Political failure

The peso is not strong. It is the dollar is weak.

The US currency began slipping after negotiations between the Obama administration and the Republican-dominated Congress remained mired. Meanwhile the clock is ticking as we move closer to August 2, when the US government hits the legal debt ceiling and Washington runs out of cash.

Moody’s ratings agency has threatened to downgrade US credit in a few days unless a deal is reached adjusting the $14.3 trillion limit imposed on American public borrowing. Should that happen, it will the first time the US will lose its Triple A credit rating since 1917.

The Obama administration is proposing a $4 trillion trimming of the public debt over a span of about a decade. The Republicans want a heftier cut in the public debt. The Democrats are unwilling to take deep reductions in their pet social programs, particularly health care.

In the latest round of negotiations held at the White House, President Obama was reported to have walked out of the meeting in exasperation. In doing so, however, he makes a deal even more unlikely.

Anxious voices are now criticizing the American political elite for putting partisan considerations ahead of the nation’s strategic wellbeing. Today, there is much doubt being expressed about the ability of the traditional two-party political system to meet the challenges of economic statesmanship.

Enough has been said about economic failure. Much thinking must now be focused on redesigning institutions of governance to diminish the likelihood of political failure.

If the Democratic and Republican leaders fail to reach a deal that will raise the debt cap, the consequences will be dire. At the moment, many pundits are saying that the failure to raise the debt cap will virtually write off the possibility of Obama winning a second term.

Previous record shows that no US President ever won reelection when the unemployment rate touched 9 percent. The present unemployment rate in the US stands at 9.2 percent. If the US government cannot raise the debt ceiling to enable it to launch yet another stimulus spending package, the high unemployment rate will produce a lot of disaffected voters, casting a shadow on Obama’s political future.

At the moment, Obama’s political future seems uncertain indeed. Even if his lackluster presidency is limited to a single term and he is succeeded by a Republican president, America’s economic outlook is not likely to be much better. The Republicans are committed to slashing both taxes and public spending. The records shows that this policy course has not done any better in bringing down unemployment and boosting economic performance. That policy course is no more than an ideological doctrine pandering to the popular disdain for taxes.

Poor Barack Obama. He started out with so much political capital and delivered less leadership than that political capital afforded. That is not an unfamiliar predicament for Filipinos.

Meanwhile, as we all know by now, the price of oil rises in response to a weakening of the dollar. If the peso does not rise significantly enough to match the resurrecting cost of crude, we will pay more pesos for our fuel.

Gerrymandering

Speaking of political failure, there is a bill passing the House of Representatives and awaiting Senate concurrence that will add yet another one to our excessive list of provinces. We speak here of HB 4728 that will carve out a province called Nueva Camarines from what is presently called Partido region of Camarines Sur.

China, with well over a billion people, has 30 provinces. We have much more than twice that number of provinces — and two autonomous regional units to boot.

A recent study supported by the Konrad Adenauer Stiftung concludes that the more provinces there are, the greater the share of public funds is diverted to paying the salaries of an already bloated list of public servants. Both autonomous regional units and an increasing number of provinces are dependent on internal revenue allotments, raising in revenues only a fraction of the IRA they receive.

In a word, creating more local government units is inherently inefficient use of public resources. It adds to bloating the public payroll and diverts funds from social services and infrastructure.

The case of HB 4728, strongly espoused by Rep. Fuentebella, appears to be driven by selfish political interest. The bill proposes to carve out from Camarines Sur the booming Caramoan area which today attracts more tourists than either Manila or Cebu. The old province will be left with the poorer, insurgency-infested municipalities and will probably be left to stagnate.

Even more dubious, HB 4728 includes a provision that will enable the President of the Republic to appoint an interim governor, vice-governor and Sangguniang Panlalawigan to govern the new province until the next elections. Given this administration’s inclination to appoint local officials rather than have them elected, as we saw in the measure postponing elections for the ARMM, the creation of a new Camarines province will likely benefit the political family that dominates that area’s politics: the Fuentebellas.

We hope the Senate will consider this clear attempt at gerrymandering more carefully than the House did. It is time to close the door on entrenched political dynasties who carve out local government units they can easily control in order to perpetuate their grip.

HB 4728, although it is reportedly supported by DILG Secretary Jessie Robredo, is unpopular among the people of Camarines Sur. The opposition to this bill is led by Gov. LRay Villafuerte — which might explain why he is now in the crosshairs of some very influential political players.