• Aquino may have just committed political suicide

    18
    Ben D. Kritz

    Ben D. Kritz

    FOR all but a few minutes of the discouraging five-plus years he has been in office, BS Aquino 3rd has led most people to suspect that he neither clearly understands nor cares that there is an important difference between the titles “President” and “Emperor.” Apparently the small degree of uncertainty bothered him, so he decided to clarify that he does not, in fact, give a damn by vetoing the proposed P2,000 per month increase in SSS pension payments.

    The SSS system here in the Philippines is approximately modeled on the US Social Security program, and the experience of US politicians suggests that, if it is allowed under Philippine law, Aquino should withdraw his veto as quickly as possible, before the angry torch- and bolo-wielding mob reaches Malacañang. Meddling with social security at all is extremely perilous for any elected official, and rejecting a payout increase is suicidal.

    Social security pensions are too small to live on in the first place, but the refusal to increase them comes across as a judgment that they are adequate, which the would-be beneficiaries naturally find very offensive. Thus, any politician with any sense of self-preservation at all knows it is simply not done. Politicians who have tried don’t just get beaten in the next election, they find themselves on the wrong end of an electoral vendetta, with anyone they support or have ever been supported by being thrown into the same unmarked grave by the voters.

    There is always the possibility, however, that a rejection of a benefit increase, distasteful though it may be, has a legitimate economic justification. Let’s examine the one offered by the President in this case: According to him, increased benefits to 2.1 million current pensioners would raise the annual payout by the SSS system to P56 billion. With investment income only reaching P30 billion to P40 billion, that would leave a deficit of P16 billion to P26 billion a year, which would have to be made up from the SSS investment reserve fund. At that rate, Aquino said, the system would run out of money by 2029.

    That an increase in payouts should be accompanied by a similar magnitude of increase in collections in one form or another is a reasonable observation, but the rest of Aquino’s argument is complete hogwash, because it assumes nothing will change in the 12-13-year time period he sees. For one thing, the perspective that the SSS account has to remain in a permanent state of surplus is a fallacy; so long as enough revenue flows in to keep the zero point at some comfortable distance in the future—it might suffice for the reserve to only cover five or six years instead of 12 or 13, as long as inflows from contributions and investment income are stable—it can safely operate at a deficit. True, it requires a much higher level of management, and perhaps Aquino’s unconscious realization that the current talent in his Administration is not even close to being up to the task is what gives him cold feet. But it can be done; the US Social Security system has operated that way for decades.

    Aquino’s complaint also assumes that no new jobs—specifically, regular jobs held by SSS subscribers who contribute to the system—will be created. The fact that he even has the realization is an indictment of his own Administration’s job creation record; despite the much-heralded “demographic sweet spot” the country is now supposedly beginning to enjoy, a significant number of the jobs created under Aquino have been statistical padding—part-time jobs, contractual jobs, jobs in family enterprises, and others that boost employment statistics but add very little value to the economy, and specifically do not add much, if anything, to the SSS coffers. Hypothetically, each new contributing worker added should cover one new retiree (through a combination of the worker’s direct contributions and the investment income those contributions earn); ideally, the number of new contributors over time should exceed the number of new retirees, at least until the population ages out of the “sweet spot.”

    Even if nothing else were done, the circumstances would eventually prove Aquino’s arguments wrong; they would be debunked much more quickly if more direct steps were taken to compensate for increased pension payouts. A bill in the Senate that would have provided the SSS more flexibility in adjusting contribution amounts was not passed—Aquino pointed this out as well—and it should have been, but by itself is not enough to justify rejecting the increased pensions. Even without a legislative measure, the SSS could adjust their investment program if necessary, perhaps opting for a somewhat more aggressive strategy for a period of time to build up reserves. Again, the objective doesn’t have to be a guaranteed, indefinite surplus, but simply to consistently hold off the deficit point.

    If Aquino sacrificed his political capital for sound financial reasons that Congress overlooked, that might be admirable, but he has apparently committed political suicide—perhaps less for himself than his party’s candidates—for erroneous reasons, and the smug way in which he did so, waiting until the last day or so before the bill automatically lapsed into law before issuing his veto, makes him look not only like a fool, but a callous bastard.

    ben.kritz@manilatimes.net.

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    18 Comments

    1. If The Filipinos Can’t Do Nothing to Oust Noynoy Aquino in spite of what he is doing from the very beginning of his Presidency…then DO NOT COMPLAIN…
      After all who put him in Malacanang in a ways…? The late Marcos NEVER TOUCHED the money of SSS Contributors, and now here comes the ” KNIGHT of their Shining Armour ” Aquino who doesn’t care about LOSING the contributors’ money keeps their BELLY full. still Survived his six years in the office. BARKING don’t give result…but Biting is…

    2. Manding Villapando on

      Pnoy must have been supporting another presidential candidates other then Roxas. What he did was a political suicide for the Liberals. Vetoing the supposed SSS pensioners increase is giving the right to kill the vote for all his anointed candidates for the May elections. Calling all pensioners to use this power!

