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Gov. Joey Salceda of Albay elaborated on his economic stimulus plan,
dubbed Noah’s Ark, during the Newsmakers Forum yesterday at the
Holiday Inn in Ortigas.
Before joining government as a congressman,
Salceda was a well-paid and respected analyst for a multinational
investment bank.
He thinks the economy is in bad shape. He used a
four-letter word starting with the letter “s” which headline
writers disdain to use.
He says the economy is bifurcated. There are the
very few rich and middle class who constitute 13 percent of total
households, and the many who are poor and constitute 87 percent.
The rich are doing very well. The poor are doing
badly. The rich can weather the perfect storm of record high fuel
prices, record high food prices, and the financial recession in the
US. The poor will become even poorer—unless government comes to
their rescue.
The poor, Salceda estimates, have already lost
P156.6 billion of their purchasing power during this year alone,
half from the rise in food costs and the other half from the rise in
fuel costs. His Noah’s Ark proposal will somehow restore a third
of this lost purchasing power.
Recent economic data has been disturbing.
Unemployment rose from 7.4 percent to 8.0 percent in April. The
number of people without jobs swelled from 2.69 million to 2.91
million. The number of the employed went down from 33.77 million to
33.53 million. About 240,000 people lost their jobs as of April.
Yet, during the first quarter, the economy expanded by 5.2 percent.
In other words, the economy, while expanding, is destroying jobs,
rather than creating them.
The slackening growth in the first quarter, from
5.6 percent in 2006 to 7.0 percent in 2007 to 5.2 percent this year,
meant, according to Romulo Virola, the secretary general of the
National Statistical Coordination Board, “the Philippine economy
succumbed to rising oil prices, the slowdown in the US economy and
the negative effects of the strong peso.”
From 2003 to 2007, poverty incidence rose, from
24.7 percent of total families to 27.2 percent today. The number of
very poor families rose from 4.0 million to 4.7 million. The fact
that almost a third of the population are deemed very poor “is a
moral disaster,” says Joey.
This is the first time in recent memory that
unemployment is rising and poverty worsening while the economy keeps
growing at rates better and periods longer than at any time in the
past. In the last three years alone, the economy expanded by 32
percent in nominal terms.
“We are in a prolonged season of unbounded
misery,” winces Joey.
Clearly, government must intervene. Market
forces are not efficient nor effective enough to transfer wealth
from the rich to the poor, nor to prevent the middle class from
becoming poor and the poor from becoming poorer. If government does
not act, the poor might take matters into their hands, Joey frets.
Salceda cites the case of US President George
Bush. He gave away an average of $1,200 to 130 million taxpayers to
help them tide themselves over with the impending US slowdown. The
total cost to the government: $150 billion. Salceda thinks a second
wave of stimulus package will be launched by Bush before the year is
over.
Salceda’s own economic stimulus package called
the Noah’s Ark involves a social protection plan costing P316
billion over three years. The amount will be funded mostly by
government borrowings equivalent to one percent of GDP or over P75
billion per year.
Including the cost of foregone revenues due to
tax relief and subsidies to the National Food Authority so it can
continue selling cheap rice, actual cost could rise to P441 billion.
The biggest component of the P316 billion is
what Salceda calls “conditional cash transfers” to the 4.7
million who are poor at the rate of P28 billion per year or P84
billion in three years. The P28 billion translates into P500 cash
doleout per month per family or P6,000 per year per family or
P18,000 in three years.
The P84 billion is equivalent to the value of
assets transferred to the poor under the Comprehensive Agrarian
Reform Program, Salceda reckons.
At the same time, the government will also give
away educational loans and scholarship vouchers so poor students who
are already in third- and fourth-year college can finish their
education and start making money as an OFW. The scholarships
(actually a study now, pay later plan) amount to P12 billion per
year or P36 billion in three years.
But the second biggest component of the P316
billion is P58 billion for agricultural production—P14 billion in
the first year, P20 billion in the second, and P24 billion in the
third.
Increased agricultural production will shield
the poor from global price spikes in commodities while at the same
time allow rural farmers to benefit from higher farm incomes.
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