Are we as stupid as gov’t thinks we are?

Given the efforts to counter growing public disgust as well as to perfume the President from the stench gradually enveloping his public persona of a squeaky-clean Dudley Do Right, for the campaign to work hucksters assume that the public can indeed be fooled.

As insulting as it is to the intelligence of the Filipino public, the presumption of public gullibility in the deodorizing campaign of the DAP (Disbursement Acceleration Program) is consistent with the same one lawmakers applied when receiving from the Palace the very first tidbit of pork, even as the program technically usurped congressional powers.

The most brazen is the assumption that the public will believe that politicians have the greater good in mind when they get their hands on multibillion-peso funds where these are off-budget and invisible to audit eyes and checks and balances, and rechanneling “in good faith” is assumed as sufficient justification.

Given amounts as huge as P149 billion, there must have been an epidemic of good faith and blinding delusions that an allocation from P50 million to P200 million controlled by a politician can reverse the economy from its recession during Mr. Aquino’s first years when gross domestic product (GDP) growth rates fell from 3.2 percent in 2010 to 1.1 percent in 2011 and 0.7 percent between 2011 and 2012.

That’s understandable. Silver shines so brightly it can obscure what’s underneath. More so if there were 30 pieces. Imagine the glare.

One other distorting, albeit ludicrous, defense of the DAP is the argument that savings are produced when a project for which a budget is intended under the General Appropriations Act (GAA) is either suspended or stopped. That is wrong.

Consult any prudent finance professional, accountant, auditor or CFO. The argument is simplistic and contrary to prudent financial protocols. From a strictly financial perspective, there is a vast difference between the definition of savings against unexpended or unspent funds.

The Administrative Code allows for savings to be used for projects or activities other than those for which the funds were budgeted. But unspent funds due to the suspension or cancellation of an expenditure does not constitute savings. Savings result from variances between programmed or projected expenses in a budget, against actual expenditures and actual cash flows upon actual operation. Projects must be undertaken to produce savings. For fiscal prudence, this is a financial control measure. And it is the rationale behind reverting unspent funds. It ensures that all expenditures not only pass budgetary scrutiny but are also statutorily authorized.

If the definition of savings were to be expanded to include cancelled or suspended expenditures, then all budgets, public or private, and the GAA itself, would be open-ended and vulnerable to technical malversation.

The integrity of the GAA and the process that elevates it from a mere budget to a yearly statute—or a republic act, for that matter—is important in analyzing the recent Supreme Court decision on the DAP.

The national budget is a law in order to protect its integrity. To deviate from it, or to violate it by spending outside its parameters, is a criminal offense. This emphasizes the GAA’s importance as its provisions and allocations pass congressional scrutiny. Expenditures outside the GAA are expenditures outside the law. In laymen’s lingo, that is the definition of an illegal expenditure regardless of economic benefits. Thus, while officials might be empowered to rechannel funds, eventual usage must still be covered by the GAA.

Unfortunately, under the DAP, these safeguards were brazenly violated.

As the usually astute, albeit politically incorrect, Joker Arroyo said rather incisively, Congress was a willing participant to its own ravaging. So warped were basic concepts of right and wrong that some senators not only enjoyed the rape but, as if afflicted sociopaths, also remain proud of it.

Note the attitude of those entrusted with billion-peso funds. Despite the unequivocal declaration of unconstitutionality based on the money’s inherent nature as technically nonsavings, its illegal diversion outside the original agency for which funds were intended, and its noninclusion in the GAA, one senator trumpets that the DAP funds had gone to economically productive projects. Never mind that the Supreme Court decision was focused, not on the DAP’s eventual usage, but on the unconstitutional aspects of its encroachments despite the separation-of-powers statutes.

Another senator, a recipient of the PDAF (Priority Development Assistance Fund) and the DAP in amounts ironically dwarfing most others despite their relative insignificance in the Corona impeachment, declared quite stupidly that only those whose DAP funds were misused should be held accountable. That totally ignores the high court’s decision where unconstitutionality lies in the DAP’s origins.

Likewise, the consequent tsunami of press releases on DAP projects takes the public for fools as each shifts focus to usage rather than origins.

When officials prematurely terminate budgeted expenditures, relabel unspent funds as savings, and then misappropriate billions beyond the GAA’s authorized parameters, all throughout claiming “good faith” disguised behind “priority activities that will promote economic wellbeing,” then we see an underlying assumption of public gullibility.

Add a pinch of political patronage to the process and suddenly Prudence leaves the building.

Dean dela Paz is a former investment banker and a consultant to the Joint Congressional Power Commission. He authored a book on energy governance tool kits and teaches finance, investment mathematics and corporate strategy.