Thursday, July 07, 2016

Pork Barrel 14, Governments living beyond their means vs. living below their means

A lawyer friend, Jijil Jimenez, made a good observation in his fb posting last Tuesday, July 5. He wrote,

Asking Congress to submit a list of projects to be later included in the proposed GAA by the President is, technically, not pork. It is beef - bigger, and as fatty. Its actually the older brother of pork practice where, unlike pork, the item of expenditure is decided before the budget becomes law. Its called budgetary insertions. It is, strictly speaking, not part of the power over the purse lodged in Congress because under this concept, only the President can propose items of expenditures. Congress either approves or disapproves. In reality, there is so much give and take outside public scrutiny. Offering pork is one way the President can control votes in Congress. Same with this beef. The President includes lawmakers pet projects in the budget proposal in exchange for their support. Everybody happy. The biggest winners, however, are the pigs. Doing away with the classic pork system gives these innocent animals a much needed reprieve from popular public opprobrium.

Jijil is correct. The mother of all corruption actually is the Executive branch, from the OP down to the Departments to bureaus and sub-bureaus, down to local government units (LGUs). People largely think of spend-spend-spend, not minding about the cost to taxpayers today and tomorrow (for borrowed money). The Exec. does not know how to live within their means, much less how to live below their means. They only know how to live beyond their means.

An independent legislative should stop this. But because they are also full of greed, they tolerate this executive corruption in exchange for their pork and beef. So both are happy, both have their money and pork and beef and beans, new taxes, new regulatory fees, more mandatory contributions will be on the bill of taxpayers, especially those in the private sector.

Thus, it is wrong to just blame the legislators, both house and senate, for their "greed" in pork as if the Executive branch are a bunch of kawawa-underpaid-overworked personnel and officials that need more salary hikes, more pension, more travels and trainings. The executive -- regardless of administration from Marcos to PNoy to Du30 -- is largely a pampered and well-fed bureaucracy whose hunger for more spending, more subsidy programs, more regulations keep rising yearly. The legislative should assert its independence but because they behave like the executive -- to live beyond their means forever -- they tolerate the executive's wasteful behavior.

My former teacher twice at UPSE (undergrad then PDE), now DBM Secretary again, sir Ben Diokno, and many other economists have a different definition of "underspending". A projected deficit of P300 B becomes P200 B or 150B deficit and it is already called underspending. Wrong. Real underspending means having fiscal surplus, stop borrowing for a few years and pay back some old debt. The overall public debt stock keeps rising, around P300B a year I think, with or without a crisis.

It is possible to do high public infra spending and still have fiscal surplus at the same time -- by cutting and discontinuing other public spending and subsidies. 

In our ordinary lives, a person with a net income of P100k a month but deep in debt because his/her regular spending is P110K a month, ang tawag dyan mayabang-gastador-maluho-magarbo-gago-etc. Pero pag government ang frequent and perennially in debt, ok lang, even among PhD people. 

Hindi pwede na puro utang, dapat marunong din magbayad. Hindi pwede puro deficit, dapat marunong din mag surplus, esp on non-crisis years.

See also:
Pork Barrel 12: Why DAP is Wrong, July 29, 2014 
Pork Barrel 13: Executive-Legislative Honeymoon and Presidential-Parliamentary Forms, July 31, 2014 

Weekend Fun 46: Pork Barrel's New Names, August 25, 2013

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