for endless borrowing continued.

Thus, legislators should not call the proposed cuts in their pork barrel as "sacrifice". It simply is the right thing to do. Legislators are called as such because their main task is to legislate and craft laws, not to execute and implement local projects. Their task is to talk and debate how to cut expenditures when these are no longer supported by projected revenues for the year, not to further bloat expenditures with their pork barrel and justify irresponsible borrowing spree by the President and the DOF.

The real "sacrifice" that legislators can proudly boast to the citizens is when they will enact legislations giving relief to taxpayers, like cutting income tax so salaried and fixed income earners will have more take-home pay to bring to their families. The real "sacrifice" that legislators can give to taxpayers is when they slash agencies and programs that abet inefficiency and corruption in government, not expand budget for corruption-tainted
agencies and programs.

Those moves are considered "sacrifices" because many of their peers in the Legislative branch will frown upon them when they would seriously push for those reforms. Sacrifices because the President and his/her Cabinet officials will be deprived of further extending political "pogi points" at the expense of taxpayers. Sacrifices because some citizens who prefer to beg for political favors and rely on dole-outs by politicians and state bureaucrats than working hard will begin to oppose them.

In addition, if it is true that legislators can identify the needs of their constituencies better than those agencies of the Executive branch, then we better shrink those agencies by demoting them from line departments to bureau-level offices, just implementing the wishes of the legislators and the President. Us taxpayers can save money with the abolition of many
Secretaries, Undersecretaries, Assistant Secretaries, planning and related departments of those agencies.

- Nonoy


Legislators are supposed to formulate laws; laws that are designed to improve the quality of life -- physical, mental, moral, cultural -- of our people.

For so long, this has not been the case. A vast majority of our national legislators (and in many respects even local ones) aspire for office because of the political and financial benefits that are available as booty when one is a member of the house of congress or the senate.

The single most indecent reality of philippine politics is the fact that candidates spend millions of pesos in campaigning for a seat that pays officially less than a million pesos a year in salaries.

That by itself is the single betraying fact of the hunting-gathering instincts of legislators. And the embodiment of that booty mentality is the so-called "pork barrel".

To heap injury upon insult upon injury, the proposal to cut and/or abolish the countrywide development fund (cdf) is being labelled as a "sacrifice".

We believe that it is about time our country's political leaders show some semblance of decency by scrapping the "pork barrel" altogether, and across the board. "pork barrel", intelligence funds, and discretionary funds are all the same -- they have no accountability. And when a government has no
accountability, it has no business collecting taxes, much more increasing them.

Scrap the "pork barrel"!
No to increase in tax rates!
Yes to stopping corruption in the revenue agencies (bir and boc)!
Yes to minimal government!

- Citizen Kori

Dear Sir Kori, Noy,

Although I don't really like what Sen. Pimentel and Sen. Joker Arroyo stand for these days, I think their points are valid when they dissented the scrapping of the pork because then the President will have the sole discretion and therefore the sole privelege to corrupt and neknok certain percentages of the funds. It will be like transferring the loot from Congress to OP. In a sense, you're making the OP responsible for a bigger portion of the expenditure pie.

There is reason to doubt the accountability and credibility of Pres. Arroyo to manage the funds. It is going to be a frenzy of finger-pointing and mudslinging unless we qualify our position. Make the Executive Department accountable by alligning the scrapped pork solely for interest payments and retirement of the principal.

Dapat hindi mapunta sa infra or social ekek kasi siguradong neneknokin. I mean we know exactly how much our debts are (unless may porsyentohan din sa bayaran ng utang?). We can easily predict when exactly we'll be able to pay off our debts because these are exact amounts.

When were we're able to pay off our debts and the economy stabilizes, let's begin the dismantling of unnecessary government agencies. Now the supposed-to-be pork barrel should be used to fund early retirement claims. Dapat hindi na utangin ang early retirement kasi babalik na naman tayo sa pagbabayad ng utang.

