IN a forum sponsored by the Asian Institute of Management Policy Center, the Social Weather Stations (SWS), and the Konrad Adenauer Stiftung, Mahar Mangahas presented the 2015 SWS survey review.
The review covered a wide range of issues: net satisfaction ratings of the national administration(s) and the high-level public officials, government response in the wake of super typhoon Yolanda, the peace agreement between the government and the Moro Islamic Liberation Front, the tension between the Philippines and China, the pork barrel scam, self-rated poverty, hunger, joblessness, quality of life, best leaders to succeed PNoy, etc.

 Instead of discussing all these topics, I’ll focus on the net satisfaction rating of PNoy. After all, the President’s satisfaction rating can serve as a proxy of how the people rate the administration’s performance in addressing the other issues surveyed by the SWS.

The SWS has done surveys since May 1986, tracking the net satisfaction ratings of previous presidents and the incumbent. From the SWS data, we see a pattern for the satisfaction ratings of presidents Corazon Aquino, Fidel Ramos, Joseph Estrada, Gloria Arroyo, and Noynoy Aquino. The net satisfaction ratings significantly drop in the latter part of their terms. Generally, except in the case of Arroyo where her rating was about -20 by the end of her term, the net ratings have shown a + sign, despite the fall in the satisfaction ratings.

Surprisingly, Corazon Aquino and Estrada almost had the same level of net satisfaction rating (about +10) just before they left office. Corazon Aquino was the icon of people power, but her net rating was a notch below +10. On the other hand, Estrada, though ousted through a “people power” revolt, had an equivalent rating as Corazon Aquino’s.

PNoy’s net satisfaction rating has taken a dip. But his rating, if compared to the former presidents, stands out. His net rating, despite a decline in the second half of his administration is quite high: +39. Of course, PNoy still has a year to complete his term, and we cannot predict whether his final net satisfaction will improve or worsen.

Nevertheless, the last year of his administration will be tough.

The problems relating to infrastructure and logistics, as exemplified by decrepit public transportation, heavy traffic, congestion of seaports and airports, a looming power crisis, and the like are now exacting their toll on the economy. Which in turn will adversely affect the president’s satisfaction rating.

The current situation calls for statesmanship and bold leadership — that is, pursue the technically correct but unpopular and politically controversial measures to address the current binding constraints. But the political cost can be heavy.

Take the issue of the power shortage. At this point, we have to accept that the power crisis is going to happen. The immediate interventions are unpalatable. The populist measure is for the government to subsidize the costs. But that will undermine credit ratings and affect investor confidence. Besides, government revenues are tied up and cannot be diverted to subsidies. The incremental revenues from the sin tax are earmarked heavily for universal health care coverage.

In addition, the government faces the threat of reduced revenues arising from the bill passed by the two houses of Congress to increase the level of exemption for individual income tax. Both houses will follow this up with the passage of a bill that will effectively lower the individual income tax rate; in particular, Congress wants to re-bracket the incomes of individuals. It is legitimate to adjust income brackets to inflation. A senior public school teacher, for example, whose income has risen through the years, is now subject to the top income tax rate of 32%.

The Department of Finance does not favor the passage of the bill because it will undermine revenue target and performance, unless the revenue loss is offset by new revenue measures. However, a presidential veto is tantamount to political suicide.

So the administration has to find ways to compensate for the revenue loss.

One solution is to increase the excise tax on petroleum. After all, prices of gasoline have drastically gone down. An increase in the excise tax of gasoline is appropriate and necessary.

The same argument to increase the tax exemption level for individual income earners applies to the increase in the excise tax of petroleum: inflation adjustment. Further, an increase in the price of gasoline through a tax rate increase can help alleviate the traffic and pollution problems. In short, we get multiple dividends.

The adverse impact on the welfare of the poor and the workers can be addressed by earmarking a part of the incremental revenues to subsidize public transportation.

That the government is compelled to increase revenues is manifested in the increase in the fare for the metro rail. The timing of the fare increase is unpropitious, for the public cannot accept a price increase for bad rail service. The service has in fact worsened.

The bad condition of the metro rail has been used as the argument for a fare increase, so the funds generated can be used for rail rehabilitation. But the timing is off. The increase should have been done much earlier — at the early stage of the PNoy administration when PNoy enjoyed a honeymoon relationship with the public and the media. He had substantial political capital, and a fare increase would have been acceptable. Further, the new administration could attribute the responsibility of failure to its predecessor.

So why didn’t the Aquino administration execute the hard and unpopular but necessary measures?

One plausible explanation relates to how PNoy became President. In a manner of speaking, PNoy’s presidency is a historical accident.

It has a generally positive side — PNoy owes his victory to the people. His victory was overwhelmingly convincing, and it was a victory that cannot be attributed to elite support or a traditional political party.

But an accidental presidency also has a downside — for example, it is impaired by a lack of a longer-term plan as well as by a loose, incoherent coalition. Let’s face it: the administration is a coalition of reformers (and on many occasions they gain the upper hand) as well as the trapos and corrupt politicians, and the competent as well as the incompetent.

PNoy must once again depend on the bloc of reformers to carry out the hard but critical reforms. But the irony is that among those with low satisfaction ratings are the reformers.

Very tough indeed.

Filomeno S. Sta Ana III coordinates the Action for Economic Reforms.

This article was first posted last January 25, 2015 on Business World.