Nathan Andrada’s Blog

It has been almost two months since the last time I wrote for my blog. The Christmas and New Year celebrations, and the extended holiday period thereafter, seemed to have held me and I have not found the time to write in these past few weeks.

Now there is all this talk about a government stimulus package. Remember folks that even in the early months of the financial crisis during October and Novermber last year, the Palace-dominated House of Representatives has already been deliberating the budget for the fiscal year 2009. The President’s allies railroaded the process without even putting into account the core issue of the crisis which is about to hit the country this year. Malacanang and Congress were so confident that the country would not be hit hard despite the rest of the world were already moving to a direction in preparation for a tumultous 2009.

It is amazing, therefore, that our leaders are jumping into the stimulus bandwagon virtually telling the public they had it all figured out. Conservative senators were even apalled when the President declared to the public they had a multibillion peso stimulus package in store when in fact no one mentioned about this in the halls of Congress when the budget was being debated.

What this is all about is the Palace and their allies in Congress are packaging the budget in a way the people would feel they are on top of things. I am afraid there has been an extreme lack of effective governance. The people should know that our government failed to recognize the magnanimity of the global financial and economic crisis and did not act when they should have. The people ought to know that the government is set to spend more anyway this year with or without the crisis. In fact, there is no stimulus package.

Government has clearly miscalculated and they are racing hard to salvage their image especially that election season is coming up.  There are disturbing reports that many lawmakers are quick to get a piece of taxpayers’ money. Lack of transparency on how the people’s money are spent is the root cause of this. This government, unfortunately, tolerates this because it makes sure they are the ones going to do the spending.

When you are a middle-income earner, you would notice that your taxes continue to remain high even at the height of the inflationary cycle last year. The Arroyo government fell in love with this setup and fought heaven and earth not to change it. The Arroyo government will never dream of providing tax cuts to middle-income families and let them improve their own savings and purchasing power. This setup afforded the Arroyo-dominated Congress to raise government spending. Not only it strayed them away from their initial goals to significantly reduce public deficit, it also took away the ability of the middle class to spend more.

 Now that we have this crisis, the Arroyo government continues to stay stubborn and sticks with this economic strategy. I mean, how stimulative can a government get by putting the fate of the economy by handing it to the hands of officials which some has been long tainted by corruption. This is classic Arroyo economics. You earn Php180,000 a year, the government takes away Php30,000. Government has all the power to spend that money but ends up only a portion of it actually goes to where it is supposed to be intended. Why not offer significant tax credits to middle-income earners and let them save and spend, stimulating the economy in the process. 

I fear that much of these spending that the government have in store are not stimulative at all. I believe some of them lack the vision of a long-term development unlike that of US President Barack Obama’s, that focuses on energy and education as the core of their economic stimulus plan. It is sad that the Filipino people are stuck with leaders with no genuine ability to handle this once-in-a-lifetime crisis. The numbers may not be availalble yet but I strongly think the Philippines is currently in recession. I honestly do not trust Malacanang and this current Congress to ever get a grip of this crisis. You might as well look after yourself because in the Philippines, no help is coming for the middle class.

I was there in Ayala Avenue and Paseo de Roxas last Friday where the heart of Manila’s business district was converted into a freedom park for anti charter change protesters. I was not there to join the rally nor oppose it, it just so happens that my wife works there and we go home together. Later that day, I learned from the news that a number of senators were there in the rally and most came from the liberal side of the upper chamber of Congress. Conservative senators have also voiced their opposition to the measure being vigorously pursued by the House.

My take on the charter change is it should be limited in the economic components of the constitution making them more up-to-date in the free market environment. The consensus among most senators is that it should be done after the 2010 elections to avoid any suspicion that it will be used to extend term limits of public officials. The House must realize that this is important and should not immediately shrug off these suspicions, regardless if it has any basis or not, because government is all about public trust.

Democracy is about the rule of the people and this rule is designated to those officials elected to office. Even if it the intention is to amend the basic law that will pave way for economic development, which the representatives from the House are claiming to be their only aim for the pursuing the measure, the notion of public trust must supersede above anything else. Anyway, there would not be much room for any alterations in the economic side of the constitution to trickle into the economy because we are currently in the downward phase of the economic cycle. The best thing the House can do is to call for a stimulus package similar to what other countries are now doing in response to the global economic meltdown.

Senator Edgardo Angara’s editorial column that appeared in the Manila Bulletin last Sunday titled “Fiscal stimulus in response to the crisis” outlined a government-initiated spending that focused on infrastructure, education and health, housing, and the environment. These would funnel national government funds to where it is best needed and at the same time create jobs that would partly cancel those that have been lost due to the crisis.

Congress must now completely abandon the charter change bandwagon and lead the country into a new direction where the realities of a new economy are fast building up. It is their job to create an oversight to make sure that as the national government spends its way out of this crisis, it should make sure taxpayers’ money is wisely spent to where it is intended and the future generations of Filipinos are protected from effects of burgeoning debt.

Before he could be even sworn in, President-elect Barack Obama is already being tested particularly in his vision for change now that he is being dragged to the scandal involving Illinois Governor Rod Blagojevich. For the benefit of Filipinos, since this story has not hit mainstream media, the scandal revolves around the corruption charges filed against the Illinois governor and his chief of staff for setting a ‘bid’ on the Senate seat vacated by Obama. By state law, the governor of Illinois is tasked to name the replacement of the Senate seat that is vacant.

Blagojevich was caught through the wiretapping efforts of federal authorities. The president-elect has already called for the resignation of the governor, who has staunchly supported the former in his bid for the White House. Obama has also denied allegations that his team has any knowledge about Blagojevich’s wrongdoings with regards to the Senate seat selection process.

However, this has not stopped conservatives from questioning the Obama camp especially when there are allegations that Obama’s personal choice for the post was pulled out of contention and was offered a White House designation immediately after the scandal broke out. Some say it suggests that the Obama camp was in fact in contact with the governor and knew of the ’selling’ and failed to report it.

This has certainly placed the president-elect in an awkward position barely six weeks before being inaugurated as the 44th president of the United States. Some are now questioning his ability to initiate change with his involvement with allegedly corrupt officials in his own turf.

Executives from struggling financial firms Wachovia, Merrill Lynch, and Morgan Stanley have already committed to defer their bonuses this year. It is a gesture by Wall Street to cut their costs in light of the global financial and economic crisis. Now that the US is in recession, thanks mostly to many of their financial companies, it sure does make sense for their top executives not to receive any bonus. 

Here in the Philippines, the government not only owns but has significant stake in various corporations. The perks and bonuses of many of the executives, at the helm of these corporations, are enormous to say the least. Now that the country’s economy is expected to slow down next year to 3.5-4.5 percent, the government should consider cutting if not defer the bonuses of the executives of the GOCCs (Government-owned and controlled corporations).

Now that the Php1.4 trillion budget for next year is almost a certainty, unless the conservatives in the Senate can salvage a last-minute effort to bring it down, Congress must act to make sure bulk of that spending will be allocated to provide relief for the poor and projects that create jobs. The Senate must make sure that while the economy is threading a dangerous path next year, the executives of GOCCs won’t be spending taxpayer’s money on new luxury cars and overseas trips.