Renowned economist Thomas Sowell once wrote, “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
Last week, House Speaker Lord Allan Velasco filed House Bill 8628, more commonly known today as Bayanihan 3 Bill. For some perspective, Bayanihan 2 is worth ₱140-billion while Bayanihan 1 allows President Duterte to realign up to ₱275 billion from the 2020 National Budget.
In short, Velasco’s Bayanihan 3 is at least ₱5 billion more than Bayanihan 1 and 2 combined. In fairness, though, the Marinduqueño’s bill has some lofty goals, such as providing more funds for teachers and students, for post-typhoon rehabilitation, for COVID-19 vaccines, and many more.
Unfortunately for the bill’s proponent, Malacañang swiftly downplayed Velasco’s bill, with Palace spokesman Harry Roque saying that 25% of Bayanihan 2 remains unspent and that the Executive Department will consider the Velasco proposal only after Bayanihan 1 and 2 have been exhausted.
Despite what sounds like a death knell to the bill, bill co-author and Marikina Rep. Stella Luz-Quimbo boldly urged Malacañang to certify the bill as urgent, with another report saying that a majority of congress members support the bill.
The Palace has yet to budge.
WHY THIS EARLY?
Velasco became the speaker in October, 2020, while the 2021 budget deliberations were ongoing. Both Houses of Congress approved the 2021 Budget in early December, so he had substantial opportunities to amend the 2021 budget bill:  during the three-or-so session days remaining before adjournment and,  during the bicameral conference committee.
With that said, why is there a proposed supplementary budget just two months later? Was the exclusion of appropriation items in Bayanihan 3 from the National Budget a case of oversight, ineptitude, or what?
With all due respect, Mr. Speaker, you need better advisers.
CAN WE AFFORD IT?
Malacañang’s shrug indicates that the Cabinet’s economic cluster never asked for Bayanihan 3, and I think there’s a pretty good reason why.
For the reader’s guidance, a budget deficit denotes how much expenses exceed revenue.
In 2020, the budget deficit was ₱1.36 trillion or 7.5% of GDP. The Development Budget Coordination Committee (DBCC) estimates the 2021 deficit at 8.9% of GDP.
DBCC projects 6.5 to 7.5% GDP growth for 2021. Generously assuming 7.5% growth, we expect the 2021 GDP to be (2019 GDP) ✕ (1-.095) ✕ (1 +.075) = 97.29% of the 2019 GDP, roughly equal to ₱18.5 trillion. The ₱420-billion Bayanihan 3, if enacted and fully spent, translates to 420 ÷ 18,500 = 2.27% on top of the 8.9% government’s deficit forecast.
We know how allergic to spending Sec. Sonny Dominguez is, mainly since he chose to enact de facto austerity measures in the middle of a national crisis.
Will he be okay with jacking up borrowings to fund Bayanihan 3? At this point, I do not think so.
Bloomberg and Reuters estimate that, at the current global rate of vaccination, the pandemic may last for seven more years.
Is it wise to dramatically boost deficit spending this early, or should we handle our country’s finances with extra caution so that we may still have fiscal breathing room in the following years?
SIGNIFICANT POLITICAL RISK
The Executive Branch isn’t keen on the Velasco proposal right now, but Velasco insists on its immediate adoption. Of course, Congress can still opt to approve Bayanihan 3 this early, but what are the chances that President Duterte will veto it?
If it turns out that the 2021 National Budget plus the remaining disbursable amounts from Bayanihan 1 and 2 are enough to address the country’s financial needs, then Bayanihan 3 will be unspent.
But the electorate expects an enacted Bayanihan 3 to be spent, especially since voters are suffering heavy economic damage today. Hence, Bayanihan 3’s potential non-utilization or underutilization may disgruntle citizens, especially if they are direct beneficiaries of the prospective law.
For example, let’s focus on Bayanihan 3’s ₱30-billion allocation for students and teachers’ allowances under Sections 11(f) and 11(g).
What would the teachers say if the Duterte administration decides against disbursing Bayanihan 3’s education-related allowances?
we know the answer.
Now, assuming all current appropriations turn out to be insufficient, thus necessitating a supplemental budget, how sure is the House that the government will need all of the ₱420 billion in Bayanihan 3?
The Duterte government might end up underspending Bayanihan 3, bringing us back to the same political dilemma.
That is, Bayanihan 3 would become a “Paasa Law (False Hope Law),” and the one who makes “Paasa” would be President Duterte and his men, many of whom will likely seek elective posts.
That’s a political nightmare.
A WAY TO MOVE FORWARD
If I may offer my unsolicited advice, Speaker Velasco should more intensively consult the Legislative Executive Development Advisory Council (LEDAC), so he is more in tune with Malacañang’s needs.
Remember that a budget law, may it be the National Budget or a supplementary appropriation like the Bayanihan Acts, merely sets spending limits. It’s still up to the Executive to find money to fund them.
We can’t just tell the Palace that we’re allowing them to spend ₱420 billion more when we’re not even certain if there’s money to spend.
There’s a pretty good chance that current appropriations may not be enough to meet all the government’s critical spending needs. And with closer cooperation with the Executive through LEDAC, Speaker Velasco can provide a proposal that will better address the situation, as opposed to one that appears to have been hastily written in a vacuum.
Speaker Velasco, you still have over a year to go as speaker of the House, and honestly, I think I already had my fill of political drama. While I am iffy about this proposal, I wish the House to succeed in serving the Filipino people.
Thus, I implore you to listen to contrarian views like those of this writer. No, the intention is not to rouse your anger, but to enable the use of the Hegelian Dialectic, i.e., your proposals (theses) and the rebuttals (antitheses) can be reconciled to create an even better course of action (synthesis).
Your predecessor had been living inside an echo chamber. Please do not commit the same fatal mistake.