This document discusses pork barrel spending and minimal government. It outlines the theory behind pork barrel funds and how they are used by legislators for political gain. It then discusses two major spending scams - the pork barrel scam and public debt scam. While the pork barrel scam totaled billions, the interest payments on public debt total hundreds of billions annually. It argues for minimal government and privatization to reduce wasteful spending and debt. The conclusion calls for fiscal responsibility, debt repayment, tax cuts, and reduced reliance on government.

1. Pork Barrel and Minimal
Government
Bienvenido “Nonoy” Oplas Jr.
Presentation at the Department of Social Sciences
Adamson University, Manila
04 September 2013

2. Outline
I. Theory of Pork Barrel
II. Pork Barrel Scam
III. Public Debt Scam
IV. Minimal Government
V. Conclusions

3. I. Theory of Legislators’ Pork Barrel
* Definition: Pork barrel funds are government appropriations bill,
programs or projects requiring considerable spending in a locality to the
benefit of the legislators’ constituents, supporters and/or contractors.
• Consistent with expansion of government at the Executive branch,
supposedly to “fight poverty”, a political mantra since governments were
invented. It’s now popularly called “inclusive growth”.
• Executive branch’s bribe to the Legislative branch so that the latter will
allow the former to have its own pork and wasteful spending, will not be
an activist and questioning body.

4. (a) Passive route: through time, costs
will stabilize while benefits will
expand
(b) Progressive route: initially, costs
will be high, decline later, while
benefits continue to expand
BENEFITS (growth with equity or
“inclusive growth”, industrialization)
COSTS (taxes, debts)
Figure 1. The Goal of Expanding Government, Executive and
Legislative

5. II. The Pork Barrel Scam

6. Source: PDI,
August 30, 2013.
Alleged P10 B pork barrel fund Coursed through Janet
Lim-Napoles (JLN) camp over many years does not
seem to be itemized, except this part covering 2006-
2011 and totaling only P3.13 billion.
Table 1. Amount Dispensed to Some Legislators in the Napoles Scandal

7. Opposition said the Administration Senators were not fully audited by COA.
Table 2. COA Audit of Selected Senators, 2007-2009

8. Source: Source: DBM,
NEP 2012 and 2014
Note the big jump of legislators’ pork barrel from the
Arroyo to the PNoy Aquino administrations, 2010 vs.
2011 PDAF fund.
The trend is retained afterwards.
Table 3. Priority Development Assistance Fund (PDAF), in P Billion

9. III. Public Debt Scam
Table 4. Principal + Interest Payment of Philippine Public Debt, 2012-2014
Source: DBM, Budget of Expenditures and Sources of Financing (BESF) 2014, Table B.20.
Interest alone: P312.8 B in 2012, P332.2 B in 2013, P352.6 B 2014, ave. of P332 B a year.
Why are the people not angry at this huge transfer of money ?

10. Table 5. Principal + Interest Payment of PH Public Debt, 2010-2011
Source: DBM, BESF 2012, Table 18.
So annual int. payment is about 14x the size of the annual lump sum pork barrel
of legislators, or 32x the Napoles scam. People’s anger is not proportionate at
this huge amount of money leaving our coffers yearly?

11. Table 6. Interest Payment as Percent of Tax Revenues, 2010-2014
Sources: Interest payment, Tables 4 and 5 above;
Tax Revenues 2010-2012, DOF, Fiscal Update
Tax Revenues 2013-2014, DBM, BESF 2014, Table C.1.
For every P100 in various taxes that we pay – personal and corporate income tax,
excise tax, VAT, documentary stamp tax, import tax, travel tax, vehicle registration
tax, etc. – about P23 of it is used to pay the interest payment alone.
Only P77 will be used for salaries, offices, subsidies, projects of various
government agencies, local and national.
Pork barrel fund of P25 billion per year, even if we assume that all of it is lost to
corruption, comprises just 1.5 percent of total tax revenues

12. Table 7. Outstanding Debt of National Government at End of
Period, in P Trillion
Sources: (1) DBM, BESF 2014, Table D.3
(2) Bureau of Treasury
* Outstanding public debt of P5.865 trillion by the end of 2013.
* Our population projected to be around 98.2 million by the end of 2013, from
92.3 milion as of May 2010 national census.
* This means that every Filipino, men and women, young and old, rich and poor,
has a per capita debt of about P59,700 by the end of December 2013.

13. • Public debt is simply the accumulation of wastes in
government. From P1 billion a year to P10 billion a year to
P300 billion a year.
• If public spending in the past was generally productive, say in
public education, health, roads and bridges, irrigation canals
and agrarian reform, then people should be productive
enough to pay back those debt after sometime, and the debt
stock should at least plateau, if not decline.
• This s not happening. Past public spending for many agencies
and programs were designed to be forever, no timetable
spending, and thus, are inefficient.
• Public debt stock keeps rising, around P350 to P400 billion a
year on average.

14. Table 8. Big Outstanding Foreign Debt Securities of the National
Government for Budgetary Support
Sources: (1) DBM, BESF 2014, Table D.3
(2) Bureau of Treasury
* Outstanding public debt of P5.865 trillion by the end of 2013.

15. Backward-bending curve, meaning as costs
increase, the benefits to taxpayers decline,
(even approach zero to negative)
BENEFITS (growth with equity,
“inclusive growth”, industrialization..)
COSTS (taxes, debt)
Figure 2. Deviation from the Promise
(see Figure 1)
IV. Minimal Government Goal

16. Figure 3: Arthur Laffer (and JM Keynes): the higher the tax rate, the
lower the tax revenue/collection
Tax rates approaching 100%, private enterprises and individuals will either stop working
at some point, or they continue working but understate output, even bribe tax collectors

17. Table 9. BIG Philippine Business Bureaucracies
(From WB-IFC’s Doing Business 2013 Report)

18. Figure 4: Privatization and Shrinking Government
point of full-privatization
(2): Privatize many GOCCs and agencies
Room for tax cut as endless subsidies to ever-losing GOCCs
are eliminated, debt servicing greatly reduced
(1): Privatize some GOCCs, use proceeds to pay back debt. A
few “earning” enterprises be retained,and hope that costs will
be kept to the minimum
+
0
-
Costs
BENEFITS

19. V. CONCLUSIONS
1. Pork barrel scam is huge, cause of the scam must be stopped, the
Executive and Legislative branches must be more transparent to the public.
Have a Freedom of Information (FOI) law.
2. Public debt scam though is much larger, many people not aware of the
magnitude of money flying out of their pockets and savings just to pay the
annual interest payment.
3. We must not renege those debt payment, pay them all. The hugeness of
the debt and its interest payment should be a constant reminder to the
current and future administrations that endless borrowing is wrong.

20. 4. Fiscally responsibility means government can have
budget deficit and borrow a lot in cases of emergencies,
like the 1990-1991 earthquake and Pinatubo eruption,
or the 1997-98 Asian financial turmoil.
5. But when there are no clear emergencies,
government should aspire to have a fiscal surplus, pay
back some debt, cut the spend-borrow-spend policy.
6. This is not happening, there are no plans by any
administration, past and present, to make this happen.

21. 7. Taxpayers and private citizens, us, must pressure
government to observe fiscal responsibility, learn to live
within its means, do not engage in endless borrowings.
8. Reduce taxes especially personal income tax, leading
to zero income tax. Government can survive with other
taxes and fees.
9. More personal and parental responsibility in running
our own lives, our own households. Not everything
should be government responsibility, from books to
tractors to condoms.