Gloria the Magician

Rudy Romero exposes GMA's hocus-pocus BS.

The board of directors of the World Society of Magicians should be considering an application from a Filipina for admission to the society. The name of the applicant is Gloria Macapagal-Arroyo.

GMA's claim for admission to the society, whose membership includes the celebrated David Copperfield, is premised on her ability to make a nation's fiscal problem disappear with a wave of her little hand. Eat your hearts out, David Copperfield and Harry Houdini: The object of GMA's prestidigitational prowess is an entire nation, not mere objects.

Late in August, Gloria Macapagal-Arroyo declared at a Philippine National Police function that this country had entered a state of “fiscal crisis.” Someone who sits in the presidential chair in Malacañang does not, and is not expected to, play around with words. The President of Cebu clearly and deliberately uttered the word “crisis,” which connotes a bad situation of very serious proportions. A crisis is far more consequential than a problem, yet GMA spoke of a crisis, not a problem.

And the crisis that GMA spoke of was a fiscal one. “Fiscal” is a word with a specific technical connotation; the average person doesn't know exactly what it means; he or she only vaguely knows that “fiscal” has to do with the government's finances.

What Gloria Macapagal-Arroyo said the nation was in last August, then, was a bad problem of very serious proportions involving the government's finances. The Filipino people and the international community took her at her word — that the Philippines was in the midst of a fiscal crisis. Why wouldn't they? This was the occupant of Malacañang talking.

Now, less than three months after making her gloom-and-doom declaration, GMA is telling her Cabinet to stop talking about a fiscal crisis because the crisis she spoke about has been solved. Congressional action on her eight-part tax program did the trick, the President of Cebu grandly explained. With the passage of the taxes, she said, there is no more crisis to speak of.

This now-you-see-it-now-you-don't performance by Gloria Macapagal-Arroyo eminently qualifies the little lady to be a member of the World Society of Magicians, perhaps even its chairman. There just isn't any way that one can make a national financial predicament disappear in three months. Three years, maybe. But three months? No way can it be done, certainly not in a Third World setting.

GMA's August 2004 declaration doubtless came as a surprise to most Filipinos, but to knowledgeable observers here and abroad it didn't. The rapid buildup of government debt during the period 2001-2003, the recurrent shortfalls in tax collections, the steady decline in tax effort, the progressive rise in the ratio of debt service to the national debt — these numbers were already there for the economists and financial analysts to evaluate and form judgments on. They already knew that the Philippines had arrived at the state that Gloria Macapagal-Arroyo said it was in a fiscal crisis.

These numbers have not changed, and even have worsened, during the last three months. What positive changes of consequence have taken place during that period? Only two. One of them — the withholding of part of the internal revenue allotment of the local government units — can hardly be called progressive, for it will take away from the LGU something that was given to them by the legislature in the interest of government decentralization of government. The other change — the indexation of taxes on the so-called sin products — has been done in such a watered-down way that the expectable incremental revenues are bound to be considerably less than the government had projected.

Nor is there likely to be any relief anytime soon from the biggest albatross on the government's back: service on the indebtedness of the National Power Corp. (Napocor).

Barring a near-miracle, the sole of Napocor is not going to materialize in the near future, and that expense item is likely to remain a very heavy burden on the national budget.

Trained economist though she is, GMA apparently appears unable to grasp the fact the fiscal crisis she reported to us about is in essence a debt management problem. The P4.5-trillion public-sector debt was in place in August 2004, and it is still there today. Service of that debt, in the context of a Philippine credit-rating downgrade, is going to remain a very critical matter for the Department of Finance.

Paraphrasing then-candidate Bill Clinton in the 1990 US presidential elections, I am sorely tempted to say to GMA, “It's the debt, stupid.”

Welcome to the World Society of Magicians Gloria Macapagal-Arroyo, the David Copperfield of the Philippines. With a wave of her little hand, she can make crises appear and disappear.