    3. I saw how poor pensioners live. Many of them might be happy to die now than live miserably, The bill was killed and poor pensioners die..

    4. Hermenigildo V. Camaya on

      ang paliwanag ni Pnoy at SSS officials kapag binigay ang 2K dagdag pension ng mga retirees ay bankarote daw ang pondo ng SSS sa taong 2029. SA aking pananaw meron naman silang tuloy-toluy na cash inflow (contributions)na galing sa old and new work force and earning sa mga funds na naka-place sa ibat-ibang financial institutions. Sa huli di mauubos taliwas sa kanilang paliwanag.at pag-aaral.Yan ang aking pananaw.

    5. He is totally immune from any repercussion as long as Smartmatic is around to ensure that only pro-Boy Sayad candidates win and SWS to pre-condition public opinion into accepting the programmed results. If you believe his ratings in spite of everything that has happened under his watch, well, I have a bridge in London you might be interested in…

    6. Hi is a callous bastard, does anyone doubts of this today?
      The guillotine should be erected at Luneta, so all can see definitive action against the crooks next June.

    7. Funds will be depleted by 2029. Same situation in USA wnicjh will be in 2033. However CONGRESS & PHIL GOVT can do something.”RA8282 or SSS ACT 1997,SEC. 20. Government Contribution. – As the contribution of the Government to the operation of the SSS, Congress shall annually appropriate out of any funds in the National Treasury not otherwise appropriated, the necessary sum or sums to meet the estimated expenses of the SSS for each ensuing year. In addition to this contribution, Congress shall appropriate from time to time such sum or sums as may be needed to assure the maintenance of an adequate working balance of the funds of the SSS as disclosed by suitable periodic actuarial studies to be made of the operations of the SSS.
      “SEC. 21. Government Guarantee. — The benefits prescribed in this Act shall not be diminished and to guarantee said benefits the Government of the Republic of the Philippines accepts general responsibility for the solvency of the SSS.

    8. The unwarranted excuse made by PRESIDENT P-NOY that in year 2029 the SSS institution will be cash-strap and he was avoiding to be remembered as the culprit in approving the additional increase of 2,000.00 to this present year is purely baseless and a lame excuse… The Government has other source of fundings that can cover up whatever the deficit can be obtained in other agencies… PAGCOR is a Government owned controlled Corporation.. This agency (PAGCOR) is producing Billions of pesos income every month, and where are the money Goes???? This alone GOCC-PAGCOR can be an alternative to be the source of funds to infuse -cover the funds, if ever a deficit of the SSS really does exist in a monthly basis……… PITY WE ARE and MAKE US MORE POOR FILIPINOS, We are a HOSTAGE in our own Motherland by one self-serving agenda..

    9. Let’s just make sure that roxas will be rejected soundly by the electorates so that any formula for cheating (and we’re very sure admin will forcibly do it) and manipulation in the results of the coming election could be obviously unacceptable that will immediately spark unrest, political turmoil and impending revolution..(maghahalo ang Balat Sa tinalupan)….and if the true and worthy president wins… put these scumbags into jail immediately together with their LP-cahoots…. who’ve robbed us for almost 6 years… let them suffer the same fate of GMA….after accomplishing this, then justice for all of us is served….

    10. Well, for this goverment, expect nothing, the concern to the masses is totally zero, all his arguments is totally nonsense, maybe because he know that the management of SSS is more inutil than him, this bill of course was passed, was scrutinized and was studied, the author did not create this law just for popularity, knowing that we have other people to check on this, the lower and the upper house. The speaker and the senate president even sign this, are this people idiot for them not to study on this and just pass anyhow to him? Well, im not a lawyer, a law maker, im just an ordinary leader out there but what i know, when you do something like report, you know and and you have studied on this, for the implication, the effects, consequenses, and all, etc blablabla….but like what you said on this report, suicidal for all his party, its good for them to end up yellowish government, matagal na pong naninilaw ang Pilipinas dahil sa naninilaw na utak….#proudpinoyshamegovernment

    11. Ang mga datos na binabanggit ni Noynoy ay galing lahat sa mga SSS official. Ang mga datos na galing sa mga kritiko katulad ng columnist dito ay hindi niya pakikinggan. Alam natin iyan.

    12. “for erroneous reasons, and the smug way in which he did so, waiting until the last day or so before the bill automatically lapsed into law before issuing his veto, makes him look not only like a fool, but a callous bastard.”

      Hahahaha very well said Sir. Can’t do much about it I guess than to wait till he bows down to his office and then let see if there’s still available room for him at Munti or NMH…Can’t wait to see that. Hello Mamasapano!

    13. Yeah. PNoyABS argument is pure hogwash indeed.
      Unlike the other advanced economies, our population are still growing with more younger productive citizens joining the workforce.

      Why award P4Million each to SSS executhieves/ boardmembers as BONUS LAST YEAR WHEN THEY HAVE P13BILLION DEFICIT IN COLLECTIONS?