Avoiding a fiscal nightmare
Who is Fr. Ranhilio Aquino, and why is he acting this way? One of 22 members of a merely consultative committee, he has seen fit to ask President Duterte to consider firing two Cabinet secretaries for their antifederalism statements. One of the officials is Carlos Dominguez of the Department of Finance—an old classmate of the President’s, the voluntary treasurer of his presidential campaign, a key member of the innermost circle. This is not to suggest that Dominguez is untouchable; only that Aquino’s response to Dominguez’s contrary view on a matter of policy is extreme and out of all proportion.
We have previously criticized Aquino’s “undemocratic condescension”—his contemptuous, and contemptible, attitude toward critics of the Duterte administration’s federalism project. He had notoriously said that a critic should have studied the subject as much as he has, forgetting that “the fundamental principle of democracy remains the same: one person, one vote. Aquino’s alleged learning does not invalidate the opinion, and thus the vote, of an ordinary citizen who does not understand why, if the shift to federalism is so important, it must be rushed; or why, if federalism supposedly solves poverty, learned men like Aquino cannot offer proof, only insult.”
Now he has directed his attention to the serious reservations expressed by both Dominguez and Economic Planning Secretary Ernesto Pernia about the true costs of changing the entire system of government, from unitary to federal.
Pernia went first. “Expenditure will be immense if we go to federalism, and we estimate that the fiscal deficit to the GDP [gross domestic product] ratio can easily jump to maybe 6 percent or more, and that’s really going to wreak havoc in terms of our fiscal situation.” A few weeks later, Dominguez followed up: “If Ernie [Pernia] is right, if we don’t manage this correctly, this can end up to be a fiscal nightmare. So, I think the legislature, in its wisdom, can sort those issues out.” He also said, speaking of the members of the consultative committee: “I had a long discussion with them and, quite frankly, I was more confused than when I started.”
Certain in his convictions, Aquino took the two secretaries to task: “If Dominguez and Pernia, in their official capacities, speak loudly against Federalism, then the question should be asked in all earnestness whether the President is for it or not.” And if the President is, in fact, for federalism, “let him sack Dominguez and Pernia or command them to keep their traps shut.”
Aquino has the process backwards. As Dominguez indicated, the economic and fiscal implications of a shift to the federal system, as provided for (or not provided for) in the draft constitution prepared by the consultative committee, are for Congress, “in its wisdom,” to sort out. Did he expect that the work of the committee would be accepted in full by Congress, if and when it finds the political will to convene as a constituent assembly? Did he think that the President’s blanket approval of the draft constitution meant that the period of discussion and debate had ended?
And consider the warnings of two of the country’s economic managers. A hasty, ill-thoughtthrough change in the constitutional order would “wreak havoc” on the government’s fiscal position, would create “a fiscal nightmare,” with very real consequences on the economy. These are issues of paramount importance.
Perhaps the fact that the consultative committee is so unrepresentative of the country (at least 15 lawyers out of 22 members, no economist or financial expert or businessperson of eminence to speak of, and—the worst aspect—only one woman in the entire roster) helps explain why these concerns were not addressed to the economic managers’ satisfaction.
But a thorough, step-by-step discussion of the draft constitution even at this stage would likely mean that Congress will be unable to convene as a constituent assembly before next year’s midterm elections. If the country must contemplate Charter change, then that must be considered as an advantage; the additional time is in the public’s greater interest.
Aquino, however, wants Cha-cha, chop-chop. Those who look after the economy are only right to remind him: Haste makes nightmarish waste.