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Brazil's New Government Is Already Planning to Balance the Budget on the Backs of the Poor

Tuesday, May 24, 2016 By Mike LaSusa, Truthout | News Analysis
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More than fifteen thousand people protest at Praça da Cinelândia in Rio de Janeiro against the new right-wing government under Brazil's interim president, Michel Temer.More than 15,000 people protest at Praça da Cinelândia in Rio de Janeiro against the new right-wing government under Brazil's interim president, Michel Temer. (Photo: Mídia NINJA)

Help Truthout keep publishing stories like this one: We depend on reader support! Click here to make a tax-deductible donation today.

Just days after the Brazilian Senate voted to suspend former President Dilma Rousseff and subject her to an impeachment trial, the country's new right-wing government is already planning to balance the budget on the backs of the poor.

To be sure, Brazil's economic problems are real and they are serious. The country is currently in the midst of its worst recession in decades. The economy shrank by 3.8 percent last year, and the International Monetary Fund projects that it will shrink by another 3.8 percent this year. Unemployment has reached 10 percent -- the highest level recorded in years.

This economic slowdown has contributed to a significant government budget deficit. According to Bloomberg, the difference between government spending and incoming revenues during the first three months of 2016 was $1.7 billion -- the largest figure registered in over a decade. The financial news service writes that the "deficit expanded to a record 2.28 percent of gross domestic product in the 12 months through March" of this year.

In order to close that gap, the Brazilian government has three basic options: raising revenues, cutting spending or some combination thereof.

To raise revenues, the government could perhaps focus on combating tax evasion, which is usually carried out by big businesses and the rich, and has cost Brazil nearly $56 billion in lost revenues so far this year, according to a government-sponsored monitoring website.

Or, the government could raise taxes on the super-wealthy, who have only gotten richer despite ongoing political and economic turmoil in the country.

But instead, Brazil's new interim president, Michel Temer -- who was recently convicted of breaking campaign finance laws and has been linked to a massive corruption scandal -- just installed an all-white, all-male cabinet that appears poised to slash the social programs that helped bring millions of Brazilians out of poverty over the past decade.

For example, the newly installed minister of social and agrarian development, Osmar Terra, warned in a recent interview with the news outlet O Globo that more than one in 10 recipients could be cut off from the widely praised Bolsa Família program, which provides cash benefits to low-income families if they meet certain criteria.

Additionally, the new minister of cities, Bruno Araujo, announced that the new government would not fulfill a promise made during Rousseff's last days in office to construct more than 11,000 new low-income housing units under another widely hailed program known as "Minha Casa, Minha Vida" ("My House, My Life.")

Guilherme Boulos, an activist with the Homeless Workers Movement, told the Folha de São Paulo newspaper that the decision to cancel the construction was "unfortunate," but "predictable."

"We said from the beginning that the [impeachment] process was also intended to attack social rights," Boulos said. "Today was only the first cut."

It seems Boulos' prediction could come true. Brazil's new health minister, Ricardo Barros, recently said that the government might not meet its constitutional mandate to provide health care to all citizens.

"We're going to have to renegotiate, as happened in Greece," Barros told Folha de São Paulo. "And in other countries that had to renegotiate the obligations of the state because it no longer had the capacity to sustain them."

Similarly, the Temer administration has floated plans to reform the pension system by raising the retirement age -- a proposal that has met with strong resistance from labor unions and left-leaning politicians in Brazil's Congress.

The Temer government is also reportedly considering selling off state assets in order to raise funds.

In an interview on the television news program "Good Morning Brasil," the new finance minister, Henrique Meirelles, defended the new government's austere economic plans, calling for the government to "tell the truth" about the state of public finances, and to put forward "realistic" solutions.

"We are going to have to reverse the trend," Meirelles said. "Public debt cannot continue growing. We are going to have to cut costs."

The Temer administration's pick to run Brazil's central bank, Ilan Goldfajn, appears to agree.

According to Reuters, Goldfajn -- who "has been widely praised on Wall Street for his orthodox approach to economics" -- "has said Brazil urgently needs to rebalance its fiscal accounts with pension reforms and public spending caps."

The Inter-American Commission on Human Rights has expressed "deep concern" over the new government's economic plans, cautioning that Brazil's international obligations bar the government from implementing policies that could "worsen the situation of economic, social, and cultural rights enjoyed by the population."