If the President wants to increase her social and development expenditure, kunin nya sa PAGCOR or similar entities.

Eventually, the size of the expenditure pie should shrink. No pork barrel, no utang, ergo, no need for too much tax.

I think, and I've been meaning to post this, the minimal government position should be tempered by the sensitivity for macro-economic stability. The UP Professors are speaking with wisdom when they said that phasing is very important if we're serious about averting a fiscal crisis and moving the economy forward. For instance, we can't possibly retire government employees now because early retirement claims will further widen the deficit; we can't fire them either and scare away investments with social unrest.

Let's pepper the minimal government position with the appropriate number crunching.

- Ellen

Hi Noy,

I agree with the principle you laid down about the pork barrel-- that the legislator's primary purpose is to establish the laws/policies for their constituents. It would be nice if someone can trace the history of the largesse. Has it always been around, or did it evolve due to some failure by the executive branch at one time or another.

Strictly speaking, legislators only "earn" from the pork barrel if contractors who bag the project will give them a %. If procurement in this regard is made more transparent and less discretionary, maybe it won't be a source of leakage.

Remember also that congressmen have to hire political officers and not just technical people. Why? To handle all those requests for assistance in funerals, hospitalizations and other "calamities" from their constituents. Joker Arroyo can afford not to accommodate those requests when he was still congressman of Makati because the local government is affluent. But what about the poorer municipalities in regions, where the congressman is the only source of grasya. It is patronage pure and simple, but it is the reality there. The congressman then becomes the last resort for situations where SSS, Philhealth, DSWD and even the church and civil society fail. Maybe that is part of the reason why they are hesitant to part with pork. Of course, that is a big MAYBE. But think, only the congressman has the incentive to really help because he can expect loyalty in the next election.

- Chichi B.

Hi chi,

Chicken and egg story yang "pork barrel to finance personal requests by constituents to buy their loyalty to get reelected to get more pork barrel to finance requests by constituents..."

A break from this cycle is impossible in the short-term, even in the medium-term.
long-term engagement talaga. kaya nga sa MG philosophy, highlighted ang

greater individual freedom,
greater individual responsibility,
lesser individual dependence from the state and the politicians,
lesser power by the state and politicians to raid our pockets.

As i discussed in my powerpoint presentation, The range is between the "collective/state" on the left, and the "individual" on the right. The extreme left is socialism (practically everything owned by the collective through the state). The extreme right is ultra-libertarianism, zero government (practically the state is unnecessary). The MG advocacies are in-between the current govt's programs and interventions, and the zero govt. philosophy.

the pork barrel politics is pulling the public, the citizens, to embrace the statist, forced collectivism, philosophy. citizens to depend on the politicians in exchange for the politicians' right to raid the citizens' pockets and political beliefs.

so i think, the call remains valid: cut pork barrel in the short-term, abolish it in the long-term.

- Nonoy

Hi Nonoy,
For the administration/executive, legislative, and judicial branches of government, I suggest that the group create a list of two types of areas of concern: (A) areas that the particular branch should be primarily responsible for; and (B) areas that it should stay out of. For example, the judiciary should render constitutional and legal judgments but should do its best to stay out of technical/engineering/accounting/financial/commercial issues that are best handled by the executive branch and also out of certain primarily political topics that have no juridical or legislative significance.

I know that this will be quite difficult and take a long-time to finish but if someone can start working on a basic framework or table for the various topics listed in the MinGovt position paper, the rest of us can just download it, work on it at his/her convenience, and then upload it to a volunteer compiler. This work in progress can then be posted in our website for others to look over and give comments on. Once the framework is done, we can designate sub-areas that we all fully agree on (e.g., that legislators should stick to law-making 90% of the time) versus more controversial sub-areas (e.g., that legislators should minimize or avoid showboat-style exposes “in aid of legislation” which don’t really accomplish much except put their names in the newspapers).

