Archive for the ‘Checks and Balances’ Category

DAP and The Power of the Purse

In the rather recent case of Araullo v. Benigno Simeon Aquino III[1], involving the chronically divisive Disbursement Acceleration Program  (or the DAP), the Supreme Court adopted a strict review of the “savings” definition to determine the President’s power to transfer amounts between programs under the General 2011, 2012 and 2013 Appropriations Act. On the flip side, the Supreme Court refused to consider the DAP as an impoundment measure based on the narrow definition of Impoundment under the same years GAAs:

 “The petitioners assert that no law had authorized the withdrawal and transfer of unobligated allotments and the pooling of unreleased appropriations; and that the unbridled withdrawal of unobligated allotments and the retention of appropriated funds were akin to the impoundment of appropriations that could be allowed only in case of “unmanageable national government budget deficit” under the GAAs, thus violating the provisions of the GAAs of 2011, 2012 and 2013 prohibiting the retention or deduction of allotments.

In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a last-ditch effort of the Executive to push agencies into actually spending their appropriations; that such policy did not amount to an impoundment scheme, because impoundment referred to the decision of the Executive to refuse to spend funds for political or ideological reasons; and that the withdrawal of allotments under NBC No. 541 was made pursuant to Section 38, Chapter 5, Book VI of the Administrative Code, by which the President was granted the authority to suspend or otherwise stop further expenditure of funds allotted to any agency whenever in his judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments and the pooling of unreleased appropriations were invalid for being bereft of legal support. Nonetheless, such withdrawal of unobligated allotments and the retention of appropriated funds cannot be considered as impoundment. According to Philippine Constitution Association v. Enriquez (citation omitted): “Impoundment refers to a refusal by the President, for whatever reason, to spend funds made available by Congress. It is the failure to spend or obligate budget authority of any type.” Impoundment under the GAA is understood to mean the retention or deduction of appropriations. The 2011 GAA authorized impoundment only in case of unmanageable National Government budget deficit, to wit:

Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act shall be impounded through retention or deduction, unless in accordance with the rules and regulations to be issued by the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and activities authorized under this Act, except those covered under the Unprogrammed Fund, shall be released pursuant to Section 33 (3),Chapter 5, Book VI of E.O. No. 292.

Section 67. Unmanageable National Government Budget Deficit. Retention or deduction of appropriations authorized in this Act shall be effected only in cases where there is an unmanageable national government budget deficit. Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the actual national government budget deficit has exceeded the quarterly budget deficit targets consistent with the full-year target deficit as indicated in the FY 2011 Budget of Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to Section 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending occurrence of such condition, as determined by the Development Budget Coordinating Committee and approved by the President.

The 2012 and 2013 GAAs contained similar provisions.

The withdrawal of unobligated allotments under the DAP should not be regarded as impoundment because it entailed only the transfer of funds, not the retention or deduction of appropriations.”

This means that while the Court recognized that the power to define savings is primordially legislative, it also allowed wide leeway for the Executive to play around with appropriations in order to create savings. In other words, although the President, if allowed by law (remember that it is not an inherent power), can realign only those funds which are defined as “savings” by Congress, it seems that he can also create a new category of savings altogether by simply “withdrawing unobligated allotments”  and the act of withdrawing itself is not considered an impoundment within the statutory definition.

I for one am still on the fence regarding the DAP issue per se but I think this distinction made by the Supreme Court on the impoundment aspect is too sophisticated for its own good. DAP would allow the executive to  declare an allotment “unobligated” merely by cherry picking which PAPs to obligate. And that precisely is the essence of impoundment — the refusal of the executive to carry out an instruction by Congress.

The items in the appropriations act are permissions for the Executive to incur obligations for the corresponding items. At the same time, the  GAA also theoretically contains a corresponding negative instruction for the President NOT to incur obligations for programs where no appropriations were made by Congress. Thus, to the extent that President acts contrary to these instructions, can it not be said that he also violates his duty to “faithfully execute” the laws of the land?

