As it turned out, the Cabinet meeting last Monday did have more important matters to discuss aside from those pathetic attempts by the Yellows to bring down the government. And one of those pressing, needful things was how to deliver on President Rodrigo Duterte’s promise to increase pensions of retiree-members of the Social Security System by P2,000.
Reports said that the debate on the pension increase pitted two groups in the Cabinet that felt very strongly about the issue against each other: the economic advisers composed of Finance Secretary Carlos Dominguez, Burdget Secretary Benjamin Diokno and Socio-economic Planning Secretary Ernesto Pernia, who were against granting the increase immediately; and the leftist bloc made up of Social Welfare Secretary Judy Taguiwalo, Agrarian Reform Secretary Rafael Mariano and National Anti-Poverty Commission Chairman Liza Maza, who wanted it granted right away.
In the end, after hearing both sides, Duterte made his decision. The SSS would immediately give out a P1,000 across the board increase for all pensioners and another P1,000 before the end of his term in 2022.
Simultaneous with the granting, the fund’s administrators, led by SSS Chairman Amado Valdez and President Emmanuel Dooc, were to impose a 1.5-percent increase in contributions. They were also told to go after delinquent contributors in order to improve the SSS’ collection efficiency (currently at a miserable 33 percent) and to increase their investment earnings, through measures such as the proposed reserving of 25 percent of the equity in profitable government infrastructure contracts (i.e., tollway projects and the like) for the SSS.
It was a bold political act on the part of Duterte, who was already drawing flak for supposedly going back on his promise to grant the increase, after his financial managers issued a memorandum that was interpreted as advising against granting the long-awaited pension hike. (I say “interpreted” here, because Dominguez and his fellow bean-counters were not really against the increase —they just wanted it granted only after many of the economic reforms they wanted done, especially the new comprehensive tax reform program, were already in place.)
Dominguez’ team had merely taken the same position of its predecessor in the previous administration, that granting an increase could endanger the actuarial life of the fund and trigger other financial upheavals that could have dangerous effects on other aspects of the economy. In the new administration, however, there are now important counterweights to this overly prudent, banker-like view of the SSS and similar funds.
First among these is the existence of the populist and left-leaning Cabinet group composed of Taguiwalo, Mariano and Maza. Invited to join the Duterte Cabinet by the president himself as a gesture of inclusiveness, the three have shown in the SSS pension increase issue that they can be relied upon to pursue a pro-people agenda—and even triumph over the very well-entrenched and influential advocates of conservative macroeconomic policy represented by Dominguez and the rest.
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And then there’s Duterte himself, who showed that he is not afraid to deliver on his promised pension hike, never mind if Diokno had warned earlier that the candidate Duterte was different from the Duterte that is now president. By siding with Taguiwalo’s group, Duterte showed most of all that he has empathy the size of Davao City and was not going to be dissuaded from acting in favor of the poor, despite the dire predictions of his own economic team.
Remember that the SSS pension increase was pushed by the last Congress in a law approved by both Houses near the end of Noynoy Aquino’s term. Without even attempting to compromise with Congress—or offering a bone to console the millions of SSS pensioners who had counted on the increase—Aquino simply vetoed the approved law when it reached his desk.
That was how influential Aquino’s economic team of fiscal conservatives was in his administration. And how unconcerned Aquino was about real-world problems of the poor.
Some may interpret Duterte’s action as simply astute politics—if SSS goes belly up because of imprudent spending, after all, that tragic event will happen long after Duterte is gone. But the truth is, Duterte doesn’t need to play politics at this time, when the most logical thing for him to do is to use his gaudy approval and trust ratings to force the people to take the bitter medicine of fiscal discipline, like his finance people want him to do.
The other truth is that the elitist Yellow economic team, through their uncaring hacienda heir of a president, had repeatedly blocked the efforts to increase SSS pensions by at least three consecutive Congresses. Duterte, without waiting for Congress to pass yet another pension-increase measure, gave the pension hike in six months.
If you still can’t understand why the Filipino masses love Duterte, you should consider the political will he showed this week when he basically told the SSS to give the pension increases now and get the money to pay for them later. This is counter-intuitive economic policy, sure, and you fill have no shortage of economic theorists and technocrats who would rather die than recommend such measures.
But the economists aren’t Duterte’s core constituency. The grateful P40-a-day pensioners, on the other hand, are.