I guess such a checklist should look like the following, more or less:


Executive:     Administer and execute policies                     Creating unbudgeted projects or institutions
Negotiate international treaties                       Discontinuing successful projects of   predecessor/s
Collect and disburse funds                             Executing projects willy-nilly and without transparency
Legislative:      Debate proposed policies                              Prioritizing and assigning
                                                                                                expenditures in/of LGUs
Create and amend laws                                  Initiating investigations without resolving them

Judiciary        Determine constitutionality of laws                 Issuance of unnecessary TROs
                        Render legal judgments                                  Intrusion into technical or political

The purpose of this exercise is to develop an easy-to-read checklist for each of the three major branches of government so everyone can see whether it is fulfilling its responsibilities or straying away from its main mission (as defined by the constitution and by agreement of the majority). Later on, we can add more specific branches of government such as the police forces, the armed forces, the local government units, the presidency, the different government bureaus, the constitutional bodies, etc. With a fully evolved checklist (it could take weeks to over a year to finish), it will become easier to delineate whether or not a particular agency or branch of government is doing its job or usurping another agency’s function. With a job-function checklist in hand, we can point to individual legislators or courts or agencies that are wasting people’s time and money by not doing their job and also doing some other agency’s job (and messing it up), or preventing another branch of government from doing its job.

The country’s political scientists and lawyers would be the major participants and contributors (if they are interested) but I also see a place for specialists in operations research, knowledge engineering, and other professionals to provide their expertise.

Can some others please help flesh out the list and trim/edit it nicely? I’m sure there are a lot more that can be added to the initial framework.

- Selwyn A.

Pareng Noy, Just want to share what i know on this issue. on your question on the history of the pork barrel, i believe it has been in existence for quite a while now, although the amount of the allotment for each legislators have ballooned by so many folds (largely by their own effort and to their sole benefits) and the ways and means by which it can be disbursed have been short-cutted.

pork barrel came from the counrty wide development funds. during pre martial law, each congressman has different percentages of allotment based on the economic status of their district and province. these funds were meant for infrastructure as well as other social projects given to legislators on the assumption that they have a better understanding of their constituents' and districts' needs.

they are, however, obliged to file a bill for a particular project with the corresponding amount to fund the bill. this will be subjected to the natural process in congress wherein fellow legislators will debate on the merit of the bill and the funds requested for it's purposes until seconded and referred to the proper committee. kung local di na to aakyat sa senate.

at present, this is another reason why alot laws passed are useless or do not have enabling laws due to lack the funds for their enactment. Ngayon kasi wala ng bills-bills pa. identify mo na lang ng ghost project bigyan ng pondo 50% and kick back.

- Raymond A.

Noy, Mayroon lang akong kaunting additions on abolishing pork barrel. According to some US papers, pork barrel is coming from the national budget and therefore is to fund national priorities. since we already have the IRA for the local governments, there is no longer any need for the pork barrel. on this note, cutting the IRA must not be across the board and should be prorated by type of municipality.

since most of our apprehension on pork barrel is that it is a major source of corruption, the best way to disprove it, is to have each representative list the details of his/her pork barrel representative and how the money is spent. similarly, other funds that are "discretionary" in nature can be allowed as long as there is regular reporting of how it was used.

abolishing the pork and their similar natured funds will break a lot of the chains that have enslaved philippine society for decades. studied thoroughly and operated carefully, the cutting of these funds will release ultimately efficiency.

- Alvin

Dear Nonoy,

You may want to rephrase the last sentence of the first paragraph under the "Role of Government" section. The point should be made that the government should help its citizens with lower taxes and efficient and corruption-free services. Helping its citizens with inefficient and corruption-tainted services should not be accepted nor tolerated.

I suggest to rephrase the first paragraph under the "Abolishing the Pork Barrel" section like the following:

Thus, Legislators should focus their time and energy on finding ways to prevent the slippage of the economy to a possible debt-default crisis. This may require cutting the Executive Branch's excess fat and expeditures, raising power rates to control the financial bleeding of NAPOCOR, scrapping the President's and legislators' pork barrel, and reducing the LGU's Internal Revenue Allotment(IRA) for at least two years.