Finally, I think that obligating items PRIOR to or independent of the GAA amounts to a kind of “executive appropriation” as it would have the unusual effect of forcing the legislature to enact an appropriation to cover the expenditure,  thus:

“While section 8 of article I enumerates the powers of the legislative branch, the appropriations clause in section 9 is not a grant of power.

Rather, the appropriations clause affirmatively obligates Congress to exercise a power already in its possession.

Congress’ power to appropriate originates in article I, section 8. The concept of “necessary and proper” legislation to carry out “all . . . Powers vested by this Constitution in the Government of the United States” includes the power to spend public funds on authorized federal activities

Article I, section 8 also grants Congress the obverse power: the power to prevent the spending of any public funds except as authorized by Congress.

That is, even if there were no appropriations clause in the Constitution, Congress would have the power to enact a statutory “appropriations clause,” worded exactly the same as the clause in article I, section 9, making Congress’ appropriations power exclusive. If Congress could not prohibit the Executive from withdrawing funds from the Treasury, then the constitutional grants of power to the legislature to raise taxes and to borrow money” would be for naught because the Executive could effectively compel such legislation by spending at will.

The `legislative Powers’ referred to in section 8 of article I would then be shared by the President in his executive as well as in his legislative capacity.

Since legislative appropriations power is rooted in article I, section 8, we may infer that a primary significance of the appropriations clause in section 9 lies in what it takes away from Congress: the option not to require legislative appropriations prior to expenditure. If the Constitution thus strictly forbids `executive appropriation’ of public funds, the exercise by Congress of its power of the purse is a structural imperative[2]. “

 

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[1] GR No. 289207

[2] Stith, Kate, “Congress’ Power of the Purse” (1988). Faculty Scholarship Series. Paper 1267. http://digitalcommons.law.yale.edu/fss_papers/1267

 

 

 


Why Pork Is Here To Stay

With new information on just how vast the conspiracy to raid public coffers via the PDAF floating to the surface almost every day, the cry for the abolition of the pork barrel has generated such a ground swell that the President was forced to issue a statement that “it is time to abolish the PDAF.”

Pundits were quick to point out (correctly so) that the President did not abolish the pork barrel but re-packaged it into a “pork substitute” — same taste but with less calories.  This is how our Chief’s statement reads:

“Now, we will create a new mechanism to address the needs of your constituents and sectors, in a manner that is transparent, methodical, and rational, and not susceptible to abuse or corruption.

“Together with Senate President Frank Drilon and Speaker Sonny Belmonte, I will make sure that every citizen and sector will get a fair and equitable share of the national budget for health services, scholarships, livelihood-generating projects, and local infrastructure. Your legislators can identify and suggest projects for your districts, but these will have to go through the budgetary process. If approved, these projects will be earmarked as line items, under the programs of your National Government. In this way, they will be enacted into law as part of our National Budget—every line, every peso, and every project open to scrutiny, as with all other programs of your government.”

This article will not spend too much time debating how much fat, if at all, was cut out from the rebooted pork barrel. We are concerned here with what abolishing the pork would really mean from a legal perspective.

In simple terms, the “pork barrel” is an item in the Appropriations Act. So in equally simple terms, all it should take to slay the hog is for: (a) the President to stop including it in the budget and/or (b) the Congress to stop appropriating for it.  But that doesn’t sound the same as “abolishing” it if by abolition is meant a permanent end to the pork barrel in whatever form.

