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.

(Last of three-part series)

The global economic crisis would be a game changer next year. If the country falls into a recession or extreme slowdown, there is no way the President’s coalition will stand a chance in 2010. It would be a political suicide for somebody to run for president under the President’s coalition. However, the administration could spend their way out of the crisis in order to show to the people they have managed to cushion the effects of the crisis and end the year with a decent 4.8 percent growth in GDP and probably a 5.5 percent the quarter before the elections in 2010.

This, however, will come at a price because the nation might return to a fiscal crisis because of the government’s deficit spending. But none of this will matter because it is up to the next president to handle, may it come from the administration party or from the opposition. The Filipino public must be reminded, though, that the premise for the imposition of the VAT, which was vigorously pushed by the President’s allies in Congress, is to stabilize the country’s fiscal health and to balance the budget in 2010. At the rate of how events are unfolding in these last few fiscal quarters, a balanced budget may be entirely scratched out of the equation. Congress may be partly blamed for this as they let spending let loose.

Neither can the current administration take credit for their so-called achievement of the highest economic growth in a lifetime because despite growing a little above 7 percent in GDP, a country of 90 million people requires at least 9 percent of growth in order to sustain the population. Their case that the economy was in good hands under their watch is largely contentious.

The expected spike in unemployment, reduction in real income especially among the middle class and those below poverty line will pave way for the people’s increased appetite for fresh policies in terms of taxation and government spending. At the same time, the people will be smart enough not to buy into any divisive rhetoric against the government, which would likely come from the mainstream opposition, because they know better now the harsh consequences brought by extreme political division.

This kind of political climate is ripe for any independent presidential candidate to take advantage. If he or she can make her case to the Filipino people that she can unite a weary and divided nation and has the technical skills to run the economy more efficiently where an economic growth can be achieved that can sustain the current population, that candidate may have a chance.

(Second of three-part series)

What is certain in this country is that local politics is immune from events in the national political arena. This was especially true in 2007 after despite the President’s unity coalition’s humbling defeat in the Senate, she continued to maintain control of the House. In addition, during the 2004 elections, Fernando Poe Jr. managed to beat Mrs. Arroyo in not just a few but many provinces despite the clear handicap in terms of support in the local level since traditionally the administration maintains a stronghold in the local front.

In this scenario, the next president of the Philippines could be elected without massive support from the local politicians. The rules of elections have changed in these last few years. We are now seeing a decline the politics of patronage. In an election climate where the likely candidates for the presidency would come from the swing parties, this could be the best time for a third force to enter the fray.

Perhaps what will happen in 2010 will be the same of what happened in 1992 with the Laban ng Demokratikong Pilipino, the most prominent political party at that time, that involved then Speaker Ramon Mitra and then Defense Secretary Fidel Ramos. Mitra got the party’s presidential nomination but Ramos continued his bid and founded his own party, Lakas.

Let us just assume that Estrada picks Villar as the standard bearer for the opposition. I truly believe this would not matter. Just like 1992, I believe that there is no clear advantage from any of the cast of candidates at this point. So a blessing or a non-blessing from any Vito Corleone would not decide the election. What will decide the election is what matters to every Filipino family at this moment- the economy.

(To be continued)

(First of three-part series)

The official word is that the Palace has declared President Gloria Arroyo would indeed step down after her term of office ends in 2010. The presidential election that same year will virtually make People Power 2 in 2001 come full circle. That event shifted the political landscape of this country from a loose multi-party system to a somehow solid two-party affair, although not exactly the way how the Nacionalistas and the Liberals did for almost 25 years since the end of American occupation.

For most part of this century, the spectrum of the political arena is divided between the followers of Joseph Estrada, who was kicked out by a popular revolt in 2001, and those loyal to President Arroyo. For six years, Arroyo almost had a firm grip in both houses of Congress. But that changed in 2007 when the people decided there should change in direction especially in the Senate although the President’s coalition party continues to enjoy filibuster-proof in the House of Representatives.

The people are clearly beginning to get wary of the President’s tax measures and corruption charges that are consistently being put under the rug. Despite losing seats in the Senate, however, time is on the Palace’s side since most senators are likely to take their positions next year in prep for 2010. That brings us to the elections. Clearly, Estrada and Arroyo will not be participating but this would be potentially the last time their respective parties, Puwersa ng Masa and Kampi, will face off in a political battle.