As the Brazil-based journalist Alex Cuadros recently tweeted, "Obviously Brazil must close its budget deficit. Question is, who will be forced to give up more? Under Temer, answer seems to be: the poor."

Cuadros also pointed out that running for elected office in Brazil on a platform of cutting social programs like health care would amount to political suicide.

Another Brazil-based writer, Pulitzer Prize winner Glenn Greenwald, responded: "This is the *absolute key* to understanding impeachment: [the Temer government is] imposing an agenda that could never win an election."

Greenwald, along with fellow journalists Andrew Fishman and David Miranda, recently raised another possible motivation for the impeachment process: putting an end to a wide-ranging corruption investigation in Brazil known as "Operation Car Wash."

Writing at The Intercept, the authors report that Folha de São Paulo has published transcripts of conversations that took place in March between a former oil executive named Sergio Machado and a powerful politician named Romero Jucá.

In the conversations, Jucá -- who was then serving as a senator and head of Temer's political party -- claimed that he discussed the impeachment process with military generals and Supreme Court justices, and he said that these officials backed Rousseff's ouster.

Jucá also said he believed Rousseff's removal from office would "end the pressure from the media and other sectors to continue the Car Wash investigation," which has already landed a number of Brazilian elites in jail on corruption charges.

Rousseff has not been implicated in corruption. Her impeachment trial has to do with alleged violations of budgetary rules. Jucá, on the other hand, is a suspect in the Car Wash investigation, as is Machado. (Jucá had been serving as planning minister in Temer's administration for just over a week, but he stepped down soon after the publication of the transcripts.) 

Greenwald and his co-authors argue that the transcripts provide "proof that the prime forces behind the removal of the president understood that taking her out was the only way to save themselves and shield their own extreme corruption from accountability."

They also raise the question of whether media outlets should follow Rousseff's lead in describing the impeachment process as a "coup."

"These transcripts make it increasingly difficult for media outlets to avoid doing so," they write.

Copyright, Truthout. May not be reprinted without permission.

Mike LaSusa

Mike LaSusa is a writer living in Washington, DC, who majored in journalism and international studies with a focus on Latin America at the University of Miami. He is currently enrolled in a master's degree program in US foreign policy and national security at American University.

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Brazil's New Government Is Already Planning to Balance the Budget on the Backs of the Poor

Tuesday, May 24, 2016 By Mike LaSusa, Truthout | News Analysis
  • font size decrease font size decrease font size increase font size increase font size
  • Print

More than fifteen thousand people protest at Praça da Cinelândia in Rio de Janeiro against the new right-wing government under Brazil's interim president, Michel Temer.More than 15,000 people protest at Praça da Cinelândia in Rio de Janeiro against the new right-wing government under Brazil's interim president, Michel Temer. (Photo: Mídia NINJA)

Help Truthout keep publishing stories like this one: We depend on reader support! Click here to make a tax-deductible donation today.

Just days after the Brazilian Senate voted to suspend former President Dilma Rousseff and subject her to an impeachment trial, the country's new right-wing government is already planning to balance the budget on the backs of the poor.

To be sure, Brazil's economic problems are real and they are serious. The country is currently in the midst of its worst recession in decades. The economy shrank by 3.8 percent last year, and the International Monetary Fund projects that it will shrink by another 3.8 percent this year. Unemployment has reached 10 percent -- the highest level recorded in years.

This economic slowdown has contributed to a significant government budget deficit. According to Bloomberg, the difference between government spending and incoming revenues during the first three months of 2016 was $1.7 billion -- the largest figure registered in over a decade. The financial news service writes that the "deficit expanded to a record 2.28 percent of gross domestic product in the 12 months through March" of this year.

In order to close that gap, the Brazilian government has three basic options: raising revenues, cutting spending or some combination thereof.

To raise revenues, the government could perhaps focus on combating tax evasion, which is usually carried out by big businesses and the rich, and has cost Brazil nearly $56 billion in lost revenues so far this year, according to a government-sponsored monitoring website.

Or, the government could raise taxes on the super-wealthy, who have only gotten richer despite ongoing political and economic turmoil in the country.

But instead, Brazil's new interim president, Michel Temer -- who was recently convicted of breaking campaign finance laws and has been linked to a massive corruption scandal -- just installed an all-white, all-male cabinet that appears poised to slash the social programs that helped bring millions of Brazilians out of poverty over the past decade.

