How long can Philippines spend more than it earns?

A family that spends more than it earns can go under. Its car and furniture might be repossessed. Unpaid water, electricity and WiFi can be cut. It may be evicted from home, and forced to hock jewelry and gadgets. The children can go hungry and fall ill.

A country that spends more than it earns can also crash. Lenders can stop financing unless it tightens its belt. There would be no new money to import food, fuel, factory equipment. Citizens will suffer scarce, costly commodities and layoffs.

Congress must think of that in its yearly government budgeting.

On Monday, the Senate and House of Representatives simultaneously but separately will ratify the 2024 national budget. Amount: P6.218 trillion. That’s P450 billion more than the P5.768 trillion that Malacañang originally proposed.

The Constitution forbids Congress from increasing whatever national budget Malacañang submits. Lawmakers may rechannel or reduce specific allotments, but never raise the total.

But something eerie happened on the way to the forum – the bicameral conference committee (BCC) on the 2024 budget that the Senate and House individually had scrutinized.

BCCs are authorized only to reconcile conflicting versions of Senate and House bills. They may not alter the intent of proposed laws. But what happened to the 2024 national budget?

The BCC gave Malacañang leeway to spend P450 billion more for “unprogrammed expenditures.”

“Congress gave the Executive the authority to spend an amount greater than what it asked; it’s as simple as that,” says Senate Minority Leader Aquilino Pimentel III. “That’s unconstitutional.”

The mathematician-Bar exam topnotcher hints at congressional profligacy. Malacañang originally had sought P281.9-billion unprogrammed expenditures. The BCC nearly doubled it with a flick of a finger.

That BCC consists of about two dozen lawmakers – a small fraction of the 24 senators and 316 congressmen. Expect the Senate and House supermajorities to accept on Monday that BCC’s unconstitutional insertion.

What are unprogrammed expenditures? Here’s the Department of Budget and Management website definition:

“Unprogrammed Appropriations provide standby authority to incur additional agency obligations for priority programs or projects when the revenue source has exceeded the corresponding revenue collections target, and when additional grants or foreign funds are generated.”

Sounds good on paper but not in practice. Why? Because government’s overall revenue sources do not exceed overall revenue targets.

Example of the effects of collection shortfalls: In his State of the Nation in July, President Bongbong Marcos promised to pay P62-billion overdue emergency allowances to health workers. Last week, Health Sec. Ted Herbosa said it will be paid over three years, 2024-2026.

Malacañang expects huge collection shortfalls in 2024. That’s why in submitting the national budget to Congress in August, it announced the need to borrow P2.46 trillion. That’s an admission of planned overspending. Now Congress gives it P450 billion more to spend at will via additional loans.

Amounts in millions, billions and trillions can be unimaginable. But not when reduced to hundreds or thousands that ordinary folk deal with every day.

Let’s say a family needs to buy P5,768 in goods from the sari-sari store. But it has only P3,308 cash in hand, so must borrow P2,460 from the store owner. Then fritters away another P450. Will the store owner trust that family?

International creditors and raters closely watch the government. As the world reels from two wars and inflation, they can slam the door if the Philippines continually breaks its own rules.

It has happened before. When lenders discovered Marcos Sr.’s admin window dressing its dollar earnings in the 1980s, they made him issue Presidential Decree 1177. That Automatic Appropriations Law gave creditors, not the Filipino masses, first crack at national budgets.

It went on till Cory Aquino’s term. The International Monetary Fund imposed fiscal austerity. People went short of cash for even the most basic services like water and electricity, and programs like education and housing.

Government has been on deficit spending for decades. It budgeted P5.268 trillion this 2023, of which P1.499 trillion was borrowed.

Compiled public debt as of June 2023 is P14.15 trillion. That means each of 114 million Filipinos is in hock by P124,129. And we had no say in that debt.

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