Neither does it seem that Congress can legislate the abolition (or in other words prohibit future iterations of the pork barrel). Under the current state of jurisprudence, the Supreme Court has been willing to draw a very thin line between appropriation (which is a legislative function) and spending (which is an executive one). In Philconsa vs. Enriquez, [GR No. 113105 (1994)], the inclusion of the discretionary fund (then named the “Countrywide Development Fund”) in the year’s GAA was questioned on the ground that it effectively allowed members of Congress to exercise the non-legislative function of “spending” earmarked funds. The Supreme Court found that the “identifications [of the projects to be funded]” was merely “recommendatory” and the power to appropriate can be exercised in a manner that is “as detailed [or] as broad as Congress wants,” thus:

“Under the Constitution, the spending power called by James Madison as `the power of the purse,’ belongs to Congress, subject only to the veto power of the President. The President may propose the budget, but still the final say on the matter of appropriations is lodged in the Congress.

“The power of appropriation carries with it the power to specify the project or activity to be funded under the appropriation law. It can be as detailed and as broad as Congress wants it to be.

“The Countrywide Development Fund is explicit that it shall be used “for infrastructure, purchase of ambulances and computers and other priority projects and activities and credit facilities to qualified beneficiaries . . .” It was Congress itself that determined the purposes for the appropriation.

“Executive function under the Countrywide Development Fund involves implementation of the priority projects specified in the law.

“The authority given to the members of Congress is only to propose and identify projects to be implemented by the President. Under Article XLI of the GAA of 1994, the President must perforce examine whether the proposals submitted by the members of Congress fall within the specific items of expenditures for which the Fund was set up, and if qualified, he next determines whether they are in line with other projects planned for the locality. Thereafter, if the proposed projects qualify for funding under the Funds, it is the President who shall implement them. In short, the proposals and identifications made by the members of Congress are merely recommendatory.

“The procedure of proposing and identifying by members of Congress of particular projects or activities under Article XLI of the GAA of 1994 is imaginative as it is innovative.

“The Constitution is a framework of a workable government and its interpretation must take into account the complexities, realities and politics attendant to the operation of the political branches of government. Prior to the GAA of 1991, there was an uneven allocation of appropriations for the constituents of the members of Congress, with the members close to the Congressional leadership or who hold cards for “horse-trading,” getting more than their less favored colleagues. The members of Congress also had to reckon with an unsympathetic President, who could exercise his veto power to cancel from the appropriation bill a pet project of a Representative or Senator.

“The Countrywide Development Fund attempts to make equal the unequal. It is also a recognition that individual members of Congress, far more than the President and their congressional colleagues are likely to be knowledgeable about the needs of their respective constituents and the priority to be given each project.

Inasmuch as the insertion of a pork barrel fund the mechanics of which allowed identification of projects by members of Congress was held to be valid exercise of legislative authority under the Constitution, the present Congress cannot pass a law “abolishing” the pork barrel for good as it would be tantamount to prohibiting subsequent Congresses from exercising a power that is granted by the Constitution. In that sense therefore, it would seem that true “abolition” of the pork barrel would require the amendment of the Constitution.

Furthermore, there are two (2) angles here. First, is the vulnerability or susceptibility of the fund to conversion or misappropriation.  Second is the concern that the unequal distribution of the fund is subject to abuse or excessive horse trading that diminishes or even eliminates checks and balances. While the first can be more or less tempered by the placement of tighter controls, the second is a more complex issue that does not lend itself to quick and elegant solutions. Curiously, the discussion in Philconsa implies that the CDF was itself designed to address the problem of  “uneven allocation” based on closeness to the “Congressional leadership.” The problem is that in taking the distributive carrot away from Congressional leadership and giving it to the President, the pork barrel system merely provided for a change in the personality of the giver. Worse, it also blurs the question of who is actually wielding the so-called “power of the purse.”

Thus, more than the pork barrel itself, what should be re-examined is the continuation or abolition of what has been commonly referred to as “pork barrel politics” defined (broadly) as the distribution of benefits to politically affiliated representatives in order to obtain, directly or indirectly, some form of political advantage. Again, this is not an easy topic to tackle and it would be reckless to dispense “unsolicited advice” in the limited space that we have here without defining assumptions. Politics is a complex dynamic with many players. We can only change politics by affecting behavior and what remains to be seen is whether a change in the architecture will be enough to do that.