The deficit hawks are stoking early fear and foreboding


Even the professional fault-finders in our midst (they are legions) can only appreciate President Aquino’s leadership. You cannot see scheming and plotting and ill-motive. You can only see a leader with the purest of intentions.

Despite this, there is a sense of foreboding and fear among us in the low-income bracket. The reason:
there seems to be an obsession with deficit-cutting. The dominant talk is about fiscal consolidation and spending cuts. Where the emphasis should be on job-generation and perking up an economy that has been sluggish over the past 10 years, deficit hawks have gained the upper hand in the discussions of our economic directions. And this has peaked into a worrisome chorus.

Worse, no public intellectuals and so-called thought leaders are raising this point and calling the administration’s attention to the folly of such policy mind set. Where are they when we desperately need them?

The part of the public that would suffer from the brutal wages of fiscal austerity is helpless and cannot take part in the policy debates. While we want to point out the folly of such policy preference, we don’t have the tools. We can’t crunch the numbers to say that a certain level of deficit would not impose much harm so long as jobs are there, the revenue stream keeps flowing and much of the spending is strategic.
Still, we in the margins would want to point out the following:

1. While the level of budgetary deficit is high, trimming it down and imposing a regime of austerity would cause more harm.

2. The first to be sacrificed under an austerity regime and putting the fiscal house in order are the social safety nets for the poor and the underclass. Think of the move to raise MRT fares. And removing rice subsidies.

3. Ramping up state investments to generate jobs would be more beneficial to the broader economy than cutting down on investments and crippling job and opportunity-generation.

4. Austerity measures are generally anti-poor. And this means us and the majority of Filipinos.

The most important point of consideration is the political calculus that has not been considered by the deficit hawks. Cutting down on the social safety nets—which for the majority of the poor are the only life lines left—would be disastrous politically for President Aquino.

Deficit-trimming measures, austerity efforts and related initiatives maybe popular with the creditors and bankers and the finance community. This preserves their wealth and the value of their equities.

But what about the poor? If you remove their safety nets (no matter of artificially and superficially implemented), do you think they will just grin and bear it. Do you think they would remain dedicated to the Aquino presidency? If you give them burdens instead of jobs and economic opportunities over long periods, do you think they will still hold on with the sense of hope and anticipation in their hearts?

Definitely no.

Who does not want a balanced budget? Who does not want a fiscal house in order? Who does not dream of a Tripe A rating from creditors? Who does not want to post surpluses instead of debt?

But policy should be this: First things first. Right now, the priority should be giving Filipinos reasons to hope and that means generating additional jobs, improving the social safety nets for the poor, and hooking up the bleeding and suffering countryside into the economic mainstream.

Experts can lay down the math to push for the superior policy option of paying more attention to job generation and opening up of economic opportunities than putting the country’s fiscal house in order.

A robust economy builds the deep and lasting foundation for fiscal growth. Revenue generation will improve automatically. Private investments would treble, reducing in the process, the burden on state investments. The tax base would expand even without the long arm and reach of revenue authorities.
Even a bare one point increase in the country’s GDP—the result of a robust economy—would matter much in terms of job generation.

At this point President Aquino should tell the deficit hawks this: Wait a minute. Then ask this question: Where would the poor and the most vulnerable be with every cut in spending?

Where would they be under the most brutal austerity measures? Would there be any tool for survival left?

The Aquino presidency is a well-loved, much-respected presidency. Majority of Filipinos want to keep it that way—all the way to 2016.

It would cease to be so if it imposes mass suffering in the course of responding to baseless fiscal fears.


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