For example, the newly installed minister of social and agrarian development, Osmar Terra, warned in a recent interview with the news outlet O Globo that more than one in 10 recipients could be cut off from the widely praised Bolsa Família program, which provides cash benefits to low-income families if they meet certain criteria.

Additionally, the new minister of cities, Bruno Araujo, announced that the new government would not fulfill a promise made during Rousseff's last days in office to construct more than 11,000 new low-income housing units under another widely hailed program known as "Minha Casa, Minha Vida" ("My House, My Life.")

Guilherme Boulos, an activist with the Homeless Workers Movement, told the Folha de São Paulo newspaper that the decision to cancel the construction was "unfortunate," but "predictable."

"We said from the beginning that the [impeachment] process was also intended to attack social rights," Boulos said. "Today was only the first cut."

It seems Boulos' prediction could come true. Brazil's new health minister, Ricardo Barros, recently said that the government might not meet its constitutional mandate to provide health care to all citizens.

"We're going to have to renegotiate, as happened in Greece," Barros told Folha de São Paulo. "And in other countries that had to renegotiate the obligations of the state because it no longer had the capacity to sustain them."

Similarly, the Temer administration has floated plans to reform the pension system by raising the retirement age -- a proposal that has met with strong resistance from labor unions and left-leaning politicians in Brazil's Congress.

The Temer government is also reportedly considering selling off state assets in order to raise funds.

In an interview on the television news program "Good Morning Brasil," the new finance minister, Henrique Meirelles, defended the new government's austere economic plans, calling for the government to "tell the truth" about the state of public finances, and to put forward "realistic" solutions.

"We are going to have to reverse the trend," Meirelles said. "Public debt cannot continue growing. We are going to have to cut costs."

The Temer administration's pick to run Brazil's central bank, Ilan Goldfajn, appears to agree.

According to Reuters, Goldfajn -- who "has been widely praised on Wall Street for his orthodox approach to economics" -- "has said Brazil urgently needs to rebalance its fiscal accounts with pension reforms and public spending caps."

The Inter-American Commission on Human Rights has expressed "deep concern" over the new government's economic plans, cautioning that Brazil's international obligations bar the government from implementing policies that could "worsen the situation of economic, social, and cultural rights enjoyed by the population."

As the Brazil-based journalist Alex Cuadros recently tweeted, "Obviously Brazil must close its budget deficit. Question is, who will be forced to give up more? Under Temer, answer seems to be: the poor."

Cuadros also pointed out that running for elected office in Brazil on a platform of cutting social programs like health care would amount to political suicide.

Another Brazil-based writer, Pulitzer Prize winner Glenn Greenwald, responded: "This is the *absolute key* to understanding impeachment: [the Temer government is] imposing an agenda that could never win an election."

Greenwald, along with fellow journalists Andrew Fishman and David Miranda, recently raised another possible motivation for the impeachment process: putting an end to a wide-ranging corruption investigation in Brazil known as "Operation Car Wash."

Writing at The Intercept, the authors report that Folha de São Paulo has published transcripts of conversations that took place in March between a former oil executive named Sergio Machado and a powerful politician named Romero Jucá.

In the conversations, Jucá -- who was then serving as a senator and head of Temer's political party -- claimed that he discussed the impeachment process with military generals and Supreme Court justices, and he said that these officials backed Rousseff's ouster.

Jucá also said he believed Rousseff's removal from office would "end the pressure from the media and other sectors to continue the Car Wash investigation," which has already landed a number of Brazilian elites in jail on corruption charges.

Rousseff has not been implicated in corruption. Her impeachment trial has to do with alleged violations of budgetary rules. Jucá, on the other hand, is a suspect in the Car Wash investigation, as is Machado. (Jucá had been serving as planning minister in Temer's administration for just over a week, but he stepped down soon after the publication of the transcripts.) 

Greenwald and his co-authors argue that the transcripts provide "proof that the prime forces behind the removal of the president understood that taking her out was the only way to save themselves and shield their own extreme corruption from accountability."

They also raise the question of whether media outlets should follow Rousseff's lead in describing the impeachment process as a "coup."

"These transcripts make it increasingly difficult for media outlets to avoid doing so," they write.

Copyright, Truthout. May not be reprinted without permission.

Mike LaSusa

Mike LaSusa is a writer living in Washington, DC, who majored in journalism and international studies with a focus on Latin America at the University of Miami. He is currently enrolled in a master's degree program in US foreign policy and national security at American University.