The problem is, neither parties do not have candidates directly from their stable that can be considered ‘presidentiable’. Look at the current candidates that have openly declared their intentions for the presidency: Mayor Jejomar Binay (PDP-Laban, Makati), Senate President Manny Villar (Nacionalista, Las Pinas), and Bayani Fernando (Lakas-CMD, Marikina). Even other potential candidates rumored to be interested in the position are affiliated with other parties such as Senator Mar Roxas (Liberal, Capiz), Loren Legarda (Nationalist People’s Coalition (NPC), Manila), Francis ‘Chiz’ Escudero (NPC, Sorsogon), and Vice President Noli De Castro (Independent, Mindoro).

Filipinos seem to have largely forgotten about the hysteria of 2001 and the furious run-off battles that it brought which divided the nation for over half a decade. What I am saying is, the 2010 polls could be a potential free-for-all and those candidates mentioned above could definitely win without the baggage of an Estrada-Arroyo rivalry.

(To be continued)

The new Barack Obama administration, which will start holding office in January 20th next year, is fast realizing that the very crisis that propelled them to election victory just a couple of days ago is now the top of its priorities. Just a few minutes ago, the Department of Labor reported 240,000 job losses in just the month of October up from September’s 159,000. This is worse than most people thought and it has certainly hurt confidence in the markets.

Although reports also today suggest that Obama will not yet be making personnel announcements regarding the people who will be helping him run the economy, calls on him to name an economic team as soon as possible is growing louder by the day. To even illustrate the pressing concern for the new president-elect, immediately after his election victory against Republican rival John McCain, Wall Street fell to its worst two-day loss ever.

Many believe that not since the 1930s when Franklin Roosevelt took over the reigns of a country that was experiencing a depression, that an incoming president will inherit an economy in such massive economic turmoil. Just as when many had thought the seemingly stable movements in the stock markets in the last two weeks would mark the end of extreme volatility, the dismal numbers in the jobs market has now reaffirmed fears that the credit crunch is now coupled with a major standstill in the real economy.

The smoke has cleared and the United States just elected Democratic nominee Barack Obama as the 44^th president and also the first-ever African-American to hold the Oval Office. I spent the entire morning watching the coverage of the US elections. My cable provider has CNN, Fox News, BBC, CNBC (NBC’s affiliate), and Al Jazeera, and all these media outfits carried the election almost every second most especially by the time the first polling station closed at 8:30am here in Manila.

I was mostly toggling between the American networks CNN, Fox News, and CNBC. It was amazing to see how CNN pulled off that hologram stunt streaming a female reporter from Grant Park in Chicago to the CNN headquarters in Atlanta just as if Wolf Blitzer and the reporter were just talking face to face. If you missed it, just remember Star Wars when Luke Skywalker and Obi Wan Kenobi opened the device that showed the hologram of Princess Leia pleading for help.

Fox News made a few blunders when their election map proved to be unreliable at times and when they inadvertently called Ohio for Obama much earlier than they should. Fox News anchor Brit Hume was quick to recall the projection though.

NBC was for me, the winner of the election coverage as they were almost always the first to make a projection. Fox News comes at close second and CNN last. Despite their massive resources, CNN were a bit too risk-averse in making projections. It should be known though that despite the difference, all three simultaneously called the elections for Obama when the California polls closed at noon, Manila time.

I was looking forward to the HBO original movie ‘Recount’, a film about the controversial 2000 US presidential elections. The film starred academy award winner Kevin Spacey as a Democratic Party campaign manager. For political and history junkies, this film is indeed a must-see.

As events would tell, George W. Bush eventually won the presidency against Al Gore, but not without a bitter fight that almost placed America in a leadership crisis never seen before. The movie began with the election in progress and the confusion among television networks on which candidate did win Florida. Then Vice President Gore was forced to retract his concession to then Texas Gov. Bush upon learning that the Florida tally might have been flawed.

This resulted to a recount that led to a can of worms being opened regarding the manner of how the elections were conducted. Allegations of mass disenfranchisement of voters and the medieval-like electoral process exposed cracks in America’s once –mighty reputation as the role model in holding free and fair elections.

Elections in the Philippines has always been scrutinized for being violent and laden with cheating. Since democracy was restored in 1986, all but one presidential election have not escaped the opinions of many that the result may have gone the other way if no deliberate attempt to sway it was placed. As the Gloria Arroyo experience has shown, the price of having any question to the legitimacy of a sitting president that has not been sufficiently brought into closure can be expensive.