- Prof. Patalinghug

Kori, Ellen,

How about these compromised formula:

(1) Phase out pork barrel in 3 years time, zero on the 4th year, instead of outright abolition now.
Say 75% in 2005, 50% in 2006, 25% in 2007, zero in 2008 onwards. So, legislators running for the 2007 elections would know that they'll have zero pork barrel starting 2008 should they win.

(2)Phase out also the President's pork barrel at the same rate as phasing out of legislators' pork barrel; ie, 75%-50%-25%-zero in 4 years time. The president to take her social fund and "neknok" funds from Pagcor.

(3) Use the scrapped pork funds of legislators and the President to retire some local debts.
For every P10 billion of domestic debt retired at 8.5% interest rates (upper range of the 91-day T-bills), that's P850 million savings from interest payment per year, a big amount already.

(4) On shrinking government, a 1 paragraph statement in this pork-barrel position paper would go something like this:

"We need to make the government bureaucracy do more for less costs. Currently, about 70% of total budget net of IRA and debt service payment goes to salaries/personnel services alone. Early retirement for redundant personnel should be started soon, starting from agencies with functions that can better be left to the markets. It will be painful for some affected personnel, but maintaining said bureaucracy is even more painful for the taxpayers because of wastes and perceived uselessness of those agencies and/or personnel."

(5) On privatization of govt. corporations, the process takes about 4-6 years/corporation to be completed.
the process should be started this year or next year. So that by 2011, we'll be rid of many of those losing corporations, in particular: Napocor, NFA, PNOC, LRTA, NEA, NHMFC.

- Nonoy

(1) Phase out pork barrel in 3 years time, zero on the 4th year, instead of outright abolition now.

Say 75% in 2005, 50% in 2006, 25% in 2007, zero in 2008 onwards.

So, legislators running for the 2007 elections would know that they'll have zero pork barrel starting 2008 should they win.

Are government programs ever phased out? It seems to me that if you leave anything left then the politicians will just increase funding when the pressure is off.

Two examples from my own experience in the US -- taxes and farm subsidies.

1) In Massachusetts, the raised the state income tax from 5% to 5.95% during a "fiscal crisis". The outrage over the increase was extensive so they promised to make it "temporary": when the crisis passed and budget deficits disappeared, the tax would be lowered. Lo and behold, the crisis passed, surpluses returned, and the money was spent. The tax was not lowered. Eventually, through an initiative petition for a ballot question the tax was returned to the original level, but it took years and the politicians put up a fight all along the way.

2) When the Republicans took over Congress following the 1994 elections, they moved to severely cut if not eliminate farm subsidies, called the Freedom to Farm Act. Unfortunately they did not, in fact, end them. When the farm market soured, Bush promised in the farm state of Iowa, while running for president in 2000, that he would boost funding, and that is what he did. It would have been better to have killed the entire program and dismantle the bureaucracy. Instead, a program was left for Bush to increase.

When given a chance, end a program entirely. Shut down its offices and sell its furniture. Kill it, completely, without mercy, at its roots. It is much harder then for politicians to come back, when no one is looking, and refund the program. They need to start all over again, rebuilding the program, passing enabling legislation. They cannot just quietly add more money to an existing program, a la farm subsidies.

We better end this "pork barrel" now. If any of it survives, it will come back stronger and healthier and it will be much, much harder to kill off.

- Bruce H.

See also:
Spontaneous Market 1: Profit, Trade and Personal Responsibility, May 22, 2006
Spontaneous Market 2: Market Failure vs. Government Failure, June 07, 2006
Spontaneous Market 3: No Nurses' Brain Drain, June 21, 2006
Spontaneous Market 4: Entrepreneurship, Community and Property Rights, October 23, 2007
Spontaneous Market 5: Limits to Free Market? November 16, 2007

No comments: