• 20 Minutes to ruin 4 years of goodwill

    Ben D. Kritz

    Ben D. Kritz

    In a Twitter post Monday night, stock guru John Mangun made a particularly biting observation of the fallout—or rather, the instantaneous, violent explosion of public outrage—from President B.S. Aquino’s defiant “defense of DAP” speech:

    “I care nothing about your politics. I do care about your political stability. [signed]Señor Foreign Investment.”

    In case you missed it, political stability is, at least for the time being, merely a nice memory in this country, destroyed in just under 20 minutes by an arrogant and stubbornly misinformed amateur dictator who had the unmitigated gall to inform his country that its political framework can be intentionally misinterpreted and prostituted to his intentions, and that because he is the President and you are not, you must assume those intentions are both an honorable and correct solution to the problem to which they are being applied.

    To summarize, the DAP was a secretive spending program developed by Budget Secretary Florencio “Butch” Abad sometime in late 2010, wherein unused budgets of government departments would be impounded and redistributed by executive order; according to information released by the Department of Budget and Management (DBM) immediately after the President’s speech Monday evening, the fund amounted to P167.06 billion over three years, 2011 through 2013, and it was used to finance 116 different projects. In November 2013, Senator Jose “Jinggoy” Estrada, under charges for a completely different corruption scandal, revealed the existence of the DAP to the public in a privilege speech in the Senate; shortly afterward, but not before a number of petitions against it had been filed at the Supreme Court, the Administration announced they had ended the program.

    Nonetheless, the Supreme Court, by a 13-0 vote (with one Justice abstaining) on July 1 ruled the DAP unconstitutional on three grounds: That impounded funds were not “savings” as defined by the Constitution; that funds could not be realigned outside the departments for which they were first budgeted, nor from one branch of government to another; and that creating and funding projects not covered by the General Appropriations Act constituted usurpation of the authority of Congress.

    The President’s response, coming two entire weeks after the ruling, was to openly declare in a nationally televised address that his Administration believed the Supreme Court ruling (a unanimous decision whose explanation covered 244 pages) was wrong, and therefore, would be ignored, and to threaten unspecified punitive action against the Court if they did not reverse the ruling when the government filed an appeal.

    To try to convince the Philippine public that the funds were put to good use, an accounting of where the money purportedly was used was provided by the DBM, which instantly raised more questions than it answered. The programs which had their budgets attenuated to fund the DAP were not revealed, nor was any information provided as to whether the projects listed under DAP disbursements were actually completed. And of the P167 billion total, at least P55 billion is of dubious credibility: P5.46 billion for “landowners’ compensation” under the agrarian reform program despite there being a formal appropriation for the purpose in the GAA; P8.592 billion for unspecified programs in the Muslim areas of Mindanao; P1.88 billion for unspecified programs by government-owned corporations; at least P8.275 billion for unspecified projects under the Department of Public Works and Highways; P17.585 billion for projects requested by local government units or legislators—a usage specifically declared unconstitutional in another unanimous ruling prior to the DAP decision, this one against the Priority Development Assistance Fund; and a P13.611 billion balance, the disposition of which has not been disclosed.

    In other words, P167 billion ($3.88 billion) in expenses not legally authorized by the Congress or any existing law were incurred by Executive caprice, and of that amount P55 billion (or roughly $1.28 billion) or more may have simply evaporated; and when the legally prescribed solution to prevent such irregularity is applied, the President not only ignores the law, he makes it a point to announce he considers it wrong and not applicable to him. And it is not a case wherein the President is making an argument that the Office of the President should be given more leeway in managing government funding, but President Aquino specifically.

    That, of course, is a very dangerous situation politically, but is almost as bad from an economic perspective as well. Under the Administration whose leader believes his spending decisions are infallible, funding for disaster preparedness and flood control was cut back in 2011 and has yet to be completely replaced—a fact that is more than a little obviously annoying to the some 14 million living or working around Metro Manila who have endured the effects of Typhoon Glenda this week. The Aquino Administration’s poor budget planning has led to a costly, unplanned rice importation deal, completely undoing the effects of moderate progress toward increased production over the past couple years. Infrastructure projects have stalled; in fact, as the Ibon Foundation pointed out in an analysis earlier this week, implementation of the DAP actually led to slower government spending, which, in turn, has begun to have a braking effect on the country’s GDP growth rate.

    And of course, it also means that any investment will, apparently, only proceed according to the President’s undefined opinion of it. And that’s only if neither of the other two branches of the government who Aquino has attempted to emasculate, the military, the still-potent Catholic Church, nor the public at large does not step up to challenge his assumption of unassailable personal authority; if that happens it will create, at least for a time, a period in which no real decision-maker will be leading the country.

    Over the past four years, President Aquino has collected—deservedly or not—a considerable stockpile of goodwill from the world economic and political communities, who listened to the carefully-crafted, say-all-the-right-things rhetoric about good governance and fostering inclusive growth, matched it to positive economic indicators, and decided this was a government that might be on the right track. In 20 minutes on Monday evening, B.S. Aquino managed to cast all that aside, and grind his boot heel on the remains for good measure. If he does not suddenly wake up and realize that he swore an oath to uphold the Constitution—which seems very unlikely—then the rest of this country will have to act fast to push him back onto the straight path he once claimed to have invented.



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    1. Sir,
      If i may deviate, an impeachment case this time will not prosper since Pres. Pinoy still enjoys political goodwill among the legislators. Besides, The issue is still debatable and the mis-interpretation of the law which i believe is not a crime to warrant a plunder case neither the executive power to allocate resources for a prudent fiscal budget management and balancing will merit grave abuse of discretion. While such strategy is tantamount to deviation of funds from one dept to another, it is my view that the funds utilized were part of general appropriations already included in the approved budget by Congress. Therefore, NO ADDITIONAL FUNDS were taken from the Treasury to augment its fiscal requirements. Hence, no law was violated and the govt can exercise its power as provided for by the Administrative code.

    2. Best analysis of the current situation so far. Precise and accurate.

      If I may add:

      Clearly, the Supreme Court’s rulings on PDAF and DAP show that they consider the pork barrel a corruptive method of governance despite nearly every president availing of it. The pork barrel system, when abused to the utmost, is what created a Janet Napoles. It has also created this “amateur dictator”. The SC decisions are a means of correcting this.

      Thank you, Mr Kritz.

    3. Nice write up, Mr Kritz.

      should i believe it?

      id rather go with the investors. they do not speak at all, they just put their money in, or pull it out at the faintest sign of instability. they will not risk losing their money.

      so what do the investors say? is the Phil unstable? is it on the way to a crisis?

      if investors go on a selling spree to pull out their investment, they’re saying, you are correct Mr. Kritz. If they do not, they are saying your talking bull Mr. Kritz, go tell your story to the marines!!

      So what are the investors saying?Hmmm, Interesting!!

      • Business will continue to grow in our country unless their investment were threatened., thanks to our OFW remittances & BPO but in rather slower pace. With 100 million population, people still has to eat & buy things for themselves. If only our gov’t can give more jobs to our jobless kababayans & improve our infrastructures our growth will be much faster.

    4. The observations as mentioned above is absolutely correct and the contributor has full knowledge of what is going on in this country. It is very clear that those who are supporting Pnoy are those people who are benefited from DAP and they want to continue supporting Pnoy to have a lasting benefits of corruption.

    5. I thought PNoy simply stated the historical and contextual facts  which eventually formed the basis for DAP. The results of the DAP spending is largely incontestable. Our economy has grown not only as attested to by our local officials but by international bodies. It has not grown to a degree perhaps where many more lower income Filipinos have benefitted from it, but that is because more structural changes need to be put in place and more time is essential;  just the same because of DAP, the economy has now been turned to the right direction.  
      The legal basis for DAP has also been covered by PNoy. It stands to reason that the least the Supreme Court justices should have done is checked on, commented on, and/or took into consideration this law.  But they did not.  So, what gives? Where they fearful of the seemingly ‘large’ backlash they will get from the boisterous noisemakers on the matter?
      Bottomline, PNoy got into the scene when so much corruption and structural problems paralyzed the political machinery of the nation.  Bottomline.  Pnoy did what he could to utilize available finance to get the machinery going towards the right direction. Should it not be the case that where there exists exceptionally troublesome circumstances that exceptionally creative, bright and within the legal limits solutions are crafted?  
      Our past experience of national leaders has been so bad and so sad  that to many it is almost inconceivable that a truly patriotic and selfless  national leader can ever come to the scene. This attitude of blatant hopelessness and incorrigible skepticism when it comes to leaders is perhaps the sorrier and worse reality among realities a lot of us need sorting out today. 

    6. legal expert says “ignorance of the law exempt no one” so let the rule of law apply in a manner that could be beneficial to the pilipino people,we were being tied-up with many diff mesh in govt.The moral fiber of our present generation and the aspiration of having a better nation lies in the hands of leaders who can be trusted,who can protect us from uncertainties and adversaries.Equal Branches in govt seems to be like in a tug-of-war,no one accept whose right or not..in all of these,,,
      charter change is the utmost solution,nothing else!! .

    7. You are right: our political stability is now in question. If this gets worse, what rate of return will FDI investors demand? What will be the political risk premium?

      If this does escalate into a crisis, how will it will differ from the recent crises? I pose this question because with crisis comes the danger of breakdown, but also the opportunity to break out. After past crises, we always seemed to revert to the status quo.

    8. Jarina kashka on

      I totally agree. Your comment that Pnoy destroyed four years of goodwill is indeed very much true. AND THIS IS ALL PNOYS DOING. He is the only one to be blamed for this DEBACLE FROM WHICH HE WILL NEVER RECOVER. WHY? Because as human nature has it, people and history will remember you for the ONE bad thing that you have done and forget all the other goods things that you have done.

      and who did the undoing? PNOY himself.

    9. BS Aquino will travail in this last two years of his administration. He is creating more enemies by this time and will reap doubts of his ability to put our country into the right track. He will be remembered in the history as the President who twist the Constitution thru his own interpretation. Wish him good luck in all his troubles.

    10. It is already an anomaly that the King of DAP, PNoy knows nothing about the law, yet he sounds and act as one lawyer, but the worse of them anomaly is the lawyers, the legal advisers/department of that building across the Pasig, his personal advisers did not stop or warn him about the perils of his televised speech. He is declaring a war against a co-equal branch in government. The people in the Philippines is now in a very dangerous situation only because they “elected” a person without any clue what to do when elected. And what did this moron do during his inauguration, he swore on the Bible in front of his favorite Justice and for all of us to see that he will abide, follow, adhere, etc. and WILL PROTECT THE CONSTUTION OF THE REPUBLIC OF THE PHILIPPINES, yet he is now the architect of destroying the institution. Is it not that this gesture only confirm that we have a President who have lost it?

      • he was warned, tutored, and pleaded to. the psychopath just wouldn’t listen. when did he? in his mind, he is the President, he is the lone decision maker, and he NEVER can make a mistake. even if he knows he made a boo boo, he has his moronic yellow followers to troll the airwaves and the internet to persuade people’s perception to make him look better.

      • it is indeed very worrying to have a President who thinks he is above all and arrogantly threatens the SC.